In The Black

Cara Bradley, CPA

When we think of children we think of innocence, laughter and imagination, not cancer. In an ideal world, cancer would not be part of growing up. For too many children though, growing up means fighting an uphill battle with cancer and thanks to St. Jude Children’s Research Hospital, children are winning. On November 19, 2011 Null-Lairson along with walkers across the nation will do their part to help save the lives of children fighting cancer. We at Null-Lairson are proud to be part of such a great event and to support such a worthy cause.  We give thanks for our families, our health and the ability to support an organization like St. Jude Children’s Research Hospital.

Please join us and take a step to help fight childhood cancer by signing up today for the St. Jude Give thanks. Walk.  On November 19th, you can join us and thousands of others in 80 cities nationwide for the walk, benefiting St. Jude Children’s Research Hospital, where no child is turned away due to a family’s inability to pay.  The Houston walk is very family-friendly, will be held at the Houston Zoo and Null-Lairson, PC has created a team!  Join our team or create your own and raise funds to help save the lives of children fighting cancer and other deadly childhood diseases. For more information and to sign up, visit www.givethankswalk.org. We hope to see you there!

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Emily Rhodes

Null-Lairson is a proud participant in the Communities in Schools (CIS) program. Communities in Schools is a network of passionate professionals working with public schools to surround students with a community of support, empowering them to stay in school and achieve in life. The program serves nearly 1.3 million students and has 181 affiliates around the country, with two new Texas affiliates recently receiving national accreditation. Null-Lairson has adopted Clear Brook High School in the Texas Bay Area.

When we first decided to explore joining the cause, we were surprised to find the number of different ways a corporate partner could be involved. Whether it is donating the left over snack packs and granola bars from the golf tournament we sponsored, to contributing to the holiday tree effort and providing clothing and other essentials to needy students- there are a lot of ways to make a difference. A granola bar could be a much needed snack for a student who can’t afford breakfast… why should it sit around in our break room?

According to a legislatively authorized study, Best Practices in Dropout Prevention in Texas (2008), CIS was found to be one of only three best practice dropout prevention programs in the nation. With CIS’s support, 97% of the students they serve remain in school. One of the key factors is the student incentives program. Students receive incentives for improved attendance, good grades and improved behavior. Fast food gift cards, nail polish and small toys provide motivation to keep the students participating in the program.

CIS’s school-community collaboration provides a means for bringing guest speakers in to the school to provide insight about a variety of careers that may be available to the students, should they continue to stay in school and actively participate. Community volunteers also meet the tutoring/ mentoring needs of the students. Dr. Peter Wuenschel, the Executive Director for Communities in Schools, Bay Area said.  “I am so happy Null-Lairson has “adopted” the CIS program at Clear Brook High School.  The students not only benefit from the incentives they receive, the employees of Null-Lairson are positive adult role models the students can look up to and learn from.”

The Communities in Schools philosophy is: “The dropout problem is not just a school problem, but in reality a community problem.” Click here to donate or find out how you can become more involved.

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Helen R. Duvall, CPA

Until fiscal years beginning after December 31, 2006, not-for-profit entities (NFPs) with gross receipts less than $25,000 were not required to file information returns, Form 990 (or variations thereof), with the IRS.  These small NFPs must now complete a Form 990-N, 990, or 990-EZ annually.  Beginning with filing deadlines in 2010, in accordance with the mandates of the Pension Protection Act of 2006, the IRS will begin revoking the tax-exempt status of those entities who have failed to file the appropriate information returns for three consecutive years.  Reinstatement will require reapplication to the IRS for tax-exempt status.  Do you remember how painful that process is?  It may also take several months to receive the exemption AND the user fee must be paid again AND any income earned in the interim may be taxable. THERE IS RELIEF IN SIGHT!

As outlined on the IRS website, a one-time mulligan is being granted to non-compliant NFPs.  Tax-exempt status may be preserved if appropriate action is taken by October 15, 2010. Eligible organizations should go to https://epostcard.form990.org to complete the super-simple Form 990-N (answer eight questions, press “submit,” you are in compliance until next filing deadline!)  Other filers should complete returns for 2007, 2008, and 2009, and ensure the returns reach the IRS by October 15, 2010.  These filers will also be required to remit a compliance fee.  It should be noted that religious organizations are still exempt from the filing requirements.

The IRS has a “List of Organizations At Risk of Automatic Revocation of Tax-Exempt Status” webpage wherein links to the lists are organized by state.  However, just because an organization is not on the list, does not mean it is compliant with filing requirements.  In 2011, a publicly available list of revoked organizations will be published on the IRS website.

GuideStar has a great Nonprofit Resource Center webpage devoted to this subject which can be found by clicking on the “Go to the revocations resource center” link.  I am sure most of you know that GuideStar is an excellent resource for NFPs.  It offers research tools for areas such as grantmaking and compensation, and registration is free!  There are many other excellent resources for NFPs on the internet, some of which will be discussed in future blogs.

Totally unrelated to the subject at hand; did you know that, in addition to Certified Public Accountant, CPA also stands for:

• Comic Performance Artist
• Cut, paste, and add (ha ha, very funny)
• Can’t pass actuary (I resent that one!)
• Canadian Psychological Association (I could use that one!)
• Compost pile activator (ok, that’s enough)

FYI – Form 990 (all series) is due on the 15^th day of the fifth month following the organization’s fiscal year-end.

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Troylynn Robichaux, CPA, CIA

Click here to read about a corrections lieutenant that has been indicted on charges of financial fraud.

There are a few lessons to be learned from this situation.

#1- You can’t fully depend on others outside the organization to be a part of the organization’s control environment. (e.g. do we really think all bank tellers verify proper signatures on checks?).

#2- Hindsight is 20-20. Implementing and executing relatively simple controls could have avoided this situation.  For example, having the Accounts Payable Personnel match the invoices, purchase orders (to which in this case they would found that there were none), and delivery receipts (or other notification that the goods, in this case ammunition, were received by the organization) before paying the line-of-credit. Doing this could have prevented the level of fraud committed here.  This may have saved the town of Berkley, MA the loss of money that the alleged crook inflicted and the embarrassment of the entire situation.

#3- Listen to your gut. I find it hard to believe that the alleged crook did not show indications that he was living the “high-life” at the expense of the City.  Did anyone notice the new items he purchased with the credit cards?  Did he brag about the home projects he started with the goods purchased at Lowe’s and Staples?  Did anyone not find his constant contact with the vendors suspicious?  I’m not suggesting to start doing surveillance 24-7 just because he mentions installing a new island in his kitchen.  However, following up on some suspicions when there are clues that something just isn’t right, by reviewing documents, inquiring of individuals involved in the purchasing process, etc. would have given cause to start the 24-7 surveillance in this case.

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Helen R. Duvall, CPA

A common question I encounter in working with Not-For-Profit organizations (NFP) relates to whether net assets (equity) are RESTRICTED or DESIGNATED.  As you know, the simple calculation of NET ASSETS is the difference between an NFPs assets and liabilities (we used to call this fund balance).  The FASB Accounting Standards Codification (ASC) 958-210-45 requires the classification of net assets into three categories:  1) PERMANENTLY RESTRICTED, 2) TEMPORARILY RESTRICTED, AND 3) UNRESTRICTED.  The classification is based on “the existence or absence of donor-imposed restrictions.”  Abbreviated definitions for these net asset classifications are as follows:

• PERMANENTLY RESTRICTED NET ASSETS are generally donor-restricted resources whose principal must be maintained in perpetuity.  Think endowment.  There are other permanently restricted scenarios but this is the most common.

• TEMPORARILY RESTRICTED NET ASSETS are donor-restricted resources whose use is limited as to purpose and/or time.  An example of this would be a contribution received by the NFP that must be used for the purchase of library books.  When the books are purchased, the restriction is satisfied.

• UNRESTRICTED NET ASSETS are resources with no restrictions as to how and/or when they must be used.

Notice that both restricted-type classifications include only resources that are donor-restricted.  From time to time, the governing body of an NFP will set-aside a portion of net assets to be used for a specific purpose.  These internally-restricted funds are DESIGNATED and remain a portion of unrestricted net assets.  This is true even of board-restricted endowment funds (quasi-endowments).

I cannot over-emphasize the importance of maintaining the separate identity of each restriction and designation, as well as the associated gains and losses.  With the advent of FAS 117-1 (which is an epic discussion for another day), I have found that some of my clients encounter difficulties in determining the funds that were restricted by outside parties versus those that were designated by the board.

In summation, funds that are restricted as to use and/or time by an outside party (the donor) will generally be classified as either temporarily restricted or permanently restricted, while those that are internally-restricted should be classified as UNRESTRICTED – DESIGNATED net assets.

www.null-lairson.com

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