Governance Issues

Defining “Those In Charge”

Posted Wed, 07/30/2008 - 15:30 by Anthony Miller

The new auditing standards require certain communications to “those charged with governance”. These individuals are responsible for overseeing the strategic direction of the church or ministry. These same individuals have accountability for and to the entity, including the financial reporting process.

Those charged with governance may include a board of directors, a supervisory board, or trustees. Subgroups (such as an audit committee) may be charged with specific tasks to assist a governing body in meeting its responsibilities.

#4 Contributions - General Requirements

Posted Tue, 07/15/2008 - 14:45 by Floyd Langley

Since the beginning of the year, we have been discussing the general requirements for reporting contributions. In this post we will discuss when to record a contribution.

When is the unconditional transfer considered a contribution? When does the church record a contribution? The timing or delivery of the unconditional transfer is very important in determining how/when to record a contribution.

Let’s review the following:
a. Checks that are mailed to a church are considered “delivered” on the date the donor mails it or the date of postmark.

Are WE Closed Yet? (5 of 5)

Posted Mon, 06/30/2008 - 12:32 by Kirk Vanderslice

As we learned in post #4 of 5, organizations must determine how to properly record leases, either as an operating or as a capital lease. In this post we will now assess how to determine prepaid expenses and unrecorded liabilities. To assist you in this determination print out the Church’s disbursement ledger for at least the last two months of the year. Review items that represent payments made before year end; but services or goods will not be received until after year end.

Prepaid/Other Assets Generally Consist of:

Prepaid Insurance
Prepaid TV/Radio Airtime
Prepaid Postage

Definition of a Church

Posted Tue, 05/27/2008 - 10:58 by Sandy Siegfried

Under the Internal Revenue Code section 501(c)(3), charitable organizations, including churches and religious organizations, are exempt from federal income taxes and are generally eligible to receive tax-deductible contributions.

What is a church? What are the characteristics of a church?

According to www.dictionary.com **, "church" can be a noun or a verb. As a noun, a church can be defined as:

1. a building for public Christian worship.
2. public worship of God or a religious service in such a building: to attend church regularly.

#3 Contributions/Event - Communication to Donor is Important

Posted Fri, 05/23/2008 - 05:35 by Floyd Langley

In our 2 previous posts in the contribution/event series, we have discussed the common scenario of a non-profit solicitating contributions/revenues in exchange for a donor benefit. Donors often receive something in exchange for a contribution. Whether it is a meal, a book, a video, all of these items are treated similarly. Remember the criteria for financial reporting:

What has been communicated to the donor and what is the donor’s intended response?

Integrated Auxiliary - Defined

Posted Thu, 05/15/2008 - 06:28 by Sandy Siegfried

Several religious organizations have created integrated auxiliaries. What are these entitites? How should the information be reported?

According to Publication 1828, Tax Guide for Churches and Religious Organizations an integrated auxiliary of a church refers to a class of organizations that are related to a church or convention or association of churches, but are not such organizations themselves.

In general, the IRS will treat an organization that meets the following three requirements as an integrated auxiliary of a church. The organization must:

Senate Inquiry - Is it Appropriate?

Posted Tue, 05/13/2008 - 07:58 by Sandy Siegfried

According to the Tax Guide for Churches and Religious Organizations, the IRS may conduct civil tax inquiries and examinations of churches under IRC section 7611. The IRS may only initiate a church tax inquiry if the Director, Exempt Organizations, Examinations, reasonably believes based on written statements of the facts and circumstances, that the Church:

1. may not qualify for the exemption; or
2. may not be paying tax on an unrelated business or other taxable activity

Are WE Closed Yet?

Posted Thu, 05/08/2008 - 12:27 by StanfieldODell

In this series of posts, we have discussed our churches and ministries can prepare for year-end reporting. In our previous post, we discussed reconciling and closing property, plant and equipment (PP&E) accounts at year-end.

In this post we will determine the characteristics of an operating lease and a capital lease. This will assist you in making sure that all capital lease items are posted as an asset and a liability for the funds owed concerning the lease. See Exhibit D for assistance, too.

End of Year Reporting - Spring Filing Requirements

Posted Thu, 05/01/2008 - 09:52 by Laurie Gnad

In our two previous posts we have discussed several filing requirements for tax exempt organizations. Here are several filings due this Spring...

Contributions - 6 General Requirements

Posted Mon, 04/28/2008 - 15:44 by Sandy Siegfried

According to Dictionary.com a contribution is synomous for a gift, donation, or benefaction. Since a gift does not occur without an irrevocable exchange, a contribution is not considered an allowable deduction unless the contribution is unconditional. The donor receives no personal benefit in exchange for the gift.

IF the donor receives a benefit for the gift, the difference between the gift and the benefit is the amount that is deductible. Here's an example...