Top tips for NFPs from the 2022 conference season

If you were fortunate enough to get out in 2022 to attend a conference that enriched and energized you or your staff, then we hope you are planning with your team to put the tidbits you took away into action for 2023.If you weren’t able to make it to a conference, then we have you covered.

Here are some of the top tips and takeaways we compiled during our conference travels that could be beneficial for your not-for-profit organization.

Fraud – Unfortunately, fraud continues to trend in headlines for not-for-profit organizations. As headcount shrinks and more people go remote, there are many challenges to make sure you stay on top of reducing the risk of fraud:

• According to the 2021 Association of Certified Fraud Examiners (ACFE) Annual Report – 42% of fraud is reported from tips by employees/vendors/customers
• Adopting a Whistleblower Policy and providing a way for people to report suspected fraud easily and anonymously is a great way to pinpoint fraud and respond swiftly to minimize damage, both financially and reputationally
• Learn more tips and tricks from Baker Tilly’s full presentation here - Fraud prevention and detection: leading practices to protect you not-for-profit - Baker Tilly
• Or join us for Baker Tilly's Fraud Summit 2023

Audit Prep – If you are a calendar year-end, you are likely in the throes of audit prep. Here are some tips we took away from Baker Tilly’s recent presentation at Sage Transform on how to take your audit process paperless:

Try to digitize as much as possible –

• Document policies and procedures
• Develop narratives and flow charts for key processes
• Show access to source documentation

Get all team members involved –

• Delegate and empower different departments to prepare for the audit
• Use checklists to track target dates and assign responsibilities
• Hold regular meetings up to and during the audit so staff can be held accountable

Get Auditors on board –

• More and more audits are going remote. Look to give your auditors access to your accounting system
• Provide a walk-through of the system so that they can navigate and find basic information such as: trial balance, general ledger, journal entries, check registers, A/P listing, etc.
• Accessing the system will save them (and you) time and allows them to work when they want to

Use a Dashboard –

• Create a home base where you can store key reports, checklists, notes, and other key items for the audit
• Give the audit team and your staff access to the dashboards so they can track along with changes and provide updates in real-time.

Sage Intacct has wonderful dashboard and reporting capabilities to make a smooth, paperless audit. Learn more about how Baker Tilly uses Sage Intacct with not-for-profit organizations at Sage Intacct - Baker Tilly

Tax Updates – There have been key tax laws introduced in the last 12-18 months that not-for-profit organizations need to know. At Baker Tilly’s Value Architect Summit in December, we received some updates that we want to pass along:

Inflation Reduction Act

• Tax-exempt organizations should take a hard look at any current building projects to determine if any of the component parts of the project qualify for the direct pay energy tax credits or if the project could be cost-effectively modified to ensure the project qualifies for energy tax credits.
• Timing - Many credits require organizations to meet the “begun construction” date of no later than December 31, 2024 and the property is required to be placed in service by December 31, 2028.
• Organizations could receive anywhere from 30% - 50% of the cost of qualifying costs of the project in cash from the government.
• Rewatch Baker Tilly’s recent webcast on the Inflation Reduction Act: Inflation Reduction Act: what higher education institutions need to know now - Baker Tilly

Employee Retention Credits

• For organizations that received the Employee Retention Tax credit, be aware that the IRS recently trained a number of agents to go and audit the refund claims.
• Make sure you retain all the information you used to determine the amount of the credit. Th is will help minimize the time spent in the event of an IRS examination.
• The IRS has 5 years from the date you filed your refund claim to audit the claim.
• Baker Tilly recently issued a short video with highlights from our tax team on ERC Employee Retention Credit audits for NFPs

Remote Employee Rules

Out-of-state remote employees can have more of an impact on your organization beyond being a headache for the payroll department. If you are in this situation (or thinking about hiring remote out-of-state employees), make sure to address potential Human Resource issues specific to the new state and the impact on state registration requirements (register to do business, solicitation registration, Form 990 equivalent filing requirements, etc.).

Please let us know if you have other Top Tips to share from conferences you attended that benefit not-for-profit organizations. We look forward to attending and presenting at more conferences this year and hope to see you there.

Please reach out to your Baker Tilly advisor if you have questions.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

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