Category Archives: Our Team

Adult Care News

Adult Care Homes (ACH) and other types of Group Homes in North Carolina have compliance requirements under the General Assembly’s Statute 131 D-4.1-4.3.  In May, DHHS sent out letters to all affected providers to remind them of this obligation.  These legislative changes mandate that cost reports be filed for these facilities every two years.  2019 is an on year for facilities licensed as an Adult Care Home (131D), Nursing Home with Adult Care beds (131E), or Mental Health living facility (122C).  Facilities that do not receive State/County Special Assistance revenue can file an exemption.

Along with the cost report, facilities with over 7 beds are additionally required to have Agreed-Upon-Procedures (AUPs) performed.  Depending on the type of facility, determines the extent of the procedures.  The Office of the Controller just released the procedures required for 2018-2019 which can be found here.

Langdon & Company has an extensive history with these requirements and we keep a great rapport with the acceptance bodies to ensure that our reports are filed correctly and timely.  We would love the opportunity to discuss the obligations of your facility and assume the responsibility of this mandate.  If you have additional questions, please contact us.

Nonprofits should be prepared for sudden outpouring of support

Americans gave unprecedented sums to charity in response to the devastating hurricanes last year. Large organizations, such as the American Red Cross, were equipped to handle the huge influxes of donations. However, some smaller charities were overwhelmed. Although it may seem like an unlikely problem, your not-for-profit needs a plan to handle a potential outpouring of support.

Know what’s normal

Perhaps the biggest lesson to learn from recent disasters is to always have an expansion plan in place. When the influx of online giving reached critical mass, many organizations found that their websites overloaded and went offline. Their sites had to be moved to more powerful servers to handle the increased traffic.

Keep track of “normal” website hits, as well as the numbers of calls and email inquiries received, so you won’t be caught off guard when you start to surpass that amount. Also, know your systems’ ultimate capacity so you can enact a contingency plan should you approach critical mass.

Mobilize your troops

Having an “early warning system” is only one part of being prepared. You also need to be able to mobilize your troops in a hurry. Do you know how to reach all of your board members at any time? Can you efficiently organize volunteers when you need extra hands quickly? Be sure you have:

• An up-to-date contact list of board members that includes home, office and mobile phone numbers,
• A process, such as a phone tree, so you can communicate with the board quickly and efficiently, and
• One or more emergency volunteer coordinators who can call and quickly train people when you need them.

Also conduct a mock emergency with staff and volunteers to learn where you’re prepared to ramp up and where you’re not.

Build relationships

A surge in donor interest may mean a surge in media attention. While it might be tempting to say, “not now, we’re busy,” don’t pass up the opportunity to publicize your organization’s mission and the work that’s garnering all the attention.

In most cases, the immediate surge of interest eventually wanes. Before that happens, start to build lasting relationships with new donors and media contacts. Inform them about the work your organization does under “normal” circumstances and suggest ways to get them involved.

© 2018

Business Credit Changes

Tax Cuts and Jobs Act makes changes to the general business credit by adding a new component credit for paid family and medical leave, and changing two current component credits, i.e., the rehabilitation credit and the orphan drug credit.

First, the Tax Cuts and Jobs Act introduces a new component credit for paid family and medical leave, i.e. the paid family and medical leave credit, which is available to eligible employers for wages paid to qualifying employees on family and medical leave. The credit is available as long as the amount paid to employees on leave is at least 50% of their normal wages and the leave payments are made in employer tax years beginning in 2018 and 2019. That is, under the Tax Cuts and Jobs Act, the new credit is temporary and won’t be available for employer tax years beginning in 2020 or later unless Congress extends it further. For leave payments of 50% of normal wage payments, the credit amount is 12.5% of wages paid on leave. If the leave payment is more than 50% of normal wages, then the credit is raised by .25% for each 1% by which the rate is more than 50% of normal wages. So, if the leave payment rate is 100% of the normal rate, i.e. is equal to the normal rate, then the credit is raised to 25% of the on leave payment rate. For purposes of the credit, the maximum leave allowed for any employee for any tax year is 12 weeks.

Eligible employers are those with a written policy in place allowing

  1. Qualifying full-time employees at least two weeks of paid family and medical leave a year, and
  2. Less than full-time employees a pro-rated amount of leave.

Qualifying employees are those who

  1. Have been employed by the employer for one year or more, and
  2. In the preceding year, had compensation not above 60% of the compensation threshold for highly compensated employees under the qualified retirement plan rules.

Paid leave provided as vacation leave, personal leave, or other medical or sick leave is not considered family and medical leave.

Second, the Tax Cuts and Jobs Act changes the rehabilitation credit for qualified rehabilitation expenditures paid or incurred starting in 2018 by eliminating the 10% credit for expenditures for qualified rehabilitation buildings placed in service before 1936, and retaining the 20% credit for expenditures for certified historic structures, but reducing its value by requiring taxpayers to take the credit ratably over five years starting with the date the structure is placed in service. Formerly, a taxpayer could take the entire credit in the year the structure was placed in service. A transition rule is also provided for certain buildings owned or leased at all times on and after Jan. 1, 2018.

Third, the Tax Cuts and Jobs Act also makes significant changes to another component credit of the general business credit, i.e., the orphan drug credit for clinical testing expenses for certain drugs for rare diseases or conditions. For clinical testing expense amounts paid or incurred in tax years beginning in 2018, the former 50% credit is cut in half to 25%. Taxpayers that claim the full 25% credit have to reduce the amount of any otherwise allowable deduction for the expenses regardless of limitations under the general business credit. Similarly, taxpayers that capitalize, rather than deduct, their expenses have to reduce the amount charged to a capital account. However, the Tax Cuts and Jobs Act gives taxpayers the option of taking a reduced orphan drug credit that if elected allows taxpayers to avoid reducing otherwise allowable deductions or charges to their capital account. The election for the reduced credit for any tax year must be made on a tax return no later than the time for filing the return for that year (including extensions) and in a manner prescribed by IRS. Once the reduced credit election is made, it is irrevocable.

I hope this information is helpful. If you wish to discuss any of these credits in more detail and the options you may have for your business, please contact our office.

Update: NC Adult Care Home Cost Reports

The NC Department of Health and Human Services released a memo dated May 15, 2017 detailing the official instructions for Adult Care Home reporting requirements as well as the release of Agreed-Upon-Procedures (AUP) instructions. As of November 21, 2016, the Cost Report for Adult Care Homes was reinstated with the significant change being reporting is only every two years, beginning this year.

To comply with these requirements all facilities that receive State/County Special Assistance funds are required to file a cost report. Those facilities that have more than 7 beds are additionally expected to have Agreed-Upon-Procedures performed.  The cost reports will be completed using the latest completed fiscal year end. These cost reports are due – September 30, 2017!

As an advocate for providers we are flexible in the midst of inconvenient legislation and would be happy to serve your Organization as well. If you have questions, please contact pwilliams@langdoncpa.com or rowens@langdoncpa.com!

https://www2.ncdhhs.gov/control/acf/2016-17/aup/adult-care-mental-health-faciliites.pdf

 

 

 

 

Gift Tax Exemptions and Avoidance Strategies

by Eric Murphy

Under current IRS regulations, when a donor makes a gift in excess of $14,000, they must file Form 709 to report the gift and pay tax on the excess above $14,000.  This exemption is applicable to each donee the donor makes a gift to in 2016, so they can make one gift for $11,000 to one person and another gift of $12,000 to a different person and they won’t be subject to the tax liability or filing requirement.  Under IRC Sec. 2513, this threshold is increased for married couples to $28,000 per donee, with the donor and spouse having the option of making “Split Gifts”, which essentially result in each of them making half of a gift to a particular donee.  An example of this is a donor giving his friend $26,000 in cash to buy a car.  Under the rule of “Split Gifts”, the donor and his spouse each made a gift of $13,000 to the taxpayer’s friend, therefore neither exceeds the exemption threshold.  However, a gift tax return would need to be filed indicating the gift split option was utilized, even though no tax would be due.

There are also some othgift moneyer ways a donor can make gifts in excess of the exemption without being subject to the filing requirement and liability on the excess, under IRS Publication 950.  Some of these include:

  • Paying the medical expenses for anyone, as long as the payments are made directly to a third party medical institution or physician. The gift can’t be given to the donee directly or else it’s subject to the exemption limit.
  • Paying the tuition expenses for anyone, as long as the payments are made directly to a third party educational institution. Similar to a gift for a donees’ medical expenses, the gift can’t be given to the donee directly or else it’s subject to the exemption limit.
  • Donors can make unlimited gifts to their spouses.
  • Donors can make gifts to qualified Political Organizations for their objectives. However, these gifts don’t qualify for a charitable contribution deduction on their personal Tax Return.  Gifts to qualified charitable organizations formed under IRC 501(c)(3) are allowed as deductible contributions on the donor’s return and are exempt from the limitation.

The preceding information is a summary of some basics of gift taxation.  If you are in the process of estate planning or want to help out someone in need, please contact Langdon & Company, LLP.  Our tax professionals can discuss your goals with you and develop a strategy that insures that you’ll have more to give to those you care for.

Eric (emurphy@langdoncpa.com) is a Tax Senior with Langdon & Company LLP.  He works primarily on medical practices, real estate holding companies, and multi-state corporations.

It is time for your CFO or Controller to become a Coach?

by Dwayne Murphy

According to the book The Traits of Today’s CFO: A Handbook for excelling in an evolving Role, by Ron Rael, CPA, CGMA, coaching is a mix of technical and people skills combined in a unique fashion that produces great results, which helps the organization achieve its goals.dwaynes pic

Coaches try to foster personal relationships with each employee so that they can tell the truth when things are going well or going poorly. They are not managers or micromanagers because they are using knowledge and insight to help employees come into their own wisdom and trusting their employees and letting them successfully stumble so they quickly learn to succeed.

Coaching is not limited to employees; you can coach a boss or a colleague. The process of coaching is consistent and once it is mastered you will find many ways to use it to help others.  Coaching at the organization level requires the CFO or controller to be the conscience of the organization. You must be seen as the professional leader who does not have any biases or an agenda other than the organization’s success. Here are nine skills of a great organization coach:

  1. Teaching and Training: Leadership positions in finance are now being required to constantly train individuals. That is why a coach should be able to constantly teach others about finance, accounting and business management.
  2. Counseling: Coaches should be able to help guide other leaders and colleagues through difficult situations and tough decisions.
  3. Guiding: Coaches should step in to help shape other leaders’ behaviors and decisions so that they stay focused on solutions and plans that benefit the organization.
  4. Relating: Coaches should use analogies, examples and stories to help get your point across and speak at the same level as the person being coached to help foster trusting relationships.
  5. Learning: Coaches should be open to learning from other leadership team members as this will ensure future success at the organization.
  6. Questioning: Don’t be afraid to ask open-ended and probing questions. These often lead to new possibilities and help the organization reach its goals.
  7. Listening: Often managers will have hidden agendas or often deny anything is wrong, but by listening with your ears, eyes and intuition you will be able to bring forth those hidden things so they can be openly discussed.
  8. Using intuition: Coaches should be aware of what to say and what not to say by using your business intuition.
  9. Creativity: Coaches should be open minded to new tools, methods, or processes that the organization can use to remove obstacles and achieve goals.

Coaching can seem daunting but with the right attitude and plan it can benefit both the coach and the whole organization. The business world is challenging and always changing and coaching can help the organization stay on target and succeed.

Dwayne (dmurphy@langdoncpa.com) is an Audit Senior in our firm.  He works with many non-profit clients as well as those in healthcare.

 

 

New Overtime Rule – What you need to know

by Meagan Bulloch

On May 18, 2016, the US Department of Labor (DOL) published the Final Rule on overtime, which amended the Fair Labor Standards Act (FLSA).  This change is expected to affect approximately 4 million workers across the United States.

Beginning December 1, 2016, the salary threshold for non-exempt workers increases from $455/weekly ($23,660 annually) to $913/weekly ($47,476 annually).  Under this new rule, any worker regardless of their role or title who earns less than that amount will have to track their hours and will be entitled to overtime pay which equates to time and a half for any hours over 40 in a week.

How does this compare to the old rule?  Check out this comparison table.

What are my Options?

  1. Raise salaries for non-exempt “white collar” employees above the $47,476 threshold so that they will be exempt from overtime
  2. Limit the hours worked by these employees to 40 or fewer per week
  3. Hire additional workers to perform the extra hours
  4. Pay non-exempt employees overtime for any hours worked beyond 40 per week

What else should I consider?

  • Determine whether your organization is entitled to minimum wage and overtime pay protections on an enterprise or individual basis.
  • Review personnel records, job descriptions and worker classifications to make sure their actual job duties (not titles) are used to determine exempt or non-exempt status.
  • Review employee workload to evaluate current staff capacity considering weekend or seasonal workload fluctuations.
  • Review terms of any grant agreements or contracts and identify staffing needs. Keeping in mind that the organization may be contractually obligated to maintain services at a predetermined level.
  • Consider “what if” scenarios and estimate budget and cash flow impacts.
  • Revisit organizational policies and procedures including timekeeping, compensation and overtime to make sure they are in line with the new rule requirements.

Is anyone excluded?

The DOL has a non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.  From December 1, 2016 through March 17, 2019, the DOL will not enforce the updated salary threshold of $913 per week for the subset of employers covered by this non-enforcement policy.

Be sure to give Langdon & Company LLP a call if you have questions on how this affects your organization.

Meagan (mbulloch@langdoncpa.com) is an Audit Partner at Langdon & Company LLP.  She works on various clients from associations to healthcare.

IT Controls: How to Keep Your Organization Safe

by Rebecca Lunn

As organizations become more and more reliant on technology, the risks around technology also continue to grow. Recently, we have heard on the news of large hospitals being attacked with ransomware, which encrypts files. Hackers then refuse to give the key to unlock the files unless a ransom is paid, typically in the form of bitcoin, which is more difficult to trace. Although these particular hackers were after sensitive patient data, other types of organizations should also be aware of this risk. For example, non-profits who have large databases of member or donor data may also appeal to these types of hackers. In the face of increasing risk, it is vital that organizations re-evaluate their IT controls. Strong IT controls consist of the following:

  • The Organization has an IT strategic planning and risk management process in place to support financial reporting requirements.
  • The Organization maintains reliable systems that include appropriate data backup and recovery processes. This includes not only backing up data, but testing the backup restoration process on a periodic basis.
  • Physical security and access to programs and data are appropriately controlled to prevent unauthorized use, modifications, damage or loss of data.
  • Program and system changes are appropriately managed to ensure that the application software adequately supports financial reporting objectives.

If your organization would like additional information about implementing or improving IT controls, please contact Langdon & Company LLP.

Rebecca rlunn@langdoncpa.com is an Audit Senior who works primarily with non-profit organizations.

Stress Relieving Tips

by Brittany Spraginsrelaxing

As a mom and accountant, I sometimes come home from work tired only to find more work at home in the form of a rambunctious child, loads of unwashed laundry, and a hungry husband.  So I use some of these stress relieving tricks.  I hope you find these helpful too.

  1. For a limited amount of time, talk about your day. When I get home, I often want to talk with my husband about the highs and lows of my day.  This helps to release the burden I feel like I am under and allows me to feel appreciated by him for my efforts.  This being said, we have a time limit for “work talk” and after that I am not allowed to talk about it again.  This allows you to say what you need or want to, but prevents you from focusing your whole life on work.
  2. Enjoy the company of those around you. If you walk in from work only to see the undone chores around your house, then you are missing the best part.  When I come home, I make it a point to greet my husband and son.  The greatest stress reliever that I have experienced is the love that they have to offer.
  3. Go exercise. Exercise does not have to be a 3 mile run, just a stroll around the block will work.  The important thing to remember is that when you exercise, your body releases endorphins, which is a neurotransmitter from your brain that helps to decrease stress and increase happiness.  This is where the “runner’s high” comes from.  A little bit of movement can go a long way in stress reduction.
  4. Think of some corny jokes or turn on your favorite radio comedian and just laugh for a few minutes.
  5. Take a few minutes for yourself. Sometimes I have to put myself into time out.  It may be a bad time for you to step out, but sometimes it will be worse if you stay put, so remove yourself from a stressful situation for a few minutes so you do not say something you will regret later.
  6. Take a bath. Soaking in water provides you with that weightless and relaxed feeling.  This may help you refocus on the important priorities in your life.
  7. Finally, if all else fails… eat dark chocolate! It’s delicious!

Langdon & Company LLP may not be able to draw your bath, however, we will do what we can to take the stress off of you.  Call our office to get additional information about ways in which, we can help.

Brittany bspragins@langdoncpa.com is a staff member of the tax department working on various projects from individuals to organizations’ tax return preparation.

US DOL Announces Overtime Changes

by Rachel Owens

The U.S. Department of Labor recently issued its final rule regarding overtime, at President Obama’s instruction.  Overall, the rule is expected to cover 4.2 million more Americans, and boost wages by $12 billion in the next 10 years. One of the most significant changes is that it doubles the salary threshold—from $23,660 to $47,476 per year—under which most salaried workers are guaranteed overtime (hourly workers are generally guaranteed overtime pay regardless of their earnings level). The final rule takes effect on December 1, 2016.

More information about this rule can be found in the links below.

To learn more about how you or your organization are affected, contact our office.