Tag Archives: Langdon & Company LLP

Accounting Changes for Goodwill

by Dwayne Murphy

The Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-02 is giving private companies another option when it comes to accounting for goodwill. Effective for new goodwill recognized in annual periods beginning after December 31, 2014 (early adoption is permitted).  Private companies will be able to subsequently amortize goodwill on a straight-line basis over a period of ten years, or less if the company is able to demonstrate that a lower useful life is better suited.  Before this update U.S. GAAP did not allow any amortization of goodwill.Goodwill

FASB Accounting Standards Update (ASU) 2014-02 also permits private companies to use a simplified impairment model, which allows them to test for impairment only when a triggering event occurs that would indicate that the fair value of a company (or a reporting unit) may have fallen below its carrying amount.  If the accounting alternative election is made, an additional election of whether to test goodwill for impairment at either the company level or the reporting unit level must be made.  Before this update U.S. GAAP required that testing of impairment be done at least annually and in some cases more frequently if certain conditions were met.

These changes should be beneficial to private companies as it allows for amortization expense and it lessens the burden of not having to test for impairment every year.

For public companies and not-for-profit companies the FASB is still considering the following alternatives for goodwill accounting at their last meeting on March 26, 2014:

  1. Same alternative as listed above for private companies.
  2. Amortize goodwill with impairment tests over its useful life, not to exceed a maximum number of years.
  3. The direct write-off of goodwill at the acquisition date.
  4. A nonamortization approach that uses a simplified impairment test.

Dwayne Murphy ([email protected]) is a Senior Accountant with Langdon & Company LLP.  He specializes in audit, serving a wide variety of nonprofit organizations.

Adult Care Provider News

dhhsNorth Carolina General Assembly passed Senate Bill 744, section 12H.11 mandating the submission of Adult Care Cost Report under General Statute 131D-4.2.  The deadline is December 31, 2014.  Providers that do not receive State/County Special Assistance or Medicaid personal care are exempt from the reporting requirements of this section.  However, these providers must file the Exemption Form, also due December 31.  According to the Controller’s website the information for the 2013-2014 Cost Report, Instructions, and 2013-2014 Chart of Accounts are all “Coming Soon.”

Langdon & Company LLP will continue to stay current on the latest developments as well.  Please call our office if we can provide any assistance in the submission process!

 

Nonprofit Organizations – Sales and Use tax refund Q&A

by Meagan Bullochsales tax

Q:  Do nonprofit organizations have to pay sales or use tax on items they purchase?

A:  Yes.  NC does not exempt nonprofit organizations from paying sales or use tax on items they purchase for use.

 

Q:  Are all nonprofit organizations eligible for refunds of the sales and use taxes paid?

A:  No.  The following entities may file for semiannual refunds of the sales and use taxes paid on purchases of tangible personal property for use in carrying on their nonprofit work:

  1. Hospitals not operated for profit
  2. Educational institutions not operated for profit
  3. Churches, Orphanages, and Other charitable or religious institutions and organizations not operated for profit

 

Q:  What information does the Department of Revenue need to determine whether an organization qualifies for sales and use tax refunds?

A:  A nonprofit organization must furnish the Department of Revenue with a copy of the documents used to create the organization (Articles of Incorporation, Articles of Amendment and Bylaws).

 

Q:  An organization has a Section 501(c)(3) Federal exempt status.  Does the organization automatically qualify to receive sales and use tax refunds?

A:  No.  The Department must review the documents used to create the nonprofit organization to determine whether it qualifies for refunds of sales and use taxes paid.

 

Q:  How does an organization file a claim for refund?

A:  The organization should complete Form E-585, Nonprofit and Governmental Entity Claim for Refund State and County Sales and Use Taxes.

 

Q:  How often do I file the Form E-585?

A: Claims for refund are filed semiannually.  The claim for refund of sales and use taxes paid during the period January 1 through June 30 is due to be filed by October 15th of the same year.  The claim for refund for the period July 1 through December 31 is due to be filed by April 15th of the following year.

 

Q:  What is the organization’s claim for refund is filed late?

A:  Claims can be filed up to three years after the due date.  Any filed later than three years will be denied.

 

Q:  Should the receipts or invoices be mailed with the organization’s claim for refund?

A:  No.  Receipts and invoices should be kept by the organization for a period of three years beyond the date the refund claim id due to be filed or three years beyond the date the claim is filed, whichever is later.

 This article is an excerpt from a bulletin from the Department of Revenue for North Carolina called “State Taxation and Nonprofit Organizations”  For more information, please visit, hereor call our office for additional details.

Meagan Bulloch ([email protected]) is an audit manager at Langdon & Company LLP.  She is focused primarily on non-profit clients.

Accounting Services Requirements

by Russell Barker

The accounting services department at Langdon and Company LLP utilizes a customized approach to serve many companies by providing varied aspects of a “backoffice” accounting department.  We can perform the following functions: accounts receivable, accounts payable, invoicing, payroll and financial reporting.  We communicate with the client to ensure that we have the needed documentation to properly record transactions.  We process transactions on a monthly or quarterly basis for general ledger processing based on the clients’ needs.  We also provide payroll services and offer direct deposit.  To efficiently and effectively perform these functions, great communication is required.  There is supporting information and documentation that is needed.

Typically, for a small business items such as bank statements, invoices, billing records, loan records, amortization schedules, credit card statements, etc. are required in order post to the general ledger.  For payroll, employee information, hours and pay rate is needed.  In order to properly maintain fixed asset records, invoices and applicable financing records are needed.

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With the client providing all appropriate documentation on a monthly basis and L&C recording proper transactions, this will enable our year end process to be more efficient, precise and timely in order for the tax department prepare the clients tax returns in a timely fashion.

 

Russell Barker is a QuickBooks Pro Advisor in the Accounting Services department at Langdon & Company LLP.  He specializes in periodic reviews for a variety of physician’s practices.

 

Does your Nonprofit Need an Audit?

baudity Brittany Powell

The National Council of Nonprofits’ Audit Guide (“Audit Guide”) can provide your organization with a starting point for making the decision on whether or not your nonprofit organization needs an audit.

As the Audit Guide points out in its “Does your nonprofit need to have an independent audit?” section, nonprofits may be required to have an audit for various reasons including, but not limited to, compliance with specific grant agreements or loan covenants.  Additionally, a nonprofit organization may be required to have a Yellow Book or Single Audit depending on its level of Federal or State expenditures.  A nonprofit with federal expenditures equal to or exceeding $500,000 is required to have a Single Audit.  As discussed in our February 10, 2014 blog post, this threshold will increase to $750,000 beginning with fiscal years beginning on or after December 26, 2014.  This Audit Guide provides a summary for each state’s audit requirements.  North Carolina requires “a non-governmental entity that receives $500,000 or more annually in state funds” to submit a Yellow Book audit.

However, an audit may not be necessary or cost effective for all nonprofit organizations.  A review, while substantially less in scope than an audit, provides limited assurance over an entity’s financial statements.  Therefore, a review can be a viable, less costly alternative to an audit for some nonprofit organizations.

If you are considering an audit or review for your nonprofit, contact someone at our office to help you determine the engagement type that best fits your organization’s needs.  See the Audit Services & Consulting section of our website for more information about audits, reviews, and other services we provide.

Brittany Powell is a Senior Accountant with Langdon & Company LLP.  She specializes in audit, serving a wide variety of nonprofit organizations.

IRS Unveils New Form for Organizations Applying for 501(c)(3) Tax-Exempt Status

by Taylor Elliott

On July 1, 2014, the Internal Revenue Service (IRS) released Form 1023-EZ as part of its efforts to streamline the application process for organizations seeking tax-exempt status.  The form is specifically designed for charities who wish to be classified as exempt under section 501(c)(3).  An organization must meet several criteria in order to be eligible to apply using the form, including a gross receipts test of $50,000 or less as well as an assets test of $250,000 or less. The form instructions outline additional criteria, including an eligibility worksheet that helps charities determine whether the form is right for them through a series of yes and no questions.

The IRS has indicated that the overall goal in developing Form 1023-EZ is to reduce the time and paperwork associated with providing a charity a determination as to its tax-exempt status. Previously, the IRS has been intensely criticized for a lengthy and cumbersome 1023 application process that includes an application backlog that is many months behind. Until now, all organizations, regardless of size, have been subject to the same 23-page form filled with a seemingly endless list of tedious questions, many of which are not relevant to smaller, simpler charities. After soliciting feedback from impacted parties, the IRS was able to whittle down to Form 1023-EZ, a three-page form containing only the most essential questions pertaining to determination of tax-exempt status of smaller organizations. According to IR-2014-77, as many as 70% of applicants are expected to be eligible to use this form, not only slashing the time spent by those charities in completing the application but also minimizing the time spent by the IRS in reviewing their files. The electronic filing requirement  is  also expected to increase the efficiency of the process. An application fee of $400 must be electronically submitted with the application as well.

For questions about this form or the tax-exempt application process in general, please contact our office.  We would love to discuss with you the ways that Langdon and Company LLP can help your organization obtain and maintain a tax-exempt status.

Taylor Elliott is a tax manager with Langdon & Company LLP. She specializes in tax compliance and planning, working with several not-for-profit organizations in the Triangle area.