Hot Nonprofit Topics in 2013

Nonprofit Organization Update:
2012 in Review and Hot Topics for 2013

January 11, 2013

Agenda

9:00–10:15 am
Exempt Organizations in the News – A Retrospective of What Made
Headlines in 2012
Doug Boedeker, CPA, CMA, Audit Partner; Katrina Henderson, CPA, Audit
Manager

10:15–10:25 am: Break

10:25–11:15 am
Accounting & Audit Update – Looking Back at 2012
Jeffrey Stefan, CPA, Audit Partner; Rich Banner, CPA, Senior Audit Manager

11:15–12:30 pm
Revisiting Executive Compensation Reporting on the Form 990
Subrina Wood, CPA, Tax Manager; Sara Smith, Senior EO Tax Specialist

12:30 pm–1:15 pm: Lunch

Agenda

1:15–2:30 pm
How to Effectively Facilitate the Investment Manager Selection Process
Lisa Swatkoski, Vanguard Institutional Advisory Services; Camille Alexander,
Graystone Consulting; Moderator: Charles Tate, CPA, Managing Partner

2:30–3:20 pm
Trending Towards CRM
Christopher McCarthy, MCP, Principal, T3 Information Systems

3:20–3:30 pm: Break

3:30–4:45 pm
How to Prevent and Detect Common Frauds at Nonprofit Organizations
Christian Spencer, CPA, Audit Partner, and John Kubichek, CPA, CFE, Audit
Manager

Exempt Organizations in the News –
A Retrospective of What Made Headlines
in 2012
Douglas Boedeker, CPA, CMA Katrina Henderson, CPA
Audit Partner Audit Manager

January 11, 2013

Course Outline

 Introduction
 Charity Fundraising Issues
 Super-PACs & Campaign Activities
 Governance Issues
 Disaster Relief Issues
 General Scrutiny of Exempt Organizations

Copyright © 2013 Tate & Tryon CPAs and Consultants

Charity Fundraising Issues


Bloomberg Takes Notice

 “Charities Deceive Donors Unaware Money Goes
to a Telemarketer” and “Telemarketers Lying for
Charities Prompts Call for U.S. Probe”
 David Evans; Bloomberg Markets Magazine; September
12, 2012 and December 4, 2012, respectively.
 InfoCision Management Group handles telemarketing for the
American Cancer Society (ACS) and other major nonprofits
 Questioning scripts used by telemarketers – deceptive tactics used
to say one percentage went to charities but actually another
 Ex. the agreement with them states 44% will go to ACS
but the script says 70%
 Another mistake – telemarketers saying they were volunteers when
actual employees of InfoCision
 InfoCision has provided a response to this article and it is posted on
their website http://www.infocision.com


Senators Are Taking Notice

 “Don’t Be Taken In by Bogus Charities”
 Senator Blumenthal;
www.blumenthal.senate.gov/blog/dont-be-taken-in-
by-bogus-charities; May 25, 2012.

 Be aware when making donations
 Veterans Support Organization hired paid solicitors to serve
as volunteers to solicit contributions
 Several complaints of similar tactics


The Senate Committee on Finance Remains
Active

 “Baucus, Burr Investigate Nonprofit For
Exploiting Veterans, Taxpayers, Abusing
Tax-exempt Status”
 Senator Richard Burr; Committee On Finance News
Release; May 23, 2012.

 Press release discussing whether tax-exempt organizations
are being used for financial/political gain
 Letter issued to the Disabled Veterans National Foundation
requesting revenue information, the fundraising expense and
other information


An Interesting Take on Grant Proposals

 “Guarding Against Grant Fraud”
 Barbara Floersch; The NonProfit Times; December 3,
2012.

 Grant writing is susceptible to fraud
 Policies and procedures should be set in place to protect the
organizations
 Examples include:
 Having a grant development project leader
 Verify all data presented
 Perform an accuracy ethics review prior to signing
 Monitor consultants timely


Fighting the Fiscal Cliff…

 “Charitable-Deduction Limit Would Hurt
Poor, Say Nonprofit Leaders”
 Doug Donovan; The Chronicle of Philanthropy;
November 13, 2012.

 Cap on deductions will reduce the amount of donations
received by nonprofits as the additional tax will be taken from
their overall donation


….and still Fighting the Fiscal Cliff

 “In Fine Print of Fiscal Debate, Charities
Unite to Defend Deductions”
 Annie Lowrey; The New York Times; December 5,
2012.
 Nonprofits uniting for the tax deduction on donations
 “Normally, every nonprofit is focused on its own particular
mission, whether saving the environment, or helping children,
or imbuing a greater appreciation for art. For the first time,
I’ve seen the sector coming together. We’re like Rip Van
Winkle waking up and saying, This is not O.K.” said Diana
Aviv, Chief Executive of Independent Sector


New Fundraising Initiatives Keep Popping Up

 “Organizers launch “Giving Tuesday” to help
charities”
 Annie Gowen; The Washington Post; November 27, 2012.

 National Day of Giving
 “Beyond the consumer focus of Cyber Monday and Black Friday, I
think people are a little anxious to do something more this holiday”
said Allyson Burs, Vice President of Communication for the
foundation of AOL founder Steve Case and his wife, Jean
 “Everybody talks about the giving season…We thought it would be
great to give the giving season an opening day” said Henry Timms,
Deputy Executive Director of 92nd Street Y


Scrutiny of “Cause Related Marketing”

 “Breast Cancer Awareness Month Criticized
for “Little Pink Lies””
 Rick Cohen; Nonprofit Quarterly; October 18, 2012.

 Pink Ribbon campaign may be deceptive as the money raised
may not actually go to the cause
 Are nonprofits really benefiting more from the cause related
marketing?


Super-PACs & Campaign
Activities


Super-PAC Spending

“Rove Biggest Super-PAC Loser, Trump Says
Waste of Money”
 Julie Bykowicz & Alison Fitzgerald; Bloomberg L.P.;
November 8, 2012.

 Are Super-PACs productive?

 How will future donations be impacted?


Super-PAC Governance

“Post-Campaign Super-PAC Cash Still Flowing
to Consultants”
 Julie Bykowicz; Bloomberg L.P.; December 3, 2012.

 Administration vs. Program Expense Ratios for
some Super-PACs are shockingly high.

 An amazing lack of governance and oversight.


Campaign Disclosures

“States Crack Down on Campaigning
Nonprofits”
 Matea Gold & Chris Megerian; Los Angeles Times;
November 26, 2012.
 Political activities of 501(c)(4) entities are
drawing scrutiny at the state level. (Amid
frustration of the Federal reporting rules.)
 Fears of nonprofits participating in “campaign
money laundering”.


Governance Issues


BoardSource Governance Index

“Nonprofit Governance Index 2012 Suggests Some
Positive Trends and Continued Concerns”
 Philanthropy Journal Staff Report; Philanthropy Journal;
October 3, 2012.

 BoardSource Nonprofit Governance Index 2012 can
be obtained via www.Boardsource.org

 Fundraising is singled out as the area where Board
members perform most poorly.


Governance Factors

“The Role of the Nonprofit Board: Four
Essential Factors for Effective Governance”
 Alice Korngold; The Huffington Post; September 9,
2012.

 Achievement
 Accountability
 Ownership
 Oversight


Call to Strengthen NFP Oversight

“Improve Oversight of Nonprofits”
 Nicholas P. Carardi; Pittsburgh Post-Gazette; April 8,
2012.

 Editorial in the wake of the Penn State scandal.
 Questions effectiveness of Boards
 Advocates a “Private Attorney General” statute –
a charity’s stakeholders could sue for
mismanagement.


The University of Maryland

“Legality of University System of Maryland’s
Big Ten Vote Questioned”
 Jenna Johnson; The Washington Post; November 20,
2012.

 Concern over state sunshine laws in conjunction
with decision to leave the ACC.
 Does “process kill the offer”?
 University issued a statement on December 7,
2012 expressing regret about not following the
sunshine laws.

The University of Virginia

“Anatomy of a Campus Coup”
 Andrew Rice; The New York Times; September 11, 2012.

 Tension over strategic direction of UVA – was there
even a strategy?
 Did the Board listen too much to mid-level
management (professors)?
 Board composition came under scrutiny.
 Avoidance of sunshine laws?
 Back-end involvement by former Board members?


Dartmouth College

“Leon Black Investing Dartmouth Money Stirs
Ethics Debate”
 Gillian Wee; Bloomberg Markets Magazine; January
7, 2013.

 Basic conflict of interest issue.
 Can safeguards overcome perception?
 But, what if the conflict is profitable?


The Corcoran Gallery of Art

“Corcoran Gallery of Art to Remain in Historic
Washington Home”
 David Montgomery; The Washington Post; December
10, 2012.

 Capped a six-month period of public exploration
about the Corcoran’s future.
 Public discussion appears to have been fruitful.
 A fascinating story to follow as it unfolded.


Disaster Relief


Hurricane Sandy Funds

 “N.Y. Sandy Fund Scrutinized”
 Laura Nahmias; The Wall Street Journal; December
9, 2012.
 Use of a state agency to oversee fund distribution and a
board of political fundraisers
 Contrary to what other states have done as other states have used large
nonprofits with disaster relief experience such as United Way
 Approach is problematic because of state regulations that
must be followed – RESULT, delays in aid
 Daniel Borochoff, president of CharityWatch says “It is
interesting that they are raising money in direct competition
with the charities”
 Their defense – every dollar raised will go to N.Y. citizens
rather than cover overhead expenses

Contingency Plans in the Wake of Sandy

 “Charities Strike Back After Sandy’s
Knockdown Punch”
 Mark Hrywna; The NonProfitTimes; December 3,
2012.

 Raised over a $100M for aid within 1 week of the storm
 Contingency plans initiated for relief agencies impacted
 Ex. moving departments to other states, learning from past situations


Hurricane Katrina’s Impact

 “Lessons Learned From Katrina”
 Ann Silverberg Williamson; The NonProfitTimes;
December 3, 2012.

 The needs of organization may be larger than those currently
served
 Principles to help maintain balance
 Stick to the mission
 Use all means of communication
 Take care of service providers
 Maintain strong systems for accountability


General Scrutiny of Exempt
Organizations


Bloomberg’s Expose’

“Tax-Exempt Firm Gets $600 Million Profit
Flying First Class”
 David Evans; Bloomberg Markets Magazine;
November 14, 2012.

 A must-read article for association executives!
 Questions the U.S. practice of allowing
associations to self-declare exempt status.
 Should royalties be tax-exempt?
 Executive compensation always draws scrutiny!

Bloomberg’s Editorial

“Making Sure Nonprofits Aren’t All About
Profit”
 Editors; Bloomberg View; November 14, 2012.

 Dovetails off of the Bloomberg’s various articles
examining exempt organizations.
 Calls for increased Federal and state
enforcement of exempt organizations.
 Interesting discussion of the Tax Reform Act of
1969’s excise tax on the investment income of
private foundations.

College Athletics

“Football-Ticket Tax Break Helps Colleges Get
Millions”
 Curtis Eichelberger & Charles Babcock, Bloomberg
L.P.; October 25, 2012.

 Part of the debate over what constitutes a
charitable deduction.
 History of the authorizing legislation is a fun
read.
 Should a college’s television, sponsorship, and
royalty revenue be tax exempt?

Charities as Fraud Conduits

“Bronx Councilman is Convicted of Fraud and
Loses Seat”
 Benjamin Weiser; The New York Times; July 26,
2012.

“Ex-D.C. Council member Harry Thomas Jr.
gets 3-year sentence”
 Tim Craig & Mike DeBonis; The Washington Post;
May 3, 2012

 Both stories involve local officials stealing
government money through charities.

Thank you for your time!


Speaker Biography

Douglas Boedeker , is a partner within Tate & Tryon’s Audit and
Assurance Services unit and is also actively involved in the Firm's
exempt organization tax services group. He has more than 20
years of experience providing an array of audit, tax, and consulting
services to a variety of nonprofit organizations and employee
benefit plans. He takes particular pride that his family has
contained at least one CPA every year since 1923.

Doug graduated summa cum laude from Susquehanna University
in Selinsgrove, Pennsylvania with a Bachelor of Science degree in
Doug Boedeker, CPA, CMA
accounting while simultaneously completing the coursework for a
Audit Partner
second major in arts administration. Tate & Tryon
202-419-5106
Known for an enthusiastic and entertaining style, he is a frequent dboedkeer@tatetryon.com
speaker on a variety of exempt organization audit, accounting, and
tax issues. Doug is also a coauthor to Guide to the Newest IRS
Form 990: Interpreting and Complying with the New Tax Reporting
Requirements for Transparency and Accountability, (published by
ASAE).

Speaker Biography

Katrina Henderson, CPA, is a manager within Tate & Tryon’s
Audit and Assurance Services unit. She has more than 12 years
of experience providing an array of audit services to a variety of
nonprofit organizations and employee benefit plans.

Katrina graduated cum laude from the University of Maryland in
College Park, Maryland with a Bachelor of Science degree in
accounting and marketing.

Katrina Henderson, CPA
Audit Manager
Tate & Tryon
202-419-5121
khenderson@tatetryon.com

Revisiting Executive Compensation
Reporting on the Form 990

Speakers:
Subrina Wood, CPA Sara Smith
Tax Manger Senior Exempt Organization Tax Specialist
Tate & Tryon Tate & Tryon

January 11, 2013

Agenda

 General Overview of Compensation
Reporting
 Voting members and independence

 Definitions and time periods

 Common paymaster treatment

 Reporting on the Statement of Functional Expenses

Agenda

 Schedule J and Compensation Information
 Special Topics

 Accountable plans and Cash Advances

 Severance, non-qualified plans, and equity based
payments

 Miscellaneous topics

Overview

 Board of Directors/Trustees
 Voting members
 Officers - By-laws
 Independence
 Conflict of interest
 Officers
 Board Officers
 Organization Officers
 Deemed Officers CEO and CFO

Overview

 Key Employee
 Authority – broad based or quantified by control over
at least 10% of the total assets, expenses, revenue
or program.
 Salary threshold - $150,000 reportable (W-2 Box 1or
5 whichever is higher or 1099 Box 7) compensation
 Must be one of the top 20 employees who satisfy the
responsibility and $150,000 test
 Five Highest Paid
 Salary threshold - $100,000 in reportable
compensation

Overview

 Officers, Trustees and Key Employees are
separately reported on Line 5.
 Amount includes salary, pension, and non taxable
benefits
 Fiscal year organizations must provide an additional
calculations for Line 5.
 Allocation differences of key and officer salaries
 Amounts are based on the fiscal year of organization
 Amounts will not tie to the totals found in Part VII due
to the $10,000 exception rules.

Overview

 Common paymaster treatment
 Method of allocation between organization is time
based and is only for the reportable compensation.
 Reportable Compensation allocated to related
organizations and reported as if paid by that
organization
Columns (D) and (E) of Part VII equal the total amount
of reportable compensation. Column E – Other
compensation is not allocated and does not change.
 Amounts reported in Part V for the number of W-2s
filed is based on the EIN of the organization that
actually filed the W-2s.

Schedule J – Compensation Information

 Special Topics
 First class travel and travel for companions
 Not business class or bumps to first class
 Any guest or family member not on bona fide business
purpose
 Health or social clubs dues or initiation fees
 Does not include on premise facilities
 Does not include athletic facilities provided by a school
 Tax indemnifications and gross ups
 Any reimbursement of any tax obligation paid by the
organization.


 Special Topics
 Business use of personal residence
 Payment for use of all or any part of a listed person’s
residence for any purpose of the organization.
 Discretionary spending accounts
 Any sum of money controlled by a listed person’s
control that is not under an accountable plan, whether
or not used for any personal expense.
 Personal services
 Babysitter, bodyguard, chauffeur, chef, tax preparer,
pet sitter, financial planner, lawyer, personal assistant.


 Expense reimbursements
 Accountable plans – require substantiation
Method is not material: credit card, reimbursement or
cash advances are permitted by these plans
Payments to employees that were not substantiated or
allowances for more than spent are compensation
 Directors and trustee are considered employees for
purposes fringe benefits and can be reimbursed
substantially identically as employees under the plan.
 Outstanding salary advances that are not under an
accountable plan are considered loans and reported
on Schedule L, Part II.


 Severance payments
 Report if amount paid by reporting or related
organization
 Includes payments for wrongful termination or
demotion
 Payments resulting in termination or change of
employment made under a change-of-control
 Report name, amount and any terms in Supplemental
Information section of Schedule J


 Participation in supplemental non-qualified
plans
 Does not include 457(b) plans or split-dollar life
insurance plans, but does include 457(f) plans.

 All plans that are not generally available to all
employees, but only to highly paid ones

 Disclose name, amount, and description of plan in the
Supplemental Information section of Schedule J


 Participation in equity based plans
 Paid by organization or related organization

 Includes stock, stock options, stock appreciation
rights, restricted stock or shadow stock.

 Includes payments determined by reference to equity
in a partnership, limited liability company, or
corporation


 Special compensation considerations for
public charities 501(c)(3) and social welfare
501(c)(4) organizations
 Compensation contingent of net earnings or revenue

 Bonuses and non-fixed payments rules

 Contracts and employment agreements
Initial contract exception and the
rebuttable presumption procedure

Miscellaneous Topics

 Insurance policies
 Form 8925 – Report of Employer Owned Life
Insurance Polices
 Only for contracts issued after 8/17/06 and in force at
the end of the tax year

 Insured must be a US citizen or resident

 Answer YES to payment of premium of personal benefit
contract on page 5


 Payments to Owners of Single Member LLCs
 Form W-9 indicates if the payment is to the
corporation of the individual
 Payments made to the corporation appear on
Schedule L, Part IV if over the reporting threshold.
 Consider additional disclosure on Schedule O
 Payments made to the individual are reported on a
1099-MISC. The amount in Box 7 should be reported
in Part VII


 Management companies
 Report payments as Independent Contractors in Part
VII, Section B
 Check question about delegating control over
management duties in Governance and Management
section YES.
 Report top management or financial person from the
management company in Part VII with full disclosure
 Leased employees
 Professional employer organization (PEO)
 Reporting is the same as above, if appropriate.

Reference Material and Website

Interpreting and Complying
with the New Tax Reporting
Requirements for
Transparency and
Accountability
By:
 Charles F. Tate, CPA
 Deborah G. Kosnett, CPA
 Douglas A. Boedeker, CPA
 Subrina L. Wood, CPA
 Frederick U. Longwood, CPA

 ASAEcenter.org/bookstore

Speaker Biography

Subrina Wood, CPA, is a Tax Manager in the Firm’s Exempt
Organization Tax department with more than 25 years of exempt-
organization tax experience. Previously, Ms. Wood worked in the
tax departments of the Boston offices of KPMG, Mellon Bank, and
Thompson Reuters.

Ms. Wood has extensive experience establishing and maintaining
private foundations and charitable gift strategies, and has worked
with organizations such as Carnegie Mellon University, Virginia
Military Institute, and Smith College. In addition, she has
Subrina Wood, CPA
considerable experience with the following exempt organization
Tax Manager
tax specialty areas: Form 990 reporting; tax reporting for Tate & Tryon
nonprofits holding alternative investments; preparing entities for 202-419-5129
electronic filing and payment options; accounting and reporting for swood@tatetryon.com
special events and fundraisers; and handling nonresident alien tax
issues.

Ms. Wood has presented on a variety of exempt organization tax
issues at nonprofit industry conferences such as the AICPA
National Not-For-Profit Industry Conference and ASAE’s Annual
Association Law Symposium.

Speaker Biography

Sara Smith, is a senior exempt organization tax specialist with the
Firm. She has extensive experience in dealing with a variety of
exempt organization tax areas such as governance policies, nexus
issues, functional allocation of expenses, non-cash contributions,
and foreign reporting requirements on the Form 990. Ms. Smith
also recently published an article in the Firm’s newsletter titled,
“The Value of Good Governance Policies,” in which she discusses
the importance of establishing good governance policies and how
this information should be disclosed on the Form 990.
Sara Smith
Ms. Smith is involved in the oversight of the tax engagements
Senior Exempt Organization
such as American Society of Association Executives (ASAE); Tax Specialist
American Society of Cataract and Refractive Surgery; American Tate & Tryon
Association of Justice, American Association of Universities; 202-419-5195
Common Cause; Council of Better Business Bureaus; ssmith@tatetryon.com
Pharmaceutical Research & Manufacturers of America; United
States Capitol Historical Society; and Washington DC Economic
Partnership.

Form 990 (2012) Page 5
Part V Statements Regarding Other IRS Filings and Tax Compliance
Check if Schedule O contains a response to any question in this Part V . . . . . . . . . . . . . .
Yes No
1a Enter the number reported in Box 3 of Form 1096. Enter -0- if not applicable . . . . 1a
b Enter the number of Forms W-2G included in line 1a. Enter -0- if not applicable . . . . 1b
c Did the organization comply with backup withholding rules for reportable payments to vendors and
reportable gaming (gambling) winnings to prize winners? . . . . . . . . . . . . . . . . . 1c
2a Enter the number of employees reported on Form W-3, Transmittal of Wage and Tax
Statements, filed for the calendar year ending with or within the year covered by this return 2a
b If at least one is reported on line 2a, did the organization file all required federal employment tax returns? . 2b
Note. If the sum of lines 1a and 2a is greater than 250, you may be required to e-file (see instructions) . .
3a Did the organization have unrelated business gross income of $1,000 or more during the year? . . . . 3a
b If “Yes,” has it filed a Form 990-T for this year? If “No,” provide an explanation in Schedule O . . . . . 3b
4a At any time during the calendar year, did the organization have an interest in, or a signature or other authority
over, a financial account in a foreign country (such as a bank account, securities account, or other financial
account)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4a
b If “Yes,” enter the name of the foreign country:
See instructions for filing requirements for Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts.
5a Was the organization a party to a prohibited tax shelter transaction at any time during the tax year? . . . 5a
b Did any taxable party notify the organization that it was or is a party to a prohibited tax shelter transaction? 5b
c If “Yes” to line 5a or 5b, did the organization file Form 8886-T? . . . . . . . . . . . . . . . 5c
6a Does the organization have annual gross receipts that are normally greater than $100,000, and did the
organization solicit any contributions that were not tax deductible as charitable contributions? . . . . . 6a
b If “Yes,” did the organization include with every solicitation an express statement that such contributions or
gifts were not tax deductible? . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
7 Organizations that may receive deductible contributions under section 170(c).
a Did the organization receive a payment in excess of $75 made partly as a contribution and partly for goods
and services provided to the payor? . . . . . . . . . . . . . . . . . . . . . . . . 7a
b If “Yes,” did the organization notify the donor of the value of the goods or services provided? . . . . . 7b
c Did the organization sell, exchange, or otherwise dispose of tangible personal property for which it was
required to file Form 8282? . . . . . . . . . . . . . . . . . . . . . . . . . . . 7c
d If “Yes,” indicate the number of Forms 8282 filed during the year . . . . . . . . 7d
e Did the organization receive any funds, directly or indirectly, to pay premiums on a personal benefit contract? 7e
f Did the organization, during the year, pay premiums, directly or indirectly, on a personal benefit contract? . 7f
g If the organization received a contribution of qualified intellectual property, did the organization file Form 8899 as required? 7g
h If the organization received a contribution of cars, boats, airplanes, or other vehicles, did the organization file a Form 1098-C? 7h
8 Sponsoring organizations maintaining donor advised funds and section 509(a)(3) supporting
organizations. Did the supporting organization, or a donor advised fund maintained by a sponsoring
organization, have excess business holdings at any time during the year? . . . . . . . . . . . 8
9 Sponsoring organizations maintaining donor advised funds.
a Did the organization make any taxable distributions under section 4966? . . . . . . . . . . . . 9a
b Did the organization make a distribution to a donor, donor advisor, or related person? . . . . . . . 9b
10 Section 501(c)(7) organizations. Enter:
a Initiation fees and capital contributions included on Part VIII, line 12 . . . . . . . 10a
b Gross receipts, included on Form 990, Part VIII, line 12, for public use of club facilities . 10b
11 Section 501(c)(12) organizations. Enter:
a Gross income from members or shareholders . . . . . . . . . . . . . . . 11a
b Gross income from other sources (Do not net amounts due or paid to other sources
against amounts due or received from them.) . . . . . . . . . . . . . . . 11b
12a Section 4947(a)(1) non-exempt charitable trusts. Is the organization filing Form 990 in lieu of Form 1041? 12a
b If “Yes,” enter the amount of tax-exempt interest received or accrued during the year . . 12b
13 Section 501(c)(29) qualified nonprofit health insurance issuers.
a Is the organization licensed to issue qualified health plans in more than one state? . . . . . . . . 13a
Note. See the instructions for additional information the organization must report on Schedule O.
b Enter the amount of reserves the organization is required to maintain by the states in which
the organization is licensed to issue qualified health plans . . . . . . . . . . 13b
c Enter the amount of reserves on hand . . . . . . . . . . . . . . . . . 13c
14a Did the organization receive any payments for indoor tanning services during the tax year? . . . . . . 14a
b If "Yes," has it filed a Form 720 to report these payments? If "No," provide an explanation in Schedule O . 14b
Form 990 (2012)

Form 990 (2012) Page 6
Part VI Governance, Management, and Disclosure For each “Yes” response to lines 2 through 7b below, and for a “No”
response to line 8a, 8b, or 10b below, describe the circumstances, processes, or changes in Schedule O. See instructions.
Check if Schedule O contains a response to any question in this Part VI . . . . . . . . . . . . . .
Section A. Governing Body and Management
Yes No
1a Enter the number of voting members of the governing body at the end of the tax year . . 1a
If there are material differences in voting rights among members of the governing body, or
if the governing body delegated broad authority to an executive committee or similar
committee, explain in Schedule O.
b Enter the number of voting members included in line 1a, above, who are independent . 1b
2 Did any officer, director, trustee, or key employee have a family relationship or a business relationship with
any other officer, director, trustee, or key employee? . . . . . . . . . . . . . . . . . . 2
3 Did the organization delegate control over management duties customarily performed by or under the direct
supervision of officers, directors, or trustees, or key employees to a management company or other person? . 3
4 Did the organization make any significant changes to its governing documents since the prior Form 990 was filed? 4
5 Did the organization become aware during the year of a significant diversion of the organization’s assets? . 5
6 Did the organization have members or stockholders? . . . . . . . . . . . . . . . . . . 6
7a Did the organization have members, stockholders, or other persons who had the power to elect or appoint
one or more members of the governing body? . . . . . . . . . . . . . . . . . . . . 7a
b Are any governance decisions of the organization reserved to (or subject to approval by) members,
stockholders, or persons other than the governing body? . . . . . . . . . . . . . . . . . 7b
8 Did the organization contemporaneously document the meetings held or written actions undertaken during
the year by the following:
a The governing body? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a
b Each committee with authority to act on behalf of the governing body? . . . . . . . . . . . . 8b
9 Is there any officer, director, trustee, or key employee listed in Part VII, Section A, who cannot be reached at
the organization’s mailing address? If “Yes,” provide the names and addresses in Schedule O . . . . . 9
Section B. Policies (This Section B requests information about policies not required by the Internal Revenue Code.)
Yes No
10a Did the organization have local chapters, branches, or affiliates? . . . . . . . . . . . . . . 10a
b If “Yes,” did the organization have written policies and procedures governing the activities of such chapters,
affiliates, and branches to ensure their operations are consistent with the organization's exempt purposes? 10b
11a Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form? 11a
b Describe in Schedule O the process, if any, used by the organization to review this Form 990.
12a Did the organization have a written conflict of interest policy? If “No,” go to line 13 . . . . . . . . 12a
b Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts? 12b
c Did the organization regularly and consistently monitor and enforce compliance with the policy? If “Yes,”
describe in Schedule O how this was done . . . . . . . . . . . . . . . . . . . . . . 12c
13 Did the organization have a written whistleblower policy? . . . . . . . . . . . . . . . . . 13
14 Did the organization have a written document retention and destruction policy? . . . . . . . . . 14
15 Did the process for determining compensation of the following persons include a review and approval by
independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?
a The organization’s CEO, Executive Director, or top management official . . . . . . . . . . . . 15a
b Other officers or key employees of the organization . . . . . . . . . . . . . . . . . . . 15b
If “Yes” to line 15a or 15b, describe the process in Schedule O (see instructions).
16a Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement
with a taxable entity during the year? . . . . . . . . . . . . . . . . . . . . . . . . 16a
b If “Yes,” did the organization follow a written policy or procedure requiring the organization to evaluate its
participation in joint venture arrangements under applicable federal tax law, and take steps to safeguard the
organization’s exempt status with respect to such arrangements? . . . . . . . . . . . . . . 16b
Section C. Disclosure
17 List the states with which a copy of this Form 990 is required to be filed
18 Section 6104 requires an organization to make its Forms 1023 (or 1024 if applicable), 990, and 990-T (Section 501(c)(3)s only)
available for public inspection. Indicate how you made these available. Check all that apply.
Own website Another’s website Upon request Other (explain in Schedule O)
19 Describe in Schedule O whether (and if so, how), the organization made its governing documents, conflict of interest policy,
and financial statements available to the public during the tax year.
20 State the name, physical address, and telephone number of the person who possesses the books and records of the
organization:
Form 990 (2012)

Form 990 (2012) Page 7
Part VII Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and
Independent Contractors
Check if Schedule O contains a response to any question in this Part VII . . . . . . . . . . . . . .
Section A. Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees
1a Complete this table for all persons required to be listed. Report compensation for the calendar year ending with or within the
organization’s tax year.
• List all of the organization’s current officers, directors, trustees (whether individuals or organizations), regardless of amount of
compensation. Enter -0- in columns (D), (E), and (F) if no compensation was paid.
• List all of the organization’s current key employees, if any. See instructions for definition of “key employee.”
• List the organization’s five current highest compensated employees (other than an officer, director, trustee, or key employee)
who received reportable compensation (Box 5 of Form W-2 and/or Box 7 of Form 1099-MISC) of more than $100,000 from the
organization and any related organizations.
• List all of the organization’s former officers, key employees, and highest compensated employees who received more than
$100,000 of reportable compensation from the organization and any related organizations.
• List all of the organization’s former directors or trustees that received, in the capacity as a former director or trustee of the
organization, more than $10,000 of reportable compensation from the organization and any related organizations.
List persons in the following order: individual trustees or directors; institutional trustees; officers; key employees; highest
compensated employees; and former such persons.
Check this box if neither the organization nor any related organization compensated any current officer, director, or trustee.
(C)
Position
(A) (B) (D) (E) (F)
(do not check more than one
Name and Title Average box, unless person is both an Reportable Reportable Estimated
hours per officer and a director/trustee) compensation compensation from amount of
week (list any from related other
or director
Individual trustee

Institutional trustee

Officer

Key employee

employee
Highest compensated

Former
hours for the organizations compensation
related organization (W-2/1099-MISC) from the
organizations (W-2/1099-MISC) organization
below dotted and related
line) organizations

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

Form 990 (2012)

Form 990 (2012) Page 8
Part VII Section A. Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees (continued)
(C)
Position
(A) (B) (D) (E) (F)
(do not check more than one
Name and title Average box, unless person is both an Reportable Reportable Estimated
hours per officer and a director/trustee) compensation compensation from amount of
week (list any from related other

or director
Individual trustee

Institutional trustee

Officer

Key employee

employee
Highest compensated

Former
hours for the organizations compensation
related organization (W-2/1099-MISC) from the
organizations (W-2/1099-MISC) organization
below dotted and related
line) organizations

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)

1b Sub-total . . . . . . . . . . . . . . . . . . . . .
c Total from continuation sheets to Part VII, Section A . . . . .
d Total (add lines 1b and 1c) . . . . . . . . . . . . . . .
2 Total number of individuals (including but not limited to those listed above) who received more than $100,000 of
reportable compensation from the organization
Yes No
3 Did the organization list any former officer, director, or trustee, key employee, or highest compensated
employee on line 1a? If “Yes,” complete Schedule J for such individual . . . . . . . . . . . . 3
4 For any individual listed on line 1a, is the sum of reportable compensation and other compensation from the
organization and related organizations greater than $150,000? If “Yes,” complete Schedule J for such
individual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Did any person listed on line 1a receive or accrue compensation from any unrelated organization or individual
for services rendered to the organization? If “Yes,” complete Schedule J for such person . . . . . . 5
Section B. Independent Contractors
1 Complete this table for your five highest compensated independent contractors that received more than $100,000 of
compensation from the organization. Report compensation for the calendar year ending with or within the organization's tax
year.
(A) (B) (C)
Name and business address Description of services Compensation

2 Total number of independent contractors (including but not limited to those listed above) who
received more than $100,000 of compensation from the organization
Form 990 (2012)

Form 990 (2012) Page 9
Part VIII Statement of Revenue
Check if Schedule O contains a response to any question in this Part VIII. . . . . . . . . . . . . . . .
(A) (B) (C) (D)
Total revenue Related or Unrelated Revenue
exempt business excluded from tax
function revenue under sections
revenue 512, 513, or 514
1a
Contributions, Gifts, Grants
and Other Similar Amounts

Federated campaigns . . . 1a
b Membership dues . . . . 1b
c Fundraising events . . . . 1c
d Related organizations . . . 1d
e Government grants (contributions) 1e
f All other contributions, gifts, grants,
and similar amounts not included above 1f
g Noncash contributions included in lines 1a-1f: $
h Total. Add lines 1a–1f . . . . . . . . .
Business Code
Program Service Revenue

2a
b
c
d
e
f All other program service revenue .
g Total. Add lines 2a–2f . . . . . . . . .
3 Investment income (including dividends, interest,
and other similar amounts) . . . . . . .
4 Income from investment of tax-exempt bond proceeds
5 Royalties . . . . . . . . . . . . .
(i) Real (ii) Personal

6a Gross rents . .
b Less: rental expenses
c Rental income or (loss)
d Net rental income or (loss) . . . . . . .
7a Gross amount from sales of (i) Securities (ii) Other
assets other than inventory
b Less: cost or other basis
and sales expenses .
c Gain or (loss) . .
d Net gain or (loss) . . . . . . . . . .
Other Revenue

8a Gross income from fundraising
events (not including $
of contributions reported on line 1c).
See Part IV, line 18 . . . . . a
b Less: direct expenses . . . . b
c Net income or (loss) from fundraising events .
9a Gross income from gaming activities.
See Part IV, line 19 . . . . . a
b Less: direct expenses . . . . b
c Net income or (loss) from gaming activities . .
10a Gross sales of inventory, less
returns and allowances . . . a
b Less: cost of goods sold . . . b
c Net income or (loss) from sales of inventory . .
Miscellaneous Revenue Business Code
11a
b
c
d All other revenue . . . . .
e Total. Add lines 11a–11d . . . . . . . .
12 Total revenue. See instructions. . . . . .
Form 990 (2012)

Form 990 (2012) Page 10
Part IX Statement of Functional Expenses
Section 501(c)(3) and 501(c)(4) organizations must complete all columns. All other organizations must complete column (A).
Check if Schedule O contains a response to any question in this Part IX . . . . . . . . . . . . . .
Do not include amounts reported on lines 6b, 7b, (A) (B) (C) (D)
Total expenses Program service Management and Fundraising
8b, 9b, and 10b of Part VIII. expenses general expenses expenses
1 Grants and other assistance to governments and
organizations in the United States. See Part IV, line 21
2 Grants and other assistance to individuals in
the United States. See Part IV, line 22 . . .
3 Grants and other assistance to governments,
organizations, and individuals outside the
United States. See Part IV, lines 15 and 16 . .
4 Benefits paid to or for members . . . .
5 Compensation of current officers, directors,
trustees, and key employees . . . . .
6 Compensation not included above, to disqualified
persons (as defined under section 4958(f)(1)) and
persons described in section 4958(c)(3)(B) . .
7 Other salaries and wages . . . . . .
8 Pension plan accruals and contributions (include
section 401(k) and 403(b) employer contributions)
9 Other employee benefits . . . . . . .
10 Payroll taxes . . . . . . . . . . .
11 Fees for services (non-employees):
a Management . . . . . . . . . .
b Legal . . . . . . . . . . . . .
c Accounting . . . . . . . . . . .
d Lobbying . . . . . . . . . . . .
e Professional fundraising services. See Part IV, line 17
f Investment management fees . . . . .
g Other. (If line 11g amount exceeds 10% of line 25, column
(A) amount, list line 11g expenses on Schedule O.) . .
12 Advertising and promotion . . . . . .
13 Office expenses . . . . . . . . .
14 Information technology . . . . . . .
15 Royalties . . . . . . . . . . . .
16 Occupancy . . . . . . . . . . .
17 Travel . . . . . . . . . . . . .
18 Payments of travel or entertainment expenses
for any federal, state, or local public officials
19 Conferences, conventions, and meetings .
20 Interest . . . . . . . . . . . .
21 Payments to affiliates . . . . . . . .
22 Depreciation, depletion, and amortization .
23 Insurance . . . . . . . . . . . .
24 Other expenses. Itemize expenses not covered
above (List miscellaneous expenses in line 24e. If
line 24e amount exceeds 10% of line 25, column
(A) amount, list line 24e expenses on Schedule O.)
a
b
c
d
e All other expenses
25 Total functional expenses. Add lines 1 through 24e
26 Joint costs. Complete this line only if the
organization reported in column (B) joint costs
from a combined educational campaign and
fundraising solicitation. Check here if
following SOP 98-2 (ASC 958-720) . . . .
Form 990 (2012)

SCHEDULE J Compensation Information OMB No. 1545-0047

2012
(Form 990) For certain Officers, Directors, Trustees, Key Employees, and Highest
Compensated Employees
Complete if the organization answered "Yes" to Form 990,
Part IV, line 23. Open to Public
Department of the Treasury
Internal Revenue Service Attach to Form 990. See separate instructions. Inspection
Name of the organization Employer identification number

Part I Questions Regarding Compensation
Yes No
1a Check the appropriate box(es) if the organization provided any of the following to or for a person listed in Form
990, Part VII, Section A, line 1a. Complete Part III to provide any relevant information regarding these items.
First-class or charter travel Housing allowance or residence for personal use
Travel for companions Payments for business use of personal residence
Tax indemnification and gross-up payments Health or social club dues or initiation fees
Discretionary spending account Personal services (e.g., maid, chauffeur, chef)

b If any of the boxes on line 1a are checked, did the organization follow a written policy regarding payment
or reimbursement or provision of all of the expenses described above? If “No,” complete Part III to
explain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b

2 Did the organization require substantiation prior to reimbursing or allowing expenses incurred by all officers,
directors, trustees, and the CEO/Executive Director, regarding the items checked in line 1a? . . . . . 2

3 Indicate which, if any, of the following the filing organization used to establish the compensation of the
organization’s CEO/Executive Director. Check all that apply. Do not check any boxes for methods used by a
related organization to establish compensation of the CEO/Executive Director, but explain in Part III.
Compensation committee Written employment contract
Independent compensation consultant Compensation survey or study
Form 990 of other organizations Approval by the board or compensation committee

4 During the year, did any person listed in Form 990, Part VII, Section A, line 1a, with respect to the filing
organization or a related organization:
a Receive a severance payment or change-of-control payment? . . . . . . . . . . . . . . . 4a
b Participate in, or receive payment from, a supplemental nonqualified retirement plan? . . . . . . . 4b
c Participate in, or receive payment from, an equity-based compensation arrangement? . . . . . . . 4c
If “Yes” to any of lines 4a–c, list the persons and provide the applicable amounts for each item in Part III.

Only section 501(c)(3) and 501(c)(4) organizations must complete lines 5–9.
5 For persons listed in Form 990, Part VII, Section A, line 1a, did the organization pay or accrue any
compensation contingent on the revenues of:
a The organization? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5a
b Any related organization? . . . . . . . . . . . . . . . . . . . . . . . . . . . 5b
If “Yes” to line 5a or 5b, describe in Part III.
6 For persons listed in Form 990, Part VII, Section A, line 1a, did the organization pay or accrue any
compensation contingent on the net earnings of:
a The organization? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a
b Any related organization? . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
If “Yes” to line 6a or 6b, describe in Part III.
7 For persons listed in Form 990, Part VII, Section A, line 1a, did the organization provide any non-fixed
payments not described in lines 5 and 6? If “Yes,” describe in Part III . . . . . . . . . . . . . 7
8 Were any amounts reported in Form 990, Part VII, paid or accrued pursuant to a contract that was subject
to the initial contract exception described in Regulations section 53.4958-4(a)(3)? If “Yes,” describe
in Part III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 If “Yes” to line 8, did the organization also follow the rebuttable presumption procedure described in
Regulations section 53.4958-6(c)? . . . . . . . . . . . . . . . . . . . . . . . . 9
For Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat. No. 50053T Schedule J (Form 990) 2012

Schedule J (Form 990) 2012 Page 2
Part II Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees. Use duplicate copies if additional space is needed.
For each individual whose compensation must be reported in Schedule J, report compensation from the organization on row (i) and from related organizations, described in the
instructions, on row (ii). Do not list any individuals that are not listed on Form 990, Part VII.
Note. The sum of columns (B)(i)–(iii) for each listed individual must equal the total amount of Form 990, Part VII, Section A, line 1a, applicable column (D) and (E) amounts for that individual.
(B) Breakdown of W-2 and/or 1099-MISC compensation
(C) Retirement and (D) Nontaxable (E) Total of columns (F) Compensation
(i) Base (ii) Bonus & incentive (iii) Other other deferred benefits (B)(i)–(D)
(A) Name and Title reported as deferred in
compensation compensation reportable compensation
prior Form 990
compensation

(i)
1 (ii)
(i)
2 (ii)
(i)
3 (ii)
(i)
4 (ii)
(i)
5 (ii)
(i)
6 (ii)
(i)
7 (ii)
(i)
8 (ii)
(i)
9 (ii)
(i)
10 (ii)
(i)
11 (ii)
(i)
12 (ii)
(i)
13 (ii)
(i)
14 (ii)
(i)
15 (ii)
(i)
16 (ii)
Schedule J (Form 990) 2012

Schedule J (Form 990) 2012 Page 3
Part III Supplemental Information
Complete this part to provide the information, explanation, or descriptions required for Part I, lines 1a, 1b, 3, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 7, and 8, and for Part II.
Also complete this part for any additional information.

Schedule J (Form 990) 2012

Accounting & Audit Update – Looking
Back at 2012

Speakers:
Jeffrey Stefan, CPA Rich Banner, CPA
Audit Partner Senior Audit Manager
Tate & Tryon Tate & Tryon

January 11, 2013

Agenda

 Not-for-Profit Advisory Committee
 Accounting Standards Update
 Clarity Project

FASB Not-for-Profit Advisory Committee

 Established in 2009 to be a resource for the
FASB in obtaining input from the NFP sector
on existing guidance, current and proposed
technical agenda projects, and longer-term
issues affecting NFPs.
 In 2011, the NAC began a standard-setting
project to reexamine the existing standards
for financial statement presentation by NFPs.
The project has three goals:

Not-for-Profit Advisory Committee – cont.

1. Improve the current net asset classification
scheme.
2. Improve statements of activities and cash
flows to more clearly communicate financial
performance.
3. Review existing NFP-specific disclosure
requirements to improve relevance and
understandability.
 In May 2012, the NAC recommendations to
FASB.


Net Asset recommendations

 Revising the net asset classification to have only
two general net asset classes:
1. Donor-restricted
2. Other net assets
 NAC believes that the distinction between
temporarily and permanently restricted net
assets has outlived its usefulness.


Net Asset recommendations – cont.

 Prefers the term Other Net Assets rather than
Unrestricted. The term Unrestricted can confuse
and perhaps mislead stakeholders to believe
that those net assets are without any
restrictions. They can be subject to limitations
that result from laws, regulations, debt
covenants, and other contractual restrictions.
 Focus on liquidity of net assets.


Presentation recommendations

 Supports requiring presentation of an operating
measure in the statement of activities.
 Suggested the FASB consider extending the
requirement of a statement of functional
expenses for all NFPs except those with an
insignificant percentage of revenue from
contributions. Currently only required for VH&W
organizations.


Notes to financial statements recommendations

 Highlights the need for cross-referencing the fair
value disclosures with the endowment
disclosures to provide clarity about the extent to
which investments represent restricted net
assets and restricted asset.
 Wants to better depict financial risks through
disclosure requirement.


Communications other than financial statements

 Recommends a management commentary that
is presented as supplemental information placed
before the financial statements and notes. (See
handout)

 The NAC staff projects that a final statement
should be issued in 2014.

Lease Accounting Changes (again)

Right of Use Model
Control of the use of the leased asset
ROU asset
Consumption of ROU Asset
 Significant portion of ROU asset
 Other than property
 Amortization expense and interest expense
 Insignificant portion of ROU asset
 Property (land and/or buildings)
 Lease expense

Lease Accounting Changes

Schedule for the Proposed New Standard
Second Exposure Draft
 due in the first quarter of 2013

After Exposure Draft
 Consultations and outreach

Final Standard Released
 TBD

Intangibles – Topic 350 (ASU 2012-2)

Testing Indefinite-Lived Intangible Assets for Impairment
Why was the standard changed?

 Cost and complexity of recurring quantitative impairment testing

What changed?
 Permits assessment of qualitative factors to determine if it is more likely
than not that the asset has been impaired

 Qualitative assessment determines necessity of quantitative
assessment

What does “more likely than not” mean?
 Likelihood of more than 50%

Statement of Cash Flows

Donated Securities – exposure draft
 If directed for immediate sale, then operating
activity.
 If donor restricted for long-term purposes,
then financing activity.
 Otherwise, investing activity.

Contributed Services from an Affiliate

 The proposal in the exposure draft would
require a recipient NFP to recognize in its
standalone financial statements all personnel
services received from an affiliate that
directly benefit the recipient NFP. Those
services would be measured at the cost
recognized by the affiliate for the personnel
providing those services.

OMB Update

 Increase audit threshold to $1,000,000.
 Creation of a new type of audit for auditees
between $1M - $3M.
 Change criteria for testing compliance
requirements.
 Making federal agencies more responsible
for audit follow-up and audit resolution.

Audit Clarity Project – SAS 122

Changes to Auditing Standards
 58 AU sections 47 new “AU-C” sections
 3 withdrawn
 37 redrafted to corresponding SAS
 7 combined into 1 new SAS
 11 combined/split into 9 SASs
 AU section numbers changed to converge with ISA numbering

 Effective for audits of periods ending on or after 12/15/2012

Audit Clarity Project – SAS 122 (continued)

Examples of Impact of Selected Standards—Auditor Reports

Headings and Subheadings

Management’s Responsibilities

Opinion
(Basis for qualified, adverse, or
disclaimer)

Emphasis of Matter
• Matters appropriately presented or
disclosed
Other Matter
• To understand audit matters

Other auditor reporting
responsibilities

Audit Clarity Project – Group Audits

Special Considerations—Audit of Group Financial
Statements (AU 600)
Acceptance and continuance - group auditor;
identify components; preconditions

Understanding - group; components;
component auditors; make reference?

Materiality decisions and responding to risks
of material misstatement

Other procedures - consolidation process;
subsequent events; evaluating evidence

Communications - with component auditors;
with group governance and management

Audit Clarity Project – SAS 122

Impact of Selected Standards—Group Audits

Extent group auditor
Understanding of
will be able to be Decision to make
entity includes
involved with reference
components
component auditor

Obtaining Communications Group auditor’s
misstatements above between group and reporting of
trivial noted by component auditor component auditor’s
component auditor increased MW and SD

Speaker Biography

Jeff Stefan, is the partner in charge of Tate & Tryon’s auditing practice
and has more than 25 years of experience serving the nonprofit sector.
In addition to his extensive audit and tax experience, he has provided
consulting services to organizations such as The World Bank, Public
Company Accounting Oversight Board, and ASAE & The Center for
Association Leadership in a variety of areas, including grant
compliance, merger due diligence, and internal controls. He has also
been called upon to consult on a variety of complex issues such as fair
value accounting (FAS 157), accounting for alternative investments
(FAS 133), split interest agreements, endowment accounting (UPMIFA
/ FSP 117-1), single member limited liability corporations, uncertain tax Jeff Stefan, CPA
positions (FIN 48), and interest rate swap agreements. Audit Partner
Tate & Tryon
Mr. Stefan has presented and authored articles on many recent 202-419-5104
accounting and auditing issues including : “FASB Staff Position (FSP) jstefan@tatetryon.com
FAS 117-1, Endowments of Not-for-Profit Organizations,” “Educating
Your Board About Audits,” “Understanding Statement of Auditing
Standards (SAS) 103, Audit Documentation,” “SAS112,
Communicating Internal Control Matters Identified in an Audit,” and “A
Summary of the new Audit Risk Standards.” Jeff is a member of the
American Institute of CPAs (AICPA), the Greater Washington Society
of CPAs (GWSCPA), and ASAE.

Speaker Biography

Rich Banner, CPA, is a senior audit manager with the Firm and
has been working with nonprofits for the past 15 years. Prior to
joining Tate & Tryon, Mr. Banner was an internal auditor with a
national labor organization based in Washington, DC.

Mr. Banner has extensive experience managing and performing
audits of various types of nonprofit organizations including trade
and membership associations, related for-profit subsidiaries,
charitable organizations, and Section 527(f) political action
committees. Mr. Banner has experience with a variety of complex
Rich Banner, CPA
auditing issues such as Federal awards and OMB A133
Audit Manager
requirements, alternative investments and fair value accounting, Tate & Tryon
and bond financing. He also has extensive experience with 202-419-5183
restricted contributions, trade shows, exhibits, and sponsorship rbanner@tatetryon.com
arrangements.

AICPA Management Discussion and Analysis – Fiscal 2012
This year we reflect not just on the past year, but on more than with the FAF’s announcement, the AICPA also announced plans Fiscal 2012 efforts to launch the National Commission on
a century as we celebrate the 125th anniversary of the Institute. to develop a financial reporting framework for small- and Diversity and Inclusion (Commission) were realized in early
Although we live in a time of rapid change, the profession’s core medium-sized entities (SMEs). This special purpose framework September 2012. The Commission includes representatives
values have remained consistent since 1887. Our core values will be a less complicated, more relevant and less costly system from minority professional advocacy groups; large, medium
— integrity, objectivity and competence — have cemented the of accounting for SMEs that do not need financial statements and small firms; state CPA societies; and leaders from
CPA profession’s strong foundation and remain the compass of prepared in accordance with U.S. GAAP. It will meet the financial business and industry, government and education, and is
the AICPA today. Since its beginnings, the Institute has been reporting needs of the SME community and the lenders and others designed to identify strategies that will increase the number
at the forefront of raising the professional performance of its who use their financial statements. and the advancement of underrepresented groups in the
members by setting high professional standards, a strict code We launched The Total Tax Insights™ calculator (totaltaxinsights.org) accounting profession. This process will involve investigating
of professional ethics and a commitment to serving the public and understanding the barriers that impede the long-term
in May 2012 as a public service to give taxpayers a clearer
interest. We are proud to continue this legacy while evolving to retention and advancement of minorities in the accounting
picture of the types and number of taxes they pay throughout the
lead future generations of CPAs to the same level of success. profession. In addition, the Commission will closely monitor
year and the estimated amounts of each. By linking federal tax
The following is a discussion of key accomplishments achieved population trends and analyze the impact of these trends on
rules with the country’s abundant and varied state and local tax
during the year and management’s report on operations for the the profession and the clients CPAs serve and the employers
conventions — including more than 20 of the most widely applied
fiscal year. This discussion should be read in conjunction with for whom they work.
taxes — this first-of-a-kind online tool fosters greater public
the audited combined financial statements and notes to the The Institute continues to provide tools and research in the
understanding of taxes and provides key insights to enhance one’s
combined financial statements. growing niche areas. These specialized niches include personal
financial well-being.
Regulatory and Legislative Advocacy financial planning, forensic and litigation services, business
Membership
On September 16, 2011, our long-term efforts paid off as valuation services and information technology and offer the
For the fifth consecutive year, we reached record-breaking
comprehensive patent reform was signed into law. A provision CPA the opportunity to provide a broader array of services
membership levels, with more than 358,000 regular voting
actively supported by the AICPA, which prohibits the U.S. to their clients and companies. Increased opportunities in
and nearly 386,000 total members at July 31, 2012. These
Patent and Trademark Office from issuing new patents for tax providing services to CPA clients and companies have led to
results reflect the AICPA’s continuing efforts to provide value to
strategy methods, was included in the America Invents Act. a 30% growth in section membership in the last five years.
the profession to attract new members and retain our current
On November 21, 2011, the Three Percent Withholding Repeal The AICPA offers credentials in the services most commonly
membership base.
and Job Creation Act was signed into law. Strongly supported offered and include the Accredited in Business Valuation
In line with our strategic plan, we continued our focus on (ABV®), Certified in Financial Forensics (CFF®), Certified
by the AICPA, this act repeals a requirement that the federal
people. In Fiscal 2012, the student member-focused Legacy Information Technology Professional (CITP®) and Personal
or state governments or their instrumentalities or subdivisions
Scholars Program was created to engage future CPAs by SM
Financial Specialist (PFS ). The credentials demonstrate a
(including multistate agencies) withhold 3% of payments to
providing scholarship opportunities and an interactive commitment to a specialty and distinguish our members in
any person for services or property.
peer community on ThisWayToCPA (ThisWaytoCPA.com). We the marketplace.
After championing for new solutions for private company U.S. registered more than 17,000 new users in this community,
generally accepted accounting principles (U.S. GAAP) for many As part of our strategy to further enhance our value to
added more than 7,000 new student members and now allow
years, the Institute supported the May 2012 decision of the our members, the Institute created a joint venture, the
international CPA candidates. In addition, with the culmination
Financial Accounting Foundation (FAF) to form a Private Company Association of International Certified Professional Accountants
of two years of study and insights from teams representing
Council to help set differences in U.S. GAAP, where appropriate, (Association) with the London-based Chartered Institute of
diverse viewpoints in practice and academia, the Pathways
for privately held companies. While the structure was not exactly Management Accountants (CIMA). Through the Association, we
Commission, a joint effort of the AICPA and the American
as supported by the AICPA, the Institute acknowledged significant launched the new Chartered Global Management Accountant
Accounting Association, released its final report in July 2012
modifications by the FAF and the step forward. In conjunction (CGMA) designation. The CGMA designation offers a unique
on the future of higher education in accounting.
value proposition to our members by recognizing their

2011 – 2012 ANNUAL REPORT 3

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