Spring 2007 issue of Horizons

INDUSTRy u

NOT-FOR-PROFIT

FORM 990

prepare the NPO’s financial statements? ..Does an independent accountant provide a compilation, review or audit? ..Did the governing body review the Form 990 before it was filed? ..Employer identification number and applicable Internal Revenue Code section of tax-exempt recipients of grants paid. • A number of new schedules have been added. Some replace information currently reported on Form 990 or Schedule A. Other schedules have been added - in areas deemed to be of interest to the public and the IRS. These include: Schedule F – Foreign Activities Schedule H – Hospitals Schedule I – Supplemental Financial Statements Schedule K – Tax-Exempt Bonds Schedule M – Noncash Contributions Of note in the draft Schedule I, the government requires that the financial statement footnote for uncertain tax positions (FIN 48, an accounting interpretation generally effective for 2007) be disclosed in its entirety. Another section of Schedule I will require new information on endowment funds. To review the proposed form and schedules, visit the IRS’ Web site, IRS.gov/eo. Questions and comments regarding the proposed form and schedules can be sent to the IRS via e-mail at Form 990 Revisions@irs.gov or can be mailed to IRS, Form 990 Redesign, SE:T:EO, Ave., Constitution Avenue, NW, Washington, DC 20224. Comments on the form must be submitted by Sept. 14, 2007. In the meantime, it would be prudent to review the new list of questions concerning governance. Many of these are best practices that we have been recommending on the heels of SOX. If you haven’t yet implemented them, now might be the time to do so!

The Internal Revenue Service recently released a proposed redesigned Form 990, Return of Organization Exempt from Income Tax. The form has been completely redesigned - the first time this has occurred in more than 25 years. The IRS is soliciting comments on the redesigned form and hopes to have the form in place for calendar year 2008 filings and thereafter. Three guiding principles led to the redesign: • Enhancing transparency of organizations and providing readers a more realistic picture of the organization and facilitating comparisons to other organizations; • Promoting compliance so the IRS can more effectively The degree to which these principles are apparent to your situation may be a function of whether the organization is under certain dollar thresholds and the degree to which “best practices” have been implemented. Some of the proposed changes include: • A summary page that provides a snapshot of the organization – mission; three most significant activities; number of members of governing body; total number of employees and number of individuals receiving compensation in excess of $100,000; and summarized financial information, including various percentages intended as the basis for comparing organizations to each other. • Additional required information regarding all current of- ficers, directors, trustees and key employees as well as certain former officers, directors, trustees, key employees and highest compensated employees receiving compen- sation from the organization and related organizations. • Expanded questioning with respect to governance issues, including best practices. New questions include: ..If your organization (NPO) has a written conflict of interest policy; how many transactions did the NPO review under this policy and related procedures during the year? ..Does the NPO have a written whistleblower policy? ..Does the NPO have a written document retention and destruction policy? ..Does the NPO contemporaneously document the meetings of the governing body and related committees through the preparation of minutes or similar documentation? ..Does an officer, director, trustee, employee or volunteer assess the risk of noncompliance; and • Minimizing the burden of filing the form.

Questions? Contact:

Judy Murphy, CPA Partner-in-Charge Not-for-Profit Services Group 314-290-3496 judy.muphy@rubinbrown.com or Rick Aselage, CPA Partner Not-for-Profit Services Group 314.290.3456 rick.aselage@rubinbrown.com

27 u summer 2007 issue

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