Nonprofit
Revitalization Act of
2013
Fred M. LaMarca CPA, CFP®
Zoltan Kemeny, CPA
Nonprofit Revitalization Act

Most Provisions take effect on July 1,
2014.
Changes in Act fall into two categories:
1.
Relieving regulatory burdens on
nonprofits
2.
Improving compliance with governance
issues.
Enhanced Audit Requirements
Dollar Thresholds for Audits have Changed

Prior $250,000 annual
revenue limit has
been increased to
$500,000, with
subsequent increases
to $750,000 in 2017
and $1,000,000 in
2021.


Review report
requirement annual
revenue limit
increases from
$100,000 to
$250,000.
Attorney general can
demand an audit
upon 120 days notice.
Audit Committees
Audit or similar independent committees
are required to oversee the accounting and
financial reporting process of the NPO and
the audit of the NPO’s financial statements.
• Requires to retain/review
the independent auditor.
• Review the results of the
audit and the management
letter.
Additional Requirements for nonprofits
with annual revenue in excess of
$1,000,000
Governing Body Must:

Review with the auditor the
scope and planning of the
audit prior to its
commencement.
Review the following upon completion of
Audit:
 Any material risks and weaknesses in internal controls





identified by the auditor
Any restrictions on the scope of the auditor’s activities or
access to requested information.
Any significant disagreements between the auditor and
management.
The adequacy of the nonprofit’s accounting and financial
reporting process.
Annually consider the performance and independence of the
auditor.
Audit committee needs to report its findings to the full Board
of Directors.
Independence Under The Act:
The act sets forth specific requirements for director
independence
An Independent Director means a Director who:
Is not, and has not, within the last 3 years been
an employee of the nonprofit.
2. Does not have a relative who is or has been
within the last 3 years a key employee of the
nonprofit . A key employee is defined as a person
who is in a position to exercise substantial
influence over the affairs of the non-profit.
1.
Independence Under The Act:
3.
4.
Has not received, and does not have a
relative who has received more than $10,000
in compensation during any of the last 3
years.
Is not a current employee and does not have
a relative who has a financial interest in an
entity that has made payments to or receives
payments from the non-profit in an amount
which, in any of the last 3 fiscal years,
exceeds the lesser of $25,000 or 2% of the
entity’s consolidated gross revenues.
Conflict of Interest Policies
The act requires all nonprofits to adopt a
conflict of interest policy
and requires each
director to submit a
completed conflict of
Specific steps need to
interest statement
be taken to clarify that
annually to the audit
any participation by the
committee.
conflicted person is
prohibited and must be
documented in minutes.
Related Party Transactions
Related party transactions are not
prohibited by the Act but significantly
raises the bar on these transactions
A nonprofit is prohibited from entering into these
transactions with an officer, director, or key
employee unless the Board first determines that
the transaction is fair, reasonable, and in the
non-profit’s best interest at the time of such
determination.
Related Party Transactions
This generally means the Board has to have
considered alternative transactions to the extent
available, must be approved by at least a majority
vote of the Board of the Directors and
contemporaneously document these
considerations in writing.
Board Committees
Sub committees
consisting of elected
board members can act
on behalf of the Board
(Executive Committees)
as long as they report to
the full board.
Committees which may
include Board and nonboard members, but act
in an advisory function
may not act on behalf of
the board.
Whistleblower Policies
Any NPO with 20 or more employees and
annual revenues of over $1,000,000 in the
prior year must adopt a whistleblower policy.
The policy must set forth:
 Reporting procedures for
suspected violations of laws
or corporate policy.
 Designation of a
corporate administrator with
responsibility to report to the
audit committee.

A copy of the policy
needs to be distributed to
all officers, directors,
employees, and
volunteers.