Magazine article The CPA Journal

A New Look at Nonprofits

Magazine article The CPA Journal

A New Look at Nonprofits

Article excerpt

For the second year in a row, New York State Attorney General Eric T. Schneiderman has taken on the grossly outof-date laws that govern not-for-profit organizations with his proposed legislation, the Nonprofit Revitalization Act.

Although last year's attempt stalled in the legislative process before it could reach the floor, Schneiderman made great strides in the 2013 session and introduced comprehensive legislation (S.5845-13/A.8072-13) that was sponsored on both sides of the aisle in both state legislative houses, and was passed at the end of the legislative session.

TTie Society's membership had a very big stake in this process. Many members count not-for-profit organizations as part of their client base or work directly for such entities as CFOs, among other positions. In addition, not-for-profit organizations often call upon CPAs in their community to serve as members of their respective boards of directors in order to utilize their financial expertise. The NYSSCPA Notfor-Profit Organizations Committee reflects the size and scope of CPAs' involvement: it is one of the Society's most active committees, and its annual conferences in New York City and Rochester attract more than 600 attendees.

The Proposal Process

This legislation is a welcome first step for all of the state's nonprofits. For years, CPAs involved with not-for-profit organizations have had to navigate a system governed by archaic rules and regulations that drained resources from mission-critical programs, especially those providing important social services to New Yorkers. The need for these services has only grown in recent years, as New York has faced a variety of challenges, from the 2007-2009 recession to Hurricane Sandy.

In brief, the legislation recommends a number of commonsense modernization rule changes for tasks such as meeting notification guidelines. In addition, it contains vital new audit guidance to provide a clearer road map for CPAs tasked with checking not-for-profit organizations' books. The bill also proposes an increase in the audit threshold in order to provide relief for smaller organizations unduly burdened with unrealistic audit requirements. The new audit guidelines, along with improved conflict-of-interest and whistleblower policies, would improve transparency and increase nonprofits' accountability to the public.

Since Schneiderman first broached the idea of nonprofit reform last year, the Society has offered assistance on the matter and has been communicating with the State Attorney General's office. …

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