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

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  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 1

02/09/2018 What ar e F inanc ial R epor ts? How Complic ate d Must T he y Be ?  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 Ha ndo ut: Sa mple F ina nc ia l Re po rt Ba sic Re po rts No npro fits < $50,000/ ye a r a nnua l inc o me  Inc o me / Expe nse  (a ka : Pro fit & L o 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 ? Ba sic Re po rts No npro fits < $50,000/ ye a r a nnua l inc o me  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 2

02/09/2018 Ba sic Re po rts 501(c )(3) No npro fits < $50,000/ ye a r a nnua l inc o me  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 I nte rme dia te Re po rts Annua l I nc o me $50,000 - $250,000  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) Adva nc e d Re po rts No npro fits > $250,000 Annua l I nc o me Also - sig nific a nt g o ve rnme nt g ra nts  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 3

02/09/2018 F inanc e - Audit R eview Basic Compr e hensive I nte rna l Co mpila tio n Re vie w F ull Audit Pe rfo rme d “in ho use ” Mo st Ba sic (le a st Me dium Re vie w (a nd Mo st E xpe nsive o r info rma lly e xpe nsive ) c o st) Only re vie ws fina nc ia l Ge ne ra lly no t Mo st Co mpre he nsive “Re a so na b le Ba sis” info rma tio n o n the a c c e pte d fo r g ra nts o r g o ve rnme nt surfa c e Do e s no t re vie w Re vie w o f F ina nc e s, po lic ie s, pro c e dure s, Ba nk Sta te me nts, F ina nc ia l Pra c tic e s, Suita b le fo r ve ry sma ll inte rna l c o ntro ls F ina nc ia l re c o rds Bo a rd pra c tic e s no npro fits pro vide d b y c lie nt No a ssura nc e s, no Pro vide s minima l o pinio n o ve rsig ht a nd pro te c tio n F ina nc ia l Co mplia nc e - F e de ra l I RS – 990 F o rm <$50,000 – 990 N >$50,000 – 990 E Z/ 990 • Cha ng e in thre sho ld • Due 5 + 15 b e g inning 2010 • 6 mo nth a uto ma tic • On-line ONL Y e xte nsio n • Due 5 + 15 a fte r e nd o f fisc a l • F o r mo st no npro fits – 990 E Z ye a r • Minima l pro pe rty o r re a l • NO e xte nsio ns o f time ! e sta te • No rma l g ro ss re c e ipts < $200,000 • T o 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 Annua l Busine ss E ntity Re po rt •I ndia na Se c re ta ry o f Sta te – b i-a nnua l E ntity Annua l Re po rt (E -1) •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 NP-20 •I ndia na De pa rtme nt o f Re ve nue 4

02/09/2018 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 ) 5

02/09/2018 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 o rm Be st Pr ac tic e s Be st Pra c tic e s F o r F ina nc ia l Ove rsig ht And Ma na g e me nt 6

02/09/2018 No npro fit F ina nc ia l “Be st Pra c tic e s” Co mplianc e , Co mpe te nc e , and Co nfide nc e  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 Cle a r, De c isive Go ve rna nc e Be st Pr ac tic e s for Conduc t  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 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 7

02/09/2018 Ac c o unta b ility Bo a rd re po rts to Are yo u Go o d •Do no rs Ste wa rds o f the T he Buc k Sto ps •Go ve rnme nt re so urc e s the with the Bo a rd •Spo nso rs pub lic e ntrusts •Gra nto rs in yo ur c a re ? •Co nstitue nts 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 Ha ndo ut – 10 F ina nc ia l Prio ritie s fo r No npro fit Bo a rds 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 8

02/09/2018 Ha ndo ut – No npro fit F ina nc ia l Co ntro l Po lic y 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 – 10 T ips fo r K e e ping a n E ye o n F ina nc e s 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: T o p 10 Rule s fo r Cha rita b le Do na tio ns Ac c ountability - Char itable Donations Wa tc h the Rule s re g a rding c ha rita b le do na tio ns! • 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 ovide in e xc hange for this donation” 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 ! 9