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Overview For New Board Members

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An overview to educate on basic financial reporting and presenting of NFPs including financial statements and 990s.

An overview to educate on basic financial reporting and presenting of NFPs including financial statements and 990s.

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  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • Discuss at beginning the source of these policies… 990 and how the 990 is structured… with asking if policies & additional information required if necessary
  • Permanent endowment – established by a donor restricted gift
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • IRS suggests that an ideal board of directors would be between 5 and 7 members and would not be more than 15 members
  • Transcript

    • 1. NOT FOR PROFIT ACCOUNTING
      1
      Presented to: Arts and Business Council
      Saturday, March 26, 2011
    • 2. Agenda
      What is the role of a not for profit board member?
      How is a not for profit different financially from for profit businesses?
      What do we need to file with the IRS and other entities?
      What occurs during an audit?
      2
    • 3. What is a Board Member’s Role?
      Fundraising
      Strategic planning
      Oversight of programs
      The IRS believes that a well-governed organization is more likely to be compliant.
      3
    • 4. Oversight of Programs
      General Oversight
      Be aware of how the organization is run
      Be aware of processes potential areas of fraud
      Have an active role in helping to mitigate risks
      Fiduciary Oversight
      Help set financial policies
      Be familiar with the financial statements
      Be able to review and understand the form 990
      4
    • 5. Policies of a Not For Profit
      Conflict of interest policy
      Policy regarding reimbursement of travel and entertainment expenses
      Executive compensation policy
      Investment policy
      5
    • 6. Agenda
      What is the role of a not for profit board member?
      How is a not for profit different financially from for profit businesses?
      What do we need to file with the IRS and other entities?
      What occurs during an audit?
      6
    • 7. Financial Differences
      Financial statements
      Statement of Financial Position
      Statement of Activities
      Statement of Functional Expenses
      Endowments
      7
    • 8. Statement of Financial Position
      Short-term investments
      Long-term investments
      Accrued income taxes
      Net assets
      Unrestricted
      Board Designated
      Undesignated
      Temporarily Restricted
      Permanently Restricted
      8
    • 9. Statement of Activities
      Allocations into restricted classes
      Realized and unrealized gains/losses on investments
      Assets released from restrictions
      Expense allocations
      9
    • 10. Statement of Functional Expenses
      Classification
      Actual vs. allocation
      10
    • 11. Endowments
      Protecting the original contribution
      Contributions and expenditures
      Investment income
      Requirements
      Policies and standards
      11
    • 12. Agenda
      What is the role of a not for profit board member?
      How is a not for profit different financially from for profit businesses?
      What do we need to file with the IRS and other entities?
      What occurs during an audit?
      12
    • 13. What is Required to be Filed?
      Internal Revenue Service
      Illinois Attorney General
      Other states
      13
    • 14. The Form 990
      Full 990 or 990-EZ
      12-page core form & 16 schedules
      Additional questions on governance, policies, and procedures
      14
    • 15. AG-990-IL
      Any 501(c)(3) organization that collects contributions from anyone in Illinois
      Audited financial statements required if gross receipts is greater than $300,000
      15
    • 16. Unrelated Business Income Tax
      Certain activities by not for profits may be subject to taxes
      Advertising in publications
      Rental income
      Sales of merchandise not directly related to program activities
      16
    • 17. Agenda
      What is the role of a not for profit board member?
      How is a not for profit different financially from for profit businesses?
      What do we need to file with the IRS and other entities?
      What occurs during an audit?
      17
    • 18. What Occurs During an Audit?
      Understanding of entity controls
      Examination and testing of statement of financial position and statement of activities
      Fraud inquiries
      Communication with board of directors
      18
    • 19. Communication with the Auditor
      Review financial statements and footnotes and inquire if additional understanding is necessary
      Discuss the audit process
      Ask about areas of possible improvement
      19
    • 20. Specializing in Financial Statement Audits, Reviews and Compilations
      Income Tax Planning, Research and Preparation
      Pension and Profit Sharing Plans
      Monthly Accounting, QuickBooks and Accounting Software Setup and Training
      20

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