What’s this ‘codification’ stuff my auditor is talking about?

You may have heard auditors talking about the codification of accounting rules. Well, it isn’t about everything getting fishy. (Bad joke – sorry!) You probably have seen lots of odd comments in the notes to your financial statements.  Instead of mentioning FAS Statement #157 when discussing fair value accounting of your investments, your notes now refer to something like ASC 820.  What happened? (more…)

Dual control over church offering

One of the most difficult areas for a church to maintain good internal controls is for the offering between the time the ushers collect it and the counters start their count.  It is hard to keep controls over the uncounted offering.  That is also one of the riskiest areas for a local church.

If you want to look at just one area where there is high risk in your church, check out your procedures for controlling the offering.

Not to worry, there will be a lot of discussion on point in this blog.

Test for ethical behavior – what will this look like on the front page of the newspaper?

You have probably heard this story before, but I will mention it again.  When you are pondering how to handle a situation, think about how it would look on the front page of the newspaper.  Do you want to see this policy, decision, or personnel action on the front page of the Wall Street Journal®?  How about the lead article in the local section of the Los Angeles Times®? The front page of your local paper?  (more…)

Small nonprofit health care tax credit — 9-7 update

The healthcare act passed in spring 2010 provides a tax credit to small businesses and nonprofit organizations to assist with the cost of providing health care to employees.  The tax credit is available to NPOs with less than 25 full time equivalents that pay over half of the health insurance costs and have less than $50,000 average compensation per person.  For those nonprofit employers who qualify, the credit is 25% of healthcare costs and is offset against payroll taxes.  There is a phase-out calculation when full time equivalents are over 10 and average compensation is over $25,000. As you would expect, there are detailed rules and requirements. 

 The IRS has a fact sheet available.  They also have a one minute YouTube video. (A YouTube video?  From the IRS?  Yes, a YouTube video from the tax people.) 

Remember this is a brief overview.  Check out the IRS information and consult with your tax advisor before you do anything!

Update on 9-7-10 – The IRS announced today that the method of receiving the credit for NPOs will be for those organizations to file a soon-to-be modified 990-T. That is the form used to report unrelated business income and to pay taxes on the UBI.  The formwill be modified for the tax credit.  Watch for more details in the future.

Merger and acquisition accounting

New accounting rules for mergers and acquisitions of nonprofit organizations are now in effect.  In the past, when two nonprofit organizations came together, the accounting was essentially to combine the accounting information of the two entities.  This is no longer allowed.

Under the new rules, there are mergers and acquisitions. The accounting for each is quite different. (more…)

Mini-courses from the IRS

The IRS has available on their web site a number of short, narrated courses on a variety of topics.  They are in PDF format, with each set of slides or entire presentation downloadable.  Length is from 7 to 37 minutes.

 Courses are available here.  Specific classes are:

 Presentation 1: Navigating IRS Resources for Tax-Exempt Organizations
Presentation 2: Political Campaigns and Charities: The Ban on Political Campaign Intervention
Presentation 3: The Wonderful World of Foundation Classification (Part I)
Presentation 4: Can I Deduct My Charitable Contributions?
Presentation 5: Applying for Tax-Exempt Status
Presentation 6: Preparing to File the New Form 990
Presentation 7: The Redesigned Form 990 – Part I
Presentation 8: The Redesigned Form 990 – Part II
Presentation 9: The Redesigned Form 990 – Part III
Presentation 10: The Redesigned Form 990 – Part IV
Presentation 11: An Overview of Form 990-EZ
Presentation 12: Disaster Relief – Part I
Presentation 13: Disaster Relief – Part II
Presentation 14: 403(b) Tax-Sheltered Annuity Plans – Employee
Presentation 15: 403(b) Tax-Sheltered Annuity Plans – Employer

Hope you can find something for you!

Small non-profits have more time to file 990-N to avoid losing tax exempt status

Nonprofits with revenue under $25,000 per year must file a 990-N at least once every 3 years to avoid loss of tax-exempt status. The deadline for filing the first 990-N, or risk losing exempt status, has been extended by the IRS. Christine Abrams, CPA, has more details.