Colette’s article highlights just one of the dramatic changes that has occurred in the Form 990.

We will be giving you a continued series on the new form that you can be informed and ready for our questions!

Kathy Hostetler, CPA

Transparency, governance, and accountability. These are three “buzz” words for non-profits over the last few years and these are the themes or objectives that the IRS had in mind when they were working on the revisions to the Form 990.

(1) Charitable organizations should promote transparency within the organization because they are spending public money - either through donations, fees, dues, or taxes (money received from government entities).

(2) Non-profits should practice effective board governance in order to have proper oversight over those funds received from the public.

(3) And non-profits should be held accountable for proper stewardship over those funds and for spending those funds in accordance with their mission.

The new revised Form 990 is required for the 2008 calendar year and fiscal years ending on (and after) December 31, 2008. One of the biggest changes is the section that has been added on board governance, which is directly related and connected to the other principles of transparency and accountability since these areas are directed and guided by the Board.

This new section on board governance asks specific questions relating to board policies and procedures. The IRS not only wants to know if you have these policies and procedures in place, but they also want to know exactly what the process is and how the process is monitored. One of the questions asked by the IRS is: Was a copy of the Form 990 provided to the Board before it was filed? You required to describe this process on an attached schedule.

So what is the best way to do this? If your auditors also prepare your Form 990, I would suggest that the draft of the Form 990 be completed by the time your auditors are ready to present the audited statements to the Board of Directors. The auditors should then explain how important it is for the Board members to know what information is available in the Form 990 because this information is available to the general public through www.guidestar.com. The auditors should then provide a brief review and discussion of the Form 990, pointing out the significant areas and how the numbers relate to the audited financial statements. This will ensure that you have a process in place that you can then document on the revised Form 990 are required.

Colette Kamps, CPA

 

Happy Holidays to everyone!