Nonprofit board members may be wondering how much time and attention they need to dedicate to reviewing form 990. Part VI, Line 11a of the form asks, “Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form?” Further, Line 11b asks the organization to describe the process used to review the form, if there was one. With this information in mind read on to understand how nonprofit board members should acquaint themselves with the information provided in Form 990.
The information on the Form 990 helps nonprofit board members understand the organization’s activities and the applicable tax laws, both of which are key to fulfilling their fiduciary duties. To help strengthen the board’s understanding of the organization, try asking them these 9 questions at your next meeting:
- Was a complete copy of the Form 990 provided to all members of your governing body before filing the form?
- Is the organization using a committee to assume responsibility for audit oversight, review, or compilation of its financial statements and selection of an independent accountant?
- Does the organization have any amounts recorded on its financial statements for receivables from disqualified persons?
- Did your organization provide a grant to an officer, director, trustee, key employee, substantial contributor?
- Did the organization engage in a business transaction with a family member of a current or former officer, director, trustee, or key employee?
- Did the organization hold assets in temporarily restricted endowments, permanent endowments, or quasi-endowments?
- Did the organization have an interest in, or a signature or other authority over, a financial account in a foreign country?
- Did the organization make any significant changes to its governing documents during its most recent tax year?
- Does the organization have a committee assuming responsibility for oversight of the audit?
It is vitally important for nonprofits board members to be aware and well versed on the contents of form 990 before it is filed. The CPA needs to talk to the board and officers and help them understand Form 990, how to read it and what to look for. This education is critical for the board to properly fulfill its oversight role for Form 990. The CPA is uniquely qualified to provide this vital education. The CPA should provide this training to the board periodically or in orientation for new members.
The Form 990 is not a simple form completed with cutting and pasting. This tool provides an opportunity for the CPA to partner with clients and moving them to a stronger position, practicing the best methods throughout the organization. It also provides a way to think creatively and answer questions that help the organization tell its positive story to the world. Form 990 presents an opportunity for the CPA to add real value for clients and to be a true adviser—it is the CPA’s opportunity to shine.
Here at RBP Methods we understand your desire to balance the needs of your various constituents. That is why we take a vested interested in each of our customers uniquely. It is our goal to provide our nonprofit customer with the service and solutions that best suit your unique needs. For more information on an accounting for nonprofits and software solutions, contact us, today.