ESOP Valuations: Same as Other Valuations or Different?
Business valuations performed for ownership interests held by Employee Stock Ownership Plans (ESOPs) are similar to business valuations of other ownership interests. Both types of valuations will consider the three approaches to value (the Market Approach, the Asset Approach, and the Income Approach), be performed by qualified valuators possessing the requisite training and experience for the type of valuation, and will consider appropriate e
conomic factors and industry trends. For both valuations, the valuator must comply with the Standards and Regulations associated with any valuation-related professional designations held.
On the surface, both valuations have similarities, but there are considerations unique to ESOP valuations. The following discussion points are a few of the more important items which make ESOP valuations different from other business valuations. The specific facts and circumstances will vary for each ESOP, but the valuator should consider how the following impacts the ESOP valuation.
Regulatory Oversight
ESOP valuations, both transactional and the annual compliance valuations, are subject to oversite by the IRS and the Department of Labor (DOL). In 1988 the DOL published its Proposed Regulation Relating to the Definition of Adequate Consideration to provide guidance on the meaning of “adequate consideration” under the Employee Retirement Income Security Act of 1974 (ERISA), which requires ESOPs to pay no more than “adequate consideration” when investing in qualifying employer securities.
The proposed regulation was never finalized but has been referenced as guidance by the IRS, DOL, and valuators. The DOL issued new draft guidance in January 2025 under SECURE 2.0 Act mandate, but the guidance was withdrawn following a regulatory freeze. The impact of the Proposed Regulation should be determined and addressed in an ESOP valuation.
Taxation Status
A 100% ESOP owned S corporation can be a non-taxable entity if certain criteria are met. The ability to avoid federal taxation (and often state taxation) on the ESOP’s share of company earnings presents a powerful opportunity. The tax savings can be used to pay down debt, invest in capital items promoting growth, or other areas the company deems appropriate.
When valuing a 100% ESOP owned S corporation, the valuator must determine if it is appropriate to “tax affect” the earnings of the S corporation. Some of the arguments for tax affecting include the belief that discount rates, pricing multiples, and transaction databases are based upon tax paying C corporations.
An additional argument is that the most likely purchaser of the company would be a C corporation, so taxes need to be considered because they will not pay for tax savings that will not be realized. A counter argument for not “tax affecting” an ESOP’s S corporation’s earnings is that the company does not have a tax liability and recording a tax liability creates a phantom expense that decreases value.
DLOM & the Put Option
A factor that generally distinguishes ESOP shares in closely held companies is that a “put option” is required to be attached to the ESOP shares. Without this put option, employee participants could be forced to hold employer securities for extended periods of time. The put option requires the employer to provide the needed liquidity by repurchasing the distributed employer securities. This employer obligation is commonly referred to as the “repurchase liability.”
The DOL Proposed Regulations guide the valuation analyst to consider: (1) the extent to which the “put options” are enforceable, and (2) the company’s ability to meet its obligation. Most ESOP valuation practitioners interpret the ESOP put right as a substantial mitigating factor in the determination of the discount for lack of marketability (DLOM). The degree of mitigation is the responsibility of the valuator to determine. A counter argument for the reduction of the DLOM is that an outside purchaser (a non-ESOP investor) would not pay for the put option because they would not benefit.
Repurchase Liability
Under U.S. Generally Accepted Accounting Principles, the repurchase liability is not presented as a liability on the company’s balance sheet. The obligation to purchase shares from participants is a legitimate future outflow of cash from the ESOP trust to be funded by the company. The valuator must determine if the future outflow of cash from the ESOP trust should impact the valuation.
One argument for not accounting for the repurchase obligation is that a hypothetical outside buyer would not have the repurchase liability, and the value would be depressed if the repurchase liability (or present value of the estimated cash outflows) were included in the valuation. Another argument is that the repurchase obligation could be met by future tax savings of a 100% S corporation ESOP which does not pay taxes.
An additional complication stems from how the repurchase liability is determined. Is it estimated by management or was it prepared by an independent third party? A repurchase obligation study performed by an independent party can be cost prohibitive to the ESOP, but the estimated annual cash outflows are difficult to determine without a study.
ESOP valuations are subject to unique factors which make them different from valuations for other ownership interests. The valuator must look at the specific facts and circumstances of each ESOP valuation engagement and determine how to address the factors. At McKonly & Asbury, we have extensive experience with ESOP valuation procedures. If you have any questions regarding ESOPs, please contact T. Eric Blocher CPA, ASA, CVA.
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Competition Starts with Information
Access to information empowers consumers, strengthens competition, and helps new ideas reach the marketplace.
Article Summary
- Access to information helps consumers understand their options, compare alternatives, and make more informed decisions.
- When businesses can communicate with consumers, competition becomes stronger and innovative products have a better chance to succeed.
- Policies that limit access to information can have broader effects on competition, innovation, and consumer choice across markets.
Competitive markets work best when consumers have access to information.
29 million
Whether purchasing a product, evaluating a service, or exploring healthcare options, consumers make better decisions when they understand the choices available to them. Access to information helps people compare alternatives, ask informed questions, and engage more confidently in the marketplace.
Just as importantly, it helps businesses compete.
Information Drives Competition
Established companies often enjoy significant advantages, including name recognition, market share, and existing customer relationships. For new entrants and innovative products to gain traction, consumers must first know they exist.
Information helps create that opportunity. When businesses can communicate with consumers, they can introduce new ideas, build awareness, and compete on the merits of their products and services. Consumers benefit from a wider range of choices, while businesses gain stronger incentives to innovate and improve.
FDA-reviewed research found that exposure to prescription drug advertising is associated with greater patient information-seeking and increased discussion with healthcare providers. Of course, access to information must go hand in hand with longstanding requirements that prescription drug advertising be truthful, balanced, and accurate.
Similarly, one national survey found that 29 million patients spoke with a physician about a health condition for the first time after seeing direct-to-consumer advertising.
Competition is not simply about having more products in the marketplace. It is about ensuring consumers have enough information to evaluate competing options.
Consumers Benefit Most When Information is Available
81%
Consumers regularly rely on information to make important decisions. The ability to research options, compare alternatives, and learn about emerging solutions is a fundamental feature of modern markets.
Information does not tell consumers what decision to make. It enables them to make better-informed decisions for themselves.
The importance of information extends well beyond healthcare. Approximately 81% of consumers research online before making an in-store purchase, and research consistently shows that consumers consult multiple sources of information before making purchasing decisions.
Access to information also does not replace professional expertise. Whether someone is consulting a physician, financial advisor, contractor, or other expert, information can help them ask better questions and engage more effectively in the decision-making process.
Why Precedent Matters
Public policy is often developed one issue at a time. Yet the principles established in one sector rarely remain confined to that sector alone.
Restrictions created for a particular category of lawful advertising can establish a framework that may later be applied elsewhere. Over time, policies that limit how businesses communicate with consumers in one market can influence discussions about communications and advertising in others.
That is why policymakers should carefully consider not only the immediate effects of a proposal, but also the broader principles it establishes for the future.
Preserving a Healthy Marketplace
50%
Nearly 2x
A thriving marketplace depends on trust, competition, innovation, and informed consumers.
When information is available, consumers are better equipped to make decisions, businesses are better positioned to compete, and new ideas have a greater opportunity to succeed. The result is a more dynamic economy that rewards innovation and responds to consumer needs.
Limiting access to information can produce unintended consequences, reducing awareness, weakening competitive pressure, and making it more difficult for new entrants and innovative products to gain visibility.
An Economy Built on Information and Innovation
Innovation depends on more than research and development. It also depends on awareness. New products, services, and ideas create value when people understand them, evaluate them, and choose whether they meet their needs.
When consumers have access to information, competition becomes stronger. When competition becomes stronger, innovation accelerates. And when innovation accelerates, businesses, consumers, and the broader economy all benefit.
Information supports competition. Competition drives innovation. And innovation helps build a stronger economy for everyone.
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The Columbia Montour Chamber of Commerce is a proud member of the U.S. Chamber of Commerce and an active part of the U.S. Chamber Federation of small and regional chambers, which routinely provides content like the article above. The content above does not constitute legal, accounting, tax, or other professional advice but is for general informational purposes. For accurate, complete advice, readers are encouraged to consult with qualified legal, accounting, or other professional advisors before making any decisions based on the information provided. If you need help finding qualified help, please contact the Chamber for a list of our members.
President’s Message: Political Odd Couple to Headline Chamber Luncheon
Source: Chris Berleth Columbia Montour Chamber of Commerce CEO/President
They call themselves “Pennsylvania’s Political Odd Couple,” but I have another description for Alan Novak and T.J. Rooney: the “Statler and Waldorf” of Pennsylvania politics. If you know Muppets, you probably understand the comparison.
Witty, self-deprecating, and perfectly comfortable poking at one another, the political system, and occasionally their own parties, Novak and Rooney’s presentations are funny, candid, and at times disarmingly honest about how politics actually works. Just as the two grumps in the box seats above The Muppet Show often become the best part of the program, Alan and T.J. are most certainly entertaining.
What makes them worth hearing, though, is just how qualified they are to have the conversation.
Qualified without taking themselves too seriously
Alan Novak is a former chair of the Pennsylvania Republican Party and has spent decades in politics, public affairs, and government relations. T.J. Rooney served seven terms in the Pennsylvania House of Representatives before later serving as chair of the Pennsylvania Democratic Party. Between them, they have worked inside campaigns, government, party politics and public policy at nearly every level.
And because they come from different political traditions, they do not simply deliver competing talking points. They challenge one another, test assumptions, and help audiences better understand what is happening beneath the surface. That is one of the reasons we are particularly excited to welcome them to Columbia and Montour Counties on October 13.
Limited resources require us to be intentional and strategic
Advocacy is one of the Chamber’s five areas of focus, but ours is a decidedly hands-on operation. We do not employ a lobbyist. Our Governmental Affairs Committee and Chamber staff are our government affairs team.
That means we must be intentional about building relationships, staying informed, and creating opportunities for our members to better understand the decisions being made in D.C., Harrisburg, county seats, and among all the municipalities whose decisions impact business. In a commonwealth system, there’s no shortage of rooms to be in! To be effective, we also need to understand and make known to our members the political environment shaping those decisions. Alan and T.J. offer exactly that kind of perspective.
There is no shortage of people willing to tell us what Pennsylvania should do. What is far more useful to our members is insight into what can realistically happen next.
Which ideas have momentum? Which face serious political obstacles? Where is compromise possible? What pressures are shaping legislators and party leaders? And how might those realities affect the issues employers care about most?
Those are the kinds of questions Alan and T.J. are particularly well equipped to answer.
That distinction is especially important in the current political climate. Strong opinions and partisan talking points are easy to find. Understanding how those positions collide with divided government, legislative math, personalities, relationships, and political realities is much harder. With how heady the topics can be, identifying speakers who can also be candid makes the conversation just a little bit lighter.
The Chamber’s goal is not to bring speakers to Columbia and Montour Counties simply to add another political speech to the calendar. We want to connect our members with people who can help us understand the landscape well enough to make our own advocacy smarter and more effective.
Throughout the year, our Chamber engages elected officials and policymakers on issues directly affecting local employers, including workforce, childcare, housing, transportation, energy, healthcare, permitting, and economic development. We work with organizations including the Pennsylvania Chamber of Business and Industry and the U.S. Chamber, participate in legislative discussions, and bring policymakers together with employers here at home. With limited resources, we must make those opportunities count.
This means listening as well as speaking, understanding the political environment before deciding where our voice can be most effective, and connecting our members with people who can help us look beyond the latest headline and better understand what may be coming next.
If you care about the future political and policy direction of Pennsylvania — particularly how it may affect your business and our communities, we think this is a conversation worth being part of.
Statler and Waldorf are among the best parts of The Muppet Show because they occupy a unique place in it: close enough to understand the show, detached enough to mock its absurdities, and devoted enough to never miss an episode. To stretch the comparison, you don’t need to catch every episode. With your limited time, attend this one and get a front-row seat for a belly-laugh and some Grade A insights that hearken back to the days when we didn’t take ourselves so seriously.
[TICKETS ONSALE NOW: CLICK HERE TO SECURE YOUR SPOT]
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The Columbia Montour Chamber of Commerce represents local employers in supporting vibrant, sustainable communities in Columbia a
nd Montour Counties. For more information about the region’s top businesses, visit www.columbiamontourchamber.com.
Member News ~ September 24, 2026
Dates & Events:
Sept 26 - Grower's Market on Ferry Street, Danville
The Danville Growers’ Market will continue every Saturday in September from 8:00 AM to 12:00 PM on Ferry Street. Shoppers can find fresh produce, baked goods, handcrafted items, and other locally made products while supporting regional growers, makers, and small businesses.
Sept 29 - McBride Parent-Child Workshops
McBride is proud to be a Family Place LibraryTM. On September 29th from 6:00 pm - 7:00 pm in the Second Floor Community Room. Parent-Child Workshops offer a five-week program to parents and their newborn–3-year-old children featuring weekly themes: Early Literacy; Speech, Hearing, & Language Development; Early Child Development; Nutrition; and Music & Movement. The community room is set up as a hands-on playroom! A community expert will be on hand every week to share information about the vast resources available to families in our area.
Sept 30 - SBDC Shares Reminder: LLCs Annual Report Due
Pennsylvania LLCs are required to file their 2026 Annual Report with the PA Department of State by September 30. Filing takes just a few minutes online. Missing the deadline can lead to penalties or losing your good standing status with the state, so it’s best to get it crossed off your list early. Learn More
Sept 30 - SEDA-COG Announces EV NEVI Grant Information Session
Businesses, organizations, and/or municipalities in Central PA: If you are interested in installing an EV charger, the Application for NEVI funds, that would cover up to 80% of the costs, is now open! You can submit your proposal until March 12, 2027. PennDOT will host a webinar to summarize the funding opportunity and answer questions on September 30, 2026 at 1:00 PM.
Oct 1 - World Music Duo from Colombia Performs in Weis Center Atrium
The Weis Center will welcome Las Áñez, a world music duo from Colombia on Thursday, October 1 at 7:30 p.m. in the Weis Center Atrium. For more information about the Weis Center for the Performing Arts, go to Bucknell.edu/WeisCenter or search for the Weis Center on Instagram, Facebook, or YouTube.
Oct 7 - Journey Bank AI Business Seminar
Oct 14 - Bette Grey Hosts Seminar
Oct 16 - SCASD Career Day
Oct 17 - Stuart Tank Offers Washington DC Veterans Memorials Bus Trip
Oct 17 - Geisinger Saturday Flu Shot Clinics
Flu season is quickly approaching, and Geisinger is making it easy to get
vaccinated at Saturday drive-through events. Drive-through flu vaccines
will be available for anyone age 3 and older at dozens of participating Geisinger locations. Children 6 months and older can receive a flu shot at participating Geisinger pediatrics locations. Most insurance plans cover an annual flu vaccine. Patients will be asked to provide insurance information at the time of vaccination. Those without insurance can also receive a drive-through flu shot. Find more information about flu vaccines and Saturday clinic locations at geisinger.org/flu
Announcements:
Susquehanna Kids Shares Big Fun, Small Budget: Your 2026 Bloomsburg Fair Guide
Susquehanna Kids has put together a guide to help you make the most of the Bloomsburg Fair without stretching your budget. This year’s fair runs September 25-October 3, and they've rounded up the best ways to save on admission and ride tickets, enjoy FREE and low-cost entertainment, find livestock schedules, and SO MUCH more.
Attention Bloomsburg Fair Guests
Don’t Get Caught at the Gate! Your Gate Admission Ticket or Concert Ticket DOES NOT include parking. Save 50% and purchase your parking pass online in advance. Visit bloomsburgfair.com/tickets
Service 1st Announces Rendering of Berwick Office
Service 1st Federal Credit Union announced plans this past May to expand their credit union services into Berwick and is now excited to share the rendering of their office located at 2295 West Front Street, Berwick. This office will be the 13th branch location for Service 1st. More details will be announced as plans are finalized. To stay updated as plans progress, visit https://service1.org/promo-landing-pages/comingsoon
The Bloomsburg Children’s Museum Announces October Schedule
For more information about these and additional programs, visit the-childrens-museum.org
Central Columbia FFA Conducts Community Service
The Central Columbia FFA Chapter constructed a landscape display for a community service project outside the large arena located in the livestock and dairy area of the fairgrounds. Members developed the display and constructed the display on Thursday, September 17, 2026.
Did You Miss Last Week's Member News? Here's News That's Still Timely:
McKonly & Asbury Named One of Accounting Today's 2026 Best Accounting Firms to Work For
McKonly & Asbury is proud to announce that it has been recognized by Accounting Today as one of the 2026 Best Accounting Firms to Work For. The firm was also ranked 10th nationwide, marking another year of national recognition for its commitment to creating an exceptional workplace culture. Click Here for the full Press Release.
Southern Columbia Area School District is Seeking Community Professionals
Community Professionals are wanted for an informal student-centered session connecting high school students with real - worlds professionals. Flexiblle times & dates availible. Click here to learn more! Interested in signing up, click here!
Stop Hopper NEW Temporary Weekend Hours For the Fair
Use their in demand curb-to-curb service in Danville, Bloomsburg, and Berwick! $2.50 per ride; FREE for registered seniors 65+ Monday - Friday 6:30am - 6:30 pm. 9/26, 9/27,10/3 9:00am - 4:30PM. Pickup & drop off at Fair Gate 8.
Congratulations to the Forge Pub & Eatery
Senator Lynda Schlegal Culver Hosts Successful Senior Expo
Nearly 1,000 seniors joined Senator Culver for her annual Senior Expo at Knoebels Amusement Resort. The event brought together organizations, agencies and businesses that provide information and services for older Pennsylvanians, giving residents an opportunity to learn more about resources available to them in one convenient location.
SEKISUI KYDEX is proud to support breast cancer awareness
Sept 24- SVUW Open House & Ribbon Cutting
The Susquehanna Valley United Way invites you to the ribbon cutting of their brand new drop-in center. The event will run from 3-6pm on Thursday, September 24th at their office located at 228 Arch Street in Sunbury. A ribbon cutting ceremony will be held at 3:30pm, Light refreshments will be available.
Sept 26 - The Bloomsburg Children’s Museum will participate in "Our World: Worldwide Day of Play"
The Bloomsburg Children’s Museum will participate in "Our World: Worldwide Day of Play" hosting an event on September 26 focused on play. The Bloomsburg Children’s Museum features play by offering discounted admission all day with a slime lab from 11-1:00 p.m. For a list of all participating Our World: Worldwide Day of Play events and more information about the initiative, please click here!
Oct 5 - CU Hosts Adult, Working, and Returning Learners Virtual Information Session
Whether you're looking to finish a degree you started years ago, advance in your current career, change professions, or gain new skills to stay competitive in today's workforce, learn how Commonwealth University can help you achieve your educational and career goals while balancing work and family commitments. The session will be held on Monday, October 5th from 7:00pm to 8:00pm. Register Today
Oct 14 - KMA FREE Senior Fall Festival
Join KMA on Wednesday Oct 14th from 11am - 2 pm at the Pine Barn Inn. The event will provide lunch, bingo, drawings, vendor's, flu shots & more! Limited spots available, RSVP to Michelle at (570) 245 - 6635 by Sept 30th to secure your spot!
Oct 28 - Trunk or Treat event at LCBC Columbia-Montour
You're invited to a FREE night out for you and your kids at LCBC Church's Trunk or Treat October 28 6-8pm! Wear your best non-scary costume and walk through an amazing line-up of themed trunks, collecting safely-packaged treats at each stop. They can't wait to see you there!
Pave The Way ABA LLC – New Member Highlight
Pave The Way ABA LLC is dedicated to providing compassionate, individualized Applied Behavior Analysis (ABA) therapy designed to help children and families achieve meaningful progress. They provide outpatient services such as individual therapy, group therapy, and psychological testing, including autism evaluations. Through evidence-based practices and personalized treatment plans, the company supports the development of communication, social, behavioral, and daily living skills while recognizing the unique strengths and needs of every client. By partnering closely with families and caregivers, Pave The Way ABA LLC fosters a collaborative approach that promotes growth, independence, and confidence, creating a supportive environment where children can build the skills they need to thrive at home, in school, and within their communities.“What Have You Done for Me Lately?”
Co-Authored By: Taryn Crayton, Vice President & Amber Hughes, Communications/Events Coordinator 
For most of us, the question doesn’t exactly bring out our warmest reaction. It can sound impatient or even ungrateful. But when you belong to a membership organization like the Chamber, it's a question we should expect and one that our members are justified in asking.
Your membership isn’t something we earn once. Because you’re investing in the Chamber, we believe you deserve to know how that investment continues to work for you and our communities.
That's why we've committed to sharing monthly dashboards highlighting the work the Chamber is doing on behalf of our members. Please know, these dashboards are not a comprehensive list – it doesn’t account for the connections made by all our volunteers, or by you, as you seek to maximize the return on your investment with your individual goals. No, our dashboards are our means of sharing with you the work that we’re doing under the Chamber’s five focus areas and thereby serve as evidence of our accomplishments as a mission-driven organization. As we approach the halfway point of our fiscal year (which runs from April through March), we thought it would be a good time to take a step back and look at what we've accomplished together over the past six months.
Engaged Membership
As of the end of August, the Chamber represented 389 members and has welcomed 26 new members since January 1. Our weekly communications continue to connect employers with timely information and resources, achieving open rates as high as 50.3% and click-through rates reaching 8.6%. Said another way, our weekly newsletters significantly exceed industry standards.
Supporting Local Employers
Direct support for local businesses remained a central focus. From June through August, the Chamber provided member businesses with $52,000 through our low-interest loan program, helping them complete capital improvements and invest in their future.
Advocating for Business
The Chamber continued to serve as a voice for employers at the local, regional, and state levels. Staff hosted monthly Government Affairs meetings with public officials and monitored issues affecting businesses, including the state budget, childcare, housing, tourism, healthcare and tax relief initiatives, education improvement tax credit programs, data center development, and regulatory reform.
We also participated in Pennsylvania Chamber Day at the Capitol, supported member grant applications, attended the Regional Rural Healthcare Summit, and engaged regional leaders on topics such as StopHopper microtransit and rural healthcare access.
Creating Connections
Building relationships remains one of the Chamber's most important roles. Over the past six months, members connected through remote office hours in Berwick and Danville, Membership Mornings, Business After Hours events, the Annual Chamber Golf Tournament, Municipal Appreciation Night, and the 7th Annual Nonprofit Mixer.
We were also honored to celebrate member milestones through ribbon cuttings and other special events for organizations including Ronald McDonald House of Danville, MPL Law Firm, MC Federal Credit Union, Mamoth, and Sholley Insurance Agency. The Chamber was proud to help mark the groundbreaking for the Bloomsburg Children's Museum.
Beyond events, countless personal connections and referrals were made by staff, Ambassadors, Board Directors and members through routine business communications, meetings, social media, the Chamber website, and more.
Developing Our Future Workforce
Workforce and leadership development efforts continued through the Foundation of the Columbia Montour Chamber. Highlights included hosting the annual SeAL Challenge, the successful launch and execution of the 2026 Educator in the Workplace program, the annual K-12 Educators Summit, the graduation of the 2026 class of Leadership Central Penn, and the launch of the 2026-2027 program.
Additional efforts included the Foundation’s 13 youth-serving programs concerning financial literacy, STEM, durable skills development and an employability credential for high school students, and the relaunch of a two-county, eight-school district career fair, in partnership with Commonwealth University.
Strengthening Our Communities
The Chamber's work extends beyond business and into the health and vitality of our communities. The staff continues to support the work of Downtown Bloomsburg, Inc., the Blueprint Community efforts in Berwick, and the Danville Business Alliance. The bi-monthly Montour County Task Force and other community activities like Geisinger’s Community Health Needs Assessment presentation and the Community Giving Foundation’s Impact Breakfast, are just a few examples of collaborations focused on community health, economic development, and regional vitality.
Looking Ahead
We’re proud of our answer to that question “What have you done for me lately, ” but we’re not satisfied to rest on our laurels. Your continued engagement and support will allow us accomplishment even more in the months to come, as we continue to meaningfully advocate for local employers, connect members with valuable resources and relationships, advance workforce development initiatives, and support vibrant, sustainable communities throughout Columbia and Montour counties.
To discuss these efforts in greater detail, please do not hesitate to reach out to us directly at chamber@columbiamontourchamber.com or 570-784-2522. Thank you for your support!
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The Columbia Montour Chamber of Commerce represents local employers in support of vibrant, sustainable communities throughout Columbia and Montour counties. Through five focus areas, including advocacy, member benefits, business connections, workforce development, and community strengthening, we work every day to help our members and region thrive. Learn more at www.columbiamontourchamber.com
Internal Audit: A Strategic Partner in Nonprofit Fraud Prevention
Key Takeaways
- Nonprofits Face Unique Fraud Risks: Lean staffing, limited resources, and reliance on trust can create opportunities for fraud.
- Strong Controls Are Essential: Effective internal controls, oversight, and accountability help reduce fraud risk and protect organizational resources.
- Internal Audit Is a Strategic Partner: Internal auditors can proactively assess risks, test controls, strengthen governance, and identify vulnerabilities before fraud occurs.
- Protecting Trust Protects the Mission: A proactive approach to fraud prevention helps nonprofits safeguard financial resources and maintain stakeholder confidence.
The Three Conditions That Enable Fraud
A culture built on trust is fundamental to every nonprofit’s mission. Whether a charitable organization, religious institution, or private foundation, nonprofits depend on the confidence of donors, volunteers, beneficiaries, and the communities they serve to create meaningful impact. When funds intended to support that mission are lost to fraud, the damage extends beyond financial loss and erodes the trust upon which the organization depends.
To reduce fraud risk and strengthen governance, nonprofit organizations must first understand why fraud occurs. The Fraud Triangle provides a useful framework for identifying the conditions commonly present when fraud takes place:
- Pressure – A financial or personal need that motivates an individual to commit fraud.
- Opportunity – Weak internal controls, inadequate oversight, or poor segregation of duties create circumstances that allow fraudulent activity to occur and remain concealed.
- Rationalization – An individual justifies unethical behavior by convincing themselves that their actions are acceptable, temporary, or necessary.
Today’s economic environment has intensified many of the conditions identified within the Fraud Triangle. As inflation continues to pressure household budgets and economic uncertainty persists, many nonprofits are experiencing increased demand for services while simultaneously facing constrained funding, rising operating costs, and pressure to accomplish more with limited resources.
These challenges often result in lean staffing models, reduced segregation of duties, and a greater reliance on trust, all of which can increase opportunities for fraud. At the same time, employees facing personal financial difficulties may experience increased pressure, and the organization’s mission-driven culture may make it easier to rationalize unethical behavior as a temporary solution or a means of supporting an important cause.
Understanding how economic conditions influence each element of the Fraud Triangle allows nonprofit leaders to work proactively with internal auditors to strengthen governance and address fraud risks before they materialize.
Why Nonprofits Are Especially Vulnerable to Fraud
Unlike many for-profit organizations, nonprofits often operate with limited financial and personnel resources. These constraints can result in fewer employees, inadequate segregation of duties, and less formal oversight. Staff members and volunteers frequently assume multiple responsibilities, increasing the opportunity to circumvent controls or conceal inappropriate activity. Although a mission-driven culture is one of a nonprofit’s greatest strengths, trust alone cannot serve as an effective fraud prevention strategy.
According to the Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2026: Report to the Nations, nonprofit organizations experience a median occupational fraud loss of $69,000, which is lower than that of government agencies and private or public companies. However, the consequences can be disproportionately severe because every dollar lost to fraud represents resources that can no longer be used to support the organization’s mission. The report also found that more than half of occupational fraud cases stem from either a lack of internal controls (32%) or the override of existing controls (21%). These findings highlight the importance of establishing and maintaining an effective control environment.
Fraud risk is not limited to any specific position or level within an organization. It can originate from individuals throughout the nonprofit, from employees responsible for processing transactions to senior executives entrusted with organizational leadership. Regardless of title or authority, fraud risk is ultimately mitigated by the strength of the organization’s governance structure, internal controls, and oversight processes. Consequently, fraud prevention efforts must be supported by independent oversight, accountability, and a culture of ethical conduct.
How Internal Audit Strengthens Fraud Prevention
Effective fraud prevention requires a proactive approach focused on identifying and addressing risks before they become costly problems. An internal audit function provides nonprofit organizations with independent, objective assurance that governance processes, internal controls, and risk management activities are operating as intended.
One of the greatest benefits of internal audit is its ability to evaluate and strengthen the organization’s control environment before fraud occurs. However, maintaining a dedicated, in-house internal audit department is often impractical for nonprofit organizations due to financial and staffing limitations. Internal audit consulting can provide a practical and cost-effective alternative by offering access to experienced professionals who help strengthen governance, enhance internal controls, and address emerging risks without the expense of a full-time internal audit function.
Internal auditors can facilitate enterprise-wide and fraud risk assessments to help leadership identify and prioritize significant risks while evaluating whether existing controls effectively mitigate those exposures. They can also assist with documenting key business processes, assessing and improving control design, and testing the operating effectiveness of controls.
Beyond financial controls, internal audit can evaluate governance and ethics programs, enhance board reporting practices, support the development of whistleblower programs, and provide advisory services related to cybersecurity and privacy risks. Through independent, risk-based recommendations tailored to the unique challenges of nonprofit organizations, internal audit helps strengthen accountability, improve operational effectiveness, and build a more resilient control environment that protects both organizational assets and stakeholder trust.
Conclusion
Fraud prevention is not achieved through trust alone. It is built through effective governance, strong internal controls, and ongoing oversight. Internal audit serves as a valuable partner in helping nonprofit organizations identify vulnerabilities, strengthen accountability, and safeguard the financial resources that make their mission possible. By taking a proactive approach to fraud risk management, nonprofit organizations can preserve the confidence of donors, board members, and the communities they serve while remaining focused on creating lasting and meaningful impact.
To learn more about McKonly & Asbury’s Internal Audit services, contact Partner Dave Hammarberg or Senior Manager Victor Kong, who have been providing internal audit and forensic accounting services for over twenty years. We would love to discuss how we can assist you with your challenges.
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How Is AI Impacting Small Business Performance? Evidence from the Third District
As adoption of artificial intelligence (AI) applications rises among U.S. firms, researchers are seeking to better understand the technology’s usage and impact across different types of businesses. Recent research suggests that although large businesses currently exhibit higher rates of AI adoption than small businesses, the latter are projected to narrow this gap by the end of 2026. Understanding how small businesses implement and benefit from this technology is particularly important because they employ roughly half of U.S. workers. Additionally, small firms face greater financial constraints and typically lack the robust information system infrastructure of larger firms.
Using data from the 2025 Small Business Credit Survey (SBCS) special question module1 on artificial intelligence, we [FRBP] explore small business AI adoption, task-specific usage, and performance impacts in Third District states (Delaware, New Jersey, and Pennsylvania).2 We [FRBP] find that AI adoption among Third District firms lags the national rate by nearly 10 percentage points at 37 percent, potentially reflecting differences in industry composition. Among adopters in the Third District, the most common uses are writing and marketing (79 percent), individual productivity tasks (e.g., notetaking, summarizing) (56 percent), and planning or analysis (e.g., research) (51 percent). Over 70 percent of firms reported no change in core business operations, including labor costs, spending on outside services, production quality, and sales, although 71 percent reported increases in productivity. See Figure 1
At the time of the survey in fall of 2025, a smaller share of Third District firms reported using AI compared with all U.S. firms: 37 percent of firms in the Third District versus 46 percent in the nation (Figure 1). Of Third District AI adopters, the majority described their level of AI adoption as “experimenting with the technology” (57 percent), and few had fully integrated AI into their business operations (3 percent). Almost half of Third District firms reported not using AI, with no plans for adoption, considerably higher than the one-third of businesses reporting the same nationwide.
One explanation for the lower regional AI adoption intensity is that Third District firms tended to see the technology as less important to their core business functions than U.S. firms. Forty-four percent of Third District firms using AI reported that AI was not important to their business’s core goods and services, compared with 37 percent of U.S. firms (Figure 2). This discrepancy could be driven by differences in industry composition: The Third District sample has more manufacturing (12 percent in the District versus 4 percent in the nation) and less nonmanufacturing goods production (15 percent versus 20 percent) and services (73 percent versus 76 percent). As our report last year showed, production workers had among the lowest generative AI exposure scores of major occupation groups, suggesting that manufacturing firms may have fewer use cases for generative AI than service firms. See Figure 2
Figure 3 shows the share of small businesses in the Third District that use AI by specific processes.3 Nearly 80 percent of Third District firms said they use AI for writing or marketing, while over half reported using it for individual productivity and planning or analysis. Roughly one-third of firms cited using AI for administrative business functions and customer service, 16 percent for process automation, and only 12 percent for coding-related tasks.
Most Third District firms using AI reported no changes across their performance metrics due to the technology, with the exception of productivity. Over 70 percent of firms saw no change in labor costs, spending on outside services, quality of goods and/or services, or sales due to AI. In contrast, 71 percent of firms reported AI-related increases in productivity, although the survey did not ask how firms measured productivity gains. Despite these self-reported increases in productivity, few Third District firms reported decreases in labor costs or spending on outside services resulting from AI usage, implying that AI had not significantly reduced regional small businesses’ spending on internal or external labor at the time of the survey. When the national SBCS sample4 was asked about employment changes due to AI, 79 percent of firms reported no change, 11 percent reported decreases, and 10 percent reported increases. See Figure 4
Productivity Gains Without Substantial Job Losses – So Far
A common concern among workers and policymakers is that AI-driven productivity gains will lead to major job losses. However, results from the Small Business Credit Survey suggest otherwise: Although most firms experienced productivity gains, few reported decreasing staff or labor costs. Similarly, another survey of both small and large Third District businesses found that AI adoption has had little impact on firm demand for workers. Research from the New York Fed indicates that more Second District firms are retraining workers rather than reducing labor due to AI usage. Overall, empirical evidence on AI adoption and labor demand remains mixed, with no clear causal link between the technology and job losses — either in AI-exposed occupations or in junior hiring.
Research from OpenAI explains that higher worker productivity due to AI does not necessarily mean fewer jobs. Other factors, such as demand elasticity (i.e., how much demand changes when the price for a good or service changes due to AI-driven productivity gains) and the human necessity of specific roles, will determine future labor demand across occupations as the technology becomes more widely adopted. However, a recent working paper surveying over 6,000 executives across the United States, the United Kingdom, Germany, and Australia presents a more cautious outlook: Although AI has had minimal effects to date, executives anticipate significant job losses and productivity gains over the next three years.
The national sample for the Small Business Credit Survey found that over 20 percent of firms using AI cite challenges such as accuracy, adapting the technology to business needs, data security and privacy concerns, training time, and costs, all of which could create barriers for small businesses considering AI adoption. As the landscape evolves, future generative AI adoption rates may be influenced by changing AI computing costs and competitive pressures between firms that adopt AI and those that don’t. Continued monitoring of adoption patterns and employment outcomes will be essential to understanding the technology’s long-term impact on regional firms and labor markets.
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The Two-Way Street: Higher Education & Industry
Source: Taryn Crayton, Vice President
It was an early morning as Jerome Manly, Executive Director of Early College and Workforce Development at Commonwealth University, and I headed to Rock Lititz for the PA Chamber Higher Education Summit. Before attending, my perception of higher education was probably similar to what many people hear in the news: college is expensive, enrollment is changing, and institutions are facing significant challenges. But the summit offered a much broader perspective on the role higher education plays in Pennsylvania's workforce future.
One of the strongest messages throughout the day was that preparing the next generation of talent cannot be the responsibility of colleges and universities alone. Business leaders, educators, and policymakers all have a role to play in building the workforce Pennsylvania needs. The summit focused on strengthening the connection between employers and higher education institutions so that academic programs align with real workforce needs, students gain meaningful experiences, and businesses have a voice in shaping the talent pipeline.
What struck me most was the idea that higher education should be a true two-way street. Industry partners can help guide program development and share emerging workforce needs. Colleges can translate that information into relevant learning experiences that prepare students for careers. Businesses can open their doors to provide internships, tours, mentorship, and hands-on learning opportunities. At the same time, colleges can invite employers to campus, showcase research and innovation, and create spaces for meaningful collaboration.
Yes, the conversation included college affordability and the reality that today's students will likely have multiple careers throughout their lifetime. But the answer is not for higher education to solve these challenges in isolation. The future of workforce development depends on stronger partnerships, better communication, and a shared commitment to helping students build both technical knowledge and the durable skills needed to adapt to an ever-changing economy.
As Jerome and I drove home, I found myself thinking less about the cost of college and more about its value when connected to community and industry. The summit reinforced an important lesson: for all the challenges we come across, the pathway from where we want to be and where we are, is the strongest when industry sectors work together. Building the future workforce in Pennsylvania is not the sole responsibility of higher education, but a challenge and opportunity that belongs to all of us.
Click here to learn more about the PA Chamber Higher Education Summit
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The Columbia Montour Chamber of Commerce represents local employers in supporting vibrant, sustainable communities in Columbia and Montour Counties. For more information about the region’s top businesses, visit www.columbiamontourchamber.com.
Member News ~ September 17, 2026
Dates & Events:
Sept 24- SVUW Open House & Ribbon Cutting
The Susquehanna Valley United Way invites you to the ribbon cutting of their brand new drop-in center. The event will run from 3-6pm on Thursday, September 24th at their office located at 228 Arch Street in Sunbury. A ribbon cutting ceremony will be held at 3:30pm, Light refreshments will be available.
Sept 26 - The Bloomsburg Children’s Museum will participate in "Our World: Worldwide Day of Play"
The Bloomsburg Children’s Museum will participate in "Our World: Worldwide Day of Play" hosting an event on September 26 focused on play. The Bloomsburg Children’s Museum features play by offering discounted admission all day with a slime lab from 11-1:00 p.m. For a list of all participating Our World: Worldwide Day of Play events and more information about the initiative, please click here!
Oct 5 - CU Hosts Adult, Working, and Returning Learners Virtual Information Session
Whether you're looking to finish a degree you started years ago, advance in your current career, change professions, or gain new skills to stay competitive in today's workforce, learn how Commonwealth University can help you achieve your educational and career goals while balancing work and family commitments. The session will be held on Monday, October 5th from 7:00pm to 8:00pm. Register Today
Oct 14 - KMA FREE Senior Fall Festival
Join KMA on Wednesday Oct 14th from 11am - 2 pm at the Pine Barn Inn. The event will provide lunch, bingo, drawings, vendor's, flu shots & more! Limited spots available, RSVP to Michelle at (570) 245 - 6635 by Sept 30th to secure your spot!
Oct 28 - Trunk or Treat event at LCBC Columbia-Montour
You're invited to a FREE night out for you and your kids at LCBC Church's Trunk or Treat October 28 6-8pm! Wear your best non-scary costume and walk through an amazing line-up of themed trunks, collecting safely-packaged treats at each stop. They can't wait to see you there!
Announcements:
McKonly & Asbury Named One of Accounting Today's 2026 Best Accounting Firms to Work For
McKonly & Asbury is proud to announce that it has been recognized by Accounting Today as one of the 2026 Best Accounting Firms to Work For. The firm was also ranked 10th nationwide, marking another year of national recognition for its commitment to creating an exceptional workplace culture. Click Here for the full Press Release.
Southern Columbia Area School District is Seeking Community Professionals
Community Professionals are wanted for an informal student-centered session connecting high school students with real - worlds professionals. Flexiblle times & dates availible. Click here to learn more! Interested in signing up, click here!
Stop Hopper NEW Temporary Weekend Hours For the Fair
Use their in demand curb-to-curb service in Danville, Bloomsburg, and Berwick! $2.50 per ride; FREE for registered seniors 65+ Monday - Friday 6:30am - 6:30 pm. 9/26, 9/27,10/3 9:00am - 4:30PM. Pickup & drop off at Fair Gate 8.
Congratulations to the Forge Pub & Eatery
Senator Lynda Schlegal Culver Hosts Successful Senior Expo
Nearly 1,000 seniors joined Senator Culver for her annual Senior Expo at Knoebels Amusement Resort. The event brought together organizations, agencies and businesses that provide information and services for older Pennsylvanians, giving residents an opportunity to learn more about resources available to them in one convenient location.
SEKISUI KYDEX is proud to support breast cancer awareness
Did You Miss Last Week's Member News? Here's News That's Still Timely:
Sept 20 - Dr. O's Ride For Victory
Sept 23 - Homeschool Hangout with the Bloomsburg Children’s Museum
Looking for a fun way to bring your homeschool lessons to life? Join them for their Homeschool Hangout featuring Cold-Blooded Encounters with CDE Exotics from 11:00 a.m.–1:00 p.m This event is for homeschool families in grades K–12.
Oct 22 - Domestic Violence Simulation
The Women's Center will be hosting a Domestic Violence Simulation: In Their Shoes at Commonwealth University to spread awareness during domestic violence month. This event will be taking place from 11am- 2pm in the Kehr Union Building 3rd Floor, Multicultural Center. Registration is required. Please see this flyer to register!
Talen Energy Reports Second Quarter 2026 Results, Raises 2026 Guidance
Knoebels Finishes Summer Season
Knoebels thanks you for an incredible summer of Fun, Food & Fantasy as they celebrated 100 years of Knoebels! Monday was their final day of daily operation, but our 100th season isn’t over yet. Check out their Fall Hours. September Hours: Saturdays (12, 19, 26): 12pm - 8pm & Sundays (13, 20, 27): 12pm - 7pm Hallo-Fun (October Weekends) Fridays (9, 16, 23, 30) 6pm - 10pm & Saturdays (10, 17, 24, 31): 2pm - 10pm & Sundays (11, 18, 25, Nov 1): 12pm - 6pm.