Offering guidance to assist your organization in filling out the often confusing and difficult IRS Form 990. Specifically addressing: • Conflict of interest policy • Whistleblower policy • Document retention and destruction policy

1. Profitable Solutions for Nonprofits
Addressing your concerns about Form 990
Hosted by Davis Kinard & Co, PC
with speaker Lori Herrick, CPA, CFE, CICA

2. Organizations responsible for filing
the 2009 IRS Form 990
* Certain religious organizations, religious affiliated organizations and
governmental organizations are not required to file. Check www.irs.gov for the
990 instructions on filing.
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Form 990 Gross receipts greater than or equal to $500,000 or total
assets greater than or equal to $1,250,000
Form 990-N Gross receipts of $25,000 or less
Form 990-EZ Gross receipts less than $500,000 and total assets at the
end of tax year, less than $1,250,000
Slide 2 of 25

3. September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 3 of 25
CONFLICT OF
INTEREST POLICY
(Part VI, Section B, question 12: a, b, c)

4. Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
• What is this policy?
– Defines conflicts of interest
– Identifies classes of individuals within the
organization covered by the policy
– Facilitates disclosure of information that can help
identify conflicts of interest
– Specifies procedures to be followed in managing
conflicts of interest
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 4 of 25

5. • What is this policy?
– Arises when a person in authority within
organization can benefit financially from a decision
he or she could make in such a capacity
– Does not include questions involving a person’s
competing or respective duties to the organization
and to another organization that do not involve
material financial interest
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
Slide 5 of 25

6. • What is this policy?
– Question 12b: Required disclosures of officers,
directors, trustees, and key employees. (Hand out of
example of disclosure statement.)
– Question 12c: Describe the practices for monitoring
proposed or ongoing transactions or conflicts of
interest and dealing with the conflicts.
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
Slide 6 of 25

7. • What is this policy?
– Three essential elements of a conflict of interest
policy:
• Full disclosure
• Board member’s abstention from discussion and
voting
• Staff member abstention from decision-making
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
Slide 7 of 25

8. • Where can I find one?
– Internal Revenue Service
• www.irs.gov/instructions/i1023/ar03.html
– National Council of Nonprofits
• Appendix A:
– Conflict of Interest Policy and Annual Statement
– Board Member Conflict of Interests Disclosure Form
– The Board Source (for a fee)
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
Slide 8 of 25

9. • Why do I need one?
– Board members have legal responsibility to act
in the best interest of their organization
– Form 1023 Application for Exempt Status
specifically asks if the organization has adopted
a conflict of interest similar to Appendix A
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Conflict of Interest Policy
(Part VI, Section B, question 12: a, b, c)
Slide 9 of 25

10. September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 10 of 25
WHISTLEBLOWER
POLICY
(Part VI, Section B, question 13)

11. Whistleblower Policy
(Part VI, Section B, question 13)
• What is this policy?
– Encourages staff and volunteers to come forward
with credible information on illegal practices or
violations of adopted policies of the organization
– Specifies the organization will protect the individual
from retaliation
– Identifies those staff or board members or outside
parties to whom such information can be reported
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 11 of 25

12. Whistleblower Policy
(Part VI, Section B, question 13)
• What is this policy?
– The policy should provide at least three things:
• Guidelines for reporting questionable activities
• Processing, tracking and retention of the concerns
reported
• Security of the employees and board members in the
reporting of information without retaliation
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 12 of 25

13. • Where can I find one?
– SAFRline
• Appendix B: ABC Whistleblower Policy
– Nonprofit Risk Management Center
• Appendix C: Employee Protection (Whistleblower) Policy
– Blue Avocado
• Appendix D: Model Whistleblower Policy for Nonprofits
– The Board Source (for a fee)
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Whistleblower Policy
(Part VI, Section B, question 13)
Slide 13 of 25

14. • Why do I need one?
– Not only provides an open forum to communicate
fraudulent concerns, but gives the Board an
additional level of oversight
– Employees and board members more aware of
Management’s commitment to high moral and
ethical behavior
– Deterrent to fraud
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Whistleblower Policy
(Part VI, Section B, question 13)
Slide 14 of 25

15. September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 15 of 25
DOCUMENT
RETENTION AND
DESTRUCTION
POLICY
(Part VI, Section B, question 14)

16. Document Retention and
Destruction Policy (Part VI, Section B, question 14)
• What is this policy?
– Identifies record retention responsibilities of
staff, volunteers, board members, and outsiders
for maintaining and documenting storage and
destruction of organization’s documents and
records
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 16 of 25

17. • What is this policy?
– The process of developing this policy includes:
• Identify what types of paper work and e-mails are
generated by the organization
• Determine the appropriate and legal length of time
to retain them
• Record those retention times on a schedule
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Document Retention and
Destruction Policy (Part VI, Section B, question 14)
Slide 17 of 25

18. • Where can I find one?
– National Council of Nonprofits
• Appendix E: Sample Document Retention/Destruction Policy
– Blue Avocado
• Appendix F: Model Document Retention Policy for Nonprofits
– The Board Source (for a fee)
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Document Retention and
Destruction Policy (Part VI, Section B, question 14)
Slide 18 of 25

19. • Why do I need one?
– A formal policy with allow everyone to know what
to save, what to discard and when
– Sarbanes Oxley Act’s prohibition of destruction of
documents subject to review in litigation propel
nonprofits to create business practice of systematic
document destruction
– Protect organization from additional legal hassles
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990
Document Retention and
Destruction Policy (Part VI, Section B, question 14)
Slide 19 of 25

20. September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 20 of 25
Questions
&
Answers

21. Lori Herrick, CPA, CFE, CICA
• 11 years of public accounting experience
• Established SAFRline, a 24-hour fraud hotline to report
concerns within organizations
• Extensive experience in tax preparation for individuals,
corporations and partnerships
• Practice emphasis in audits for nonprofits, governmental
entities and private companies
• Memberships in TSCPA, AICPA, TASBO, TANO and ACFE
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 21 of 25

22. References
• Blue Avocado, www.blueavocado.org
• Board Source, www.boardsource.org
• Internal Revenue Service, www.irs.gov
• National Council of Nonprofits,
www.councilofnonprofits.org
• Nonprofit Risk Management Center,
www.nonprofitrisk.org
• SAFRline, www.dkcpa.com/services/safrline.html
September 23, 2010
Profitable Solutions for Nonprofits:
Addressing your concerns about Form 990 Slide 22 of 25