Nuts and Bolts of Financial

Administration, Tax Matters &

990’s

TERRY W. LANCASTER
C. DEWITT FOARD AND CO., PA, CPAS
TERRY@CDFCO.COM
 Nuts and Bolts of Financial Administration

Factors in Generating Reliable Financial Information

 Tone at the top
 Good internal controls
 Proper staffing
 Knowledgeable and engaged volunteers
 Effective budgeting and monitoring
 Transparency of financial information
 Proper level of detail of financial information
 Good Internal Controls

The most basic aspect of financial administration is that you need to

know that your financial records are complete and accurate.

Good internal controls are not only about protecting the funds but also
about protecting the people handling the funds

Internal controls should be reasonable

 The internal controls for a large business and a small nonprofit are not the same.

Internal controls should be effective

 Division of duties in small organizations can be especially difficult
 Overriding principle is that more than one person should be involved in each major
accounting function
 Practical Internal Controls

 Receipt of Funds
 Separate the receipt of cash and checks from the recording into
the accounting system
 Have someone without access to accounting system receive mail
and log in receipts
 Compare expected amounts to amounts deposited
 Number of attorneys times the dues amount
 Number of attendees at CLE times the rate for the course
 Practical Internal Controls

 Disbursement of Funds
 Review of bank statements and scans of cancelled checks

 Web access to banking information by someone other than the

bookkeeper
 Payroll
 Use of a payroll service

 Payroll reports should be automatically sent to someone not

involved in payroll processing.
 Review of Financial Information

 Complete Financial Statements

 Balance sheet, with prior month comparison

 Income statement, current month and year to date, detailed

with budget comparison
 General ledger

 Items to Look For

 Inconsistencies, unusual balances

 Variances to budget
 Tax Matters

 Payroll taxes
 Severe penalties for late payment and late filing of payroll tax
returns
 Employee vs. independent contractor
 IRS preference is employee
 Document relationship clearly
 Overtime Issues

 Exempt vs non-exempt
 Administrative, executive, and professional employees, outside
salespeople and certain computer employees may be classified
as exempt if they meet the following criteria:
 Employees are paid on a salary rather than an hourly basis.
 Employees earn at least $455 per week.
 Employees are paid full salary for any week they work, regardless
of how much time they work.
 In general, non-exempt employees earning less than $455 per
week, which is $23,660 per year, are guaranteed overtime pay
 Must pay 1.5 times normal rate for more than 40 hours per week
 Form 990

 Your Form 990 is open to public inspection

 www.guidestar.org

 Sensitive issues regarding Form 990

 Timely filing – penalties are $20 per day if under $1 million of
revenue, $100 per day if over
 Percentage of management and general and fundraising to
total expenses