11 ideas for approaching your Form 990

Feb 07, 2012

Aug 31, 2011

The need for accountability and transparency can lead to nonprofits getting themselves into trouble even when they are meticulous in their record keeping, and even the slightest mistake can be magnified into a major scandal.

During the recent AICPA Not-For-Profit Executive Forum in San Francisco, Mary Rauschenberg, tax director with the Washington National Tax Practice of Deloitte Tax LLP, offered several tips about approaching Form 990, which has been a source of heartburn for many nonprofit accountants.

Rauschenberg reminded listeners that 990 is very complex and includes many nuances that are not intuitive just by looking at the form.

Further, she said:

  1. Read, read and re-read the instructions (in several places) for guidance. 
  2. Exercise care in completing the return. There are many instances where a taxpayer might inadvertently provide conflicting data. 
  3. Begin with the Part IV Checklist. 
  4. Involve subject matter experts, including public relations and development. 
  5. Consider board involvement, education, distribution, etc. 
  6. Consider how a reader might interpret your responses. 
  7. Compare similar organizations. 
  8. Determine resource needs/constraints. 
  9. Ask “Did the organization get it right the first time?” 
  10. Start early. 
  11. Devote the appropriate time and effort to completing the return. Be consistent between related party returns. Involve others. Remember the Form 990 is a public document and will likely be reviewed by people who are scrutinizing the filing organization.
Source:  The NonProfit Times