Profitable Solutions For Nonprofits: Addressing your concerns about Form 990

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Offering guidance to assist your organization in filling out the often confusing and difficult IRS Form 990.

Specifically addressing:

• Conflict of interest policy
• Whistleblower policy
• Document retention and destruction policy

Published in: Technology, Business
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Profitable Solutions For Nonprofits: Addressing your concerns about Form 990

  1. 1. Profitable Solutions for Nonprofits Addressing your concerns about Form 990 Hosted by Davis Kinard & Co, PC with speaker Lori Herrick, CPA, CFE, CICA
  2. 2. Organizations responsible for filing the 2009 IRS Form 990 * Certain religious organizations, religious affiliated organizations and governmental organizations are not required to file. Check www.irs.gov for the 990 instructions on filing. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Form 990 Gross receipts greater than or equal to $500,000 or total assets greater than or equal to $1,250,000 Form 990-N Gross receipts of $25,000 or less Form 990-EZ Gross receipts less than $500,000 and total assets at the end of tax year, less than $1,250,000 Slide 2 of 25
  3. 3. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 3 of 25 CONFLICT OF INTEREST POLICY (Part VI, Section B, question 12: a, b, c)
  4. 4. Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) • What is this policy? – Defines conflicts of interest – Identifies classes of individuals within the organization covered by the policy – Facilitates disclosure of information that can help identify conflicts of interest – Specifies procedures to be followed in managing conflicts of interest September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 4 of 25
  5. 5. • What is this policy? – Arises when a person in authority within organization can benefit financially from a decision he or she could make in such a capacity – Does not include questions involving a person’s competing or respective duties to the organization and to another organization that do not involve material financial interest September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) Slide 5 of 25
  6. 6. • What is this policy? – Question 12b: Required disclosures of officers, directors, trustees, and key employees. (Hand out of example of disclosure statement.) – Question 12c: Describe the practices for monitoring proposed or ongoing transactions or conflicts of interest and dealing with the conflicts. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) Slide 6 of 25
  7. 7. • What is this policy? – Three essential elements of a conflict of interest policy: • Full disclosure • Board member’s abstention from discussion and voting • Staff member abstention from decision-making September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) Slide 7 of 25
  8. 8. • Where can I find one? – Internal Revenue Service • www.irs.gov/instructions/i1023/ar03.html – National Council of Nonprofits • Appendix A: – Conflict of Interest Policy and Annual Statement – Board Member Conflict of Interests Disclosure Form – The Board Source (for a fee) September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) Slide 8 of 25
  9. 9. • Why do I need one? – Board members have legal responsibility to act in the best interest of their organization – Form 1023 Application for Exempt Status specifically asks if the organization has adopted a conflict of interest similar to Appendix A September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c) Slide 9 of 25
  10. 10. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 10 of 25 WHISTLEBLOWER POLICY (Part VI, Section B, question 13)
  11. 11. Whistleblower Policy (Part VI, Section B, question 13) • What is this policy? – Encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the organization – Specifies the organization will protect the individual from retaliation – Identifies those staff or board members or outside parties to whom such information can be reported September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 11 of 25
  12. 12. Whistleblower Policy (Part VI, Section B, question 13) • What is this policy? – The policy should provide at least three things: • Guidelines for reporting questionable activities • Processing, tracking and retention of the concerns reported • Security of the employees and board members in the reporting of information without retaliation September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 12 of 25
  13. 13. • Where can I find one? – SAFRline • Appendix B: ABC Whistleblower Policy – Nonprofit Risk Management Center • Appendix C: Employee Protection (Whistleblower) Policy – Blue Avocado • Appendix D: Model Whistleblower Policy for Nonprofits – The Board Source (for a fee) September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Whistleblower Policy (Part VI, Section B, question 13) Slide 13 of 25
  14. 14. • Why do I need one? – Not only provides an open forum to communicate fraudulent concerns, but gives the Board an additional level of oversight – Employees and board members more aware of Management’s commitment to high moral and ethical behavior – Deterrent to fraud September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Whistleblower Policy (Part VI, Section B, question 13) Slide 14 of 25
  15. 15. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 15 of 25 DOCUMENT RETENTION AND DESTRUCTION POLICY (Part VI, Section B, question 14)
  16. 16. Document Retention and Destruction Policy (Part VI, Section B, question 14) • What is this policy? – Identifies record retention responsibilities of staff, volunteers, board members, and outsiders for maintaining and documenting storage and destruction of organization’s documents and records September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 16 of 25
  17. 17. • What is this policy? – The process of developing this policy includes: • Identify what types of paper work and e-mails are generated by the organization • Determine the appropriate and legal length of time to retain them • Record those retention times on a schedule September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Document Retention and Destruction Policy (Part VI, Section B, question 14) Slide 17 of 25
  18. 18. • Where can I find one? – National Council of Nonprofits • Appendix E: Sample Document Retention/Destruction Policy – Blue Avocado • Appendix F: Model Document Retention Policy for Nonprofits – The Board Source (for a fee) September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Document Retention and Destruction Policy (Part VI, Section B, question 14) Slide 18 of 25
  19. 19. • Why do I need one? – A formal policy with allow everyone to know what to save, what to discard and when – Sarbanes Oxley Act’s prohibition of destruction of documents subject to review in litigation propel nonprofits to create business practice of systematic document destruction – Protect organization from additional legal hassles September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Document Retention and Destruction Policy (Part VI, Section B, question 14) Slide 19 of 25
  20. 20. September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 20 of 25 Questions & Answers
  21. 21. Lori Herrick, CPA, CFE, CICA • 11 years of public accounting experience • Established SAFRline, a 24-hour fraud hotline to report concerns within organizations • Extensive experience in tax preparation for individuals, corporations and partnerships • Practice emphasis in audits for nonprofits, governmental entities and private companies • Memberships in TSCPA, AICPA, TASBO, TANO and ACFE September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 21 of 25
  22. 22. References • Blue Avocado, www.blueavocado.org • Board Source, www.boardsource.org • Internal Revenue Service, www.irs.gov • National Council of Nonprofits, www.councilofnonprofits.org • Nonprofit Risk Management Center, www.nonprofitrisk.org • SAFRline, www.dkcpa.com/services/safrline.html September 23, 2010 Profitable Solutions for Nonprofits: Addressing your concerns about Form 990 Slide 22 of 25

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