The Washington Business Journal is reporting that two people from Prince George’s County, Maryland were indicted in district court last week with 21 counts of fraud against the US Agency for International Development (USAID) under its Analysis and Information Management (AIM) contract. The charges include money laundering, program and identity theft and fraudulently submitting bogus invoices for more than $1 million from 2005 to 2010 for work that was never performed.
One of the accused parties was working as the Deputy Director and Project Manager of the AIM contract at the time.
How did he allegedly do it? The accusations claim he used other people’s identities without their knowledge, forged signatures on purchase orders, and colluded with others to submit and pay invoices of a fake company. The couple have entered not guilty pleas.
Remember! When it comes to fraud, people in positions of authority can frequently cause the biggest damage if they abuse their position. Generally speaking, the higher up the person is, the greater the potential level of damage. Keep this in mind when planning internal controls and make sure everyone has checks and balances, regardless of position.
Source: Washington Business Journal
#fraud #collusion #USAID
Volunteers, fundraisers, and donors are human and don’t take kindly to being slighted. Especially by the board they’ve dedicated years of service to. The Wall Street Journal is reporting the story of the Brooklyn Museum Community Committee, a group of largely older women some of whom had invested more than 50 years in time and funding of the museum only to be curtly disbanded by the board who decided to shift to professional fundraisers. The committee had a documented level of success for years, raising funds since 1948. In the late 1990s, their annual ball netted $850,000. Many of the committee members included the museum in their wills but after feeling discarded and unappreciated, those wills are being revised.
The point being that these women were personally invested and they felt their time, efforts and money were worth more than a sudden disbanding with a note of thanks and a pin from the museum gift shop.
One can imagine that a board faced with a fundraising committee with some of their members in their 90s, might be thinking in terms of succession. Opting for professional fundraisers is not unreasonable but possibly there could have been a more respectful way to proceed. Maybe some sort of blended committee with the volunteers and the professionals or a phase out. Maybe even just asking the committee themselves what their suggestions were for a 5 year plan and succession.
One member who had bequeathed her personal art collection, including valuable prints from Rauschenberg, has since changed her will and those prints will now go to the Jewish Museum of New York. The Brooklyn Museum now has garnered negative press, lost funding, bequests, and general goodwill.
With the nonprofit sector news lately reminding everyone that the job market is opening up and employee retention is going to come down to work satisfaction, job meaningfulness, and generally being appreciated, it is imperative to keep those same concepts in mind with volunteers and committed donors. Don’t forget to show them your love and appreciation!
#fail #fundraising #nonprofit #volunteer
An organization seeking exemption under section 501(c)(3) of the Code is required to apply for recognition of exemption on Form 1023. However, churches, their integrated auxiliaries, and conventions or associations of churches seeking section 501(c)(3) status are exempted from this application requirement. Churches that meet the requirements of section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS. However, it is noted that some Churches choose to obtain the tax-exempt status from the IRS to assure their members that any contributions made are indeed tax-exempt. In addition, this exemption is only for types of organizations listed above. Religious organizations, that wish to be tax-exempt and whose gross receipts exceed $5,000, must still apply to the IRS for the coveted status.
It is important to note what rules all 501(c)(3)’s (including churches ) must abide by to maintain their status:
- Their net earnings may not be given to a private individual or shareholder.
- Their substantial benefit cannot be to private interests.
- The majority of their time cannot be devoted to attempting to influence legislations.
- They cannot participate or intervene in any political campaign.
- Their purpose and activities must be legal and not violate fundamental public policy.
In conclusion, if you are unsure if you need to obtain an IRS determination letter, err on the side of caution and get one!
#nonprofit #determinationletter #taxexempt #irsfiling
As previously discussed here, the job market is opening up which means people who had been in lock-down mode now have more flexibility to look for better fitting work. The turnover rate in fundraising is particularly high, primarily due to dissatisfaction with low salary rates. The latest research from the Association of Fundraising Professionals suggests that offering a better salary may be cheaper than the average direct and indirect costs of finding a replacement. The study shows that the cost to replace a fundraiser is close to $127,000, more than two times the level of salary increase it would take to keep them.
Read more about it here.
Recording restricted contributions can be a confusing topic, so it shows up often as a management letter comment. Depending on the extent of the matter this could range from a significant deficiency to a material weakness. Below are some suggestions on how identify and record restricted contributions and avoid getting a management letter comment from your auditors.
First, what is a restricted contribution and what isn’t?
- When a pledge is received and will be paid in future year(s), it is temporarily restricted for time. If it is for a specific program it may also be purpose restricted. These would be recognized as temporarily restricted revenue in the year pledged.
- A contribution received in the current year that is intended for specific purposes is temporarily restricted. If it is for core or general operations, it is unrestricted.
- Payments received relating to future memberships or conference revenue are not temporarily restricted as they are not contributions. These would be deferred revenue.
- Payments received for contract services not yet rendered would be deferred revenue, not temporarily restricted.
- Advances on exchange transactions when the expenses have not yet been incurred, are deferred revenues.
An important concept to note is that you can’t defer a receivable and vice versa. Deferring is a way of not recognizing the revenue yet. You defer things received but not yet earned. A receivable is revenue you’ve earned and rightly recognized, but not yet received. A temporary restriction is to identify funds received and recognized as revenue, but not yet expended in accordance with donor intent. It’s easy to forget all of that in the face of a confusing revenue event. Continue reading »
University of Maryland University College President, Susan Aldridge, went on “indefinite leave” in February for reasons that were undisclosed. After a month of being placed on leave, Aldridge announced her formal resignation, effective March 31, ending a six year tenure at the nonprofit college. No official statement has been made, however, Daniel de Vise at the Washington Post got his hands on a complaint filed with a Maryland auditor that has some rather scandalous accusations. It was filed under the condition that the author would remain anonymous, which seems smart considering that the document is 91 pages and builds a case of alleged buy-offs of terminated staff with large amounts of possible federal money going towards ensuring the silence of the fired party. A compounding issue is that UMUC has large contracts with the Dept. of Defense.
The complaint poetically states “President Aldridge has surrounded herself with a cadre of shameless sycophants who are willing to terminate anyone who won’t play along….given the number of people that have been forced out, this sum must be in the hundreds of thousands to millions of dollars by now.” The alleged scheme involved keeping terminated employees on the payroll until their buy-out was complete.
Not playing along includes the infractions of questioning the merits of an exam, trying to uphold high academic standards, and in one case alleged sexual harassment. The complaint states that this was a way of creating a “watered down” academic program that could push more students through in less time, with less cost.
Having terminated employees on active payroll is bad in any context but super bad if you have a contract with the Dept. of Defense. The estimate in the complaint of hundreds of thousands to millions of dollars, if proved out, would have to be paid back plus interest and penalties if any of it was on D.O.D.’s dime. Beyond that, perpetrating a massive fraud scheme is generally one way to ensure you don’t get any more federal funding.
#fraud #aldridge #nonprofit #don’tdothis
source: Daniel de Vise blog
The U.S. House of Representatives stepped into the fray on Wednesday by holding hearings on PCAOB’s proposal for mandatory auditor rotation for SEC companies. The chair of the House Capital Markets and Government Sponsored Enterprises Subcommittee, Rep. Scott Garrett, R-N.J., spoke up voicing concern that the PCAOB is overstepping its bounds by trying to regulate corporate governance. “I think it is important to remind the PCAOB that it is not a policy-making entity; Congress and this committee are the policy makers,” Rep. Garrett stated. OH SNAP!
That is a major SMACKDOWN that has followed what Accounting Today is referring to as a “tense exchange” between the PCAOB chairman, James Doty, and a representative from the Chamber of Commerce. Doty defended the board saying the PCAOB is “engaged in a deep and wide-ranging public dialogue about ways to enhance the independence, objectivity and professional skepticism of public company auditors.”
The subcommittee’s response was to introduce legislation that would amend Sarbanes-Oxley (which created the PCAOB) to prohibit the PCAOB from requiring public companies from using specific auditors or require rotation.
The President of the AICPA, Barry Melancon, testified at Wednesday’s hearing that he opposed mandatory auditor rotation because of increased costs, disruptions, and lack of evidence linking tenure to audit quality. “Most importantly, the risk that mandatory rotation is actually a detriment to audit quality,” he argued was the reason behind the opposition.
Doty has also introduced legislation to amend Sarbanes-Oxley to allow for making disciplinary proceedings for auditing firms public. Melancon was having NONE of that talk saying “auditors belong to a profession in which a good reputation is essential and publication of unproven charges may end an individual auditor’s career or audit firm’s existence,” which is why congress put the confidentiality clause in there in the first place.
Scorecard: Doty landed no solid punches, the House TKO
(Source: Accounting Today)
#PCAOB #SarbanesOxley #audit #auditorrotation #smackdown #ohsnap
The fourth annual State of the Plate research results compiled by Maximum Generosity, in collaboration with Christianity Today International and ECFA has been released. The State of the Plate is a valuable resource for churches. It documents trend, demographic information and draws conclusions from its survey of thousands of churches.
#church #ECFA #stateoftheplate #nonprofit #taxexempt
Nonprofit HR Solutions has published results of a poll of 450 nonprofits that indicate a stronger job market for nonprofit workers in 2012. Over 40% of nonprofits reported that they are looking to add staff. Lisa Brown Morton, Chief Executive of Nonprofit HR Solutions, told the Chronicle of Philanthropy that organizations need to show caution however, and be aware that an improving job market means turnovers are going to be higher as more get job offers.
Ms. Brown Morton cites lack of money and promotions, along with workload and an perhaps most importantly work meaningfulness are the key components in an employee deciding to stay or go. When the market was in a downturn, employees locked down and held on to the positions they had. People postponed retirement. Those people may have more flexibility now. Organizations need to think about what they need to do to keep their best people and attract the best new staff.
Determining whether or not to include some of the particulars and quirks of different medical plans as a component of wages can be tricky. This should help. For the full table click here.
|Coverage Type||Report on form W-2||Do Not Report on Form W-2||Optional
|Dental or vision plan not integrated into another medical or health plan||X|
|Dental or vision plan which gives the choice of declining or electing and paying an additional premium||X|
|Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts||X|
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009