BDO 2019 NONPROFIT SUMMIT · Shared Servicing, PNC Riverarch Capital, and PNC Erieview Capital are registered marks of The PNC Financial Services Group, Inc. (“PNC”). PNC Retirement

BDO 2019

NONPROFIT

SUMMIT

May 16, 2019

2019 BDO Nonprofit Summit

Agenda

8:00 AM – 8:45 AM REGISTRATION / NETWORKING / BREAKFAST

8:45 AM – 8:50 AMWELCOME

Laurie De Armond National Co-Leader, Nonprofit & Education Practice, BDO

8:50 AM – 9:40 AM

DISRUPTIVE TECHNOLOGY AND INNOVATION: FINANCIAL PROCESS TRANSFORMATION

OPPORTUNITIES FROM THE EVOLVING PAYMENT LANDSCAPE

David Temme Senior Vice President, Treasury Solutions Group Leader, PNC

9:40 AM – 10:30 AM

NAVIGATING PRIVACY AND RISK MANAGEMENT ISSUES OF EVOLVING TECHNOLOGY

Andras Kosaras Counsel, Arnold & Porter

Nancy Perkins Counsel, Arnold & Porter

Derrick King Senior Manager, Governance and Risk Compliance, BDO

Taryn Crane Manager, Governance and Risk Compliance, BDO

10:30 AM – 10:45 AM BREAK

10:45 AM – 12:00 PM

NONPROFIT VOICES – A DISCUSSION AMONGST YOUR PEERS

Maria Georges Senior Vice President and Managing Director, PNC

Christian Curtin Controller, NPR

Alex Galeano CFO, ASIS International

12:00 PM – 12:40 PM LUNCH


Agenda

12:40 PM – 1:30 PMLEADING DURING A TIME OF CHANGE

Seth Verry VP Go Team, Indiggo

1:30 PM – 2:45 PM

ACCOUNTING AND TAX UPDATE

Lee Klumpp National Assurance Partner, Nonprofit & Education Practice, BDO

Marc Berger National Director, Nonprofit Tax Services, BDO

Amy Duffin Assurance Director, Nonprofit & Education Practice, BDO

2:45 PM – 2:55 PM BREAK

2:55 PM – 4:35 PM

IMPACT RE-ENVISIONED: HOW TECHNOLOGY IS HELPING NONPROFITS ACHIEVE GREATER

IMPACT

Kirstie Tiernan Managing Director, Data Analytics and Automation, BDO

4:35 PM – 4:45 PM

CLOSING REMARKS

Laurie De Armond National Co-Leader, Nonprofit & Education Practice, BDO

Glenn Groninger Senior Vice President & Managing Director, PNC

4:45 PM – 6:00 PM NETWORKING RECEPTION

Join the conversation on Twitter @BDONonprofit #BDONonprofitSummit


Disruptive Technology and Innovation:

Financial Process Transformation

Opportunities from the Evolving Payment

LandscapeDavid Temme, Senior Vice President, Treasury Solutions Group Leader, PNC

Disruptive Technology and InnovationFinancial Process Transformation Opportunities From The Evolving Payment Landscape

2019 Non Profit SummitWashington, DCMay 16, 2019

IntroductionEvolving Expectations and Related Opportunities

Impact of MillennialsPayments are

Speeding Up

Peer to Peer Networks

Offer New Financial

Connection Channels

Real Time Connectivity

and Processing

Fintechs Introduce

Innovation and

Disruption

Accelerating Technology

Advances

IntroductionDigital Transformation Focus and Status

The Hackett Group: Building a Value Driven Business Case for Digital Transformation (August 2018)

Key Transformation Value Drivers

0% 20% 40% 60%

System Usability

Operating Cost

Business Value

Cycle Time

Service Quality

Agility

Customer Satisfaction

Identified by Respondent Top Performers

Where is the Most Activity?

0% 20% 40% 60% 80% 100%

Treasury

Business Analysis

Planning

Accounting

Revenue Cycle

Disbursements

Completed Piloting Exploring

Digital Transformation Projects By Life Cycle Stage

Multiple Paths to Explore

Faster Payments

Smart Automation

Application Program Interface

(API’s)

Block Chain and Distributed

Ledger

Account and Identity

Verification

Application Program Interface (API)

▪ An API is a technology protocol that allows for

disparate software programs to communicate with

one another

▪ API’s make a request and receive a response …

versus webhook

▪ Will API’s replace current batch-based processes?

▪ Where API’s best fit

− When an improved, cohesive experience for the

complementary systems are needed

− When looking to control the online user experience

in systems and apps

− To transmit data in real-time rather than wait for

batch processing to occur

▪ Bank approach

− Utilize API’s to more seamlessly connect internal

system operations

− Create discrete capabilities to collect, pay and

receive information

− Enable development and integration with third

party solutions

What is It? Why Should I Care?

Google Maps API that lets developers

easily embed Google Maps on web pages

:

Application Program Interface (API)Banking View

Aite Group: Corporate Banking API Strategies (2018)

0 20 40 60 80 100

Supply Chain Finance

Trade Finance

Comml Lending

Treasury Mgt

Retail

% of Respondents

Which Product Management Areas of Your Bank are Involved in API

Projects?

0 20 40 60 80 100

Support Open BankingPlatform That AllowsDevelopers AccessVia Published APIs

Use Internally toConnect Systems

% of Respondents

What is the Status of Your Bank’s Initiatives Regarding API?

> 2 Years Within Last Year Planning In Next 2 Years

Application Program Interface (API)Examples

Information Reporting into Quick Books

Mobile Check Deposit

Invoice Automation into NetSuite

Transit Routing Number Verification

Smart Automation

DOING THINKING

Artificial Intelligence

Machine Learning

Robotic Process

Automation

Robotic Desktop

Automation

AU

TO

MA

TIO

N …

CO

MP

LE

XIT

Y

PROCESS DRIVEN DATA DRIVEN

Smart AutomationStill Early, But Inevitable?

Outsourcing relationships have

largely failed to deliver on

technology and information-related

value drivers, especially for top

performers

Hackett Group: 2016 Business Process and

IT Outsourcing study, 2016

BPO Limited to Labor

Arbitrage?Humans are … Human

Typical failure rates in businesses

using common work practices

range from 10 to 30 errors per

hundred opportunities

Lifetime Reliability Solutions: Understanding

the Hidden Truths in Human Error Rate

Tables, 2019

Potential Impact of Digital

Labor

RPA technology costs one third of

the amount of an offshore

employee, and one fifth of a

domestic employeeGartner Inc.: Revolutionizing via Robotics,

2018

62% of respondents from larger

enterprises are already investing or

are planning to invest in digital

labor (which includes artificial

intelligence, automation, and robotics)

Harvey Nash/KPMG: CIO Survey (2017)

Planned InvestmentWhere Are We Now – RPA

Adoption

0% 25% 50% 75% 100%

Within 2 Years

Current

Broad Limited

Hackett Group: Key Issues Study (2019)

Where Are We Now – AI and

Cognitive Computing Adoption

0% 25% 50% 75% 100%

Within 2 Years

Current

Broad Limited

Hackett Group: Key Issues Study (2019)

Smart AutomationIn Practice

Data Capture

Extract key data fields for

cash application and

invoice automation

solutions

Client Onboarding

RPA used to support

onboarding of new card

service clients

Cash Forecasting

Provide on-demand

analysis of cash flow

forecasting and

recommend tactics and

solutions to further optimize

cash flow

Denied Claims

Analyzing healthcare

claims to identify likely

denials prior to

submission

Faster Payments Emerging Payment Channels

Real Time Payments

▪ Developed and hosted by The Clearing House

▪ Consistent with design principles of Federal

Reserve Faster Payments initiative

▪ First truly new US payment channel in 40 years

▪ Focus on payer controlled credit push –

complemented with integration of Request for

Payment messaging

▪ Key Attributes

− Network availability – 24/7/365

− Speed - < 15 seconds

− Irrevocable

− Transparent

− Collaborative

Payments Through P2P Network

▪ Enables expedited, electronic payment without

associated banking information – payee email

address is the token used to execute notification

and payment

▪ Focus on Business to Consumer and Government

to Consumer payments

▪ Expedited payment (minutes) for in network banks,

1-3 days for out of network banks

▪ Network Reach

− 148 network banks – representing 60% of

consumer accounts

− >27M users (vs. 22M for Venmo)

▪ Options for prepaid card and check issuance for

recipients who decline to participate

ERP providers incorporating RTP capabilities

Transaction limit increases

Alignment and likely asset sharing between Zelle and TCH

Building integration foundation through a library of API’s

Leading banks expanding capabilities to transact

Faster PaymentsRTP Key Developments

Faster PaymentsRTP Path to Ubiquity

Where are we now?

Perspective

from the past

Defining

effective

ubiquity

Key next steps

Announcement

from Fed

Faster PaymentsEarly Use Case Examples for Faster Payments

18

Same Day ACH ePayments Real-Time Payments

▪ Emergency Payroll

▪ Selected B2B payments

▪ Emergency Payroll -extended processing window, value of confirmation

▪ Termination Pay

▪ Drawdown of foundation funds from designated investment accounts for program distribution

▪ Donation Enablement –integration with online organization experience

▪ Health study participation payments

▪ Intelligent Routing

▪ Property and casualty claims payments

▪ Refunds

▪ Other program disbursements …

Electronic alternative when banking information is not

available

Block Chain and Distributed LedgerTransforming Traditional Systems

Traditional Systems:

▪ Transactions are recorded in multiple

ledgers. At best, each one captures a

moment in time and reflects the information

held by a single party.

▪ No record of what happens next, what came

before, or the role of others – partners,

suppliers, consumers – in the transaction.

▪ Prone to human error and vulnerable to

tampering.

Blockchain Solutions:

▪ Distributed ledgers can be shared and

updated in near real-time across a group

of participants.

▪ Every transaction becomes part of the

permanent record and can be scrutinized

by those that have permission.

▪ Relevant information can be shared with

others based on their roles and access

privileges.

Block Chain and Distributed LedgerTransforming Traditional Systems

Distributed Network

Leverages a distributed network of computers sharing and “hosting” the exact history of activity, transaction data

Security/Privacy

Enhances security and privacy through encryption

Single Source of Truth

Provides a single, consistent and shared view of the state of a business process

Immutable Record

No one unilaterally has the power to edit transactions

Provenance

Establishes provenance, or a record of an entire transaction, workflow

‘Smart’ Contracts

Automates transaction execution and integrate workflows

Separation of crypto-currency from the transformational potential of

underlying distributed ledger technology

Block Chain and Distributed LedgerSmart Contracts Unlock the Full Power of Block Chain

A Smart Contract is a computerized

transaction protocol that executes and

enforces the terms of an agreement.

Like traditional contracts, Smart Contracts

define the operating rules and penalties

between parties around an agreement.

Unlike traditional contracts, Smart

Contracts also automatically enforce

those obligations.

What are Smart

Contracts?What is their role?

Process, workflow and transactions automation.

Allow parties to interact directly, eliminating the

need for a “middle man” or additional

communication to validate that activities are being

carried out according to defined terms.

What is their value

proposition?

Block Chain and Distributed LedgerPNC Perspective

Investments

PNC invested in distributed ledger

software startup in December 2016

PNC joined financial services

consortium focused on developing

blockchain solutions

Connected to Block Chain Based Network

Operationalizing cross-border

payment solution – first US Bank

to connect to RippleNet payment

network via xCurrent technology

Healthcare Concepts in Development

Healthcare claims straight-

through processing

Bundled payment program

administration

Is There A Potential Use Case?

Need for multiple parties to interact?

Value in data sharing?

Reliance on manual processes /

reconciliation?

Can parties agree to common /shared

operating rules?

Account and Identify VerificationImportance of Really Knowing Customers, Vendors, Employees

72% of respondents listed cyber and information security as a high risk (Hackett Key Issues Study 2019)

Cybercriminals utilize social engineering techniques to obtain employee credentials to conduct payroll diversion (FBI 2018)

Account takeover grew significantly last year - $5.1B in losses last year (Javelin Strategy and Research: Identify Fraud Study 2018)

77% of organizations experienced Business Email Compromise (AFP Payments Fraud and Control Survey 2018)

Account and Identify VerificationReal Time Access Via API or Web Interface

National Shared Directory (NSD)

Verify Account Number and

Transit & Routing Number

Authenticate Account

Owner

Validate Digital DNA of

Consumer or Business

Telecommunication Consortiums and

Mobile Network Operators

Large Billers, Utility Companies,

Financial Institutions and Bank

Consortiums

Law Enforcement Records, Vehicle

Registration, OFAC Federal Watch

Lists

Credit Bureaus, Bankruptcy and

Deceased Records

Account and Identify Verification

▪ Persistent ACH return activity

− Organization specific or common industry issue

▪ Process for onboarding donors / suppliers / students / others

− How do you verify who you are working with?

− How are you validating the information captured, including

payment information?

▪ Process for managing trigger events:

− How do you validate changes to names, address, email, phone,

bank account information?

− How do you confirm identify, account information prior to

disbursements?

▪ Priorities around ensuring regulatory compliance

Where Will This Fit Best?

Standard Disclosure

PNC, PNC Bank, ACHIEVEMENT, PINACLE, Working Cash, ActivePay, Global Trade Excellence, Vested Interest, Midland Loan Services, Enterprise!, CMBS Investor Insight, Portfolio Investor Insight, Borrower Insight, Shared Servicing, PNC Riverarch Capital, and PNC Erieview Capital are registered marks of The PNC Financial Services Group, Inc. (“PNC”). PNC Retirement Solutions is a service mark of PNC.

Bank deposit, treasury management and lending products and services, and investment and wealth management and fiduciary services, are provided by PNC Bank, National Association (“PNC Bank”), a wholly-owned subsidiary of PNC and Member FDIC. Certain fiduciary and agency services are provided by PNC Delaware Trust Company. Foreign exchange and derivative products (including commodity derivatives) are obligations of PNC Bank. Equipment financing and leasing products are provided by PNC Equipment Finance, LLC, a wholly-owned subsidiary of PNC Bank. Energy financing is provided by PNC Energy Capital LLC, a wholly-owned subsidiary of PNC Equipment Finance, LLC. Aircraft financing is provided by PNC Aviation Finance, a division of PNC Equipment Finance, LLC. Asset–based lending is provided by PNC Business Credit, a division of PNC Bank and PNC Financial Services UK Ltd. (an indirect wholly-owned subsidiary of PNC Bank) in the United Kingdom. Specialty finance products are provided by Steel City Capital Funding, a division of PNC Bank. Merchant services are provided by PNC Merchant Services Company. Direct equity investing and mezzanine financing are conducted by PNC Capital Finance, LLC through its PNC Riverarch Capital, PNC Mezzanine Capital and PNC ErieviewCapital divisions. Investment banking and capital markets activities are conducted by PNC through its subsidiaries PNC Bank, PNC Capital Markets LLC, Harris Williams LLC, Harris Williams & Co Ltd. and Solebury Capital LLC. Services such as public finance investment banking services, securities underwriting, and securities sales and trading are provided by PNC Capital Markets LLC. Merger and acquisition advisory and related services are provided by Harris Williams LLC and Harris Williams & Co. Ltd. Equity capital markets advisory and related services are provided by Solebury Capital LLC. PNC Capital Markets LLC, Harris Williams LLC and Solebury Capital LLC are registered broker-dealers and members of FINRA and SIPC, and Harris Williams & Co. Ltd is authorized and regulated by Financial Services Authority (FRN No. 540892). Harris Williams & Co is the trade name under which Harris Williams LLC and Harris Williams & Co. Ltd. conduct business. Retail brokerage services and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member of FINRA and SIPC. Annuities and other insurance products are offered through PNC Insurance Services, LLC. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors, LLC, a wholly-owned subsidiary of PNC Bank. PNC Bank and certain of its affiliates including PNC TC, LLC, an SEC registered investment advisor wholly-owned by PNC Bank, do business as PNC Real Estate. PNC Real Estate provides commercial real estate financing and related services. Through its Tax Credit Capital segment, PNC Real Estate provides lending services, equity investments and equity investment services relating to low income housing tax credit (“LIHTC”) and preservation investments. PNC TC, LLC provides investment advisory services to funds sponsored by PNC Real Estate for LIHTC and preservation investments. Registration with the SEC does not imply a certain level of skill or training. This material does not constitute an offer to sell or a solicitation of an offer to buy any investment product. Risks of each fund are described in the funds’ private placement memorandum or other offering documents.

Important Investor Information: Securities and insurance products are:Not FDIC Insured • Not Bank Guaranteed • Not A DepositNot Insured By Any Federal Government Agency • May Lose Value

In Canada, PNC Bank Canada Branch, the Canadian branch of PNC Bank, provides bank deposit, treasury management, lending (including asset-based lending through its Business Credit division) and leasing and lending products and services (through its Equipment Finance division). Deposits with PNC Bank Canada Branch are not insured by the Canada Deposit Insurance Corporation. Deposits with PNC Bank Canada Branch are not insured by the Federal Deposit Insurance Corporation, nor are they guaranteed by the United States Government or any agency thereof. In the event of the failure of PNC Bank, deposits with PNC Bank Canada Branch would be treated as unsecured general liabilities, and creditors would be considered general creditors of PNC Bank.

Lending and leasing products and services, as well as certain other banking products and services, require credit approval.

PNC does not provide legal, tax or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide investment advice to PNC Retirement Solutions and Vested Interest plan sponsors or participants.

©2017 The PNC Financial Services Group, Inc. All rights reserved.


Navigating Privacy and Risk Management

Issues of Evolving TechnologyAndras Kosaras, Counsel, Arnold & Porter

Nancy Perkins, Counsel, Arnold & Porter

Derrick King, Senior Manager, Governance and Risk Compliance, BDO

Taryn Crane, Manager, Governance and Risk Compliance, BDO

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved

arnoldporter.com

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved

arnoldporter.comPrivileged and Confidential

Navigating Privacy and Risk Management for Nonprofits

Nancy Perkins, Arnold & Porter

Andras Kosaras, Arnold & Porter

Derrick King, BDO

Taryn Crane, BDO

May 16, 2019

arnoldporter.comarnoldporter.comPrivileged and Confidential

Agenda

• Why are privacy laws changing

• Federal and state laws and issues related to privacy

• Key themes in privacy legislation

• Responding to breach

• Developing and implementing a privacy compliance plan


Why Privacy Laws are Changing

73%...

…of consumers say a company’s ability to keep their data private is extremely

important.

…of consumers say businesses focus on profits over protecting consumers’

privacy rights.

At least 15 large retailers have experienced loss of personal data since January 2017.

78%...

Source: Harris Poll for IBM, online survey of 2,039 U.S. adults March 27-29

The impact of the consumers’ voice


Data Protection & Privacy Business Drivers

Why privacy is such a hot topic


Privacy Issues at the Federal Level

Congressional

Hearings

Response to GDPR LegislationData Scandals

Among Major Tech

Companies


Privacy Legislation at the State Level

California

California Consumer

Privacy Act will take effect

in January 2020.

New Jersey

Retail privacy law took

effect in October 2017.

Vermont

Data broker regulation

went into effect in

January 2019.

Colorado

Data protection law took

effect in September 2018.

States that are currently considering or have

recently considered privacy legislation

States that have recently passed privacy

legislation


Laws & Regulations Driving Data Protection & Privacy

Imposes new rules on organizations that offer goods and services to people in the European Union (EU), or that collect and analyze data tied to EU residents, no matter where they are located. This law went into effect on May 25, 2018.

Enhanced personal privacy rights

Increased duty for protecting data

Mandatory breach reporting

Significant penalties for non-compliance

General Data Protection Regulation

(GDPR)

California Consumer Privacy Act

(CCPA)

Administered through an active regulator (CA AG), it protects California residents by giving them rights similar to the GDPR, but in some cases is more rigid. This act is set to go into effect on January 1, 2020.

Enhanced personal privacy rights

Increased duty to inform and provide notice

Broader definition of PI

Enforcement by both CA AG and private plaintiffs through class actions

China Cyber-Security

China has a current Cybersecurity law that applies to cross-border transfer that applies to “Critical Information Infrastructure (CII)”. Regulators have also drafted requirements that will apply to “Network Operators” which may be finalized by year end of 2018.

Localized storage of PI and important data

Enhanced security assessments before cross-border transfer


Themes in Privacy Legislation

Additional Rulemaking Authority for the Federal Trade Commission

Federal Preemption of State Laws

Opt-in vs. Opt-out Requirements for Data Access, Use, or Sharing

Data Security Requirements

Data Breach Notification Requirements

Requirements for Notifying Consumers about Privacy Policies


California Consumer Privacy Act

The right to request that a business delete personal information that it has collected about a consumer

The right to request and receive information about, and specific pieces of, personal information that has been collected or sold or disclosed to third parties by a business

The right to opt out of the sale of a consumer's personal information

The right not to be discriminated against due to the exercise of any right established by the CCPA

Although not applicable to nonprofits in its current form (to be effective Jan. 2020), the CCPA may serve as a template for future privacy regulation that may apply to nonprofits. In addition, organizations that nonprofits partner with may revise their data sharing policies as a result of the CCPA that applies to them.


FTC and Other Federal Agencies

• Federal Trade Commissiono Uses its general unfair and deceptive acts and practices (UDAP) authority

(FTC Act § 5) to regulate privacy and data security in the IoT space

o Protect consumers from harm and practices that frustrate meaningful, informed choices about IoT data privacy and security

‒ False or misleading statements about how data is collected, used, or stored

‒ Practices that cause substantial harm without countervailing benefits to competition or that consumers cannot reasonably avoid – failing to provide reasonable security; using data in ways that consumers would not expect

o Without unnecessarily hindering innovation, eliminating competitors, or entrenching incumbents



• Federal Trade Commission (cont’d)o Enforcement actions

‒ alleged deceptive statements about security of devices and lack of reasonable security features

‒ alleged failure to get consent for tracking personalized viewing data and deceptively described interactivity and tracking functions

▪ Outcome: required to prominently disclose tracking practices, and obtain express consent to track and share viewing data

‒ alleged deceptive statements about encryption of data and inadequate security measures

▪ Outcome: required to implement data security program with biennial audits for 20 years



• Federal Trade Commission (cont’d)o Hearings on Competition and Consumer Protection in the 21st Century

‒ Privacy themes

▪ Big data

▪ Cognizable privacy/informational injuries

▪ Notice and choice

o Potential Enforcement Changes

‒ More specific data security orders

‒ Calls to hold more individuals liable

‒ May start to bring enforcement actions more quickly

‒ FTC supports national legislation giving it specific privacy and data security enforcement authority



• Federal Communications Commission (FCC)o FCC has authority to enforce basic privacy protections granted by the Communications Act

• National Institute of Standards and Technology (NIST)o Non-regulatory agency within the Commerce Department

o Currently developing a voluntary privacy framework with input from various private and public stakeholders

o Tool to provide a catalog of privacy outcomes and approaches to help organizations of all kinds prioritize strategies for managing the particular privacy risks they face, rather than prescribing one-size-fits-all requirements

• National Telecommunications and Information Administration (NTIA)o Commerce Department agency responsible for advising the President on telecommunications and

information policy issues

o NTIA completed a request for comment on a “Flexible Risk-Based Approach to Consumer Privacy” in the fall of 2018

‒ RFC aimed at how the Administration should “advance consumer privacy while protecting prosperity and innovation” with a flexible, risk-based approach

‒ Broad consensus on the need for federal privacy legislation, the FTC as lead enforcement agency and some alignment with international standards

‒ Disagreements in comments centered on the regulatory approach (risk-based flexibility v. prescriptive requirements), preemption of state privacy laws, and powers to be given the FTC and state AGs


HIPAA: Scope of HIPAA Privacy and Security Rules

• The HIPAA rules regulate uses and disclosures of:o “Protected health information” (PHI), which is:

‒ individually identifiable health information; and

‒ created, received or maintained by a HIPAA-covered entity or an employer

• Entities subject to the HIPAA rules are:o “Covered entities”:

‒ Health care providers that conduct “standard” reimbursement-related transactions electronically;

‒ Health plans (HMOs, PPOs, health insurers);

‒ Health care clearinghouses (companies that convert health data into standard formats); and

o “Business associates”:

‒ Persons/entities that process PHI for or on behalf of a covered entity or other business associate


HIPAA: Who Is Using a Mobile Health App?

More than four in ten smartphone or tablet owners possessed a health or wellness app.

ONC Data Brief, No. 40, April 2018


HIPAA: Mobile Health Technologies

• Mobile health technologies are subject to HIPAA privacy, security, and data security breach notification rules if a HIPAA-covered entity or business associate:o Uses the technology;

o Offers the technology for use by an individual for purposes of the covered entity/business associate’s relationship with the individual.

• Developers of such technologies become HIPAA business associates in these circumstances.


HIPAA: Mobile Health Technologies

Examples

• Consumer downloads a diabetes health app to her smartphone and inputs blood glucose levels and blood pressure readings she obtained herself using home health equipment.

• As directed by her provider, patient downloads a health app to her smart phone. Provider has contracted with app developer for patient management services, including electronic health record (EHR) integration and application interfaces, and the information the patient inputs is automatically incorporated into the provider’s EHR.

• Consumer downloads a health app to her smartphone that is designed to help her manage a chronic condition. She downloads data from her doctor’s EHR through a patient portal onto her computer and then uploads it into the app. She also adds her own information to the app.


GDPR Article 33: Notification of a personal data breach

The controller shall without undue delay and, where feasible, not later than 72 hours* after having become aware of it, notify the personal data breach to the supervisory authority. Failure to comply could result in fines of 2% of global revenues or €10 million.

INVESTIGATE

• Nature of breach

• Categories & number of data

subjects

• Categories and records

affected

NOTIFY

• Regulators & impacted Data Subjects

• Describe likely consequences

• Describe containment plan

• Provide DPO or other contact point for

more info

DOCUMENT

• Nature of breach – who, what, when, where,

and how

• Organizational and technical measures in place

at the time

• Risks to individual rights and freedoms of

natural persons

• Remediation/mitigation plan

• Forensic report

* Where such notification cannot be achieved within 72 hours, the reasons for the delay should accompany the notification


OPERATIONS

PRINCIPLES

OBLIGATIONS

INDIVIDUAL RIGHTS

Policies, procedures, IT,

security, third parties, products

Personal data locations, notice,

consent, data transfers

Fair, lawful, data minimization,

accuracy, storage limitations

Access, restriction, erasure,

transparency, objections,

portability, cookies

1. Adopt a Principles based privacy program that is resilient to change; 2. Assign privacy ownership and accountability;3. Know your data and operational risks;4. Assess, design, build, and monitor your technical, administrative, and

organizational controls; and5. Sustain by adopting a privacy by design and default mindset.

GDPR, CCPA, and Other Coming Privacy Regulations

How to comply


Step-By-Step Privacy Compliance Approach

Assess

Identify personal data sources, map sources, evaluate governance structure & operating models, assess risk, conduct third party risk assessments and assess data sharing relationships

1

Design

Update policies, procedures, utilize PbD operating model to develop security & data sharing practices, categorize personal information, and map solutions to address consumer requests

2

ImplementEstablish controls to prevent, detect, and respond to consumer requests, vulnerabilities and incidents3

Monitor & Govern

Keep required documentation, manage data requests

and breach notifications, automate consumer requests,

and perform regular governance

4


Nonprofit Sector’s Privacy Activities

• Donor information

• Changing technologies in fundraisingo AR, VR, collecting information about donors

o Partnering with third-parties that may desire to collect certain specific information about donors

• List trading


Questions & Discussion


Speakers

Nancy Perkins, Counsel, Washington, DC

[email protected], +1 202.942.5065

Andras Kosaras, Counsel, Washington, DC


Derrick King, Senior Manager, Data & Information Governance, McLean, VA


Taryn Crane, Manager, Data & Information Governance, McLean, VA


mailto:[email protected]





Nonprofit Voices – A Discussion Amongst Your

PeersMaria Georges, Senior Vice President and Managing Director, PNC

Christian Curtin, Controller, NPR

Alex Galeano, CFO, ASIS International


Lunch Break


Leading During a Time of Change

Seth Verry, VP Go Team, Indiggo

Return on Leadership®

Leadershipin a Time of Rapid Change

Seth Verry

Indiggo


Focused Leadershipin a Time of Rapid Change

Seth Verry

Indiggo



in a Time of Rapid Change

Seth Verry

Indiggo

The Assault on the Modern Leader

Achieving Return on Leadership®

ROL Practices

• Treat Capacity Like Capital

• Extreme Focus on Priorities

• Put the Rocks in the Jar First

The Rise of Virtual Collaboration (Inundated)

Source: Bain & Co.

The Rise of Network-Based Work (Interconnected)

Source: CEB

System Overload

Messaging Overload

“Over” Collaboration

Meeting Overload

Information Overload

30,000communications

per leader per year

(1,000 in 1970s)

60% of employees now coordinate with 10+ individuals on a day-to-day

basis

Managers spend 25% of time in meetings that shouldn’t even

happen

76% employees spending more

time finding and reviewing data

and information

It’s Amazing We Get

Anything Done at All!

Assault on the Modern Leader

Pulled in too many directions64% cite conflicting priorities

Overwhelmed, drowning in work2/3 say not enough time

Constantly interrupted, shifting gearsEvery 3 min 5 seconds on average

No time for thinking or reflectionJust 5% of the average workday

Feeling that time allocation is sub-optimalJust 8% say “very satisfied”

this is not sustainable

DEMANDSCOMPLEXITYUNCERTAINTYOVERWHELM

There’s a Financial Cost, Too

What’s the Cost at Your Organization?

• Take out your smartphone

• Open your browser

• Go to indiggolead.com

• Scroll down to the calculator

(shown)

• Follow the prompts

Live Results This Group Live Results All

http://rol.indiggolead.com/Indiggo/LeadershipWaste2day.jsp

http://rol.indiggolead.com/Indiggo/LeadershipWaste.jsp

Table Discussion

Which of these struggles resonates most with you?

• Keeping up with an avalanche of email

• Find myself in reactive mode too often

• Find myself wasting time in meetings I shouldn’t be a part of

• Seems like important priorities aren’t getting enough attention

• Struggle to get it all done, feel like there’s not enough time

• Look back on some days and wonder where all the time went


RETURN ONLEADERSHIP®

• Accountability

• Focus

• Action On What Matters

• Control

• Reduced Uncertainty

• Increased Confidence

• Peace Of Mind



ROL Practices




We Treat Leadership Capacity as Limitless

We Can’t Execute Without Capacity

Source: CEB “Growth Unlocked: Closing the Strategy-to-Execution Gap” 2015

Impact on Success of Execution

$$$$$$$

Invest your most

expensive and

influential resource as

strategically as you

would invest your

financial capital

$$$$$$$

Treat Capacity Like Capital

With capital, we…

• recognize that it’s finite

• make intentional decisions on how to allocate it

• allocate it to highest ROI opportunities

• put controls in place

• don’t waste it…

Use It or Lose It

Shifting 1 hour a day…

for you personally

=25 more days per yearfor you

for a teamof 10

=250 more days on the most important deliverables

for a 500leader firm

=Adds the equivalent of 50 new managers w/o hiring anyone new



ROL Practices




Extreme Focus on Priorities

“The 80-20 Rule”

Disproportionate Focus on a Few Key Priorities

Board Engagement

Team Building

Staff Coaching

Finance Transformation

Finance Operations

Stakeholder Engagement

Recruiting

Communications

Upward Management

2020 Planning

Bank Relationships

Innovation

Recruiting40%

Communications25%

2020Planning

20%

Other Work15%

JUNE TIME ALLOCATION

Setting Meaningful Priorities

Specific Filters

• Look at the upcoming month or quarter versus the year

• The most vital areas for you to focus now (subset of annual goals)

• As specific and tangible as possible: right level of granularity

• Aligned with departmental / organizational priorities

Key Test

• Do you feel compelled to protect and fight for time for your

priorities?

Priorities and Goals are Different

Goals Priorities

Horizon 12 months 1-2 months

Number 10-15 3

ScopeBroad outcomes or output of your work

Specific activities or focus areas needing your personal

limited capacity

• Your priorities help you realize your goals

• Priorities reflect the more narrow areas

that need your dedicated capacity and

mindshare right now

• We feel a meaningfully different level of

commitment – that’s more emotional –

to our priorities because they deeply

impact our life in the near term

Powerful Filters for “Yes” or “No”

follow-up actions

reading emails

internal meetings

impromptu huddles

admin tasks

planning

writing emails

client meetings

self-improvement

conference calls

strategic thinking

management by walking

around

Priority #1

Priority #2

Priority #3

“No Way!”

“Hell Yeah!”

Priority Filter

From all the $#!^ competing for your attention… …to clear choices

Mastering the “Productive No”

ProductiveNo

Not now

Not me

Never

(Delay)

(Delegate)

(Delete)



ROL Practices




Seen this on YouTube?

1

2

3

Consistent, dedicated capacity to the few areas of activity that create the most value

Put the Rocks in the Jar First

Protecting capacity for the important

things first

Failure Success

Here’s the problem

If it’s not in the calendar, it may never happen

Recruiting

Communications

2020 Planning

June Priorities

“how much focus time will I need, and when?”

~ an hour / day

~ 2-3 hours / week

~ 20-30% of my time this month

June Calendar

Blocking Focus Time

Blocking Focus Time

Developing My Team

Developing My TeamDeveloping My Team

Developing My Team

Developing My Team

Tips on Focus Time

1. Start small: 20% of your time at most

2. Work in 1- to 3-hour time blocks

10% of a working month (200 hours) =

ten 2-hour blocks

3. Make this part of your existing daily/weekly/monthly planning

4. If you have to schedule over a block: don’t delete it, move it

5. Start your day with Focus Time

The start of a good day

• Build focus time in the morning

• Save as much of email and other

necessary evils for the afternoon

• Check for urgent messages

• Build in time for breaks

• Minimize distractions (DND mode)

• Let your colleagues know



ROL Practices




Indiggo – The Leadership Platform


Accounting and Tax Update

Lee Klumpp, National Assurance Partner, Nonprofit & Education, BDO

Marc Berger, National Director, Nonprofit Tax Services, BDO

Amy Duffin, Assurance Director, Nonprofit & Education Practice, BDO

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK

company limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO 2019

NONPROFIT

ACCOUNTING

UPDATE


LEE KLUMPPNational Assurance Partner,

Nonprofit & Education, BDO

703-336-1497

[email protected]

MARC BERGERNational Director, Nonprofit Tax

Services, BDO

703-336-1420

[email protected]

AMY DUFFINAssurance Director

703-770-1059

[email protected]

With You Today


Agenda

Accounting Update

Presentation of Financial Statements of Not-for-Profit Entities, ASU 2016-14

Revenue Recognition from Contracts with a Customer, ASU 2014-09

Clarifying the Scope and Accounting Guidance for Contributions Received and

Contributions Made, ASU 2018-08

Updating the Definition of Collections, ASU 2019-03

FASB Projects: Exposure Draft

• Not-for-Profit Entities (Topic 958): Intangibles - Goodwill and Other and Business

Combinations


Presentation of Financial Statements of NFP

Entities (ASU 2016-14)


Key Provisions of ASU 2016-14

Net Asset Classification

Updated net asset classification scheme to two classes, changes

to underwater endowment accounting, enhanced disclosures

Liquidity & Availability

Quantitative & qualitative disclosures about liquidity and

availability of resources Expenses

Requirement to report expenses by function (already required), nature, and an analysis showing

the relationship between function and nature

Statement of Cash Flows

Continue to allow direct or indirect method for operating cash

flows; indirect reconciliation no longer required for direct method

Investment Return

Present investment return net of external and direct internal

investment expenses, no longer required to disclose netted

expenses

Effective Date: Fiscal years beginning after 12/15/2017


Implementation Issues


ASU 2016-14 – Implementation Issues

Nonprofits will have to determine if any contributions of long-lived assets need to be

reclassified from net assets with donor restrictions to net assets without donor

restrictions upon adoption of the ASU. Policies may also have to be updated to reflect

change in reporting of contributed long-lived assets.

Nonprofits will now have to include disclosures that will reflect how much of their assets

are in reserve and not available for use. If these analyses were not done in the past,

some results may be surprising. Nonprofits may want to look at establishing an operating

reserve as part of its process of managing liquidity.

Nonprofits should review their allocation methodologies to determine if there are any

changes that are necessary to comply with the ASU, especially in adhering to the

definition of direct conduct and supervision. Nonprofits will also have to develop wording

for its allocation methodology disclosures.

To comply with the ASU, nonprofits needs to fully understand the definitions of internal

investment expenses to ensure these costs are being appropriately and accurately

captured and reported.


Revenue From Contracts with a Customer

(ASU 2014-09)


Revenue Recognition (Topic 606)

Objective: To develop a single, principle-based revenue standard for U.S. GAAP and IFRS

The revenue standard aims to improve accounting for contracts with customers by:

• Providing a robust framework for addressing revenue issues as they arise

• Increasing comparability across industries and capital markets

• Requiring better disclosure

Substantially converged with IFRS on major provisions


Scope

All contracts with customers, except

• Lease contracts

• Insurance contracts

• Financial instruments

• Guarantees

• Non-monetary exchanges in the same line of business to facilitate sales to customers

Contracts not with customers are excluded:

• Contributions

• Collaborative arrangements


Final U.S. GAAP Model – Recognition

Core Principle:

Steps to apply the core principle:

Recognize revenue to depict the transfer of promised goods or services to customers in

an amount that reflects the consideration to which the entity expects to be entitled in

exchange for those goods or services

1. Identify

the contract(s)

with the

customer

2. Identify the

performance

obligations

3. Determine

the transaction

price

5. Recognize

revenue when

(or as) a

performance

obligation is

satisfied

4. Allocate

the transaction

price


Revenue Recognition – Transition

Transition

method

PY2

(2016)

PY1

(2017)

CY

(2018)CY Footnotes

Retrospective

(with optional

practical

expedients) Cum

ula

tive

catc

h-u

p

Contracts under new standard

Cumulative effect

at date of

application

Contracts under

legacy standard

Cum

ula

tive

catc

h-u

p Existing and

new contracts

under new

standard

Existing and new

contracts under

legacy standard

for CY (2018)

Transition dates for non-public entities are extended one year later than the dates above


Revenue Recognition – Transition Practical

Expedients

No restatement required for contracts that begin and are completed within the same

annual reporting period

Completed contracts that have variable consideration:

• Use transaction price at completion

• No estimation required

No restatement required for contract modifications that occur before the beginning of the

earliest period presented

Modified retrospective approach may be applied to all contracts or completed contracts

only

Significant judgment needed




ASU 2014-09 – Implementation Issues

There may be differences between existing practices and the new standard, therefore

current revenue streams of NFP organizations should be evaluated in order to determine

what steps may need to be taken.

There may be changes in the way NFP organizations address contract modifications,

therefore, current practices should be reviewed in order to determine if changes need to

be made.

Revenue may have to be recognized over time or at a point in time based on the new

criteria. Systems, processes and controls at NFP organizations may need to be updated as

a result of the new criteria and any changes in timing of revenue recognition.

Data gaps may need to be identified between what is presently available at the NFP and

what will be needed for the required disclosures in the new standard.


Revenue Recognition of Grants and Contracts

by NFP Entities

Clarifying the Scope and Accounting Guidance for Contributions

Received and Contributions Made


Scope

Applies to all entities (NFPs and business entities) that receive or make contributions

unless otherwise indicated.

Excludes transfers of assets from the government to business entities.

Applies to both contributions received by a recipient and contributions made by a resource

provider.

The term used in the presentation of financial statements to label revenue (for example,

contribution, grant, donation) that is accounted for within the Scope of Subtopic 958-605

is not a factor for determining whether an agreement is within the scope of that guidance.


Grants and Contracts to NFPs – Background

Long-standing diversity in practice in classifying grants and contracts, particularly from governmental entities

Issue 1: Reciprocal Versus Nonreciprocal Issue 2: Conditional Versus Unconditional

ASU 2014-09, Revenue from Contracts with Customers, including related disclosures, heightened the issue

Raised question as to whether grants and contracts are in scope of that guidance (reciprocal or nonreciprocal)

Project added to FASB’s Technical Agenda to improve and clarify existing guidance


Issue 1: Reciprocal (Exchange) vs. Nonreciprocal

(Nonexchange/Contribution) TransactionsWho Receives the Benefit?

1

1

3

General PublicDirect Commensurate

Value to Resource Provider

Specified Third Parties

EXCHANGE

Direct Commensurate Value to Resource

Provider General Public

EXCHANGE NONEXCHANGE

Specified Third Parties

Government/Resource

Provider is a 3rd Party

Payer on Behalf of an

Identified Customer*

Follow Topic 606 (or other, such as Leases)

Current Practice

Clarification

Follow Topic 958-605

*The revenue recognized would actually be the underlying contract’s patient service revenue, tuition revenue, etc.

**A focus on whether or not there is a “performance obligation” could even ultimately include some contracts

where the general public is the primary beneficiary.

Continue to monitor

GASB and IPSASB

projects in this

area**


Indicators to Determine a Barrier

The inclusion of a measurable performance-related barrier or other measurable barrier.

Whether a stipulation is related to the purpose of the agreement.

The extent to which a stipulation limits discretion by the recipient.

To determine what is a barrier, an NFP would consider indicators, which would include, but are not limited to, the following:


NFP Revenue Recognition Decision Process

No

Restrictions

present (i.e.

limited

purpose or

timing)?

Reciprocal

transaction. Apply Rev

Rec (ASC 606) or other

guidance.

Unconditional and

restricted

Unconditional and

without restrictions

(unrestricted)

Yes

Transaction in

which each

party directly

receives

commensurate

value?*

Conditions

present (i.e.,

right of

return/release

and barrier)?

Conditional - Recognize revenue

when condition is met

Nonreciprocal transaction. Apply

contribution (non-exchange) guidance.

*Includes third-party payments on behalf of identified customers. These do not create new revenue.


Effective Date

The effective date is the same as the new Revenue Recognition standard (Topic 606), but allows for early implementation.

Annual periods beginning after June 15, 2018, including interim periods:

• Public Business Entities

• NFP that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on exchange or an over-the-counter market

Annual periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019:

• All other entities

Different Implementation Dates for Resource Providers




2018-08 – Implementation Issues

Some grants that are considered exchange transactions under current US GAAP will be

accounted for as conditional contributions under this ASU.

Some grants that are considered contributions with no donor-imposed conditions under

current US GAAP will be considered conditional under this ASU.

Some judgment will be required to support accounting conclusions upon determination

between exchange transactions and contributions

Nonprofits will have to review the language in their contracts and agreements in order to

distinguish between exchange transactions and contributions.


ASU 2019-03

Updating the Definition of Collections


Topic 958: Updating the Definition of Collections

Purpose: To clarify and improve the accounting guidance for collections and to eliminate

diversity by clarifying the definition of collections.

Who is affected: Accounting for collections is primarily for certain NFP entities that hold

collections. However, this ASU would apply to all entities, including business entities,

that maintain collections.

Provisions: To modify one of the existing conditions in order to not recognize contributions

of works of art. This update would allow the proceeds from sales of collection items to be

used to support the direct care of existing collections in addition to the current

requirement that proceeds from sales of collection items be used to acquire other items

for collections.

Effective Date: The amendments in this Update are effective for annual financial

statements issued for fiscal years beginning after December 15, 2019, and for interim

periods within fiscal years beginning after December 15, 2020. Early application of the

amendments is permitted. The amendments in this Update should be applied on a

prospective basis.


FASB Projects: Exposure Draft


Topic 958: Extending the Private Company Accounting

Alternatives on Goodwill and Certain Identifiable

Intangible Assets to Not-for-Profit Entities

Purpose: To improve and simplify the accounting for goodwill and certain identifiable

intangible assets for NFP entities.

Who is affected: The amendments in this proposed Update would apply to all not-for-

profit entities including those that are conduit bond obligors.

Provisions: To allow the alternative for NFPs to amortize goodwill on a straight line basis

and test for impairment upon a triggering event rather than testing goodwill impairment

annually, and to allow impairment testing to be done on an entity-level basis.

Effective Date: This proposed Update would be effective upon issuance for all entities.

The proposed final Update would be applied on a prospective basis, for all existing

goodwill and new goodwill generated in acquisitions by NFP entities after the effective

date.


Tax Update


Agenda

Tax reform - UBTI Silos and Notice 2018-67

Tax reform - UBTI from Fringe Benefits and Notice 2018-99

Tax reform - Excise Tax on Executive Compensation and Notice 2019-09

Q&A


UBTI Silos – IRC Sec. 512(a)(6) and Notice 2018-67

The Act disallows tax-exempt organizations from taking the business losses from one

unrelated trade or business and deducting them from the income of another unrelated

trade or business.

Losses incurred in tax years beginning before January 1, 2018 can be carried forward and

used to offset any UBI up to 80% of current year’s income.

Notice 2018-67 issued on 8/21/2018

• Separate unrelated trades or businesses

• Allocation of expenses

• Investment activities

• Net operating losses


UBTI increased by Certain Fringe Benefit Expenses-

IRC Sec. 512(a)(7) and Notice 2018-99

UBTI shall be increased by any amount…

i. for which a deduction is not allowed under IRC §274, and

ii. which is paid or incurred for

− any qualified transportation fringe,

− any parking facility used in connection with qualified parking, or

− any on-premises athletic facility.

Effective: Amounts paid or incurred after Dec. 31, 2017

IRS Notice 2018-99 issued 12/10/2018

• Qualified transportation fringe benefits

• Parking


Excise Tax for Excessive Executive Compensation –

IRC Sec. 4960 and Notice 2019-09

For employer’s tax years beginning after December 31, 2017

“Applicable Tax-Exempt Organization” pays an excise tax of 21% on “remuneration” over

$1 million paid to covered employees.

Tax also applies to excess parachute payments

Notice 2019-09 issued on 12/31/2018

• Who owes the tax?

• Taxable year

• Covered employee

• Remuneration

• Excess parachute payments

• Reporting and paying the tax


Questions


Resources


Resources

Visit BDO’s Institute for Nonprofit Excellence Resource Center here

Visit our FASB Financial Reporting Guidance page here for information on ASU 2016-14

that includes:

• Links to FASB Resources

• Podcasts and videos

• Articles and blog posts

https://www.bdo.com/resource-centers/institute-for-nonprofit-excellence/fasb-financial-reporting

https://www.bdo.com/resource-centers/institute-for-nonprofit-excellence/fasb-financial-reporting


Resources

BDO’s Publication: How to Read Nonprofit

Financial Statements: A Practical Guide

Link: https://www.bdo.com/resource-

centers/institute-for-nonprofit-

excellence/book-promo

https://www.bdo.com/resource-centers/institute-for-nonprofit-excellence/book-promo


Impact Re-Envisioned: How Technology is

Helping Nonprofits Achieve Greater ImpactKirstie Tiernan, Managing Director, Data Analytics and Automation, BDO


IMPACT RE-ENVISIONED:

HOW TECHNOLOGY IS HELPING ACHIEVE GREATER IMPACT.

KIRSTIE TIERNAN, CFE, OCAManaging Director,

Data Analytics & Automation


With You Today

Kirstie Tiernan,

Managing Director, Data

Analytics & Automation, BDO


Digital Transformation: Helping Achieve Greater

Impact

Business Intelligence

Automation Artificial Intelligence

Business Intelligence


Investigation

CFO Start DateCFO Termination

Date

6,000 Vendors Limited by:

• Location of interest

• Vendor spend over $50,000 160

Vendors to Review


Investigation

CFO Start DateCFO Termination

Date

Limited by:

• Specific user time of

employment

• Round dollar amounts

• 11 Vendors to Review


Investigation

$350,000 Fraud 2010-2015


Investigation


Vendor Geographic Region

Quality Health - $38K St. Pete’s Hospital - $29K

AutoMak Body Repair - $40K Gen Chiropractor - $12K



Benford’s Law

The principle that in any large, randomly produced set of natural numbers, around 30

percent will begin with the digit 1, 18 percent with 2, and so on, with the smallest

percentage beginning with 9.


Benford’s Law

Good

Bad

Payments begin with $40*

($400, $4,000, $40,000)

$500K of payments are

to Heavy Equipment

Training Company



University ClientRevenue Testing (tuition/financial aid, meals, housing, etc.)

Choose sample of 15 students and pull documents related to class registration

and payments

Students must use ID badge on campus (food, buildings, parking, etc.)

Students actually attending classes will not be expected to be getting all D’s/F’s

Obtain badge security swipe data

Obtain transcript data

Run analysis to check for students with fewer than 10 swipes

Run analysis to check for students with all Ds/Fs implying that they aren’t

actually attending classes (will expect some false positives for deadbeat

college kids)


Expenses Analysis

AIRFARE

HOTEL

RENTAL CAR

FUEL

TRIP

MISC

UNKNOWN

AIRPORT

What is Misc for $1,500?

Why are there airfare

expenses with no airport

expenses? Meals?

Why so many gas

reimbursements?


Base Analytics

Employee

Vendor/employee similar name, address, phone

or tax ID

Payroll trend analysis by function

Duplicate employees

Employees without payroll deductions

Employees with a PO box address

Invoice Invoices created on weekends, holidays, or in off

hours

Round dollar invoices

Keyword analysis on description

Zero amount invoices

System created invoices

Invoices from vendors not in vendor master

Invoices with no description

Vendor One time vendors

Blocked/deleted/do not use vendors

Vendors without an address

Vendors with similar names or addresses

Vendors with non-standard payment terms

Inactive vendors with activity in last year

Keywords analysis of vendor name

Duplicate vendor IDs

Disbursement Payments created on weekends, holidays, or in

off hours

Round dollar payments

Duplicate payments (same amount, payee, date)

Keyword analysis on payment description

Benford’s Law on payment amounts

Payments just below approval limit

Summary of payments by users

Payments to vendors not in vendor master


Predictive Analytics

Historical data

External data

Statistical algorithms

Machine learning

Beyond forecasting…predicting the future


Internet of Things

The inter-networking of physical

devices, vehicles, buildings, and

other items embedded with

electronics, software, sensors,

actuators, and network connectivity

which enable these objects to

collect and exchange data.


Sensors – Subway Doors

DATA POINTS CAPTURED

# of times open/close

Force used to close

Temperature

Humidity

Indoors/Outdoors

Weather

Time of day

DATA USAGE

Replace parts

Schedule technicians

Purchase inventory

Sell data back to manufacturing engineering

team for improvements


Stretch and Learn


Discussion

How does/could your nonprofit

utilize predictive analytics to

achieve greater success?

Automation


Robotic Process Automation


A Typical Process

Transformation Process

Transformation Process SYSTEM


Multi-Location Data Extraction Bot

John SmithFinancial Reporting Developer

Each morning I begin by

collecting the franchisees’ sales

data…

Now I can analyze the data and

email to the other departments

Access DB

Original process: 5-10 min/store

New process: Runs overnight = NO TIME


Address Cleansing Bot

Sales data is obtained from multiple systems/clients/formats

City/State/Zip Code combinations are often incorrect or misspelled

The cleaned file with corrected address combination is exported for

review and processing

Software robot reviews the address combination and updates the

misspelling automatically

Chicago Hieghts, IL 60411should be

Chicago Heights, IL 60411

Original process:

3-5 hours

New process:

5 minutes


Contract Review

BULK FILE LOCATION

UPLOAD PORTAL

CONVERT ANALYZE REPORT

Original process:

1 hour / contract

New process:

5 min / contract


Stretch and learn


Discussion

What are the perceived

challenges for automation

adoption? How could they

be overcome?




Learned to bluff

“It’s not about the money, it’s about preserving

human dignity, and it’s not going well.”

https://www.theverge.com/2017/1/25/14358246/ai-poker-tournament-cmu-libratus-vs-human-losing



MindBridge Ai Auditor

Domain Expertise

Business RulesStatistical

Methods

Machine

Learning

Cross

Correlation

Standard TestsAdvanced Tests

Completeness Checks

Benford’s law, Regression, 3 Digit Testing

Humint ScoringOutlier Detection

Reinforced Learning

External Data SourceSanction Lists

Negative Databases

MindBridge‘sAi Auditor




Computer Vision


Sponsorship Exposure Analysis


Facial Recognition


Extended Reality


Mixed Reality – Inspection/Maintenance


What’s Next



Thank You


Closing Remarks

Laurie De Armond, National Co-Leader, Nonprofit & Education Practice, BDO

Glenn Groninger, Senior Vice President and Managing Director, PNC

Thank You

Documents

BDO 2019 NONPROFIT SUMMIT · Shared Servicing, PNC Riverarch Capital, and PNC Erieview Capital are registered marks of The PNC Financial Services Group, Inc. (“PNC”). PNC Retirement