Brett’s article is one of the many that we will be providing over the next few months regarding the new I.R.S. Form 990. This form has changed significantly and we want to be sure that you, and we, are ready to navigate through the complexities of the form and what it means to you in improving transparency and disclosure on your Form 990.

Kathy Hostetler, CPA

In the last few years, changes have affected the accounting policies of not-for-profit organizations. One of those changes was the new auditing standards. These new standards affected the way that the auditor approached the audit. Another significant change is the new Form 990. Both of these changes impact the way accounting policies are implemented, documented and enacted. Recently while reading “2008 National Board Governance Survey for Not-for-Profit Organizations” compiled by a leading national firm, I noticed some interesting trends that I thought I would share.

The new I.R.S Form 990 requires disclosure of certain accounting policies such as a conflict of interest (92%), investment (87%), code of ethics (80%), records retention (81%), gift acceptance (70%), and whistle blower (71%) policies. (Parenthesis after the policy name shows percentage of not-for-profits that have a formal policy implemented.) According to the 2008 survey, 90% of not-for-profits had implemented revised an accounting  policy that pertained to governance. The 2008 survey shows an increase in not-for-profits that have these policies, which may be a result of the new Form 990.

All of these policies are great additions to your not-for-profit’s accounting procedures or employee handbook, and if implemented properly, will increase awareness and allow greater transparency. The reason to implement or revise policies should not be because of a new tax form requirement, but since the form requires disclosure on the on the policy, it may be a good time to implement, document and/or improve your not-for-profit’s policies. If you have any questions about ways to implement new policies or need policy recommendations, please let us know.

Brett Hubert