New Overtimes Rules Issues: What It Means for You
On May 18, the Department of Labor (DOL) issued its final overtime rules, which take effect on Dec. 1, 2016. The rules will significantly raise the salary level used to determine whether employees are eligible for overtime and will affect more than 4 million salaried employees. The DOL has more than doubled the current salary threshold for the overtime exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). In addition, it increased the total annual compensation amount required to exempt highly compensated employees from $100,000 to $134,000. These thresholds will automatically increase every three years.
Organizations should review their employee classifications and determine what steps need to be taken to address these new rules. The impact of these new rules on nonprofits needs to be carefully examined as the new regulations will result in higher salary costs for employers.
2016 Office of Management and Budget (OMB) Compliance Supplement
As of the date this newsletter was prepared, OMB had not issued the final 2016 Compliance Supplement. The expectation is that the 2016 Compliance Supplement (CS) will be issued by mid-July. The 2016 CS is effective for fiscal years beginning after June 30, 2015, and will supersede the 2015 OMB CS.
Appendix V of the CS, List of Changes in the 2016 Compliance Supplement, identifies all changes in the 2016 CS and should be reviewed to begin your process of assessing the changes in the 2016 CS.
Based on the draft version of the 2016 CS, one change that was made to the 2016 CS is the addition of the applicable row from Part 2, Matrix of Compliance Requirements, to each program/cluster included in Parts 4, Agency Program Requirements and Part 5, Cluster of Programs. This has been added to assist auditees and auditors in identifying the applicable compliance requirements and put this in one location.
The 2016 CS will include Part 6, Internal Control, whereas the 2015 CS Part 6 was blank. Part 6 provides an overview and the objectives of internal control. Part 6 describes the characteristics of internal control relating to each of the five components of internal control that should reasonably assure compliance and highlights the relationship between those characteristics and the 17 principles of internal control.
Once the 2016 CS is issued, organizations should review the document for changes to compliance requirements to their programs and ensure they have the proper controls and processes in place.
Update on FASB’s Nonprofit Financial Reporting Exposure Draft
The FASB is expected to vote on the final Accounting Standards Update on this topic by the end of June. If this occurs as expected, a final ASU should be issued during the summer. The ASU is projected to provide examples that will assist organizations in drafting their statements under the revised guidance.
This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Summer 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com
Warren Averett is an independent member of the BDO Alliance USA. This article was borrowed with permission from BDO USA, LLP.