The New York Non-Profit Revitalization Act of 2013, which became effective July 1, 2014, revises the financial oversight requirements nonprofits must adhere to if soliciting contributions in New York State.  Massachusetts nonprofits who solicit in New York must be aware of these changes as the new law applies to all nonprofits, even those that are incorporated in other states.  The new requirements make changes to annual attest requirements, corporate governance and related-party transactions. We’ve listed these requirements by category below and encourage you to contact Alfonso or Gino to schedule a discussion.
ANNUAL ATTEST REQUIREMENTS:
1. Gross revenue of $250,000 - $500,00 requires an Independent CPA Review
2. Gross revenue of more than $500,000 requires an Independent CPA Audit
3. In 2017, these thresholds increase to $250,000 - $750,000 for a review and more than $750,000 for an audit 
4. In 2021, these thresholds increase to $250,000 - $1,000,000 for a review and more than a Million for an audit 

CORPORATE GOVERNANCE:
1. Organizations with gross revenue of $500,000 or more are required to form an audit committee of 3 independent directors and perform the following functions:
a) Oversee the accounting and financial-reporting processes
b) Retain an independent auditor on an annual basis
c) Review the results of the audit and management letter with the auditor
2. Organizations with gross revenue of $1,000,000 or more are required to do the same as above with the following additional requirements:
a) During the planning phase of the audit, discuss the scope of the audit with the auditor
b) At the conclusion of the audit, discuss any material risks and weaknesses in internal controls with the auditor
c) Any restrictions on the scope of the auditor’s activities or access to information
d) Any significant disagreements between the auditor and management
e) Adequacy of the organization’s accounting and financial reporting processes
f) Report the audit committee’s activities to the full Board
3. All organizations must have a conflict of interest policy in effect by July 2015
4. Have a whistleblower policy in effect for all organizations with at least 20 employees and $1 million in revenue
5. As of July 2015, the Board Chair cannot be a paid employee of the organization.
NEW DEFINITION OF “INDEPENDENT DIRECTOR”
The Act defines an “independent director” as an individual who meets all of the following criteria:
1. Has not been an employee of, or does not have a relative that was a key employee of, the corporation or an affiliate of the corporation in past three years;
2. Has not received, or does not have a relative that has received, $10,000 or more in direct compensation from the corporation or an affiliate in the last three years (other than expense reimbursement or reasonable compensation as a director);
3. Is not a current employee of or does not have substantial financial interest in an entity that made or received payments from the corporation or an affiliate of more than $25,000 or 2% of the corporation’s gross revenue for property or services (whichever is less) in the last three years; and
4. Does not have a relative who is a current officer of or has a substantial interest in an entity making or receiving payments of a similar amount to the organization in the past three years.
RELATED-PARTY TRANSACTIONS:
New York approved a process that is similar to the IRS safe harbor guidelines.  The potential conflict must be disclosed and analyzed in comparison to alternatives. If a decision is made to enter into a transaction in which there is a conflict of interest, the rationale for the decision must be documented that it is in the best interest of the organization.   
© 2015 Edelstein & Company LLP. All Rights Reserved.
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