The IRS does not require board review of Form 990 however, 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.
The information on the Form 990 helps 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 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.
At Beck & Company we specialize in not-for-profit accounting and auditing. We understand the unique challenge of balancing the needs of your various stakeholders – contributors, members and your board, too. We have experience serving not-for-profit organizations such as unions, homeowner’s associations, religious organizations, charities, and social service organizations. If you have any questions regarding the filing of your form 990 we are here to help. Contact us today for more information.