Att 2 Form 990 Review _O'Malley_ by huangyuarong

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									2009 Form – An Overview

             December 11, 2010

    Speaker: Patricia A. O’Malley, CPA
       Rubino & McGeehin, Chartered
          CPA’s and Consultants
              pomalley@rubino.com




                                         1
                                       Form 990


   2008 was the first year the expanded Form
    990 was filed.
   The time expended on the form was high
    due to:
        Expanded request for information
              The prior year form consisted of an 11 page core
               form
              2 schedules that potentially would need to be
               completed
        Rubino & McGeehin, CPA's and Consultants                  2
                             Form 990 continued


   For 2008, the form was substantially
    expanded:
        There are 16 additional schedules
              The schedules are completed only if the organization
               meets the requirements for additional reporting for
               that schedule
        Core form of 11 pages

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            Form 990 continued

     Form 990 for 2009
          The form was expanded slightly
          Major changes came in the form of
           changed instructions
                Governance
                Compensation
                Schedule L, Interested Parties
                Schedule R, Related Parties

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            Form 990 continued
          For 2009:
                The process was much smoother as the
                 changes to the form and schedules were
                 minimal
                The request for information included the prior
                 year comments, so only updates were
                 necessary
                The major changes were included in the
                 instructions
                     The IRS reworded parts of the instructions to clarify
                      what was being requested
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                             Form 990 continued



   The IRS is collecting data
        Comparisons are being made to information
         collected from other forms
        Information will be used to determine future
         actions
              Audits
              Additional information requests for types of entities
               where inaccurate reporting is noted
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            Form 990 continued

     Part I, Summary:
          An overview of the entire return
          Information provided is found in more
           detail in other parts of return
          The financial information is in comparative
           form



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                          Form 990 continued


   Part I, Summary: continued
   Activities and governance:
       Questions are organizational and include:
       Number of voting members of the governing body
       Number of employees
       Gross unrelated business income has always been
        disclosed.
            Also requests the net amount from the Form 990T


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                             Form 990 continued



   Part VI, Governance, Management and Disclosure:
       Broken into three parts:
       Governing body and management
       Policies
       Disclosure
       Some of the questions relate to current legal
        requirements, but none of the policies is required
       Most are best practices that the IRS believes should be
        promoted.
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            Form 990 continued
     Reasonable effort
          Relates to the effort made to obtain
           information from Board members and
           related parties while preparing the Form
           990
                An example is the sending of an annual
                 questionnaire to each member that includes the
                 name, title, date and signature of the person
                 reporting, along with instructions and
                 definitions relating to the particular part
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                              Form 990 continued


   Part VI, Section A, Governing Body and
    Management:
       All questions require a yes or no answer.
       Many require further explanation if answered a specific
        way
   Questions include:
       The total voting members of the governing body at the
        end of the year
       The number of independent members of the governing
        body
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                              Form 990 continued


   Independence of Voting Members
       Must meet three criteria at all times during the year to be
        independent:
   Criteria 1
     The member was not compensated as an officer or other employee of
      the organization or a related organization
   Criteria 2
       The member did not receive total compensation or other
        payments exceeding $10,000 from the organization or related
        organizations as an independent contractor, other than:
            Reasonable expense reimbursements under an accountable plan
            Reasonable compensation for services provided in the capacity as a member
             of the governing body
        Rubino & McGeehin, CPA's and Consultants                                   12
                       Form 990 continued



   Independence of Voting Members
   Criteria 3
       Neither the member, nor a family member was
        involved in a transaction with the organization,
        whether directly or indirectly through affiliation
        with another organization, that is required to be
        reported on Schedule L (Transactions with
        Interested Parties) for the reporting organization
        or a related organization
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                             Form 990 continued


   Independence of Voting Members
       Circumstances that will not jeopardize
        independence:
            The member is a donor of the organization, regardless
             of the amount of the contribution
            The member receives financial benefits from the
             organization solely in the capacity of being a member
             served by the organization in the exercise of its
             exempt function

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                                  Form 990 continued


   Relationships
       Explanations need to be given if the following questions
        are answered “yes”:
       Were there any family or business relationships between
        the officers, directors, trustees and key employees?
            Family relationship includes:
                 Spouse
                 Ancestors
                 Siblings (whole and half blood)
                 Children (natural and adopted)
                 Grandchildren and great-grandchildren
                 Spouses of those listed above

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                                  Form 990 continued



   Relationships
   Explanations continued

        Business relationships between two persons
         include:
             One person is employed by the other in:
                   A sole proprietorship
                   An organization in which the other person is a trustee,
                    director, officer, key employee or a greater than 35% owner



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                             Form 990 continued


   Business Relationships continued
           Business is transacted with the other, directly or indirectly, in one or
            more contracts of:
                 Sale
                 Lease
                 Loan
                 License
                 Performance of services
                 Transactions involving transfers of cash or property valued in excess of
                  $10,000 in the aggregate for the year
                 Does not include transactions in the ordinary course of business on the same
                  terms as are generally offered to the public
                 Indirect transactions for this purpose are those with an organization with
                  which the one person is associated as a trustee, director officer, key
                  employee, or greater than 35% owner.
           Both are directors, trustees, officers, or greater than 10% owners in the
            same business or investment entity.
     Rubino & McGeehin, CPA's and Consultants                                          17
                                 Form 990 continued


   Governance – Affiliated Organizations
       Does the organization have chapters, branches, or
        affiliates?
          If yes, are there written procedures governing the

            activities of these groups?
          IRS is looking for consistency with the activities of the

            organization.
          If the answer is no, an explanation of how the

            organization ensures that the local unit’s activities are
            consistent with its own is required.
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                  Form 990 continued


   Governance – Board Review of Form 990
       Did the members of the governing body review the
        Form 990?
            Can only answer “yes” if a copy of the final document was
             provided to each voting member of the governing body prior
             to submission to the IRS
            Whether the form is distributed before or after submission,
             an explanation stating the process for the review must be
             provided



    Rubino & McGeehin, CPA's and Consultants                           19
                                 Form 990 continued


   Part VI, Section B, Policies
       Conflict of interest
             Asks if officers, directors and key employees are
              required to make disclosures annually
             Also asks whether the organization regularly and
              consistently monitors and enforces compliance.
             If the answer is yes, must provide a description of the
              process


        Rubino & McGeehin, CPA's and Consultants                 20
               Form 990 continued

  •   Policies continued
     Definition of a conflict of interest for this
      purpose:
           “A conflict of interest arises when a person in a
            position of authority over an organization, such
            as an officer, director, or manager, can benefit
            financially from a decision he or she could
            make in such capacity, including indirect
            benefits such as to family members or
            businesses with which the person is closely
            associated.”
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                                Form 990 continued



   Policies continued
       Does the organization have a whistleblower
        policy?
            Sarbanes Oxley imposes criminal liability for retaliation
             against whistleblowers
       Does the organization have a document retention
        policy?
            Sarbanes Oxley imposes criminal liability for destruction
             of records with intent to obstruct a federal investigation
        Rubino & McGeehin, CPA's and Consultants                   22
                                Form 990 continued



   Policies continued
       One question with multiple parts relates to the
        approval process for determining the
        compensation for:
            The CEO
            Executive Director
            Other top management official
            Other officers or key employees of the organization
        Rubino & McGeehin, CPA's and Consultants                   23
                                 Form 990 continued


   Policies continued
       Components of the approval process are:
            Review and approval by independent persons
            Comparability data
            Contemporaneous substantiation of the deliberation and decision
            An explanation of the process must be made if the answer is yes.
       The questions must be answered by all organizations
       Answer yes only if all of the criteria are met
       If yes, must provide an explanation of the process

         Rubino & McGeehin, CPA's and Consultants                          24
                                Form 990 continued


   Part VI, Section C, Disclosure
       A description of whether and how the following
        documents are made available to the public:
             Governing documents
             Conflict of interest policy
             Financial statements




        Rubino & McGeehin, CPA's and Consultants     25
                                   Form 990 continued



   Part VII, Compensation of Officers, Directors,
    Trustees, Key Employees, Highest
    Compensated Employees and Independent
    Contractors
       All organizations must now provide information
        that was formerly limited to 501(c)(3)
        organizations

        Rubino & McGeehin, CPA's and Consultants         26
                                 Form 990 continued

   Part VII, Section A Officers, Directors, Trustees, Key
    Employees and Highest Compensated Employees
       To be included:
            All current officers, directors, and trustees regardless of
             compensation level
            All key employees who received reportable compensation greater
             than $150,000
            The organization’s five current highest compensated employees
             (other than current officers, directors and key employees) who
             received reportable compensation of more than $100,000
            All former officers, key employees and highest compensated
             employees who received more than $100,000
            Former directors and trustees that received, in the capacity of a
             former director or trustee, more than $10,000

         Rubino & McGeehin, CPA's and Consultants                           27
                Form 990 continued
   Part VII, Section A, continued
       The definitions for those to be included:
          Director or Trustee

              Is a member of the governing body, but only if the
                member has voting rights
              Those who served at any time during the organization’s
                tax year is considered a current director or trustee
          Officer:

              A person elected or appointed to manage the
                organization’s daily operations
                   Includes a president, vice president, secretary or

                     treasurer as noted in the governing documents
                   Regardless of titles, includes top management official

                     and top financial official

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                 Form 990 continued
   Part VII, Section A, continued
        Key Employee
              There is now a 3 part test
                   $150,000 Test
                         Reportable compensation for the calendar year ending with or within
                          the organization’s tax year is in excess of $150,000
                   Responsibility Test
                         Has responsibilities, powers or influence over the organization as a
                          whole that is similar to those of officers, directors, or trustees
                         Manages a discrete segment or activity that represents 10% or more
                          of the activities, assets, income, or expenses of the organization,
                          compared to the organization as a whole
                         Has or shares authority to control or determine 10% or more of the
                          organization’s capital expenditures, operating budget or compensation
                          for employees
                   Top 20 Test
                         Is one of the 20 employees that satisfy the first 2 tests with the
                          highest reportable compensation from the organization and related
                          organizations for the reporting period



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                                  Form 990 continued


   Part VII, Section A, continued
       Information to be provided:
            Name and title
            Average hours per week
            Position (check all that apply as listed on the form)
            Reportable compensation from the organization (W-2/1099-MISC)
            Reportable compensation from related organizations (W-2/1099-
             MISC)
            Amount of other compensation from the organization and related
             organizations

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                                Form 990 continued


   Part VII, Section A, continued
        Schedule J is to be completed if:
             Any former officer, director, trustee, key employee, or
              highest compensated employee is listed on Part VII
             If the compensation for any individual listed from the
              organization and all related organizations is greater
              than $150,000
             Schedule J requires additional compensation disclosure
              for those who meet these requirements

        Rubino & McGeehin, CPA's and Consultants                31
                                  Form 990 continued


   Schedule J, Compensation Information
       The form is used to provide additional, detailed
        information for those listed in Form 990, Part VII, Section
        A if they:
           Are former officers, directors, trustees, key employees or five
            highest paid employees
           Current officers, directors, trustees, key employees and five
            highest compensated employees for whom the sum of columns
            (D), (E) and (F) in Form 990, Part VII is greater than $150,000
           Each of the current and former officers, etc. who received or
            accrued compensation for services rendered to the organization
            from an unrelated organization and is reported in Line 5 of Part
            VII of Form 990.
         Rubino & McGeehin, CPA's and Consultants                          32
    Form 990 continued
   Schedule J, Compensation Information
        Part I, Questions Regarding Compensation
             General questions relating to the organization’s policies and
              procedures including:
                   Checking the box for several listed benefits if applicable, including
                    travel for companions, first-class travel, discretionary spending
                    account, personal services
                        If these benefits are given, need to indicate whether there is
                          a written policy regarding payment. If the answer is no, an
                          explanation must be provided.
                   Is substantiation required prior to reimbursing expenses?
                   Checking the box to indicate the methods used to establish the
                    compensation of the CEO
                   Did any of the listed persons receive severance or change in
                    control payments, participate in a supplemental nonqualified
                    retirement plan or participate in an equity-based compensation
                    arrangement?


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                                 Form 990 continued



   Schedule L, Transactions with Interested
    Persons
   The definition of an interested person is different for each of
    the 4 parts of Schedule L
      Transactions requiring disclosure:
           Excess benefit transactions for 501(c)(3) and 501(c)(4)
            organizations




        Rubino & McGeehin, CPA's and Consultants                      34
                                 Form 990 continued


   Schedule L, Transactions with Interested
    Persons       continued



       Loans to and from interested persons
           Includes salary advances, other advances and
            receivables
           Each loan must be reported separately
           Does not include advances under an accountable plan
       Grants or assistance benefiting interested persons
           Includes scholarships, fellowships, prizes and awards
           Related persons who benefit must also be reported
         Rubino & McGeehin, CPA's and Consultants               35
                                Form 990 continued


   Schedule L, Transactions with Interested Persons                       continued



        Business transactions
             Includes direct and indirect business transactions for which
              payments were made during the tax year between the
              organization and an interested person exceeded $100,000
             All payments during the year from a single transaction between
              such parties exceeded the greater of $10,000 or 1% of the filing
              organization’s total revenues
             Compensation payments by the organization paid to a family
              member of certain persons exceeds $10,000



        Rubino & McGeehin, CPA's and Consultants                          36
 Form 990 continued
     Schedule L, Transactions with
      Interested Persons continued
          Part IV continued
                Business transactions include, but are not
                 limited to:
                     Contracts of sale, lease
                     Performance of services
                     Joint ventures in which either the profits or the
                      capital interest of the organization and the interested
                      person each exceeds 10%

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                                               CMI

   Gross receipts continued to be below $25,000
    for 2009
   Electronic filing of short form




    Rubino & McGeehin, CPA's and Consultants         38
                       Group Trust
     Form 990 is filed with consolidated
      information received from all of the
      participating chapters
     Only selected information is requested
     The required information is still being
      obtained


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