Pre Preparing fo for Annual Annual Audi Audit & Wh What at Yo - PDF document

2/3/2016 Pre Preparing fo for Annual Annual Audi Audit & Wh What at Yo You Need Need to to Kn Know About About NFP NFP Ta Tax Filin ilings June 14, 2017 Reasons to have an Audit • Required by the federal Office of Management and Budget • State requirement (E ‐ 1) • Banks • Funders • Board of directors • Bylaws 1

2/3/2016 Your Responsibilities • Internal controls • Accounting principles • Financial statements • Prevent and detect fraud • Inform auditors of fraud • Comply with laws and regulations • Assume management responsibilities Auditors’ Responsibilities • Establish an understanding of services • Independence • Generally accepted auditing standards • Obtain reasonable assurance • Evaluate appropriateness of accounting policies • Reasonableness of estimates • Consider internal controls 2

2/3/2016 What Auditors Do • Properly plan the audit • Risk assessment • Determine materiality • Obtain an understanding of the organization’s accounting system and policies • Engagement team discussion What Auditors Do • Audit procedures • Inspection of documents • Observation • Inquiry • Confirmation • Recalculation • Re ‐ performance • Analytical procedures 3

2/3/2016 What Auditors Do • What we are looking for • Existence and occurrence • Completeness • Rights and obligations • Accuracy or classification • Valuation or allocation • Cutoff Preparing for the Audit • Have documentation ready • Reconcile all accounts • Take an inventory of fixed assets • Inform your auditor of any unusual items • Review internal controls • Be available for questions • Pre audit meeting with your auditor 4

2/3/2016 Preparing for the Audit General Items • Trial balance • Internal financial statements • General ledger • Budget • Check register • Listing of all federal awards, including federal award agency, pass through agency, grant number, CFDA number • Board of directors’ and committee minutes Preparing for the Audit Cash • Bank reconciliations • Bank statements • List of authorized check signers 5

2/3/2016 Preparing for the Audit Receivables • Accounts receivable aging • Listing of promises to give • Schedule of maturities of promises to give • Calculation of present value discount • Award letters for grants/contributions • Detail of deposits made after year end • Calculation of allowance for uncollectible accounts • Award letters received prior to year end for grants to be received after year end Preparing for the Audit Inventory • Inventory listing 6

2/3/2016 Preparing for the Audit Prepaid • Schedule of prepaid expenses • Invoices for insurance paid during the year Preparing for the Audit Investments • Investment statements • Listing of any donated investments received during the year, including the donor’s name, date of donation and valuation • Summary of investment activity for the year, including interest, gains/losses and fees 7

2/3/2016 Preparing for the Audit Fixed Assets • Listing of all fixed assets purchased during the year, including description, cost, date in service and life • Invoices for all fixed assets purchased during the year • Listing of all fixed assets donated during the year, including the donor’s name, date of donation and value • List of all fixed assets disposed of during the year, including the date of disposal and any proceeds received • Depreciation schedule for the year Preparing for the Audit Accounts Payable • Accounts payable listing • Check register for checks paid after year end • Invoices paid after year end • Invoices received after year end not yet paid 8

2/3/2016 Preparing for the Audit Notes Payable • Detail of notes payable activity for the year, including proceeds and payments, as well as interest and maturities • Debt agreements signed during the year • Listing of any covenants or restrictions and if they are being met Preparing for the Audit Payroll and Withholdings • Quarterly 941 forms and UC ‐ 1 forms • W ‐ 3 and W ‐ 2s • Payroll register for the last payroll in the year and first payroll subsequent to year end • Calculation of accrued payroll • Calculation of accrued vacation, including employee name, hourly pay rate, hours carried over and hours to be awarded in the following year 9

2/3/2016 Preparing for the Audit Deferred Revenue • Detail of deferred revenue, including payee and purpose of payment • Is this really deferred revenue? If not, journal entry to reclass temporarily restricted revenue recorded as deferred revenue. Preparing for the Audit Net Assets • Detail of all restricted money received during the year, spent during the year and end of year balance. Include donors’ names and restrictions. • Listing of any board designated net assets as of year ‐ end, including the designation. 10

2/3/2016 Preparing for the Audit Support and Revenue • Listing of single contributions of $x,xxx or more, including donors’ names and addresses (addresses for 990) • Check copies and grant letters for single contributions of $x,xxx or more • Grant agreements, including any government awards • Detail of any fund raising events, including ticket price, number of tickets sold and amount disclosed to attendees as deductible • Listing of all revenue received for any fund raising events by type (ticket sales, contributions, sponsorships, etc.) Preparing for the Audit Expenses • Listing of all expenses for any fund raising events • Lease agreements signed during the year or subsequent to year end • All legal invoices paid during the year • Detail of any pending litigation • Policy for allocating expenses to program, management and general, and fund raising • Schedule of expenses allocated by program, management and general, and fund raising 11

2/3/2016 Preparing for the Audit Other List of all related parties paid during the year and invoices for • payments General journal entries for the year and supporting • documentation Contracts entered into during the year • Agreements signed during the year for payments to be made • after year ‐ end Communications with IRS • Changes to bylaws • Changes to personnel policy manual/employee handbook • Changes to written financial procedures • Listing of all board members • Preparing for the Audit Form 990 • Number of voting members of the board of directors • Number of volunteers for the year • Describe the organization’s program service accomplishments for each of its programs • Number of 1099s issued for the calendar year • Description of any board members or key employees that have a business or family relationship • Detail of benefits paid by the organization on behalf of the Executive Director or CFO during the year 12

2/3/2016 Preparing for the Audit Internal control matrix Audit Results • Financial statements with an audit opinion • Management representation letter • SAS 114 letter • SAS 115 letter • Management letter 13

2/3/2016 Annual Filings Internal Revenue Service • Form 990, Return of Organization Exempt from Income Tax • Form 990 ‐ EZ, Short Form Return of Organization Exempt from Income Tax • Form 990 ‐ N, Electronic Notice (e ‐ Postcard) For Tax ‐ Exempt Organizations Not Required to File Form 990 or 990 ‐ EZ • Form 990 ‐ PF, Return of Private Foundation • Form 990 ‐ T, Exempt Organization Business Income Tax Return • Form 8868, Extension of Time to File an Exempt Organization Return 14

2/3/2016 IRS Form 990 Series • Due by the 15 th day of the 5 th month after your organization’s accounting period ends (May 15 th for calendar year ends) • Additional 6 month extension available (Form 8868) • No tax due with Form 990 series (990, 990 ‐ EZ or 990 ‐ N) Annual Filings Indiana Department of Revenue • Form NP ‐ 20 , Indiana Nonprofit Organization’s Annual Report • Form IT ‐ 20NP, Indiana Nonprofit Organization Unrelated Business Income Tax Return Indiana Secretary of State • Indiana Business Entity Report 15

2/3/2016 Payroll and Related Forms Internal Revenue Service • Form W ‐ 4, Employee’s Withholding Allowance Certificate • Form 941 , Employer’s Quarterly Federal Tax Return • Form 944 , Employer’s Annual Federal Tax Return • Form W ‐ 2 , Wage and Tax Statement • Form W ‐ 3, Transmittal of Wage and Tax Statements • Form 1099 ‐ MISC , Miscellaneous Income • Form 1096 , Annual Summary and Transmittal of U.S. Information Returns Payroll and Related Forms Indiana Department of Revenue • Form WH ‐ 4 , Employees’ Withholding Exemption and County Status Certificate • Form WH ‐ 1 , Indiana Withholding Tax Return (must be filed through INTax) • Form WH ‐ 3 , Annual Withholding Tax Form 16

2/3/2016 Payroll and Related Forms Indiana Department of Workforce Development • Form UC1 ‐ S , Quarterly Contribution Report • Form UC ‐ 5A , Quarterly Payroll Report • DWD Form 1065 , Election to Pay Tax U.S. Citizenship and Immigration Services • Form I ‐ 9, Employment Eligibility Verification Property Taxes Allen County Assessor • Form 136, Application for Property Tax Exemption • Notice of Change of Ownership or Use of Exempt Property • Form 103, Business Tangible Personal Property Assessment Return • Form 104, Business Tangible Personal Property Return 17