1. 1 2009 Form – An Overview December 11, 2010 Speaker: Patricia A. O’Malley, CPA Rubino & McGeehin, Chartered CPA’s and Consultants pomalley@rubino.com

2. Rubino & McGeehin, CPA's and Consultants2 Form 990 2008 was the first year the expanded Form 990 was filed. The time expended on the form was high due to: Expanded request for information The prior year form consisted of an 11 page core form 2 schedules that potentially would need to be completed

3. Rubino & McGeehin, CPA's and Consultants3 Form 990 continued For 2008, the form was substantially expanded: There are 16 additional schedules The schedules are completed only if the organization meets the requirements for additional reporting for that schedule Core form of 11 pages

4. Form 990 continued Form 990 for 2009 The form was expanded slightly Major changes came in the form of changed instructions Governance Compensation Schedule L, Interested Parties Schedule R, Related Parties Rubino & McGeehin, CPA's and Consultants4

5. Form 990 continued For 2009: The process was much smoother as the changes to the form and schedules were minimal The request for information included the prior year comments, so only updates were necessary The major changes were included in the instructions The IRS reworded parts of the instructions to clarify what was being requested Rubino & McGeehin, CPA's and Consultants5

6. 6 Form 990 continued The IRS is collecting data Comparisons are being made to information collected from other forms Information will be used to determine future actions Audits Additional information requests for types of entities where inaccurate reporting is noted

7. Form 990 continued Part I, Summary: An overview of the entire return Information provided is found in more detail in other parts of return The financial information is in comparative form Rubino & McGeehin, CPA's and Consultants7

8. 8 Form 990 continued Part I, Summary: continued Activities and governance: Questions are organizational and include: Number of voting members of the governing body Number of employees Gross unrelated business income has always been disclosed. Also requests the net amount from the Form 990T

9. Rubino & McGeehin, CPA's and Consultants9 Form 990 continued Part VI, Governance, Management and Disclosure: Broken into three parts: Governing body and management Policies Disclosure Some of the questions relate to current legal requirements, but none of the policies is required Most are best practices that the IRS believes should be promoted.

10. Form 990 continued Reasonable effort Relates to the effort made to obtain information from Board members and related parties while preparing the Form 990 An example is the sending of an annual questionnaire to each member that includes the name, title, date and signature of the person reporting, along with instructions and definitions relating to the particular part Rubino & McGeehin, CPA's and Consultants10

11. Rubino & McGeehin, CPA's and Consultants11 Form 990 continued Part VI, Section A, Governing Body and Management: All questions require a yes or no answer. Many require further explanation if answered a specific way Questions include: The total voting members of the governing body at the end of the year The number of independent members of the governing body

12. Rubino & McGeehin, CPA's and Consultants12 Form 990 continued Independence of Voting Members Must meet three criteria at all times during the year to be independent:  Criteria 1  The member was not compensated as an officer or other employee of the organization or a related organization Criteria 2 The member did not receive total compensation or other payments exceeding $10,000 from the organization or related organizations as an independent contractor, other than: Reasonable expense reimbursements under an accountable plan Reasonable compensation for services provided in the capacity as a member of the governing body

13. Rubino & McGeehin, CPA's and Consultants13 Form 990 continued Independence of Voting Members Criteria 3 Neither the member, nor a family member was involved in a transaction with the organization, whether directly or indirectly through affiliation with another organization, that is required to be reported on Schedule L (Transactions with Interested Parties) for the reporting organization or a related organization.

14. Rubino & McGeehin, CPA's and Consultants14 Form 990 continued Independence of Voting Members Circumstances that will not jeopardize independence: The member is a donor of the organization, regardless of the amount of the contribution The member receives financial benefits from the organization solely in the capacity of being a member served by the organization in the exercise of its exempt function

15. Rubino & McGeehin, CPA's and Consultants15 Form 990 continued Relationships Explanations need to be given if the following questions are answered “yes”: Were there any family or business relationships between the officers, directors, trustees and key employees? Family relationship includes: Spouse Ancestors Siblings (whole and half blood) Children (natural and adopted) Grandchildren and great-grandchildren Spouses of those listed above

16. Rubino & McGeehin, CPA's and Consultants16 Form 990 continued Relationships Explanations continued Business relationships between two persons include: One person is employed by the other in: A sole proprietorship An organization in which the other person is a trustee, director, officer, key employee or a greater than 35% owner

17. Rubino & McGeehin, CPA's and Consultants17 Form 990 continued Business Relationships continued Business is transacted with the other, directly or indirectly, in one or more contracts of: Sale Lease Loan License Performance of services Transactions involving transfers of cash or property valued in excess of $10,000 in the aggregate for the year Does not include transactions in the ordinary course of business on the same terms as are generally offered to the public Indirect transactions for this purpose are those with an organization with which the one person is associated as a trustee, director officer, key employee, or greater than 35% owner. Both are directors, trustees, officers, or greater than 10% owners in the same business or investment entity.

18. Rubino & McGeehin, CPA's and Consultants18 Form 990 continued Governance – Affiliated Organizations Does the organization have chapters, branches, or affiliates? If yes, are there written procedures governing the activities of these groups? IRS is looking for consistency with the activities of the organization. If the answer is no, an explanation of how the organization ensures that the local unit’s activities are consistent with its own is required.

19. Rubino & McGeehin, CPA's and Consultants19 Form 990 continued Governance – Board Review of Form 990 Did the members of the governing body review the Form 990? Can only answer “yes” if a copy of the final document was provided to each voting member of the governing body prior to submission to the IRS Whether the form is distributed before or after submission, an explanation stating the process for the review must be provided

20. Rubino & McGeehin, CPA's and Consultants20 Form 990 continued Part VI, Section B, Policies Conflict of interest Asks if officers, directors and key employees are required to make disclosures annually Also asks whether the organization regularly and consistently monitors and enforces compliance. If the answer is yes, must provide a description of the process

21. Rubino & McGeehin, CPA's and Consultants21 Form 990 continued Policies continued Definition of a conflict of interest for this purpose: “A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, or manager, can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated.”

22. Rubino & McGeehin, CPA's and Consultants22 Form 990 continued Policies continued Does the organization have a whistleblower policy? Sarbanes Oxley imposes criminal liability for retaliation against whistleblowers Does the organization have a document retention policy? Sarbanes Oxley imposes criminal liability for destruction of records with intent to obstruct a federal investigation

23. Rubino & McGeehin, CPA's and Consultants23 Form 990 continued Policies continued One question with multiple parts relates to the approval process for determining the compensation for: The CEO Executive Director Other top management official Other officers or key employees of the organization

24. Rubino & McGeehin, CPA's and Consultants24 Form 990 continued Policies continued Components of the approval process are: Review and approval by independent persons Comparability data Contemporaneous substantiation of the deliberation and decision An explanation of the process must be made if the answer is yes. The questions must be answered by all organizations Answer yes only if all of the criteria are met If yes, must provide an explanation of the process

25. Rubino & McGeehin, CPA's and Consultants25 Form 990 continued Part VI, Section C, Disclosure A description of whether and how the following documents are made available to the public: Governing documents Conflict of interest policy Financial statements

26. Rubino & McGeehin, CPA's and Consultants26 Form 990 continued Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors All organizations must now provide information that was formerly limited to 501(c)(3) organizations

27. Rubino & McGeehin, CPA's and Consultants27 Form 990 continued Part VII, Section A Officers, Directors, Trustees, Key Employees and Highest Compensated Employees To be included: All current officers, directors, and trustees regardless of compensation level All key employees who received reportable compensation greater than $150,000 The organization’s five current highest compensated employees (other than current officers, directors and key employees) who received reportable compensation of more than $100,000 All former officers, key employees and highest compensated employees who received more than $100,000 Former directors and trustees that received, in the capacity of a former director or trustee, more than $10,000

28. Rubino & McGeehin, CPA's and Consultants28 Form 990 continued Part VII, Section A, continued The definitions for those to be included: Director or Trustee Is a member of the governing body, but only if the member has voting rights Those who served at any time during the organization’s tax year is considered a current director or trustee Officer: A person elected or appointed to manage the organization’s daily operations Includes a president, vice president, secretary or treasurer as noted in the governing documents Regardless of titles, includes top management official and top financial official

29. Rubino & McGeehin, CPA's and Consultants29 Form 990 continued Part VII, Section A, continued Key Employee There is now a 3 part test $150,000 Test Reportable compensation for the calendar year ending with or within the organization’s tax year is in excess of $150,000 Responsibility Test Has responsibilities, powers or influence over the organization as a whole that is similar to those of officers, directors, or trustees Manages a discrete segment or activity that represents 10% or more of the activities, assets, income, or expenses of the organization, compared to the organization as a whole Has or shares authority to control or determine 10% or more of the organization’s capital expenditures, operating budget or compensation for employees Top 20 Test Is one of the 20 employees that satisfy the first 2 tests with the highest reportable compensation from the organization and related organizations for the reporting period

30. Rubino & McGeehin, CPA's and Consultants30 Form 990 continued Part VII, Section A, continued Information to be provided: Name and title Average hours per week Position (check all that apply as listed on the form) Reportable compensation from the organization (W-2/1099-MISC) Reportable compensation from related organizations (W-2/1099- MISC) Amount of other compensation from the organization and related organizations

31. Rubino & McGeehin, CPA's and Consultants31 Form 990 continued Part VII, Section A, continued Schedule J is to be completed if: Any former officer, director, trustee, key employee, or highest compensated employee is listed on Part VII If the compensation for any individual listed from the organization and all related organizations is greater than $150,000 Schedule J requires additional compensation disclosure for those who meet these requirements

32. Rubino & McGeehin, CPA's and Consultants32 Form 990 continued Schedule J, Compensation Information The form is used to provide additional, detailed information for those listed in Form 990, Part VII, Section A if they: Are former officers, directors, trustees, key employees or five highest paid employees Current officers, directors, trustees, key employees and five highest compensated employees for whom the sum of columns (D), (E) and (F) in Form 990, Part VII is greater than $150,000 Each of the current and former officers, etc. who received or accrued compensation for services rendered to the organization from an unrelated organization and is reported in Line 5 of Part VII of Form 990.

33. Rubino & McGeehin, CPA's and Consultants33 Form 990 continued Schedule J, Compensation Information Part I, Questions Regarding Compensation General questions relating to the organization’s policies and procedures including: Checking the box for several listed benefits if applicable, including travel for companions, first-class travel, discretionary spending account, personal services If these benefits are given, need to indicate whether there is a written policy regarding payment. If the answer is no, an explanation must be provided. Is substantiation required prior to reimbursing expenses? Checking the box to indicate the methods used to establish the compensation of the CEO Did any of the listed persons receive severance or change in control payments, participate in a supplemental nonqualified retirement plan or participate in an equity-based compensation arrangement?

34. Rubino & McGeehin, CPA's and Consultants34 Form 990 continued Schedule L, Transactions with Interested Persons The definition of an interested person is different for each of the 4 parts of Schedule L Transactions requiring disclosure: Excess benefit transactions for 501(c)(3) and 501(c)(4) organizations

35. Rubino & McGeehin, CPA's and Consultants35 Form 990 continued Schedule L, Transactions with Interested Persons continued Loans to and from interested persons Includes salary advances, other advances and receivables Each loan must be reported separately Does not include advances under an accountable plan Grants or assistance benefiting interested persons Includes scholarships, fellowships, prizes and awards Related persons who benefit must also be reported

36. Rubino & McGeehin, CPA's and Consultants36 Form 990 continued Schedule L, Transactions with Interested Persons continued Business transactions Includes direct and indirect business transactions for which payments were made during the tax year between the organization and an interested person exceeded $100,000 All payments during the year from a single transaction between such parties exceeded the greater of $10,000 or 1% of the filing organization’s total revenues Compensation payments by the organization paid to a family member of certain persons exceeds $10,000

37. Rubino & McGeehin, CPA's and Consultants37 Form 990 continued Schedule L, Transactions with Interested Persons continued Part IV continued Business transactions include, but are not limited to: Contracts of sale, lease Performance of services Joint ventures in which either the profits or the capital interest of the organization and the interested person each exceeds 10%

38. Rubino & McGeehin, CPA's and Consultants38 CMI Gross receipts continued to be below $25,000 for 2009 Electronic filing of short form

39. Group Trust Form 990 is filed with consolidated information received from all of the participating chapters Only selected information is requested The required information is still being obtained Rubino & McGeehin, CPA's and Consultants39