Transparency In Ministry

In our previous posts we have discussed the new risk standards promulgated by the AICPA affecting audits for years ending after 12/16/07. In post #5 we briefly discussed SAS 108 and 109. Now we will end this series of posts and discuss SAS 110 and 111.

SAS 110 – provides new guidance on matters the auditor should consider in determining the nature, timing, and extent of audit procedures. Basically, SAS 110 redirects the auditors’ consideration of risk at the financial statement level to the financial statement category ‘line level’ so that auditor can make their risk assessment as a result of, and in conjunction with, their performance of risk assessment procedures performed as indicated above. This is the final risk assessment step. The auditor will take into consideration all of the information obtained as a result of these procedures and use that to design and perform tailored audit procedures.

SAS 111 – provides a more clear-cut guidance on the auditors’ assessment of their materiality levels.

In conclusion, this sounds like a lot of additional work, and make no mistake about it, it is. But these standards are designed to urge the auditor to make more informed, documented, and worthwhile decisions that ultimately will provide the client with a more valuable audit product, resulting in a more tailor made corporate audit.

posted by Anthony Miller

Over the past several months we have discussed the requirements for reporting/deducting charitable contributions. In our final post, we will discuss the substantiation rules...

The Pension Protection Act of 2006 (PPA of 2006) changed the substantiation requirements for deducting charitable contributions. Prior to 2007, donors could deduct charitable contributions using a cancelled check, a receipt from the charity or another reliable written document.

For 2007 and following, the PPA of 2006 requires that cash contributions be substantiated by either a bank record (cancelled check) or a written communication from the receipt.

If the individual contribution (cash or property) exceeds $250 the donor is required to substantiate the donation by a contemporaneous written acknowledgement from the charity. Cancelled checks are no longer allowed for cash contributions individually exceeding $250.

Certain documentation is required for quid pro quo cash contributions, depending on the amount. Quid pro quo contributions are payments made partly as a contribution and partly in consideration for goods and services.

For non-cash property contributions less the $500, the donor should maintain the following information:
1. Donee's name and address
2. Date of contribution and location of the property
3. Property description
4. Fair market value of property including appraisal if obtained.
5. Cost or other basis of the property.
6. Amount of deduction claimed
7. Documentation of any terms/restrictions placed on use of the property

For non-cash property contributions ranging from $500 to $5,000, the donor should maintain documentation satisfying the above 7 requirements plus:
1. Description of how the donor acquired the property
2. Date of property acquisition
3. Cost or other basis, including any adjustments, of the donated property

For non-cash property contributions exceeding $5,000, the donor must satisify the following three requirements:
1. Qualified appraisal dated at least 60 days prior to the contribution
2. Complete a qualified appraisal summary enclosed in the donor's tax return
3. Maintain records that document the requirements of non-cash contributions less than $500 above.

For additional information relating to contributions of cars, boats and planes, see Laurie Gnad's posts beginning November 7, 2007. .

For additional help in determining what documentaiton is required for charitable contributions, contact us.

Over the past several weeks we have described the requirements for deducting and recording charitable contributions.

In this post we will discuss calculating the deduction...

The amount of charitable contributions that may be deducted by a taxpayer is limited based on adjusted gross income, the type of property contributed or the nature of the charity.

Limitations:

Deductible contributions made to churches, educational organizations and most other charities are limited based on the donor's adjusted gross income. The type of property contributed (i.e. capital gain property) will determine how much can be deducted by the taxpayor. These limits range from 20% to 50% of the taxpayer's adjusted gross income (AGI).

Excess contributions may be carried over to subsequent filings up to five years, until the excess has been used.

For questions, contact us.

Posted by Kirk Vanderslice

Audit Risk (AR) expresses the general relationship of risks associated with the auditor's assessments of risk of material misstatements (RMM = inherent risk x control risk); the risk that audit procedures will fail to detect a material financial statement misstatement due to an internal control failure (DR).

Audit Risk must be low because of the high level of assurance provided by the audit opinion.