January, 2010

Contents

• Public Support Section Changes –
  Form 990 Schedule A
• Topic 740 – Accounting for Uncertainty in Tax Positions
• Contact SC&H Tax & Advisory Services

Upcoming Events

Join Us For A Webinar &
Earn 2 Free CPE Credits

403(b) Plans – The New Frontier
February 24, 2010
1:00-3:00
Click Here to Register

Not-for-Profit Services

We specialize in providing not-for-profit organizations a variety of comprehensive solutions for their accounting and consulting needs.

At SC&H, we know that not-for-profit organizations are unlike any other type of business. From uncertain budgets and lean accounting staff, to board relations and unusual tax issues, your goals and challenges are unique. Only a service provider with a complete grasp of these issues and a strong commitment to serving not-for-profit organizations can provide the responsiveness and quality of services that will exceed your expectations.

Many of our partners and managers are active on not-for-profit boards, which provide us with a first hand understanding of your needs. This understanding is why SC&H has become the CPA and management consulting firm of choice for many not-for-profit entities including educational and healthcare institutions, associations, religious organizations and foundations.

Services include:

• Financial statement audits and reviews
• A-133 audits
• Employee benefit audits and consultation
• Internal auditing
• Evaluation of internal controls
• Tax compliance
• UBIT studies and FIN 48 analysis
• Strategic planning
• Change management
• Organizational development

Testimonials

"SC&H has the breadth of a national firm while providing personalized local service in an efficient and customer friendly manner. I highly recommend this firm." - CFO of a not-for-profit organization

"I am pleased to share my thoughts regarding my association with SC&H. They have provided tax preparation and advisory services to my organizations for over ten years. I find the professionals at SC&H to be very knowledgeable of the issues facing not-for-profit organizations. I highly recommend this firm." - CFO of a not-for-profit organization

Public Support Section Changes – Form 990 Schedule A

For many non-profit organizations, the Schedule A Support Test is the principal test used to document and retain the organization's IRC §501(c)(3) public charity status. Historically, this test was done on a cash basis resulting in contributions being recorded when the cash was received. Among the sweeping changes with the new Form 990 is the requirement that the same method of accounting that is used for the Form 990, generally the accrual method, be used for the preparation of this support schedule.

This change may greatly impact an organization's public support test. Pledges for accrual method organizations will now be recorded on Schedule A in full in the year of the pledge. For organizations that receive a few significant pledges from a small number of donors that are payable over a number of years, the resulting impact will generally be larger year-to-year changes in public support percentages. In certain instances, this could cause organizations to fail the public support test. With proper planning and analysis, these fluctuations can be mitigated.

This change also creates additional recordkeeping for the organization. Organizations must recalculate their support test for the current year and the prior four years using the accrual method.

If you are interested in learning more about these changes or how to manage these changes, please contact Lori Burghauser at 410.403.1616 or lburghauser@scandh.com.

Back to top

Topic 740 – Accounting for Uncertainty in Tax Positions

New for financial statement periods beginning after December 15, 2008 will be Topic 740 of the FASB Accounting Standards Codification (ASC) relating to accounting for uncertainty in income taxes (formerly known as FIN 48).  Previously, FIN 48 had been effective for fiscal years beginning after December 15, 2006 and included not-for-profit organizations; however, in part due to questions and confusion as to the applicability of FIN 48 to not-for-profit entities, the FASB deferred FIN 48's effective date.

The purpose of Topic 740 is to provide guidance on accounting for uncertain tax positions.  Organizations will be required to determine if it is more likely than not a tax position previously taken will be upheld under examination and whether a tax benefit/provision should be recorded in the financial statements.  Areas of focus under Topic 740 for not-for-profit organizations include:

1. Tax exempt status
2. Excess benefit and private inurement
3. Unrelated business income
4. Joint ventures and investments

Organizations will be required to disclose the following under Topic 740:

• The total amount of interest and penalties recognized in the statements of financial position and activities.
• Where tax positions could result in significant changes in the unrecognized tax benefits within 12 months of the reporting date
• The nature of the uncertainty
• The nature of the event that could occur in the next 12 months that would cause the change
• A range estimate for the change and, if that's not available, a statement disclosing that an estimate cannot be made at this time
• The tax years that remain subject to an examination by a major tax jurisdiction

Implementation of Topic 740 will require that its provisions be applied to all tax positions at the time of adoption. Any cumulative effect resulting from the application will be recorded as an adjustment to beginning net assets.

If you are interested in learning more about Topic 704 or require assistance in its implementation, please contact Lori Burghauser at 410.403.1616 or lburghauser@scandh.com.

Back to top

For More Information

For more information about Not-For-Profit services offered by SC&H Tax & Advisory Services, LLC, contact Michael Young or Lori Burghauser.

Michael Young
Audit Director
(410) 403-1513

Lori Burghauser
Tax Principal
(410) 403-1616

Forward This Newsletter

Unsubscribe From This Newsletter
By unsubscribing, you will no longer receive general e-mail communication from SC&H Tax & Advisory Services, LLC. This includes newsletters, event announcements, and general news and updates.

Click here to unsubscribe.