Skipping the release entry leaves restricted net assets overstated and unrestricted net assets understated on the statement of activities, which makes the organization look less financially flexible than it is. This is one of the more common issues auditors flag, since it requires an active journal entry rather than something that happens automatically when a grant period ends. Structured accounting services for nonprofits track each restriction against its terms so the release entry is never missed.

A single audit under Uniform Guidance becomes mandatory once an organization spends $1,000,000 or more in federal awards within a single fiscal year, for fiscal years ending on or after September 30, 2025. Organizations that receive federal funds through multiple pass-through grants sometimes miss that their combined spending crosses this threshold, since no single grant alone triggers it. Accounting services for nonprofits should track cumulative federal spend across every award, not grant by grant.

It depends on whether the activity is substantially related to the organization’s exempt purpose. Revenue from activities unrelated to the mission, such as renting facility space to an unrelated business or running a commercial venture unconnected to the nonprofit’s programs, can trigger Unrelated Business Income Tax, requiring a separate filing even though the organization remains otherwise tax exempt. Our accounting services for nonprofits include UBIT assessment on new revenue activities as they arise.

Functional expense allocation should follow a documented, consistent methodology, such as allocating shared costs based on time spent or square footage used by each function, applied the same way period over period. Auditors and funders reviewing Form 990 routinely flag allocation methods that change year to year without explanation. Accounting services for nonprofits should carry one documented allocation policy forward across every reporting period.

Yes. Maspartner’s accounting services for nonprofits maintain bookkeeping in line with GAAP under FASB ASC 958, including proper net asset classification and release entries, while also tracking IRS filing obligations like Form 990 and UBIT triggers. Our accounting for nonprofit organizations process is built to keep you audit ready year round, not scrambling to reconstruct records when a filing deadline or funder request comes up.