Audits of Not for Profits
Our not for profit clients include membership organizations, private foundations and public charities.
Each year the IRS requires most tax-exempt organizations to submit the Form 990 and its related attachments, which includes the following items:
- Statement of Activities, with very specific revenue and expense categories like donations, salaries, postage, rent…
- Statement of Financial Position, with specific categories like cash, accounts receivable, accounts payable…
- Functional Expense Statement, with all the expenses allocated to either program services, fundraising, or operations.
- Statement of Cash Flow, this statement reconciles net income (change in net assets) with the ending balance of cash and cash equivalents.
- Individual Program Expense Statement that reports all of the expenses for each program or service like seminar programs or educational mailings.
- Revenue Support Schedules that detail the organization’s sources of income in specific categories like charitable donations, membership fees, investment income.
The IRS uses these very specific revenue and expense classifications to determine if your organization will retain its tax-exempt status. So it’s imperative that you build your accounting system around these revenue and expense classifications.