July 17, 2015 – Just like our vegetable and flower gardens, changes in the not-for-profit sector are blooming. If you have blinked, here’s what you should know:

The New York State Non‐Profit Revitalization Act of 2013 is not news, but the NYS Attorney General’s (AG) recently published guidance certainly is.  Here is a summary of topics; we’ll address some of the particulars in future blogs and emails.

New Developments: NYS Revitalization Act

The New York State Non‐Profit Revitalization Act of 2013 is not news, but the NYS Attorney General’s (AG) recently published guidance certainly is.  Here is a summary of topics; we’ll address some of the particulars in future blogs and emails.

Audit committee responsibility

• Oversight of the audit process;
• Reviewing the organization’s internal and financial controls on a periodic basis;
• Assuring the conduct of appropriate risk assessments and risk response plans;
• Identifying and monitoring related party transactions and reviewing the conflicts of interest, ethics, whistleblower and related party disclosure policies periodically and updating as needed;
• Periodically reviewing the organization’s insurance coverage and determining its adequacy.

Internal controls and financial accountability for non-profit board of directors

The guidance on internal controls and financial accountability for non-profit board of directors indicates the board of directors is responsible for obtaining and reviewing documented financial controls.  Notable items to be included in the written document include procedures for:

• Preparation of financial statements, budgets and variance reports;
• Cash disbursements and receipts with consideration to make embezzlement and misuse of funds difficult;
• Accessing, inputting and changing electronic data maintained by the organization;
• Preserving electronic records, protecting private data and creating an appropriate records retention policy;
• Maintaining an organizational chart that clearly identifies the responsibilities of all individuals including directors and employees;
• Developing a prudent investment strategy and providing proper oversight of investment assets.

Whistle blower policies

Conflicts of interest policies

Your Next steps

We strongly recommend that agencies should review current policies and procedures against the Act and AG’s guidance to determine if changes need to be implemented.  When drafting new policies and procedures, consider including entire definitions (related party, conflict of interest, etc.) from the Act into policies to make them clear.  Organizations will need to consider how compliance with the Act and AG guidance is documented and documenting oversight by the board of directors or audit committee.

The guidance indicates that organizations may need time to comply and therefore recommends non-compliant organizations should create a written plan with a timetable to achieve compliance. If after reviewing the documents at: https://charitiesnys.com/nonprofit_rev_act_guidance.jsp you feel you don’t have the resources, capacity or nitty-gritty expertise, call us. We can help on a number of levels, as much or as little as appropriate.