Some of your not-for-profit’s communications are of interest only to a select group of your supporters. But your organization’s annual report is for all stakeholders — donors, grantmakers, clients, volunteers, watchdog groups and the government.

a person's hands holds paper with circle and arrow diagrams and a pie chart, showcasing an annual report with data to engage support for a not-for-profit organization

Some report elements are nonnegotiable, such as financial statements, but you also have plenty of creative license to make your report engaging and memorable for its wide-ranging audience.

Continue Reading Your Not-for-Profit’s Annual Report Could Engage Support

If you’re planning to sell assets at a loss to offset gains that have been realized during the year, it’s important to be aware of the “wash sale” rule.

a person holds a cell phone with the screen showing a graph and "$3,812.57" in their left hand and in the background is a laptop with another graph with green and red lines; portrayal of selling securities and avoiding wash sale rule

How the Rule Works
Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in any significant way.

Continue Reading How to Avoid the Wash Sale Rule when Selling Securities

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Kristin Ryan, an audit senior manager and one of the faces of PKF Texas’ Employee Benefit Plan team. Kristin, welcome back to the playbook.

Kristin: Good to be here.

Jen: So, we’ve talked about fiduciary responsibilities, but what are some of the main causes of fiduciary noncompliance in 401(k) plans?

Kristin: What we do commonly see is that companies offload their 401(k) responsibilities to, let’s say, a new hire or somebody in the company that doesn’t have a lot of experience administering them. So, unfortunately, you end up with a lot of errors that come out of that and just kind of the way we’ve always done things. So, understandably compared to getting your employees paid and filling a position, 401(k) kind of falls behind those, but it exposes a company to litigation risks.

Jen: So, what are some common deficiencies you see in fiduciary compliance?

Kristin: The most common I would say deals with how they document their fiduciary responsibilities. It’s a lot of the litigation that were seen recently in the practices that they’re doing a good job of documenting plan investment options, so the participants know that their investments are being monitored, that if there’s certain funds that are not performing that they’re on the watch list and things like that.

What they’re not doing a great job of is discussing plan fees, making sure that those are reasonable, looking at plan features and stats, making sure the participation is high enough – things like that. There are changes that occur within the organization or within the plan that can affect compliance, and so, that’s where we really see deficiencies, and we want our clients to really cover their bases and not over rely on their third-party administrators and advisers.

Jen: So, is there anything that they can do to mediate those common deficiencies?

Kristin: I would say the biggest thing is to just document what they’re doing. They may be doing these things, but it’s not always documented. And the over reliance is a big issue, because they’re obviously paying a lot. They’re paying third-party administrators and advisers to help, but ultimately, they’re responsible as a fiduciary, so if there’s litigation, it’s likely to come back to the plan sponsor.

Jen: Great, we’ll get you back to talk a little bit more about what you see in the space.

Kristin: Sounds great.

Jen: For more information about this topic, visit www.PKFTexas.com/BenefitPlanAudits. This been another Thought Leader Production brought to you by PKF Texas the Entrepreneurs Playbook. Tune in next week for another chapter.

In response to the American Institute of Certified Public Accountants Private Companies Practice Section’s Technical Issues Committee (TIC) request letter from May 13, 2019, the Financial Accounting Standards Board (FASB) has voted to delay effective dates for three major standards for private companies and certain other entities. These standards include accounting for leases, credit losses (known as CECL) and hedging activities.

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Currently, an Accounting Standards Update (ASU) is being drafted, which will change the effective dates. This will be issued after a formal written ballot by the board, expected to occur in November. FASB members shared that one of the advantages of the delay is to “allow preparers with limited resources to learn from the implementation performed by large public companies that possess more staffing and resources.”

Continue Reading Under FASB Vote, Effective Dates for Three Major Standards are Delayed

In our continuing effort to help you co-create your business future, we offer the following ideas, insights and perspectives. These thought leadership pieces in the latest Leading Edge Digital Magazine for Summer 2019 are ready to be accessed any time, anywhere at LeadingEdgeMag.com/PKFTexas.

the Leading Edge Digital Magazine articles for summer 2019

If you have topics you would like us to cover in future Leading Edge Digital Magazine editions, contact us. As always, we enjoy receiving comments and feedback from our clients and the friends of our firm.

Continue Reading Summer 2019 Leading Edge Magazine is Now Live

According to a Sept. 26, 2019 press release, the Securities and Exchange Commission recently voted to adopt a new rule, which allows all issuers to engage in “test the waters” communications with potential investors. According to the SEC, the rule was adopted in order to encourage more issuers to enter public equity markets.

close up photo of a man in a blue suit, holding a pen to a paper, perhaps a document for a new rule from the Securities Exchange Commission (SEC)

The communications made under the rule are allowable as long as they are not intended to evade the requirements of Section 5 of the Securities Act, and issuers will still be required to ensure that their filings are compliant with the new rule.

Continue Reading Issuers can “Test-the-Waters” According to Newly Adopted SEC Rule

If your not-for-profit owns its own facility, it likely will have more control of work space than if you’re leasing. However, ownership carries risks — and leasing can provide several advantages.

office hallway with black-frame glass doors and windows, in one room sits a white couch with three navy blue pillows, overhead lamps hang from the ceiling, possible leasing option for not-for-profit organizations

If you’re trying to make a buy-or-lease decision, be sure to weigh the following factors.

Continue Reading How Buying and Leasing can Benefit Not-for-Profits

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here with Kristin Ryan, audit senior manager and one of the faces of PKF Texas’ Employee Benefit Plan team. Kristin, welcome to the playbook.

Kristin: Thanks for having me, Jen.

Jen: We’ve talked a little bit about common deficiencies with compensation definition with Michael. I know that there are some errors that you also wanted to cover as well. What does that look like from your perspective?

Kristin: Compensation is a tough topic. It seems like it’d be straight forward, but it never really is. There’s a base definition that most plans use – let’s say W-2 wages – but there’s always exclusions or modifications that they make to that based on your plan based on their employees, so it gets tricky.

Let’s say you have an award that’s given to an employee, is that considered a bonus or is it considered a fringe benefit? Same with PTO; is that considered an earned wage or is it considered a fringe benefit? So that’s where the gray area lies.

Jen: What happens if errors are discovered in the plan when you, as an auditor, are going in there and taking a look at it?

Kristin: Typically what happens is it can be really costly for the company; the plan sponsor usually has to go back many years and correct the error.

Jen: Oh my gosh.

Kristin: Yeah, so, the easiest scenario is that they can do a plan amendment, so they can retroactively go back and amend the plan to be in line with the way that they operate the plan. Usually that’s not an option if they’ve underfunded and they owe the participants money, so they have to make the participants whole and they usually end up paying lost earnings and penalties as well.

Jen: Oh my gosh. So, that’s something you want to be right with at the very start of it.

Kristin: Absolutely

Jen: Perfect. Well sounds like we need to get you back to talk a little bit more about some things that you see in employee benefit plans.

Kristin: Thanks, would love to.

Jen: All right. For more about this topic, visit www.PKFTexas.com/BenefitPlanAudits. This has been another Thought Leader production brought to you by PKF Texas the Entrepreneur’s Playbook. Tune in next week for another chapter.

On Tuesday, September 17, 2019, Tropical Storm Imelda made landfall in Texas. Over the course of a few days, several cities in the Gulf Coast region endured heavy rain, which left various areas, streets and highways underwater. The PKF Texas office and our team members were safe, however, other Texans unfortunately were impacted by Imelda.

A Presidential Disaster Declaration was made on Friday, October 4, 2019, for six Southeast Texas counties. As per the IRS News Release on October 7, 2019, the IRS has extended tax filing deadlines – including October 15th. Further, the IRS will provide other forms of tax relief for victims of Tropical Storm Imelda, offering relief to areas designated by the Federal Emergency Management Agency (FEMA).

a golden yellow diamond street sign with red, yellow and green vertical circles, submerging below rising rain water, signifying tropical storm imelda in texas

Currently, the extended deadline to file is January 31, 2020. This extended deadline applies to:

  • individuals who had a valid extension to file their 2018 return due to run out on October 15, 2019,
  • quarterly estimated income tax payments due on January 15, 2020,
  • quarterly payroll and excise tax returns normally due on October 31, 2019, and
  • tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on November 15, 2019.

The IRS has created a disaster relief page with more information on returns, payments and tax-related actions.

For more details, visit the IRS website at www.irs.gov.