Form 990 Question

[JohnH]

One of my New Years resolutions is to find out more about NPO's and Form 990. Am already lining up some CPE as well as doing some CPE. But a quesiton comes to mind I'd like to ask if anyone can answer.

This question concerns is a small NPO with about $225K in contributions. Everything is on the up and up insofar as its bookkeeping and program services are concerned. It has a good record of complying with all legal & reporting requirements for a NPO. It had a 5-person board of directors, with 4 of the directors not on the payroll.

Would it be a conflict of interest for one of the unpaid directors to prepare the Form 990 for the organization?

[Uncle Sam]

Form 990 Question

I don't see a conflict - so long as all the data is factual.
What I DO suggest you do - is have at least one other board member review it comparing the financial
data - before it's submitted.
It's like a Tax Matters Partner of a partnership.

[ATSMAN]

From ABA

In the past, most nonprofits have left the preparation of Form 990 to the accountant, with whatever assistance was necessary from staff. This is no longer sufficient.

The revised form asks whether each member of the board received the Form 990 before it was filed. To answer "yes," each member must have received the final version, and not merely a draft, before filing. Further, the organization must describe the actual review process. Cursory submission to board members immediately before filing will allow the organization to answer "yes," but the organization may need to disclose that the board had little time for its review. Boards should consider adopting a Form 990 review policy that provides adequate time for review by at least a subcommittee of the board. This may mean that the board (or the relevant subcommittee) will have to schedule an extra meeting for this purpose, and that a draft of the Form 990 will have to be prepared in anticipation of this meeting.

The organization may answer "no" to the question whether the entire board has received the final Form 990 prior to filing, and explain why the review process was nevertheless sufficient. However, it is likely that many members of the public, such as potential donors and ratings agencies, will only look at the yes/no answers on the form itself, rather than examining the explanation of the process, to determine whether the process is satisfactory.

Some of our best friends are accountants, but preparing Form 990 requires the skills of other professionals in addition to accountants.Accountants are not public relations experts. The Form 990 is a public document and should be reviewed with public relations in mind. Because of its wide availability, the form may be the organization's number one public relations document. Accurate financial data, of course, are essential but are not sufficient. The accountant should not be expected to draft descriptions of the activities of the organization, the answers to the questions on governance, and other similar narrative statements.

Accountants also cannot be expected to function as lawyers. Many of the questions, particularly those dealing with corporate governance, have legal implications that go way beyond matters of accounting and finance. The organization would do well to work with its legal counsel to determine the implications of each answer. To complete this form accurately, the accountant, the attorney, and the exempt organization must work together.

[John of PA]

990's are very envolved, make sure go through a checklist (PPC has a good one) and be aware that IRS is looking very closely at 990's. Watch the due date (May 15) and if you need an additional extension to Nov 15, you have to file a second extension (like 1040's used to be years ago).

[JohnH]

Thanks for all the responses - lots of very helpful information on this thread already.

[BOB W]

In the past, most nonprofits have left the preparation of Form 990 to the accountant, with whatever assistance was necessary from staff. This is no longer sufficient.

The revised form asks whether each member of the board received the Form 990 before it was filed. To answer "yes," each member must have received the final version, and not merely a draft, before filing. Further, the organization must describe the actual review process. Cursory submission to board members immediately before filing will allow the organization to answer "yes," but the organization may need to disclose that the board had little time for its review. Boards should consider adopting a Form 990 review policy that provides adequate time for review by at least a subcommittee of the board. This may mean that the board (or the relevant subcommittee) will have to schedule an extra meeting for this purpose, and that a draft of the Form 990 will have to be prepared in anticipation of this meeting.

The organization may answer "no" to the question whether the entire board has received the final Form 990 prior to filing, and explain why the review process was nevertheless sufficient. However, it is likely that many members of the public, such as potential donors and ratings agencies, will only look at the yes/no answers on the form itself, rather than examining the explanation of the process, to determine whether the process is satisfactory.

Some of our best friends are accountants, but preparing Form 990 requires the skills of other professionals in addition to accountants.Accountants are not public relations experts. The Form 990 is a public document and should be reviewed with public relations in mind. Because of its wide availability, the form may be the organization's number one public relations document. Accurate financial data, of course, are essential but are not sufficient. The accountant should not be expected to draft descriptions of the activities of the organization, the answers to the questions on governance, and other similar narrative statements.

Accountants also cannot be expected to function as lawyers. Many of the questions, particularly those dealing with corporate governance, have legal implications that go way beyond matters of accounting and finance. The organization would do well to work with its legal counsel to determine the implications of each answer. To complete this form accurately, the accountant, the attorney, and the exempt organization must work together.

That is a great post. I only handle 1 990 but my research came up with exactly your post.