Reporting Issues

#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.

#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?

Basis of Accounting for Non-Profit Entities - Modified Cash Basis

Posted Mon, 05/19/2008 - 15:19 by Anonymous

In our two previous posts, we have discussed the different financial statement presentations, GAAP, cash basis and now we will define modified cash basis of reporting.

There must be "substantial support" for reporting under the modified cash basis. Ordinarily, a modification would have substantial support if the method is equivalent to the accrual basis of accounting for the particular item and if the method is not illogical. The modified cash basis is more common than the "pure" cash basis.

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

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...

Contributions/Event - Continued

Posted Fri, 04/18/2008 - 05:23 by Floyd Langley

Contributions may be the most gracious form of expression that a donor can provide a Ministry to aid in its Vision. Yet, with gracious offerings can come many challenges when attempting to account for the funds. The following example is a scenario that most any Ministry will encounter:

Basis of Accounting for Non-Profit Entities

Posted Thu, 04/10/2008 - 10:55 by Anonymous

Cash Basis - vs - Modified Cash Basis…What’s the Difference?

Risk Standards (SAS 104 and 105)

Posted Mon, 04/07/2008 - 16:15 by Anthony Miller

As noted in our previous post, the AICPA has issued several new auditing standards that are applicable for audits ending after 12/16/07. We will briefly discuss the 8 new standards:

SAS 104 – More clearly defines the level of assurance auditors are to provide the client and interested 3rd parties regarding whether or not the client’s financial statements are free of material misstatement. This has not direct client impact.

Inherent Risk Defined

Posted Wed, 03/26/2008 - 15:23 by Craig Legener

Inherent Risk is defined as "what could go wrong, in the absence of internal controls".

Internal Controls are defined as...systems in place that identify errors and irregularities on a timely basis.

Contributions - 6 General Requirements - (2 of 6)

Posted Tue, 03/11/2008 - 15:30 by Floyd Langley

In order for a contribution to be deductible for income tax purposes, the contribution must meet 6 general requirements. In our previous post we discussed the gift of cash or property. In our post today we will discuss what types of organizations can receive contributions and provide substantiation to the donor in order to deduct the donation for income tax purposes.

Requirement #2 for contributions is that the donation of cash or property must be made to or for the use of a qualified organization.