March 2010 | Dean Dorton Ford

March 29, 2010

403(b) Plan Audit – Are You Ready?

Filed under: Colleges & Universities, Not for Profit, Uncategorized — Tags: accounting, Accounting Firm, Assurance services, College and University, CPA, DDF, Dean Dorton Ford, Kentucky accounting firm, KY accounting, Louisville CPA, Not for Profit — ddf @ 10:44 am

Beginning with 2009 Form 5500 filings, employee benefit plans under section 403(b) of the IRC will be subject to the same reporting and audit requirements that currently exist for 401(k) plans. Is your organization ready?

The major new requirement is the presence of a Plan Document. The Plan Document will have the same required elements as a 401(k) plan (eligibility, investment options, contribution limitations, vesting schedules, distribution guidelines, provisions for compliance testing, etc). Your plan record keeper should have the ability to help draw up a plan that meets IRS guidelines.

Another large provision relates to the audit requirement – if your organization has over 100 eligible participants, your 403(b) plan will have to be audited for any plan years beginning on or after January 1, 2009. Audits can be quite time-consuming on any organization, especially in the first year. Beginning balances will have to be audited in addition to 2009 amounts. It may be difficult to gather complete and accurate investment information from all third party administrators (TPAs) that have been associated with the plan. Records may not be readily available and may come from multiple sources. It may also be difficult to collect information related to former employees who continue to have holdings in the plan. You should begin discussing your needs with all applicable TPAs as soon as possible so that it will be clear what they will be able to provide. As the information is being gathered, the plan sponsor (usually your organization) will need to carefully and thoroughly document its approach for the data collection.

There are several other new requirements that may also impact your plan. If you have any questions related to what information you’ll need to be prepared for these requirements, feel free to give us a call.

Morgan Daulton
mdaulton@ddfky.com
Daulton Morgan

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March 26, 2010

CRA Credentials & What It Can Mean For Your Institution

Filed under: Not for Profit — Tags: accounting, Accounting Firm, Assurance services, College and University, CPA, DDF, Dean Dorton Ford, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, Not for Profit — ddf @ 11:23 am

I started my career in the not-for-profit industry by working at a state institution that, in FYE 2008, had received approximately $115 million in federal funding. I was the Grant Coordinator for a department that was spending approximately $12 million/year in federal expenditures. I had a BS in Business and was pursuing a Masters in Accounting, but felt that my background did not give me enough foundation to be good in the realm of federal expenditures. I had research and sought out additional training and found the Certified Research Administrator designation could help me in my quest.

What is a CRA? It is an individual who through experience and testing has the fundamental knowledge necessary to be a professional research or sponsored programs administrator. The body of knowledge for the CRA examination covers the following areas:

Project development and administration
- Topics include:
  - Identification of funding opportunities, public relations, agency structure/practice, proposal development including budget preparation, administration of awards, ethics and professionalism, intellectual property, and electronic research administration.
  - Legal requirements and sponsor interface
    - Topics include:
      - Regulations and statutes, compliance, federal/sponsor appeal procedures, and legal authority
  - Financial Management
    - Topics include:
      - Budgeting/accounting, costs, sponsor financial reporting, and audits.
  - General Management
    - Topics include:
      - Facility management, contracts and purchasing, records management, and human resource management.

These topics help to give your administrator a broader view of the projects they are managing. It opens up many doors of communications between your Principle Investigators and those charged with daily governance. To me, this was the bridge I was looking for to help make me a better grant coordinator and a bigger asset to my department/institution.

Here at DDF we want to help offer tools to managing your institution as best as you can. If you think that the CRA credential would be of use to your school, we would enjoy the opportunity to help start your administrators on a path of a better foundation.

For more information please contact, Makenzie Layne
mlayne@ddfky.com

Layne Makenzie

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March 18, 2010

GASB 53 is here. Will you be affected?

Filed under: Colleges & Universities, Not for Profit — Tags: accounting, Accounting Firm, business, College and University, CPA, DDF, Dean Dorton Ford, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA — ddf @ 3:54 pm

In order to improve how state and local governments report information about derivative instruments in their financial statements, the Governmental Accounting Standards Board (GASB) issued GASB Statement 53, Accounting for Financial Reporting for Derivative Instruments. It is meant to give additional transparency to derivative transactions and provide users of the financial statements of government entities a better understanding of the risks that governments may be exposed to when they enter into these types of arrangements.

Governments sometimes enter into derivatives instruments as a hedge to mitigate financial risks that may be associated with specific assets or liabilities. For instance, one of the most common examples of a derivative instrument entered into by a government is an interest rate swap. This is usually done when a government has variable interest rate debt and wants to mitigate the risk associated with interest rates rising. When effective, the interest rate swap causes the interest paid by government to, in effect, become fixed.

Statement 53 requires that the fair value of a derivative instrument be reported in the financial statements. It gives specific guidance that governments must follow to determine whether a derivative instrument is an effective hedge. Changes in the fair value of these derivative instruments that result in an effective hedge will be reported in the period in which the change occurred. However, the changes in fair value do not affect current investment income or loss. Instead, they are reported as a deferral in the statement of net assets (balance sheet). For those derivative instruments that do not qualify as an effective hedge or are associated with investments that are already being reported at fair value, the government entity should report them as investment derivative instruments. Changes in the fair value of these derivative instruments are reported as part of investment income or loss in the current reporting period. The fair value of the agreement is recorded on the statement of net assets as either an asset or a liability depending.

Statement 53 also requires a note disclosure that summarizes a government’s derivative instruments. The note disclosure must provide a summary of the government’s derivative instrument activity, its objectives for entering into derivative instruments, and their significant terms and risks.

This statement is effective for reporting periods beginning after June 15, 2009. Please contact Dean Dorton Ford if you have any questions or need assistance in implementing this new standard.

Please contact Anthony Allen
aallen@ddfky.com

Allen Anthony

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March 11, 2010

Are You Prepared for the Requirements Relating to the

Filed under: Colleges & Universities, Not for Profit — Tags: accounting, Accounting Firm, Assurance services, College and University, CPA, DDF, Dean Dorton Ford, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, Not for Profit — ddf @ 2:15 pm

I participated in a recent AICPA conference call which discussed the impact of more than $300 billion of American Recovery and Reinvestment Act of 2009 (Recovery Act) funds being disbursed to not-for-profits, states and local governments. The government has mandated an exceptional amount of accountability and transparency for these funds. Some items that you should prepare for if you have or will receive Recovery Act funds are:

Single Audit – if your entity expends more than $500,000 of federal funds, you will be required to have an audit in accordance with OMB A-133. Many organizations that have not been subject to this audit requirement before will now be subject to it. Also in recurring A-133 audits, there will be an increased number of major programs to be audited due to the nature of the Recovery Act funds.
Reporting – there will be quarterly reporting requirements for Recovery Act fund recipients. Also, Recovery Act funds will have to be separately identified on the Schedule of Expenditures of Federal Awards and the Data Collection Form. Additionally, the Federal Audit Clearinghouse will be required to make publicly available on the internet all single audit reports filed with them for fiscal years ending September 30, 2009, and later.
Capacity/Internal Controls – it will be imperative for organizations to have adequate staff and internal controls in place to be able to ensure that the Recovery Act funds are being spent appropriately, the more stringent reporting requirements are being met, and their system can track activity properly.

We recommend your organization consider all the requirements for your Recovery Act funds and implement any necessary changes as early as possible to ensure a smooth transition into compliance. Please contact us if you have questions or need assistance.

For more information please contact, Jaclyn Badeau

jbadeau@ddfky.com

Badeau Jaclyn 2

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March 1, 2010

It Pays to Build Green

Filed under: Construction — Tags: accounting, Accounting Firm, Assurance services, CPA, DDF, DDF Technology, Dean Dorton Ford, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA — ddf @ 11:08 am

The Emergency Economic Stabilization Act of 2008 (HR-1424), signed on October 3, 2008, extended the benefits of the Energy Policy Act of 2005 through December 31, 2013. This Act creates multiple incentives for construction projects to include environmentally friendly components. What does that mean to you as a contractor? It means there may be financial benefits for using environmentally friendly components in construction design plans and perhaps more importantly, you may actually have time to market these concepts to potential clients.

The Energy Policy Act of 2005 created a tax deduction of up to $1.80 per square foot (of entire building) available to owners or tenants of new or existing commercial buildings that are constructed or modified to save at least 50% of the heating, cooling, ventilation, water heating, and interior lighting energy cost of a building that meets ASHRAE Standard 09.1-2001. In the case of government owned buildings, designers are also eligible for this deduction.

A partial deduction of $.60 per square foot is available if improvements are made to any one of three building systems that reduce total heating, cooling, ventilation, water heating and interior lighting energy by a specified percent – the building envelope (10%), lighting (20%), or heating and cooling system (20%).

The tax deductions discussed above are for the benefit of the party paying for the construction. The deduction can be taken in the year the property is placed in service. To qualify for the deduction the building or system must be tested and inspected to confirm compliance with the energy cost savings goal according to guidance issued by the IRS in consultation with the Department of Energy.

Construction contractors should take the time to familiarize themselves with the commercial building tax deductions discussed above. Dean Dorton Ford, PSC has thirty years experience helping clients understand the various tax laws impacting their industry. Our construction team devotes significant time to researching and applying the tax laws for contractors and related services. We would be happy to assess the benefits that this deduction may provide you and your customers.

For more information please contact,
Justin Hubbard
jhubbard@ddfky.com
859.425.7604

Hubbard Justin

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