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May 2017
In This Issue
Your BRC Team
Bernard Robinson & Company ranks number one on the list of the Best Employers in North Carolina (small and medium sized companies) by Business North Carolina!

Click here to learn more about why Bernard Robinson & Company is such a great place to work!

Congratulations to Laine Smith, Senior Accountant in the Greensboro office, for winning the  1st Quarter Employee Recognition Award!
Noteworthy Links
IRS Tax Calendar for Businesses & Self-Employed
IRS: Tax Scams / Consumer Alerts
Many Tax-Exempt Organizations Must File by May 15; Do Not Include Social Security Numbers or Personal Data
2018 Health Savings Account Limits Increase Slightly
Why Job Hopping Can Hurt Your Retirement
70 Years of Growth Through Client Service
By Rhonda Skiles, CPA, Partner

It was January 2000 when I began working at Bernard Robinson & Company.  All the "Y2K" projects to ensure that computers could successfully handle the date change from 1999 to 2000 were behind us, and many wondered what all the concern had been about.  I had been working for a large corporation as a State Tax Manager, but industry was not where I saw myself long-term.  I was offered a job at BRC for a specific reason: I had real estate partnership tax experience in the highly specialized area of affordable housing.  I had worked with Tim Smith at another public accounting firm several years earlier, and Tim was the newest audit partner at BRC.  At the end of 1998, Tim was recruited by Dan Hayes to join BRC to work with a new client who managed and developed affordable housing.  After one tax season without a dedicated tax person, two of the tax partners at that time, Pat Price and Wes Stallings, decided to look for someone who knew the technical side of the Low Income Housing Tax Credit Program.  When I met Tim, Pat and Wes for lunch one day, it was apparent that they placed priority on client service and that they valued the employees of the firm. I decided that BRC would be a good fit for me to continue my accounting career. 

That was over 17 years ago, and our firm has grown over the years, due in part to our practice in the affordable housing industry.  Affordable housing clients are individuals and entities, both for profit and not-for-profit, that develop, manage and maintain housing for low to moderate income families, seniors and those with disabilities.  BRC now serves almost 50 distinct client groups who collectively own or manage over 1,000 properties.  We work with developers, investors, management companies and governmental agencies from the planning and development stage, through construction, leasing and finally disposition.  The people working in the affordable housing industry believe that everyone deserves a decent, safe and affordable place to live, and they are dedicated to providing this housing.  In many ways, this dedication mirrors BRC's dedication to serving these clients by not just providing audit and tax services, but being their trusted advisor.

As the affordable housing area of our practice has grown, other areas of our practice have grown, such as services provided to high net worth individuals, closely held businesses, real estate and construction entities, non-profit entities, and employee benefit plans.  We firmly believe that our commitment to providing the highest quality service possible has been the driving force behind this growth, and this growth provides opportunities for all our employees.  As we celebrate our firm's 70th anniversary, I am proud to have been a part of the success of the firm over its last 17 years and look forward to continued success in the years to come.
Tips on Maintaining Your Non-Profit's Exempt Status
By Casey Patterson, CPA, Senior Manager

You have filled out the seemingly endless amounts of paperwork, worked countless hours and finally have your non-profit established. Now, let's keep it that way. Below is a list of do's and don'ts to help retain your non-profit status. 
  1. Do - file Form 990-N, Form 990-EZ, Form 990, or Form 990-PF on time. Failing to file your non-profit's applicable version of Form 990 for three consecutive years results in automatic revocation of your non-profit status by the IRS.
  2. Do - have established bylaws and follow them. Be sure to amend if these become outdated.
  3. Do - conduct board meetings and keep minutes.
  4. Do - pay taxes on any income over $1,000 that does not relate to your exempt status. Form 990-T is used to report this income and determine tax due.
  5. Do - provide a public inspection copy of Form 990 for the last three years.
  6. Do - renew your state charitable solicitation license annually if applicable. NC requires that you file annually for the license if you receive $25,000 or more in private grants or contributions. If you receive less than $25,000 in private grants or contributions, NC requires that you file annually to be exempt from the license.
  7. Do - provide your donors with acknowledgment letters for contributions of $250 or more.
  8. Don't - contribute to a political campaign.
  9. Don't - participate in any substantial lobbying.
  10. Don't - use income for any purpose other than your tax-exempt purpose.
If you are not sure of your current status with the IRS or Secretary of State, there are websites available to check the status of your organization.
  1. Does the IRS recognize your organization as exempt?
  2.  Are you in good standing with the NC Department of the Secretary of State? (for NC)
Additional resources can be found at (for 501(c)(3) organizations) and (NC Secretary of State).
Consolidation Guidance for Not-For-Profit Entities Clarified
By Elizabeth Danner, CPA, Senior  Manager

During 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-02, Amendments to the Consolidation Analysis.  This update eliminated the concept of presumed control by general partners over a limited partnership.  The update instead required that the Variable Interest Entity ("VIE") model be used as a guide for determining who should consolidate a limited partnership.  The problem with this standard is that Not-for-Profit ("NFP") entities are not in the scope of the VIE model.  Therefore, it was unclear what criteria an NFP that is the general partner in a limited partnership should use to determine whether or not to consolidate said limited partnership.

To eliminate this confusion, FASB issued ASU 2017-02, Clarifying When a Not-for-Profit Entity that is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity.  Under this guidance, NFPs that are general partners continue to be presumed to control a for-profit limited partnership, regardless of ownership percentage, unless that presumption can be overcome.  To overcome the presumption, the limited partners must have substantive kick-out rights or substantive participating rights.  Kick-out rights are substantive if they can be exercised by a simple majority vote or a lower threshold of the limited partners' voting interests.  When evaluating the threshold, limited partners' voting interests should exclude voting interests held by the general partner, parties under common control with the general partners, and other parties acting on behalf of the general partners.
For NFPs, both the latest amendments on the presumption and ASU 2015-02 are effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2017. An NFP that has not yet adopted ASU 2015-02 must adopt both ASUs using the same transition method. 
Corporate Culture - Is It a Breeding Ground For Fraud?
By Kyle Corum, CPA, CFE, Senior Manager

Tone at the top is crucial in any organization. These are the individuals that are looked up to, and the ones on which the foundation of the company is built. We look to these leaders for vision, guidance, and leadership.  Take a moment to ponder this question:  What is the tone at the top at your company or organization? What is your company culture?

If your initial reaction to that question was positive, and you trust your leadership, that is awesome.  But, others reading this may not have that opinion of their leadership or culture. Their leadership may play fast and loose with the rules.  And if they are, what message is this sending to the people that work for them? What message is it sending to you? Or are you, as a leader of an organization or even a department, sending messages to "bend the rules for the company"?

This takes me back to an article I read last year about Volkswagen and Wells Fargo and the cultures that were pushed down from the top to meet certain goals, quotas, and expectations. 

Is your organization a breeding ground for similar things that Volkswagen did, or is it a high-pressure environment to sell or make certain numbers? If it is, it will not be long before your company may be written about in the news.  Or worse, your name will be in the headlines.

It's easy for us to sit here and say we would never have done this, or "I am too good to allow this to happen."  As the article pointed out, the people doing these things were not bad people, but they were good people who were asked to cross the line for the company.  They were able to rationalize their actions. And more likely than not, it could have been prevented if the tone at the top was different and the culture was such that the employees did not feel this pressure. 

Examples of reinforcing the tone at the top to help prevent fraud are:
  • Say what you mean and mean what you say - make sure the policies and procedures you have developed align with the company's values, and that you are operating in a manner to highlight these values everyday.  Emphasize these values at staff meetings and in communication within the company. The more people know, the more they will adhere to these standards.
  • Monday morning quarterback - your response to unethical actions within management will no doubt be a conversation piece on Monday morning.  Did your decision align with the company's ethical standards?  By not doing something about an issue, you made your decision about where you stand for ethics and compliance.
  • Rewards and timely employee evaluations - include compliance and ethics as part of the valuation process for key employees. As they move up within the company, others will see this type of behavior rewarded, and they will follow these leaders and the character they possess.
If your company's policies and corporate culture do not agree with your personal ethical standards, then it may be time to find a company that does share your standards for ethics. 

Bernard Robinson & Company, L.L.P. | (336) 294-4494 | |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410
BRC Strategy is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice.  The opinions and interpretations expressed should not be construed or used as legal or tax advice, written or otherwise, and cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local law.