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EisnerAmper Blog

Not-for-Profit Trends and Tips Blog

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.

Form 990 Series: Why Are Those Compensation Numbers Different? (Part 2 of 3)

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June 10, 2014 

By Kimberly Grossman, CPA


If you have had the pleasure of delving into the Form 990, this is probably a question you have asked. Compensation and benefits have to be listed for each of the players*involved in an organization in Part VII (Page 7) of the core Form 990.  But then there is also compensation listed (in total) for the officers, directors and key employees only on the functional expense statement in Part IX (Page 10). Why are these totals different? They appear to be asking for the same information, right? Unfortunately, the IRS did not make it that easy on us. (And let’s be honest – did we expect anything else?) Here are the most common reasons why the information in Part VII (“Player Listing”) would NOT be the same as the information in Part IX (“Expense Statement”). 

  1. Only the current officers, directors and key employees are included the Expense Statement – no highest compensated employees or former officers, directors or key employees.  
  2. If the organization is a fiscal year-end filer (meaning their yearend is anything but 12/31), then the compensation and benefit information listed on the Player Listing will match their W-2 or the information based on the calendar year ending with the organization’s fiscal year (i.e., if the organization filed a tax return for their year ended June 30, 2013, the 2012 W-2 information would be included on the Player Listing). The compensation information on the Expense Statement (on line 5) is on whatever basis the organization’s financial statements are on (meaning fiscal year information). Line 5 also includes compensation and benefits in one lump sum as opposed to it being broken out amongst the categories.

If you’ve made it all the way through the core Form 990 and have now stumbled upon Schedule J without falling asleep, you have now reached the final place where compensation information may appear in the 990.  Schedule J is for the compensation Information for certain officers, directors, trustees, key employees and highest compensation employees.  Part I is the question-and- answer portion of the quiz which includes the types of “above and beyond” benefits individuals may be receiving and how compensation is determined by the organization’s governing body. Part II is the juicy stuff. This section contains the calendar year information (from the Player Listing) in even more detail than back on Page 7. Here the reader can see the individual components of the total compensation reported in Part VII: base compensation, bonus amount, other compensation, retirement plan contributions, deferred compensation and other nontaxable benefits. The totals in column E will tie back to the totals for each individual in the Player Listing. (We can rest easy tonight – something ties!)

* The “players” of the organization include officers, directors, trustees, key employees and highest compensation employees. Some additional explanation on some of the more ambiguous titles is discussed in a previous post  in this Form 990 Series.

Form 990 Series: The “Players” listed on the Form 990 (Part 1 of 3)

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June 4, 2104

By Kimberly Grossman, CPA


One of the unique aspects of the Form 990 is included in Part VII (Page 7) of the core form. This is where the reader can find a listing of all of the “players” involved with the organization as well as their compensation – some might consider this the organization’s “lineup.” There are 6 check boxes next to each individual’s name which identifies the individual’s position. As in any sport, each position has a different definition and different responsibilities. In order to correctly set your organization’s lineup, you must first understand what each of the positions entail. The information below might help all of those “coaches” out there. 

  • Officer
    • Determined by organizational documents 
      • president, vice president, secretary, treasurer, board chair
       
     
  • Top management official
    • charged with implementing decisions of governing board
      • chief executive officer, executive director, etc.
      • Top financial official (treasurer, CFO, etc.)
       
     
  • Director/Trustee
    • Member of the organization's governing board
    • Has to have voting rights
    • An officer that has voting rights is also considered a director
      • *NOTE* this is the only situation when a player is in multiple positions
       
     
  • Key employees
    • Must meet ALL THREE requirements listed below
      • 1. compensation in excess of $150,000
      •  2. power/influence over the organization as a whole or manages a segment/activity that is more than 10% of organization
      •  3. one of the top 20 compensated employees other than the officers and directors/trustees that meet #1 and #2 above.
       
     
  • Highest compensated employee
    • Compensation in excess of $100,000
    • Only the top five employees are listed
     

The following applies to all players listed above: 

  • If at any point during the year an individual met one of the qualifications/criteria listed above, then they are considered a “current” player and need to be listed on the Form 990.
  •  If the individual “played” one of these positions in the prior fiscal year but continued to receive compensation in the current fiscal year then they would be considered a “former” player but still listed on the Form 990 (because of the compensation). 
  • The number of average weekly hours spent working for the organization (or a related organization) is also displayed for each of the players.

This part of the 990 as well as Schedule J (additional detail on each of the players’ compensation) can be a controversial part of the 990. Not only can the reader see all of the individuals involved with the organization but they can also see their compensation and benefits (also discussed in another Form 990 series article). This information is included in the 990 in order to enhance the transparency of nonprofit organizations.

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