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EisnerAmper Blog

Not-for-Profit Trends and Tips Blog

Not-For-Profits and Credit Card Fraud

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August 26, 2014

 

By: Brian Collins, CPA


Collins_BrianNot-for-profits and credit cards can be a bad combination when the right internal controls and oversight are not in place.  A Philadelphia non-for-profit learned this lesson the hard way when a federal grand jury indicted its former chief operating officer and former chief program officer on federal embezzlement charges.  The charges allege the two suspects were using mission-directed funds as well as the not-for-profit’s credit cards to pay for personal expenses, including overseas vacations, expensive meals, and even a personal trainer.  Authorities claim the two suspects charged a combined $350,000 in personal expenses on the not-for-profit’s credit cards during their employment.

If this not-for-profit had the right combination of internal controls and oversight this credit card fraud could have been deterred.  The not-for-profit could have simply adopted a formal credit policy which would have outlined the internal controls and oversight necessary to enforce proper usage of the credit cards.  A formal credit card policy, clearly written and easy-to-understand, should be implemented by the board and management, and communicated to all employees.  The policy should stipulate that supporting receipts be submitted for all charges with the purpose of the expense clearly documented, and the policy should limit the use of the credit card for certain specified transactions.  An independent board member or manager should carefully review all credit card activity on a monthly basis before payment is authorized.

For more information on protecting your not-for-profit from credit card fraud click here.

FY 2014 Data Collection Form Submission Notice

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Brian CollinsIf your not-for-profit is required to have an OMB Circular A-133 audit, also known as a Single Audit, you are required to submit your not-for-profit’s Single Audit reporting package to the Federal Audit Clearinghouse (FAC) via the Data Collection Form.  The FAC has posted a notice on its website regarding the submission of FY 2014 Data Collection Forms.  The notice states that “in order to ensure the accurate and timely collection of the FY 2013 audit submissions, the FAC will begin accepting single audit submissions for audits with fiscal year end dates in 2014 on October 20, 2014. The Office of Management and Budget (OMB) granted an extension until November 30, 2014 for any 2014 forms due on or before November 30, 2014. The extension is automatic and there is no approval required. Single audit submissions with a December 31, 2013 fiscal year end date are due no later than September 30, 2014.”

View the Federal Audit Clearinghouse website to stay up to date on any further announcements.

Have You Paid Your Patient-Centered Outcomes Research Institute Fee?

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Brian CollinsThe Patient Protection and Affordable Care Act of 2010 imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI), an independent, not-for-profit organization created to conduct research for patients and caregivers with an eye toward improving health care outcomes.  The fee, required to be reported only once a year on the IRS Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.  For the purposes of a health reimbursement arrangement (HRA), an employer is allowed to count only employees and disregard the count for dependent family members when calculating the fee.  The fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019.

Is your not-for-profit organization a sponsor of a self-insured health plan, including health reimbursement arrangements and health flexible spending arrangements?  If so, then your not-for-profit organization may be liable for the PCORI fee.

If you have any further questions about the PCORI fee, please contact a member of the EisnerAmper Not-for-Profit group or Employee Benefit group.

For additional information:
Patient-Centered Outcomes Research Institute fee
Form 720 instructions

EisnerAmper Team to Speak at AICPA National Not-for-Profit Program

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EisnerAmper’s Not-for-Profit Services Group will be well represented at the AICPA National Governmental and Not-for-Profit Training Program in the fall. Senior Manager Candice Meth is a member of the Conference Committee and, along with Partners Julie Floch and Ed Martin, will be speaking at the event which takes place in Las Vegas October 20-22, 2014. Candice and Julie will present a session entitled “IRS Workplan: What’s New for the Form 990 Series?” on October 21. “Internal Controls in Small Environments” is another seminar Julie will participate in that same day.  Candice and Ed will present “Asset Diversion – Fraud” and “Fraud Case Studies,” also on October 21.
 
To learn more and to register, please visit the 2014 AICPA Governmental & Not-for-Profit Training Program website.  As part of the AICPA’s peer discount program, you can also receive a $100 discount off of registration by using discount code USC when you sign up.

EisnerAmper Cares

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July 8, 2014

Schroeder, TimBy Timothy Schroeder, CPA

During the week of June 16, 2014, the EisnerAmper Not-for-Profit , Tax, and Private Business Services groups teamed up to perform  EisnerAmper Cares work. Together, we coordinated and volunteered at various charities throughout New York City, resulting in a rewarding experience for team members and help and support for the charities selected.

The EisnerAmper Cares work was performed at the following charities:

  1. Animal Haven (June 16) – volunteers  walked dogs, cleaned out cat and dog cages, ran a donation stand, and socialized with the dogs and cats.
  2. Riverside Park (June 17) – volunteers helped with the preservation efforts to improve New York’s classic waterfront green space by pulling weeds, removing invasive trees, pruning shrubs, and cleaning up the coast line.
  3. Randall’s Island Park Alliance (June 18) – volunteers helped with the maintenance of the parkland by painting and gardening selected areas.
  4. Baby Buggy (June 18) – volunteers organized and bundled donated clothes, toys, books, and other products for distribution to families.
  5. Association to Benefit Children (June 20) – volunteers assisted teachers in organizing their classrooms and helped with classroom learning activities. Additionally, volunteers socialized with the children and assisted the teachers in having the kids talk about themselves.

OMB Circular A-133 Audit Terms and Definitions

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 Brian CollinsBy Brian Collins, CPA

 

 

The EinserAmper Philadelphia Not-for-Profit Group recently conducted training in the OMB Circular A-133 audit process, highlighting some terms and definitions specific to this area.  At the conclusion of the training, attendees tried to solve a crossword puzzle containing these new terms and definitions.  If you would like to test your own OMB Circular A-133 audit term knowledge, try to complete the crossword puzzle below. You can click the puzzle for a larger printable version. Click on the bottom link to view the answers.

 

OMB A 133 Crossword Puzzle - small

Click Here to view the answers

Form 990 Series: Schedule G – Why Does the IRS Want Us to Look Like We Lost Money? (Part 3 of 3)

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June 18, 2014 

By Kimberly Grossman, CPA

For the strong who survived the core Form 990, Schedule A, Schedule B and Schedule D, you may now have arrived on Schedule G. If you were “lucky” you might have skipped ahead to this schedule when you looked at the statement of revenues (Part VIII Page 9) and saw that the Special Event looked like it lost money? How is that possible? Special Events are specifically designed and laboriously planned to PRODUCE REVENUE for the organization. The IRS strikes again! The details of the 2 largest special events and the total of other special events (grossing more than $5,000) are detailed in Part II of Schedule G.  Here is a quick explanation of each line:

Line 1 – Gross receipts – This is kind of self-explanatory. All receipts collected at/for the event are included in this line. We are going to be using an example throughout this article so let’s start now. (Full disclosure – this is a very simple example) A not-for-profit organization is holding a golf outing. The attendance is great – 100 people! Each person paid $175 for their ticket, therefore gross receipts would be $17,500

Line 2 – Less contributions – Here is the fun part. This is where the IRS “ties” the 1040 contribution deductions to the amounts included on a not-for-profit’s Form 990. The contribution amount included in the gross receipts needs to be removed. For the sake of our example, George attends the golf outing as discussed above. The golf outing includes a round of golf, a golf cart and dinner. This package would normally cost $90 at the golf course. The remaining portion of George’s ticket price ($85) is the contribution he has given to the organization. If 100 people attended the golf outing, each having paid $175 for their tickets, then the amount of contributions listed on line would be $8,500. The organization should be sending George an acknowledgement which will let him know that the deductible portion of his ticket price was $85 and if you were to look at George’s 1040, he should deduct $85 as a contribution to the not-for-profit organization.

Line 3 – Gross income – this is simply gross receipts less contributions. In our example line 3 would be $9,000.

Lines 4 through 9 – Direct expenses – The items included on these lines should only represent those expenses incurred on the day of the event. If an organization advertises for the event to sell tickets, these costs should NOT be included as direct expenses on the Schedule G. If the expense was not “used” on the day of the actual event, then do not include it on this schedule. To continue our example, we had the following costs associated with the event: golf course fees & dinner $7,500, band for dinner music $1,000, signage $200 and logo items to give away to each participant $1,000.

Gross Receipts   $17,500
Less Contributions  ($8,500)
Gross income     $9,000
Direct Expenses  ($9,700)
Net income summary    ($700)

To an unknowing reader, this might look like the organization lost money on the event. That is not really the case. The IRS requires that contributions be shown separately and not included in the net income calculation of the special event. (As I said earlier, the IRS strikes again!) It is important for the accounting staff to be involved in the reporting of the special events and the development staff should be careful with the “deductible portion” being reported to the attendees of the events. It is important not to overstate the amount contributed by each individual. It is just as important for the management of the organization to understand how this particular schedule works so that they can explain to their governing body and others how they should be reading the schedule.

EisnerAmper is an independent member of PKF North America.
PKF North America is an independent member of PKF International.