Form 1023: IRS to post approved tax-exempt status application forms online
The IRS has announced plans to post online approved copies of Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), and Form 1024, Application for Recognition of Exemption Under Section 501(a), according to a report from Tax Analysts (2017 TNT 239-5).
Section 6104 already required organizations to make Forms 1023 (or 1024 if applicable) available for public inspection. Form 1023 has already been made publicly available for charitable organizations registered in NY via CharitiesNYS.com
Accounting for Multi-Year Pledges (with journal entries)
SFAS 116 (ASC 958) established accounting standards for contributions received and made. Promises to give (i.e. pledges) spanning over multiple years will result in future cash flows that should be discounted from net realizable value to present value using an appropriate discount rate. In addition, SFAS 117 (ASC 958)requires that the statement of financial position report net assets based on the existence of donor-imposed restrictions. Total net assets are categorized as unrestricted, temporarily restricted and permanently restricted. (the new FASB Not-for-Profit Standard will change Unrestricted net assets to “net assets without donor restrictions” and temporarily and permanently restricted net assets to “net assets with donor restrictions”)
Below are sample Journal Entries assuming a simplified case of a multi-year $1,000,0000 unconditional pledge was made in 2017 (Year 0), with $200,000 payments per year, the first payment made in 2018 (Year 1). Also using an estimated total discount of $50,000 ($10,000 per year).
NONPROFIT YEAR-END FINANCIAL STATEMENT AUDIT (OR REVIEW) PROCESS IN A NUTSHELL (PART 5 of 5)
THE YEAR-END FINANCIAL STATEMENT PROCESS:
A PRACTICAL GUIDE FOR SMALL NONPROFIT ORGANIZATIONS HAVING A CPA AUDIT (OR REVIEW)
(Part 5 of 5)
The Year-End Process - Step by Step Walkthrough
Pre-engagement process
□ Organization identifies audit committee chair (ACC) or Independent Board Member (IBM)
□ Pre-engagement communication is sent to ACC or IBM
□ ACC or IBM confirms selection of the auditor
□ Preliminary information is requested from management (Including quickbooks file and board minutes)
□ CPA assesses scope of engagement and determines any non-attest service needed
□ Engagement letter with fee quote and deposit invoice sent to ACC or IBM
□ Signed engagement letter and deposit is returned to CPA
Planning
□ Initial information request is sent to organization
□ Date that the organization will have information ready is determined
□ Organization sends initial information to CPA
□ Initial questions and follow-up are handled via phone or email
□ Onsite visit date set
□ Auditor identifies any additional information to have available for onsite visit
Audit Field Work
□ Auditor looks at financial and other records that the client was asked to have available.
□ Copies of some documents might be made
□ Auditor will document the steps to key processes (i.e., payroll , cash disbursements etc.)
□ Auditor will document internal control procedures
□ Auditor will discuss operations with management and may ask to speak to key personnel
□ Follow-up questions and auditor updates management on the overall audit
Concluding the Audit
□ Auditor assembles workpapers and files
□ Auditor has follow-up communications with ACC or IBM
□ Additional documents may be requested, if needed
□ Auditor drafts financial statements and footnote disclosures
□ Draft reports are sent to client 's management for review
□ Changes that result from management's review are made
□ Revised drafts are sent to ACC or IBM
□ Changes that result from ACC or IBM are made
□ Revised drafts are sent to ACC or IBM for board approval
□ The representation letter is sent to ACC or IBM
□ The representation letter is signed and returned to Auditor
□ Audit findings and other communication letters are sent to ACC or IBM
□ Final copies of all documents are emailed to management in PDF format for organization’s files
□ Package is sent to client with copies to sign and mail (if not Efiled)
□ Final invoice is included with the package
Any Accountant can prepare IRS Form 990 but ... do you have a Form 990 Accountant?
Can anyone prepare IRS Form 990? Any accountant , or non-accountant, can prepare a Form 990, but will it be prepared correctly? Or will an incomplete or incorrectly prepared Form 990 lead to an IRS audit. Does your preparer (whether a CPA or in-house preparer) understand the purpose of the form? IRS Form 990 is an “informational” return. It differs from other IRS “tax” forms since its purpose is not to compute tax. Although there are circumstances when a nonprofit does pay IRS taxes, that is computed and paid on a difference for (990-T). Since the Form 990 is information in nature, it is important that an accountant that prepares Form 990 understands the IRS’s purpose for requesting this specific information. In addition to being a method to disclose information publicly, the 990 is a tool the IRS uses to ensure organizations understand the rules and regulations that they need to stay in compliance with to maintain tax exempt status.
At JV CPA we specialize in Form 990 preparation as we only serve nonprofit organizations.