Financial Integrity and Accountability for Churches & Faith-based Nonprofits

In January 2011, Senator Charles Grassley (R-IA), a member of the Senate Finance Committee, asked the Evangelical Council for Financial Accountability (ECFA) to facilitate responses on policy issues related to financial accountability for religious nonprofits. The result was the Commission on Accountability and Policy for Religious Organizations. Join us on Monday, June 17, 2013 for a timely discussion about possible policy changes that may impact you. Register Here.

Rob Eby, CPA of Aronson, LLC, will be leading a discussion about the Commission’s findings and how the policy changes will impact you, including:

• Senior leadership compensation
• Love offerings and housing allowances
• Self-regulation
• Donor engagement
• Administration of the law

About the Forum:

The forum is FREE, but registration is required.

Project Bridges Ministry Renewal Forums are designed to address pertinent ministry issues and to provide an opportunity to network and obtain strategic informational updates with governmental, community and faith-based leaders.

REGISTRATION DEADLINE: Friday, May 31

Forum Location:

First Baptist Church of Glenarden Ministry Center

3600 Brightseat Road | Landover, MD 20785

DATE: Monday, June 17, 2013
7:00 PM – 9:00 PM

Parking: FREE

For More Information:

Call: 301-386-0300
Email: info@projectbridges.org

Website: www.projectbridges.org

Webinar: Financial Reporting at Schools – Support Your Board, So They Can Support You

Effectively communicating financial performance to your Board is a critical skill.

Your board is the fiduciary of your school and a key resource for your management team. Your Board must understand your school’s financial performance—and where it is likely headed—to perform their oversight role and to support management in achieving organizational goals.

What does an effective financial presentation to a Board look like? How do you convey information that supports decision making, keeps the conversation on point and out of the ‘weeds,’ and is accessible to Trustees without a financial background? How do you ensure your board has the understanding to help you build the financial strength that will in turn support achieving educational goals?

Join Craig Stevens and Rob Eby of Aronson LLC for a free webinar led by Brad Olander, CEO of GoldStar, on April 17^th at 11am. During this convenient 30-minute session, we will address these critical questions including:

• What information should you present?
• How should it be presented?
• How detailed should it be?
• How to balance discussion of current results with forecasts?

 Executive directors, controllers, CFOs, principals and other school professionals serving in an administrative or finance role should register today for this free event!

Register HERE

Type: Webinar

Date: April 17, 2013

Time: 11:00-11:30AM

Price: FREE

Location: Via WebEx

Webcast on Internal Controls for Smaller Entities

MACPA is having a webcast April 2, 2013 from 1-3pm Eastern entitled “Internal Controls for Smaller Entities – Practical Case Studies in Design, Evaluation and Communication”.  Cost is $79 for members and non-members for 2 CPE credits. 

See http://www.macpa.org/public/catalog/coursedetails.aspx?courseID=1317W610 for more details.

Financial Integrity and Accountability for Faith-Based Nonprofits

Allegations of fraud or financial mismanagement of religious organizations has cast a pall on the vast majority of faith-based nonprofits operating with integrity and accountability. However, by working together to adhere to best practices, the nonprofit community can have a positive impact on public perception. Most importantly, a commitment to compliance and self-regulation will help you achieve your mission and attract donors.

Senator Charles Grassley asked ECFA to lead an effort to provide input on key policy issues related to financial accountability in the religious nonprofit sector. ECFA, in response, formed the Commission on Accountability and Policy for Religious Organizations to offer suggestions on how we can work together to improve accountability and preserve the great work that is being done each day.

Join Aronson LLC nonprofit expert Rob Eby, CPA on February 28th for a webinar discussion on these important topics:

• The Commission’s Findings
• Self-Regulation
• Donor Engagement
• Administration of the Law

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

REGISTER 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

China claims charitable giving decline due to no major disasters in 2011

Charitable giving suffered a steep decline in China, according to the Ministry of Civil Affairs’ annual report released last week. The reasoning? “No major disasters happened in 2011,” according to the head information office of the China Charity and Donation Information Center, oh and some recent scandals and maybe some lack of transparency had some impact as well seems to be mumbled as an aside. “In China, people’s willingness to give is disaster driven”, a Beijing-based university professor speculated to the state-run news outlet, China Daily.

It’s an interesting statement considering the year included the tsunami in Japan, horrible droughts in East Africa and floods in Thailand. Even just in mainland China, the Ministry reported over 2 million people were evacuated in the first half of the year due to earthquakes, droughts, floods, and snow. I’m thinking the scandals and lack of transparency may have a bit more to do with that drop in charitable giving.

To be fair, while the state may be encouraging the ‘no disaster’ explanation, it was government auditors that first exposed problems at the state-run China Red Cross, the country’s largest nonprofit,  resulting in scandal, metaphorical heads rolling, and accusations of overspending and corruption.

Source: China Daily, China Times, and Chronicle of Philanthropy

CEO Expenses and the Board

An Op-ed piece by Michael Peregrine at the Chronicle of Philanthropy provides a good reminder about why it is so important to pay attention to CEO expense account spending. The head of the foundation of the University of Texas Southwestern Medical Center, Dr. Wildenthal, is stepping down after an internal investigation concluded inappropriate spending including mingled business and personal purchases.

Dr. Wildenthal led the foundation for 22 years before tips reporting lavish international travel, fine wines and other extravagances spurred an internal investigation. Peregrine states “the entirety of the report leaves an impression – fairly or unfairly – of a respected executive who developed a sense of ‘entitlement‘ based on a record of extraordinary accomplishment.” He notes this created an atmosphere of excessive deferential attitudes to Dr. Wildenthal’s judgment in spending.

There’s only so much an auditor can do if we take issue with the exact nature of spending, in terms of whether this is really best way to meet your program or fundraising objective. We can bring it to the board’s attention but if the board isn’t willing to question it themselves or has bought into an executive’s reasoning for spending, all we can really do is repeatedly point at it. An audit opinion speaks to whether the numbers are free from material misstatement. This does include whether program spending was actually spent on the program (as opposed to personal spa days), but we don’t and can’t actually opine on whether the spending was particularly wise or frugal.

The board bears fiduciary responsibility to monitor spending and make sure there is sound judgment involved. When it comes to nonprofit organizational structures, the board is the highest authority and should not defer to an executive when it comes to questionable expenditures.

Read more of Peregrine’s piece here.

Congressional Hearing of IRS Monitoring of Nonprofits

Representative Charles Boustany Jr. (R – LA) has called a hearing of the House Ways and Means Committee scheduled for next week to discuss tax-exempt organizations and concern that the IRS has not been aggressive enough in monitoring charity abuses.

Up for discussion are items outlined in Boustany’s letter to the IRS sent October 6, 2011 as follows:

• How many tax-exempt organizations have been audited since 2008 and what issues were identified?
• How has the redesigned Form 990 increased transparency and accountability?
• Analysis of unrelated business income, revenues and the value of assets held by nonprofits for the years 2008 – 2010.
• What is the process for following up on allegations of excessive political campaign activity?
• Discussion of the level of charity care provided by all hospitals.

Click here to see the entire letter.

Per the Ways and Means Committee website, nonprofits are invited to submit their opinions on the topics by written statement. In order to submit your thoughts, go to the Committee homepage, http://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, May 30, 2012.The hearing will take place on Wednesday, May 16, 2012, in Room 1100 of the Longworth House Office Building, beginning at 10:00 A.M.

See specific formatting requirements for submissions and more details on the hearings here.

Additional Source: Chronicle of Philanthropy

Fall-out Over Foundation Impropriety

There’s a lot of finger-pointing and passing the fiduciary buck going on at the Los Angeles Trade Technical College these days and heads are rolling. The executive director of the Trade Tech foundation, Rhea Chung, is being investigated on claims of lavish spending, excessive bonuses, and allegations of forged signatures on checks. The improper spending came to light during a state audit.

File this under Do Not Do This: Included in the questionable spending are items such as: $1,500 monthly car allowance, $22,000 performance bonus, $2,000 monthly pay for running the youth orchestra, tens of thousands of dollars on golf outings and daily restaurant meals averaging $150 a day.

Here goes the finger pointing: Ms. Chung claims all her expenses were approved by the President of Trade Tech, Chip Chapdelaine. Chapdelaine claims no knowledge. Faculty claim they brought the questionable spending to Chapdelaine’s attention and that he ignored it. Chapdelaine stated he never had fiduciary responsibility over Chung, that it was the chair of the board, Darryl Holter’s responsibility. Holter claims Chung reported to Chapdelaine, not to the board. Holter is also under fire for potential conflict of interest and claims personal vendettas are causing all these problems. Faculty of the college and the state education code agree that as President, Chapdelaine bore responsibility to ensure the foundation’s finances were appropriate.

Here goes the head-rolling: Chung is on administrative leave pending further investigation. Chapdelaine removed Holter as chair of the board and Holter, along with another board member resigned. The faculty governing body at the College issued a no-confidence vote yesterday, calling on Chapdelaine to resign. Chapdelaine is declining to comment.

What to learn from this: Don’t make assumptions someone else is responsible or looking. When it comes to public funding, everyone involved owes some fiduciary responsibility but absolutely no one at the top can shirk that responsibility. Review current financial reports regularly. Ask questions about odd spending and follow up – especially if someone else seems to be ignoring it. If you aren’t sure of the chain of command – it needs to be in the by-laws.

Source: L.A. Times

#LATradeTech #fraud #fiduciary #Chapdelaine

More Pushback on PCAOB Auditor Rotation Issue

According to the Virginia Society of CPAs, several public businesses have banded together and submitted a group letter to the PCAOB in opposition to their stance on the auditor rotation issue. Viacom, Safeway, United Healthcare, FedEx, and even the SEC themselves were among those signing the letter.

The letter points to that there has been no compelling proof presented by the PCAOB of a benefit of mandatory auditor rotation.

For more on the debate, see previous posts The House Gives PCAOB a Smackdown and AICPA Opposed to Mandatory Audit Firm Rotation.

Source: VSCPA

#auditorrotation #pcaob