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Planned%20Parenthood%20Finance%20Directors

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Planned Parenthood Finance Directors Risk Assessment Standards and Changes to the 990 Presented by: Gelman, Rosenberg & Freedman Certified Public Accountants – PowerPoint PPT presentation

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Title: Planned%20Parenthood%20Finance%20Directors


1
Planned Parenthood Finance Directors
  • Risk Assessment Standards and Changes to the 990
  • Presented by
  • Gelman, Rosenberg Freedman
  • Certified Public Accountants
  • Terri McKnight, CPA, Director, Audit Department
  • Richard J. Locastro, CPA, JD

March 26, 2008
2
Eight New Auditing Standards
  • Collectively referred to as the Risk Assessment
    SASs 104 - 111
  • Effective for all audits of financial statements
    for fiscal years beginning on or after January 1,
    2007
  • Requires changes in the audit process
  • Increased effort by your organization and CPA
    firm

3
What is Risk Assessment?
  • More focused audit approach using the COSO
    internal framework
  • Control Environment
  • Risk Assessments
  • Control Activities
  • Communication and Information
  • Monitoring

4
What are the Requirements?
  • Obtain a more in-depth understanding of the
    organization and its operating environment
  • Identify specific risks of material errors or
    fraud occurring and remain undetected by you
    along with the actions you are taking to mitigate
    those risks
  • Perform a rigorous assessment of the risks of
    material misstatements of your financial
    statements based on that understanding
  • Link the assessment with the resulting audit
    procedures
  • Meet new documentation requirements

5
What will CPA firms do differently?
  • Perform more up-front time planning the audit
  • Perform new, required planning procedures
  • Evaluate internal control in more depth
  • Reevaluate materiality levels
  • Test some accounts differently
  • Communicate more internal control deficiencies

6
Perform new, required planning procedures
  • Ask more questions about your business risks,
    responses, and performance measures
  • Formally discuss the risk of material errors
  • Observe more of your procedure and controls
  • Inspect more documents and records

7
Perform new, required planning procedures
(contd)
  • Consider what can go wrong at a more detailed
    level to identify specific risk of error or fraud
  • Assess the identified risks
  • Link the risks to our audit procedures

8
How will the Risk Assessment Standards Impact you?
  • Request more information and documentation
  • The demands on your personnel will increase

9
Key Internal Control Elements
  • Control environment everyones roles and
    responsibilities are clearly defined
  • Accounting System
  • Methods and records established to identify,
    assemble, analyze, classify, record and report on
    transactions
  • Maintains accountability for the related assets
    and liabilities
  • Accounting Principles

10
Key Internal Control Elements
  • Document accounting policies and procedures,
    including
  • Cash management
  • Procurement policies
  • Disbursement policies
  • Budgeting and monitoring
  • Reporting
  • Payroll
  • Chart of accounts
  • Investment policies

11
Key Internal Control Elements
  • Document accounting policies and procedures,
    including
  • Financial statement presentation and
  • disclosures
  • OMB Circular A-133, A-122 requirements
  • Grant requirements
  • Revenue recognition
  • Account reconciliations
  • Fraud and fraud indicators
  • Conflict of interest
  • Allowable and unallowable costs associated
  • with grants
  • Credit card policies

12
New Form 990
  • Still in draft status
  • New Form 990 and background information available
    on IRS website
  • www.irs.gov/charities/article/0,,id176637,00.htm
    l
  • Effective Date
  • Years beginning on or after 1/1/08
  • Transition period if gross receipts lt than 1MM
    and assets lt2.5MM
  • Bond reporting on Schedule K delayed for 1 year
    (limited reporting in 2008)

13
New Form 990
  • Much more detailed reporting
  • GRF estimate of time (both client and GRF) to
    prepare 990 will increase 50-100 in first year

14
New Form 990
  • Transparency
  • Emphasis on Governance and Compensation
  • 11 page Core form
  • 16 schedules that are filed, if applicable

15
New Form 990
  • Changes from first draft
  • Eliminates ratios, percentages from Summary page
  • Moves Program Service description to Page 2 (from
    Page 10)
  • Checklist (Page 3) of Required Schedules

16
New Form 990
  • Changes from first draft (cont.)
  • More opportunity to provide supplemental
    information
  • Revised governance and compensation sections
  • Less detailed reporting on some schedules

17
New Form 990
  • Core form, Part VI - Governance, Management, and
    Disclosure
  • Best practices not required by Internal
    Revenue Code
  • Independence issues
  • Oversight was Form 990 provided to governing
    body before filing? Describe review process.

18
New Form 990
  • Core form, Part VI - Governance, Management, and
    Disclosure (cont.)
  • Whistleblower policy?
  • Document retention/destruction policy?

19
New Form 990
  • Part VII, Compensation
  • Must use W-2 amounts (calendar year)
  • Detailed reporting on officers, former officers,
    and independent contractors

20
New Form 990
  • Schedule A Public Charity Status and Public
    Support (no major changes)
  • Schedule B Schedule of Contributors (no
    changes)
  • Schedule C Political Campaign and Lobbying
    Activities

21
New Form 990
  • Schedule D Supplemental Financial Statements
  • Donor Advised Funds
  • Conservation Easements
  • Art Collections and Similar Assets
  • Trust, Escrow, and Custodial Arrangements
  • Endowments

22
New Form 990
  • Schedule D (cont.)
  • Investments
  • Other assets
  • Other liabilities
  • Reconciliation to Financial Statements
  • Supplemental information

23
New Form 990
  • Schedule E Schools
  • Schedule F Statement of Activities outside of
    U.S.
  • Schedule G- Fundraising and Gaming Activities
  • Schedule H - Hospitals

24
New Form 990
  • Schedule I Grants and other assistance in the
    U.S.
  • Schedule J Compensation
  • Policy questions about setting and monitoring
    compensation
  • Payments for perks such as first- class travel,
    club dues, housing, companion travel

25
New form 990
  • Schedule K Tax Exempt Bonds
  • Issue descriptions
  • Proceeds
  • Private Business Use
  • Arbitrage

26
New Form 990
  • Schedule L Transactions with Interested Persons
  • Excess benefit transactions
  • Loans to/from Interested Persons
  • Grants to/from Interested Persons
  • Business transactions involving Interested Persons

27
New Form 990
  • Schedule M Non-cash contributions (detailed
    descriptions of types of property)
  • Schedule N Liquidation, Termination, or
    Significant Disposition of Assets
  • Schedule O Supplemental Information (for longer
    explanations)

28
New Form 990
  • Schedule R Related organizations and unrelated
    partnerships
  • Disregarded entities
  • Related tax-exempt entities
  • Related partnerships
  • Related corporations
  • Unrelated partnerships

29
New Form 990
  • Next Steps
  • Have management try to complete it now to
    identify
  • Challenging questions
  • New information that will need to be collected
    for 2008
  • Have Board perform detailed review of management
    draft so that there are no surprises

30
Taxation of Benefits
  • IRS increased scrutiny on benefits
  • Automatic excess benefit transactions
  • Items covered cell phones, computers, cars
  • Other perks

31
QUESTIONS?
  • Gelman, Rosenberg Freedman
  • Certified Public Accountants
  • 4550 Montgomery Avenue
  • Suite 650 North
  • Bethesda, MD 20814
  • 301-951-9090
  • www.grfcpa.com
  • Terri McKnight, CPA, Director,
  • Audit Department
  • Richard J. Locastro, CPA, JD, Principal,
  • Nonprofit Tax Department
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