F inanc e Ba sic s o f F ina nc ia l Sta te me nts 1 02/09/2018 - - PDF document

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F inanc e Ba sic s o f F ina nc ia l Sta te me nts 1 02/09/2018 - - PDF document

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02/09/2018 F ina nc ia l Ac c o unta b ility I mpo rta nt Stuff No npro fit Bo a rds MUS T K no w Pre se nte r Miria m Ro b e so n, Atto rne y F e b rua ry 9, 2018 F ina nc ia l Ac c o unta b ility fo r No npro fits F ina nc e

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SLIDE 1

02/09/2018 1 F ina nc ia l Ac c o unta b ility

I mpo rta nt Stuff No npro fit Bo a rds MUS TK no w

Pre se nte r Miria m Ro b e so n, Atto rne y F e b rua ry 9, 2018

F ina nc ia l Ac c o unta b ility fo r No npro fits

  • F

ina nc e

  • Sa le s T

a x

  • Be st Pra c tic e s
  • Ac c o unta b ility
  • Risk Ma na g e me nt

F inanc e

Ba sic s o f F ina nc ia l Sta te me nts

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SLIDE 2

02/09/2018 2

What ar e F inanc ial R epor ts?

 Ba sic Re po rts

 I nc o me / E xpe nse  Ba la nc e She e t

 Inte rme dia te Re po rts

 Co mpila tio n  Re vie w

 Adva nc e d Re po rts

 Audit  Sta te me nt o f F ina nc ia l Po sitio n

How Complic ate d Must T he y Be ?

Ba sic Re po rts

 Inc o me / Expe nse

 (a ka : Pro fit & L

  • ss, P&L

, Ca sh F lo w)  Re po rts inc o me fro m a ll so urc e s, a ll e xpe nse s  I nc lude Re stric te d F unds  Sho uld b e pro vide d a t e ve ry b o a rd me e ting  Wha t’ s missing fro m this o ne ?

No npro fits < $50,000/ ye a r a nnua l inc o me

Ha ndo ut: Sa mple F ina nc ia l Re po rt

Ba sic Re po rts

 Ac c o unt Balanc e

 (a ka : Ba la nc e She e t)  Ca sh a c c o unt b a la nc e  Asse t b a la nc e  Sho uld b e pro vide d a t e ve ry b o a rd me e ting (in so me fo rm)  Wha t a re Re ta ine d E a rning s?

 Ac c umula te d ne t inc o me fro m a ll pre vio us ye a rs

No npro fits < $50,000/ ye a r a nnua l inc o me

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SLIDE 3

02/09/2018 3

Ba sic Re po rts

 Ye ar

  • End Ac c o unting

 Ye a r-E nd Re vie w

Inte rna l (Audit/ Re vie w) Co mpila tio n Re vie w Audit

 Go ve rnme nt Re po rting

IRS 990N Sta te NP20

501(c )(3) No npro fits < $50,000/ ye a r a nnua l inc o me

I nte rme dia te Re po rts

 Same as Basic -PL

US:  I

nte rnal Audit T e a m  CPA Re vie w o r Aud it  So me de ta ile d re po rts  Additio na l F ina nc ia l pro c e dure s  I RS 990 E Z (no t 990N)

Annua l I nc o me $50,000 - $250,000

Adva nc e d Re po rts

 All Re po rts in Ba sic a nd I nte rme dia te  PL US –

 Additio na l F ina nc ia l Pro c e dure s  F ina nc ia l - IRS 990 re q uire d  F ull Audit

 F ina nc ia l I nfo rmatio n  F ina nc ia l Ma na g e me nt  Asse ts a nd I nve nto ry

No npro fits > $250,000 Annua l I nc o me Also - sig nific a nt g o ve rnme nt g ra nts

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SLIDE 4

02/09/2018 4

F inanc e - Audit R eview

F ull Audit

Mo st E xpe nsive Mo st Co mpre he nsive Re vie w o f F ina nc e s, F ina nc ia l Pra c tic e s, Bo a rd pra c tic e s

Re vie w

Me dium Re vie w (a nd c o st) “Re a so na b le Ba sis” Do e s no t re vie w po lic ie s, pro c e dure s, inte rna l c o ntro ls

Co mpila tio n

Mo st Ba sic (le a st e xpe nsive ) Only re vie ws fina nc ia l info rma tio n o n the surfa c e Ba nk Sta te me nts, F ina nc ia l re c o rds pro vide d b y c lie nt No a ssura nc e s, no

  • pinio n

I nte rna l

Pe rfo rme d “in ho use ”

  • r info rma lly

Ge ne ra lly no t a c c e pte d fo r g ra nts

  • r g o ve rnme nt

Suita b le fo r ve ry sma ll no npro fits Pro vide s minima l

  • ve rsig ht a nd

pro te c tio n

Basic Compr e hensive

F ina nc ia l Co mplia nc e - F e de ra l

I RS – 990 F

  • rm

<$50,000 – 990 N

  • Cha ng e in thre sho ld

b e g inning 2010

  • On-line ONL

Y

  • Due 5 + 15 a fte r e nd o f fisc a l

ye a r

  • NO e xte nsio ns o f time !

>$50,000 – 990 E Z/ 990

  • Due 5 + 15
  • 6 mo nth a uto ma tic

e xte nsio n

  • F
  • r mo st no npro fits – 990 E

Z

  • Minima l pro pe rty o r re a l

e sta te

  • No rma l g ro ss re c e ipts <

$200,000

  • T
  • ta l Asse ts < $500,000

F a ilure to file – auto matic re vo c a tio n o f §501(c )(3) sta tus

Othe r Co mplia nc e - Sta te

  • I

ndia na Se c re ta ry o f Sta te – b i-a nnua l Annua l Busine ss E ntity Re po rt

  • I

ndia na Sta te Bo a rd o f Ac c o unts

  • F

ina nc ia l Re po rting fo r Go ve rnme nt F unds E ntity Annua l Re po rt (E

  • 1)
  • I

ndia na De pa rtme nt o f Re ve nue NP-20

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SLIDE 5

02/09/2018 5

Sale s T ax

Whe n do yo u ne e d to c o lle c t sa le s ta x? Whe n a re yo u e xe mpt fro m pa ying sa le s ta x?

Sa le s T a x Rule s – Co lle c ting a nd Pa ying Sa le s T a x

 Sale s mo re tha n 30 da ys in a c a le nda r ye a r

 I nte rmitte nt o r c o nse c utive  Wha t a b o ut inte rne t sa le s?

 Do e s no t a pply to sa le s to me mb e rs

 Bo o ks, me mb e rship supplie s, e tc .

Ge tting in the Syste m Co lle c ting a nd Pa ying Sa le s T a x

 I ndia na De pa rtme nt o f Re ve nue BT

  • 1

Online Applic a tio n $25 fe e

 Re ta il Me rc ha nt Ce rtific a te

 Re g iste r fo r IN T AX (o nline re po rting a nd pa ying )

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SLIDE 6

02/09/2018 6

Re po rting Re q uire me nts Co lle c ting a nd Pa ying Sa le s T a x

 Mo nthly re po rting

 E ve n if yo u DO NOT HAVE SAL E S  Re po rt Ze ro $0.00 sa le s  Pe na lty fo r fa iling to re po rt

 Se a so na l Re po rting

 Must b e a ppro ve d fo r se a so na l re po rting  Re po rt o nly the mo nths o f sa le s

 Re po rt a nd Pa y o nline

 Be sure yo u BOT H Re po rt a nd Pa y

Sa le s T a x Rule s –

E xe mptio n fro m Sa le s T a x fo r pur

c hase s

 Must b e I ndia na No npro fit Co rpo ra tio n  Must ha ve T a x I D#

 Do e s no t ne e d to b e ST AT E ta x ID#

 Do NOT ne e d to file BT

  • 1

 E xe mptio n fro m pa ying sa le s ta x fo r purc ha se s fo r no npro fit purpo se s

 Do e s no t inc lude me a ls, ho te ls  Ma y no t b e wo rth the tro ub le (la rg e r ve ndo rs)

 Must use ST

  • 105 F
  • rm

Be st Pr ac tic e s

Be st Pra c tic e s F

  • r F

ina nc ia l Ove rsig ht And Ma na g e me nt

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SLIDE 7

02/09/2018 7

No npro fit F ina nc ia l “Be st Pra c tic e s”

 Pra c tic e c le a r, de c isive fina nc ia l g o ve rna nc e  Ado pt E thic s a nd Co nflic t o f Inte re st Po lic ie s  Imple me nt F ina nc ia l Co ntro ls  E ng a g e re g ula r, inde pe nde nt fina nc ia l re vie w  Pro mo te tra nspa re nc y o f Re po rting  De ve lo p a Risk Ma na g e me nt Pla n  K no w e me rg ing no npro fit fina nc ia l issue s

Co mplianc e , Co mpe te nc e , and Co nfide nc e

Cle a r, De c isive Go ve rna nc e

 Pro pe r po lic ie s in pla c e  Re vie w a ll fina nc ia l do c ume nts  Pro c e dure s to ve rify da ta  Sa fe g ua rd No npro fit a sse ts  Co mplia nc e with le g a l a nd ta x re po rting

Be st Pr ac tic e s for Conduc t

Ac c ountability

Re q uire me nts to pro te c t the fina nc ia l inte g rity o f the no npro fit

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SLIDE 8

02/09/2018 8

Ac c o unta b ility

T he Buc k Sto ps with the Bo a rd Bo a rd re po rts to

  • Do no rs
  • Go ve rnme nt
  • Spo nso rs
  • Gra nto rs
  • Co nstitue nts

Are yo u Go o d Ste wa rds o f the re so urc e s the pub lic e ntrusts in yo ur c a re ?

Wha t is F ina nc ia l Ac c o unta b ility? T he Bo a rd is Re spo nsib le fo r: K no wing the fina nc ia l sta tus o f the NP Unde rsta nding the fina nc ia l sta tus Ac ting o n fina nc ia l ne e ds o f the NP Pre ve nting fina nc ia l misha ps Mitig a ting fina nc ia l c risis

F ina nc ia l Ac c o unta b ility Ba sic Re q uire me nts

  • F

ina nc ia l Po lic ie s

  • F

ina nc ia l Co ntro ls

  • Mo nito r a ppro pria te use o f no npro fit

funds

  • Rule s fo r Cha rita b le Do na tio ns
  • Audit - re vie w

Ha ndo ut – 10 F ina nc ia l Prio ritie s fo r No npro fit Bo a rds

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SLIDE 9

02/09/2018 9

Ac c o unta b ility F ina nc ia l Po lic ie s

  • Po lic ie s fo r –
  • Ha ndling Mo ne y
  • Re c o rding Mo ne y
  • Re po rting Mo ne y

Ha ndo ut – No npro fit F ina nc ia l Co ntro l Po lic y

Ac c ountability - F inanc ial Over sight

Watc h the mo ne y - Watc h the pe o ple

F ina nc ia l Ove rsig ht is the re vie w o f b o th fina nc e s a nd fina nc ia l pra c tic e s E nsure s sa fe , e thic a l fina nc ia l pro c e dure s Pro te c ts No npro fits a nd the Dire c to rs/ Sta ff Pro vide s inte g rity a nd tra nspa re nc y to the pub lic Ca tc he s fina nc ia l diffic ultie s b e fo re the y b e c o me fina nc ia l impo ssib ilitie s

Ha ndo ut – 10 T ips fo r K e e ping a n E ye o n F ina nc e s

Ac c ountability - Char itable Donations

  • Wha t c a n b e c o nside re d a do na tio n?
  • Wha t pa pe rwo rk is re q uire d?
  • Do na tio ns o f g o o ds o r funds > $250 re q uire writte n

a c kno wle dg e me nt

  • Magic language : “No goods or

se r vic e s we r e pr

  • vide in

e xc hange for this donation”

Wa tc h the Rule s re g a rding c ha rita b le do na tio ns!

NOT E – do na tio ns o f T I ME a nd E XPE RT I SE a re NOT de duc tib le !

Ha ndo ut: T

  • p 10 Rule s fo r Cha rita b le Do na tio ns
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SLIDE 10

02/09/2018 10

Ac c ountability - Gover nanc e

  • Pe rso na l Be ne fit
  • Ab use o f Sta tus

Co nflic t o f I nte re st

  • Bo a rd – Sta ff – Vo lunte e r - Do no r

E thic a l Sta nda rds

Ha ndo ut – Co nflic t o f Inte re st Po lic y Ha ndo ut – Do c ume nt De struc tio n Guide line s

E thic s/ Co nflic t o f I nte re st

 Co nflic t o f I nte re st Po lic y

 Sig ne d b y Bo a rd a nd Sta ff a nnua lly  Pra c tic e d o pe nly  T ra nspa re nc y c ritic a l to c re d ib ility!

 E thic s

 Ne wspa pe r He a d line T e st  Appe a ra nc e o f I mpro prie ty

Be st Pr ac tic e s for Inte gr ity

I mpro ving F isc a l He a lth

 Ge ne r

al T ips fo r He althy No npr

  • fits

Pa y a tte ntio n to fina nc e s a s we ll a s missio n Re c ruit Bo a rd me mb e rs b a se d o n ne e d E mb ra c e in-kind do na tio ns – b ut ha ve a pla n Ma ke sma rt de c isio ns a b o ut fa c ilitie s Gro wth is no t a lwa ys g o o d – wa tc h “missio n c re e p” a nd ina de q ua te c a pa c ity

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SLIDE 11

02/09/2018 11

R isk Manage me nt

Ste ps to I de ntify a nd ma na g e no npro fit fina nc ia l risk

Risk Ma na g e me nt fo r No npro fits

Be st Pra c tic e s to Pre ve nt F ina nc ia l Crisis

I de ntify Risk Ra nks Risk I de ntify Po lic ie s to ma na g e risk I mple me nt pro te c tio ns I mple me nt pro c e dure s in e ve nt o f c risis

Ge ne ra l L ia b ility I nsura nc e

Do n’ t L e a ve Ho me Witho ut It!

“Slip a nd F a ll” insura nc e fo r b a sic a c tivitie s Pe rso na l Injury Pro pe rty Da ma g e

Mo st pla c e s re q uire it

F a c ility re nta l Wo rking with

  • the r
  • rg a niza tio ns

NOT E – Usua lly DOE S NOT COVE R ME MBE RS

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SLIDE 12

02/09/2018 12

Risk Ma na g e me nt D&O I nsura nc e

D&O I nsura nc e c o ve rs D&O I nsura nc e c o ve rs

Bre a c h o f Duty Bre a c h o f Duty Wro ng ful a c ts o f the b o a rd Wro ng ful a c ts o f the b o a rd Misma na g e me nt Misma na g e me nt

Wha t D&O Do e s Wha t D&O Do e s

Pro vide s le g al de fe nse Pro vide s le g al de fe nse Pa ys c la ims Pa ys c la ims

Wha t D&O Do e sn’ t Wha t D&O Do e sn’ t

No rma l lia b ility c la ims No rma l lia b ility c la ims Crimina l a c ts Crimina l a c ts

Dire c to rs & Offic e rs I nsura nc e Pro te c ts - Bo a rd a nd K e y Sta ff

Risk Ma na g e me nt Pla n

T ype s o f Risk to Ma na g e

  • Bo a rd me mb e rs, vo lunte e rs, e mplo ye e s,

c lie nts, do no rs, the pub lic .

Pe o ple

  • Building s, fa c ilitie s, e q uipme nt,

ma te ria ls, c o pyrig hts, tra de ma rks

Pro pe rty

  • sa le s, g ra nts, c o ntrib utio ns,

spo nso rs, fund ra ising

I nc o me

  • re puta tio n, sta ture in c o mmunity,

a b ility to ra ise funds a nd a ppe a l to pro spe c tive vo lunte e rs

Go o dwill

Risk Ma na g e me nt - Pe o ple Risk Ma na g e me nt - Pe o ple

 E mb e zzle me nt b y e mplo ye e s  E mb e zzle me nt b y o ffic e rs  E mb e zzle me nt b y me mb e rs  F ra ud fro m “o utside rs”  T rust But Ve rify

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SLIDE 13

02/09/2018 13

Who Commits F r aud?

 Hig h-le ve l fra udste rs (Offic e rs/ Dire c to rs) c a use g re a te st da ma g e – mo re tha n 3x mo re c o stly, a nd ta ke lo ng e r to de te c t.  Mo re tha n 85% ha ve ne ve r b e e n pre vio usly c ha rg e d o r c o nvic te d.  Be ha vio r wa rning sig ns: L iving b e yo nd me a ns a nd e xpe rie nc ing fina nc ia l diffic ulty  YE S – T he 2014 Glo b a l F ra ud Study fo und tha t o rg a niza tio ns tha t ha d c o mmo n c o ntro ls in pla c e ha d

 Sig nific a ntly fe we r lo sse s (in # a nd $)  Sho rte r time -to -de te c tio n 2014 Glo bal F raud S tudy, Asso c iatio n o f Ce rtifie d F raud E xamine rs

Do anti-fr aud measur es help pr event fr aud?

Pr imar y Contr

  • l We akne sses for

Vic tim Or gs.

Ha ndo uts – 10 Wa ys to Ca tc h F ra ud a nd Mista ke s fro m Outside Ha ndo ut – 15 Wa ys to Minimize E mplo ye e F ra ud

1% 2%2% 4% 5% 7% 8% 19% 20% 32% L a c k o f Re po rting Me c ha nism L a c k o f Cle a r L ine s o f Autho rity L a c k o f E mplo ye e F ra ud E d L a c k o f I nd e pe nde nt Aud it Othe r L a c k o f Co mpe te nt Ove rsig ht Po o r T

  • ne a t the T
  • p

Ove rride o f E xisting Co ntro ls L a c k o f Ma na g e me nt Re vie w L a c k o f I nte rna l Co ntro ls

Pre ve nting F ra ud

Ha ve a nd use fina nc ia l c o ntro l po lic ie s

K no w who ha ndle s the mo ne y

Re mo ve te mpta tio n

Re vie w fina nc ia l info rma tio n

  • AL

SO - ha ve inde pe nde nt re vie w o f

fina nc e s

Be a wa re tha t it c a n ha ppe n to yo ur no npro fit!

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SLIDE 14

02/09/2018 14

K no w E me rg ing No npro fit I ssue s

 Sub sc rib e to No npro fit fo rums

 Bo a rd So urc e , I NRN wo rksho ps

 L iste n to yo ur sta ke ho lde rs

 Wha t c o nc e rns a ffe c t the m?

 L iste n to yo ur pro fe ssio na ls

 Atto rne y, CPA

Be st Pra c tic e s to Sta ying Curre nt

F inanc ial Ac c ountability for Nonpr

  • fits
  • F

ina nc e

  • Sa le s T

a x

  • Be st Pra c tic e s
  • Ac c o unta b ility
  • Risk Ma na g e me nt

T ha nk yo u fo r yo ur a tte ntio n! Any Que stio ns?

Miria m Ro b e so n, Atto rne y T

  • da y’ s ma te ria ls a re a va ila b le
  • n Miria m’ s We b site :

www.lawlatte .c o m Co nta c t Miria m a t: MiriamRo be so n@lawlatte .c o m