NC Medicaid issued Special Bulletin COVID-19 #124 on Wednesday, August, 19, 2020. This bulletin outlines the specifics regarding a retroactive rate increase for any fee-for-service codes that are billed through NCTracks. The increase will retro to March 1 and will incorporate any service codes that have not already received a rate increase through a Managed Care Organization (MCO).
By Lee Byrd
Small business owners and nonprofit executives often wear many hats while managing their organization. Whether it’s day-to-day accounting or oversight of an internal accounting department, an accounting firm offers many services that will allow you to focus on the core strategies of your business. Here at Langdon & Company LLP, we offer a wide range of services from basic bookkeeping to acting in a CFO role to financial statement audits and tax return preparation. Often times you will find that the cost of hiring an accounting firm to perform these services is less than hiring an employee.
Many small organizations do not have the need or financial resources to hire a full-time employee to perform the day-to-day bookkeeping tasks. In such cases, it may be helpful to seek the aid of an accounting firm that can provide services such as accounts payable and receivable, billing, payroll, bank reconciliations, general ledger entries and monthly financial reports. You will gain the knowledge of an experienced bookkeeper with access to CPAs within the firm at a cost effective rate.
Do you need the expertise of a Chief Financial Officer but can’t bear to add such a salary to your already tight budget? A CPA firm can offer the expertise of a CFO in tasks such as creating budgets, preparing financial statements, analysis of financial data, or review of your organization’s internal accounting personnel offering a greater segregation of duties. These services can be provided on a periodic basis, such as monthly or quarterly, or on a project by project basis, as needed throughout the year.
Audit and Attest Services
Whether it is at the request of a lender or required by the organization’s by-laws, many organizations feel the need for a higher level of review of the financial statements. CPA firms offer attest services that will provide the level of assurance needed. An Audit provides the highest level of assurance that the financial statements are free from material misstatement and includes the auditor obtaining an understanding of the client’s internal controls and assessing fraud risks. An audit is also the most costly level of attest service. While less costly, a Review is substantially narrower in scope than an audit and provides only limited assurance. A review consists mostly of inquiry and analytical procedures. If the audit or review services do not meet the needs of the organization, CPA firms also offer Agreed Upon Procedure (AUP) services. An AUP is an engagement in which an auditor is engaged to carry out procedures of an audit nature to which the auditor, the client, and any appropriate third party have agreed and to report on factual findings.
Tax and Consulting
In addition to day-to-day booking or more extensive oversight services, accounting firms also advise clients on financial strategies, such as lowering tax burdens, providing suggestions on a business plan, or suggestions on the most effective way to comply with third party regulations. CPAs can also assist with the preparation of state and federal tax returns.
Langdon & Company LLP is a full-service CPA firm committed to providing quality customer service in the highest professional manner. Contact us to see how we can help you!
Lee ([email protected]) is an Audit Manager with Langdon & Company LLP. She works with many not-for-profit and healthcare organizations.
NC Senate Bill 424 “Fostering Success,” an analysis of the current proposal and how it will affect the Foster Care Benefits Program in North Carolina
by Josh Bryant
Under current State law, foster children stop receiving benefits on their 18th birthday, unless they are a full-time student, up until the age of 21. However, North Carolina legislators have been working to extend the age limit for foster care benefits from 18 to 21 under a wider swath of requirements that will undoubtedly benefit thousands who are currently cared for in the Foster Care Program.
In order to receive foster care benefits until the age of 21, under the current law a child must be a full-time student. With the passage of NC Senate Bill 424, effective August 1, 2016, under Section 1 a foster child may fulfill one of following five requirements and remain eligible to receive benefits until 21:
- completing high school or a GED,
- being enrolled in a college or a vocational program,
- participating in an employment program,
- being employed for at least 80 hours per month,
- or, incapable of completing one of these requirements due to a medical condition or disability.
Additionally, “Fostering Success” also expands the ability of foster parents and children to succeed in life by allowing more “wiggle room” for decisions to be made on part of the child. For example, under the proposed law, a foster child who is a full-time student over age 18 may now be approved to live outside a foster care facility in a college dormitory or a partially-supervised residential agreement. Furthermore, the Bill will make it easier for foster children who are eligible for guardianship but are unlikely to find a permanent residence in the formation of the Guardianship Assistance Program or GAP.
In summary, “Fostering Success” lends a hand to individuals who are otherwise deemed an adult the necessary assistance they need to supplement their life without having to endure additional hardship in order to receive such help.
Funding for the bill has been set aside for implementation in the coming year and will be fully implemented August 1, 2016.
Josh ([email protected]) is a staff Auditor with Langdon & Company, LLP. He works on a variety of clients in the non-profit sector. Please contact our office if we can help your organization better understand the latest legislation and how it affects your constituents.
by Meagan Bulloch
As year-end fundraising drives have now ended, the development departments of many non-profits are busy preparing contribution acknowledgements or “thank you” letters. So, how can these non-profits ensure they give the donors what they expect and what the IRS requires?
If a monetary contribution was made for which the organization did not provide any good or service in return, the donor is required to have a bank record or written acknowledgement of the gift before they can claim a charitable contribution deduction on their federal tax return. It is acceptable if the acknowledgement is provided electronically to the donor but many organizations still find value in mailing personalized thank you letters.
If the donation received is greater than $250, a basic thank you note not will not suffice as adequate support for the IRS. To aid your donors the organization should provide the following information in the acknowledgement/thank you letter:
- Name of your organization
- Statement that the non-profit is a recognized tax-exempt entity under IRS under Section 501(c)(3)
- Amount of cash contribution or description of non-cash donation (but NOT the value)
- Date the donation was received
- A statement that no goods or services were provided by the organization in return for the contribution
Separate acknowledgements can be provided for each contribution exceeding $250, or an annual acknowledgement can be provided if more practical. Best practice is that acknowledgement(s) should be provided to donors no later than January 31 of the year following the donation.
If your organization received a quid pro quo contribution, when a donor makes a payment exceeding $75 that is comprised of both a contribution and a good or service provided by the organization, the organization is required to provide a written disclosure.
Example – The organization holds a dinner valued at $40 and charges a ticket price of $100, the donor’s tax deduction is limited to $60. However, because the total amount paid was greater than $75, the organization must provide a disclosure statement to the donor even though the value of the contribution is less than $75. The disclosure statement provided to donors should include:
- A statement informing the donor of the amount of the contribution that is tax deductible – limited to the excess of the contribution less than fair market value of the goods or services received
- A good faith estimate of the fair market value of the goods and services
A penalty is imposed on charities that do not meet the written disclosure requirement. The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. An organization may avoid the penalty if it can show that failure to meet the requirements was due to reasonable cause.
But what if…
Gifts in-kind with a market value in excess of $5,000 may require an appraisal (that the donor can be required to pay for)
The above guidelines are detailed in the IRS Publication 1771, these rules do not apply to a donated motor vehicle, boat or airplane if the claimed value exceeds $500. (See IRS Publication 4302, A Charity’s Guide to Vehicle Donations and IRS Publication 4303, A Donor’s Guide to Vehicle Donations).
We now have some clarity when it comes to DHHS compliance for Adult Care Homes (ACH). Last year, the North Carolina General Assembly passed General Statute 131 D-4.1-4.3. It was under this statute, that the Adult Care Cost Report requirement returned. These cost reports are mandatory for facilities receiving State/County Special Assistance Program funds. Types of facilities subject to this requirement include nursing home combination facilities with adult care beds, mental health supervised living facilities, and all other adult care homes (Licensed under general Statute Chapters 131E, 122C, and 131D, respectively).
In addition to these cost reports, any of these facilities that are licensed for 7 or more beds, are to be audited. This audit is of the cost report information in the form of Agreed-Upon-Procedures (AUPs), that must be done by a certified public accountant (CPA)/independent accountant.
The requirements for the combination facilities are slightly different since they are based on the Medicare’s requirements of Skilled Nursing facilities. Combined nursing facilities should submit a cost report and related AUPs based on their last completed Medicare cost report, which in most cases covers October 2013 through September 2014.
Important Dates: For the mental health facilities, the reporting period is July 1, 2014 through June 30, 2015. The reporting period for adult care home facilities is October 1, 2014 through September 30, 2015.
The due date is December 31, 2015 for all facilities.
All facilities that do not receive any funds through the State/County Special Assistance Program are considered exempt and an exemption form must be completed. This form can be found on the DHHS Office of the Controller’s website at www.ncdhhs.gov/control.
The ACH cost report software is also available online, here. All questions related to the AUPs can be addressed to [email protected]. If you have questions about cost report and AUP preparation, please contact our office.
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.
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:
- Same alternative as listed above for private companies.
- Amortize goodwill with impairment tests over its useful life, not to exceed a maximum number of years.
- The direct write-off of goodwill at the acquisition date.
- A nonamortization approach that uses a simplified impairment test.
North 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!
by Meagan Bulloch
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:
- Hospitals not operated for profit
- Educational institutions not operated for profit
- 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, here, or call our office for additional details.
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.
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.
by 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.