Stay Ahead of the Curve on Foreign Account Tax Act (FATCA) Compliance

The Foreign Account Tax Compliance Act (“FATCA”) was enacted on March 18, 2010 as part of the Hiring Incentives to Restore Employment Act of 2010 (P.L. 111-147, H.R. 2847).  The purpose of FATCA is to help improve U.S. compliance involving foreign financial assets and offshore accounts.  FATCA affects U.S. taxpayers and foreign financial institutions.  FATCA requires U.S. taxpayers with specified foreign financial assets that exceed certain threshold amounts to report such assets to the IRS on Form 8938 beginning with the 2011 tax filing season.  FATCA also requires foreign financial institutions (“FFIs”) to report Continue reading »

Undisclosed Offshore Financial Account Discovery Broadens

The search for tax evaders is turning into a modern day witch hunt.  Earlier this week, the French authorities raided the homes of UBS employees, and the German authorities raided the homes of Credit Suisse clients.

The German state of North Rhine-Westphalia paid €3.5 million for a CD containing details of approximately 1,000 German clients of the Swiss branch of Coutts, the Royal Bank of Scotland’s private banking division.  In 2010, several German states purchased CDs produced by whistleblowers, though the exact origin of this CD is unknown.

While you may think that this is happening only “over there,” Continue reading »

Affordable Care Act-Required MLR Rebates Have Started to Arrive

As a result of the Affordable Care Act (ACA), some employers that sponsor group health plans have begun receiving Medical Loss Ratio (MLR) rebates from their health insurance carrier(s). Upon receipt of these rebate checks, employers have some decisions to make: Continue reading »

IT Security and Common Weaknesses

The internet has provided nonprofit organizations with increased fundraising reach and unprecedented access to donors. However, as you continue to adopt technology, greater emphasis must also be placed on reducing the risk associated with it. Intrusion and data loss can jeopardize a nonprofits reputation and brand and raise concerns among donors. Join Aronson LLC on September 18th for a webinar that will introduce you to these important concepts. Guest speaker Jack Heyman of Your Internal Controls will discuss:

• Introduction to IT Security
• IT Security and Common Weaknesses
• Logical Security Weakness, Prevention, Detection and Correction
• PC Security Weakness, Prevention, Detection and Correction
• Internal Controls Testing in Support of Financial Statement Audits

Register today to reserve your spot at this free and convenient online presentation!

Guest Speaker: Jack Heyman earned a Bachelor of Science in Accounting from Florida International University and a Master of Art in Information Assurance Information Technology from the University of Maryland. He is a Certified Public Accountant (CPA), Certified Information Systems Auditor (CISA), Certified Government Financial Manager (CGFM), Certification and Accreditation Professional (CAP), and a Certified Information Privacy Professional (CIPP). Jack also co-authored Identity Management, which was published by the Information Security, Audit & Control Association (ISACA).

REGISTER HERE

Former President of Veteran Charity Paid $2.3 Mil Salary – Deemed Excessive

California officials are taking aggressive action against Help Hospitalized Veterans, a nonprofit whose stated mission is to bring arts and craft kits to patients in VA hospitals. The State Attorney General’s office filed a civil lawsuit Thursday that demands the removal of the president and entire board of directors and asks for more than $4 Mil in reparation due to alleged misrepresentations and misspending.

CNN reports that nearly two-thirds of the charity’s revenue went to overhead and excessive officer compensation with perks such as golf club memberships and D.C. area condos. The complaint also alleges that funds were unlawfully diverted to start another nonprofit with a mission unrelated to veteran support.

It isn’t the first time Help Hospitalized Veterans has been in the news. In 2008, the House Committee on Oversight and Investigations discovered the nonprofit’s former president, Roger Chapin, purchased a condo with donated funds and received $1.96 million in pension payments.

The new lawsuit alleges Chapin was paid out in excess of $2.3 Mil from 2002 to 2009 and that the current president, Michael Lynch, has been paid more than $900K, more than a third of which was just in 2010.

The charity received more than $31 Mil in donations in 2010. The value of the kits it distributed was reported as approximately $8 Mil.

Unfortunately, this is starting to be a recurring theme in veteran support related charities. In June, the Disabled Veteran’s National Foundation was being investigated by the Senate Finance Committee on similar allegations. It’s clear the American people want to contribute support, it’s also clear that certain groups will take advantage of that.

Source: CNN

Value of Donated Drugs, The Ongoing Fall-out

The fall-out over the valuation of donated medicine continues with the nonprofit watchdog site, Charity Navigator, landing in the news because of its controversial approach to rating organizations that have changed their values due to adopting more a conservative estimate.

Charity Navigator has decided that instead of punishing organizations that would suffer bad ratings due to a severe drop in revenue based on a more conservative calculation, that they will allow the organizations to file revised financial information for past periods. This would effectively apply the change in value retroactively so that revenue is more comparative.

Opponents to this decision argue that it lets organizations that overstated the value of their donations off the hook and that the excessive balances reported were never supportable under existing accounting rules anyway.

Supporters of the decision say it is a realistic approach to the change in accounting rules.

Organizations that want to file revised financial information have to provide adjusted Form 990 returns, have audit committee sign off, and the revised information must be available on the organization’s website.

Read more about it here.

Read additional posts tracking the ongoing fall-out here, here, and here.

Exec Director of 21 Years Files Plea Agreement for $1.35Mil in Embezzlement Case

Thomas Nelson was, until recently, the Executive Director of a York County, Maine nonprofit that provides services to low-income residents. It was a position he held for 21 years. He’s now awaiting sentencing after copping a plea arrangement in federal court, agreeing to pay restitution of $1.2Mil to the nonprofit and $150,000 to the IRS for tax evasion. He stands to receive up to 10 years for embezzlement, 5 years for conspiracy, 5 years for tax evasion, and 3 years for signing false tax returns.

How’d he do it? He arranged over-payments to a consulting company that gave him kickbacks and he also diverted money to a defunct nonprofit where he had served as treasurer. He used the money to pay his mortgage and cover gambling debts. There was only one invoice from the consulting company over the time of the collusion but it was for $8,700, not the $413,000 they were paid.

He claimed he avoided diverting federal money because he knew government funds are subjected to greater scrutiny.

The board has been reviewing its financial oversight practices and is “very disappointed.”

#smh

Read more about it in the Portland Press Herald