No surprise, many not-for-profits (NFPs) saw greater demand for services and less resources following 2020. And while NFPs work to address their communities’ needs, managers, directors and board members are left with the financial and accounting fallouts as well.
The passing of federal legislation – Coronavirus Aid, Relief and Economic Security (CARES) Act, the American Rescue Plan Act, the Families First Coronavirus Response Act and the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act – lessened the financial burden on businesses and nonprofits during the height of the pandemic. But the results of these legislations are not fully known.
According to the American Institute for Certified Public Accountants (AICPA), the accounting measures required with these pandemic acts are a major concern for NFPs. This article outlines the accounting issues non-profits are facing in 2022.
Accounting and Financial Reporting for Non-Profits after 2020
During the peak of COVID-19, the Financial Accounting Standards Board (FASB) delayed the effective dates to changes being made to the accounting standards at the time. The delayed dates were a blessing for many not-for-profits.
However, as 2021 ended, most of the updates became effective, leaving NFPs trying to understand the current accounting standards. In fact, depending on your fiscal year start date, you may be already grappling with these changes. Risk and uncertainties, revenue recognition, leases and asset impairment are just a few accounting measures non-profits are working to better understand.
Auditing Considerations for NFPs after COVID-19
Auditing, just like accounting, was affected by COVID-19. For example, remote auditing has become more common. Ability to screen share and to attest to records via a video chat are essential for many NFPs audits. Inventory may be counted remotely too.
As 2022 continues, non-profits must work to keep communication open through as many channels as possible. That way, they can continue receiving funding and answering to contributors.
We Assist Non-Profits at Morgan & Associates
We at Morgan & Associates have accountants who specialize in non-profits. We want to help with your audits and reviews. You’re required to prepare a reviewed financial statement if contributions are over $275,000 and must perform an audit if contributions exceed $525,000. We can assist you with these.
At Morgan & Associates, we think of ourselves as your biggest fans!