Taking Care of Business

Simple Governance Steps

for Nonprofits
By Marilyn Pendergast, Partner
8601 Robert Fulton Drive l Suite 210 l Columbia, MD 21046 l 410-720-5220 l Fax 410-381-2524 l www.uhy-us.com
U H Y L L P b r i n g s s p e c i a l i s t s i n n o n p r o f i t
s o l u t i o n s i n a c c o u n t i n g a n d t a x
Website
Development Costs
By Cindy McGiffin, Senior
A
n area of confusion I see fre-
quently on audits is the treat-
ment of website development
costs. Clients tend to place their
entire website development costs
in one bucket, either expensing
or capitalizing everything. The
correct treatment is somewhere in
the middle, and knowing which
activities are which is important.
Fortunately, there are detailed
accounting rules on what to capi-
talize and what to expense.
Website development costs can
generally be divided into various
stages. The following table summa-
rizes the accounting treatment for
the most common activities in each
stage. The table is based on FASB
ASC 350-50 Intangibles - Goodwill
and Other: Website Development
Costs. It is intended as an overview
and exceptions may apply.
Ask your website development
consultant to provide a breakdown
of their fees based on this table
(see page 2). Imagine the delight
of your auditors when they see the
spectacular job youve done of
properly accounting for your web-
site development costs!
continued on page 2
the next level of service
For more information,
please contact Jennine Anderson
at janderson@uhy-us.com
Nonprofit
Insider
February 2014 Vol. 5 No. 1
backgrounds? Are the majority of
board members independent of the
entitys management?
I Maintaining a conflict of inter-
est policy. Is the policy in writing?
Does it require regular disclosure? Is
the policy applied to both man-
agement and the board?
IDocumenting policies for fund
raising and acceptance of
gifts. How are the gift re-
strictions documented?
What is the minimum
level for a restricted
gift? What types of
fund-raising activities
are considered appro-
priate? How is the
donor listing utilized?
Are grant applications and
reporting functions properly
established and monitored?
IDeveloping a policy for upper
level management and board
compensation. Do board members
receive a stipend or expense reim-
M
ost nonprofit
organizations
focus their energy
and resources on a
dedicated cause.
This dedication and
commitment can
sometimes create a
situation where less priority is placed
on basic policies related to governance.
Board-governance policies, in partic-
ular, can help strengthen the
organization without signif-
icant costs.
It is both helpful and im-
portant for nonprofit
boards to consider their
role in establishing poli-
cies and overseeing man-
agements implementation,
where appropriate. To do so,
boarddiscussions shouldinclude the
following:
IReviewing the size and structure
of the board. Is the board the right
size to accomplish its objectives?
Does it have members from diverse
UHY Advisors
Mid-Atlantic MD, Inc.
Tax & Business Consultants
continued on page 2
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bursements? Who approves these
transactions? Who approves the ex-
ecutive directors compensation?
What are the procedures used in de-
termining the compensation level?
I Monitoring financial matters.
Is there an independent audit
committee or similar group? Does
this group oversee the work of the
independent auditor? Is the 990
return reviewed by board repre-
sentatives and management be-
fore it is filed?
I Establishing a document-re-
tention policy. Are there legal
requirements related to document
retention? Is the policy under-
stood by those who work with the
documents?
I Documenting board activities.
Are minutes maintained for all
meetings? Are meetings open to
the public? What matters are con-
sidered in closed meetings? Is there
enough detail in the minutes to
support decisions and policies?
To accomplish the organizations mis-
sion, there must be thoughtful con-
sideration and establishment of gov-
ernance policies by board members.
They must help focus scarce resources
in the areas where they count the
most. It is important that board mem-
bers understand their organizations
policies and goals. In doing so, they
will be able to focus on the organi-
zations key purposes with a strong
underlying base of documented poli-
cies and processes.
Simple Governance Steps
for Nonprots
continued from page 1
Website Development Costs, continued from page 1
the next level of service
Stage Activities Treatment
Planning I Developing the Expense
business/project plan
I Determining functionalities
I Identifying hardware and
web applications/software
I Conceptual formation of
graphics and content
I Selection of vendor(s)
Application and I Acquiring or developing hardware Capitalize
Infrastructure and software needed to operate
Development the website
I Obtaining domain name
I Developing or acquiring the software
or website operations, database
and applications
I Purchasing the hardware
I Installing the hardware/software
I Testing the hardware/software
Graphics I Overall design of web pages Capitalize
Development (design, layout, color, images)
Content I Data entry and data conversion Expense
Development of content
I Software used to integrate a Capitalize
database with the website
Operating Stage I Training employees on the new website Expense
I Registering the website with internet
search engines
I User administration activities
I Backups
I On-going maintenance
I Upgrades and enhancements that Capitalize
increase functionality