Respond to at least two of your classmates’ posts in substantive responses no less than 80 words per response with attention to current realities and applications. I need 50 words each on Ques 1 & 2

Respond to at least two of your classmates’ posts in substantive responses no less than 80 words per response with attention to current realities and applications. I need 50 words each on Ques 1 & 2

Discussion 3 forum 1 response

QUESTION 1: You indicated that many companies do not include enough information in their 990 Form in this regard. So my question to you is, what are the consequences of this lack of information? Are there any consequences for not including enough information?

 

FORUM1: Creating an accountable organization is an ongoing process. Developing a culture of accountability and transparency educates and informs employees, volunteers, and board members. Standards, rules, and principles are more effective when the people they effect, understand them Tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations file Form 990 to provide the IRS with the required information (IRS.Gov., n.d.). The function of the 990 is for filers with income of more than one million dollars or assets above two and a half million dollars.

The 990 is to be reviewed by the board of directors and signed by the chief executive or chief financial officer and posted on the nonprofit website. The 990 enhances transparency of a nonprofit by these steps to disclose finances, operations, governance, and impact (kuralay0505, 2009). Doners, volunteers, and staff are more confident in the assurance provided by the Form 990 processes and procedures. Online/Public disclosure of how the organization is run accompanied by vision and mission statements constructs credibility.

There are two types of reviews that a nonprofit may encounter, information posted on IRS. Gov on fact sheets (Nonprofit World, 2008). The IRS conducts audits/examines a nonprofit to determine the organization’s tax liability or its qualification for tax-exempt status. Compliance checks are what IRS uses to confirm whether a nonprofit is keeping records and meeting reporting requirements and/or to assess if the activities of the organization align with its tax-exempt purpose.

In anticipation of Form 990 disclosure policies and procedures should be reviewed (Tsacoumis, 2008). IRS “best practices,” guidance informs nonprofits of the gravity of adhering to governance-related disclosure requirements. Organizations not following IRS guidelines will likely experience additional scrutiny. Form 990 requires a substantial amount of time to prepare, and if the disclosures do not reflect compliance, there is a risk of audit.

A positive aspect of change is the IRS focus on nonprofit compliance with ethical standards, promoting the public good. The IRS emphasized that a nonprofit’s board is responsible for establishing ethical standards that permeate the organization, informing its practices.

References

Nonprofit World. (2008). IRS fact Sheets help nonprofits comply with laws. Nonprofit World, 26(3), 8.

IRS.Gov. (n.d.). Tax information for charities and other nonprofits. https:/www.irs.gov/charities-non-profits

kuralay0505. (2009, May 8). Steps for Nonprofit Accountability. [Video File]. http://www.youtube.com/watch?

Tsacoumis, S. (2008, May). What corporate lawyers need to know about new IRS Form 990. Insights; The Corporate & Securities Law Advisor, 22(5), 11-16.

 

FORUM 2: The IRS tax form 990 is how nonprofits organizations or foundations show who they are, what they do and the deficits and assets they maintain. The criteria for filing IRS form 990 include private foundations. IRC section 527 (political) organizations who are required to file an annual exempt organization return must file form  990  or form 990-EZ. Tax-exempt organizations with annual gross receipts that are normally greater than $50,000 must file form 990 or form 990-EZ. Section 509(a)(3) supporting organizations must file form 990 or form 990 EZ, (IRS Gov n.d.). Each nonprofit organization must have and show accountability.

The changes that have taken place in the form adopted in 2009 include a yes or no section (Part VI) that are questions that address policies and practices of the organization. While the IRS does not require you to answer the questions, the answers are analyzed and compared to any other information that has been provided to see if the organization is compliant and transparent, (Worth, 2021). What was once a simple tax form has now become a matter of checking for noncompliance and governance. Blackwood et al noted (2014, as cited in Worth, 2021) that while most nonprofits were compliant with many of the principles outlined in Part VI, not all principles were given the same consideration and adherence from nonprofit to nonprofit.

One of the biggest benefits of the new provisions in the IRS 990 is the summary and the checklist, (LaurenceScot, 2009). Not only are you answering questions that elucidate your standing it also holds you accountable for that clarification.

 

IRS. Gov (n.d.). Tax Information for Charities and Other NonProfits.  (Links to an external site.) https://www.irs.gov/charities-non-profits

Laurence, Scot (2009, October 30). Excerpt from 2009 990 Seminar  (Links to an external site.) http://www.youtube.com/watch?v=NMGgpRgrLX8

Worth, M. J. (2021).  Nonprofit Management: Principles and practices  (6th ed.). Sage Publications, Inc.

 

 

Discussion 3 forum 2 response

Question 2: In your post you note that the act provides legal sanctions against those who falsely provide certifications. Can you cite any examples of this occurring in the nonprofit sector? If not, please share a for-profit example.

Forum 3: The Sarbanes-Oxley Act of 2002 is a law the U.S. Congress passed on July 30 of 2002, to help protect investors from fraudulent financial reporting by corporations BoardSource. (2003). Also known as the SOX Act of 2002 and the Corporate Responsibility Act of 2002. It mandated strict reforms to existing securities regulations and imposed tough new penalties on lawbreakers. The Sarbanes-Oxley Act of 2002 responded to financial scandals in the early 2000s involving companies such as Enron Corporation. The high-profile frauds shook investor confidence in the trustworthiness of corporate financial statements and led many to demand an overhaul of decades-old regulatory standards. Besides the financial side of a business, such as audits, accuracy, and controls, the SOX Act of 2002 also outlines requirements for information technology (IT) departments regarding electronic records. The act does not specify a set of business practices in this regard but instead defines which company records need to be kept on file and for how long. The standards outlined in the SOX Act of 2002 do not specify how a business should store its records, just that it’s the company IT department’s responsibility to keep them.

One of the provisions of the Sarbanes-Oxley is the Whistleblower. The Whistleblower requires that companies have whistleblower procedures in place and provides substantial protections to employee whistleblowers who report specific company misconduct. The Sarbanes-Oxley whistleblower protections are outlined in Section 806 of the Act. Section 806, which is currently in effect, applies to any employee who either: files, testifies, participates in, or otherwise assists in any proceeding relating to an alleged violation of the mail, wire, bank, or securities laws; or provides information or assists in an investigation regarding any conduct that the employee “reasonably believes” constitutes a violation of the mail, wire, bank or securities laws. An employee is protected by Section 806 if he or she reports the information to, or the investigation is conducted by: a federal regulatory or law enforcement agency; any member or committee of Congress; any person with supervisory authority over the employee; or any other person who has “the authority to investigate, discover, or terminate misconduct.”

References:

BoardSource. (2003, March 1). The Sarbanes-Oxley Act and Implications for Nonprofit Organizations (Links to an external site.) (Links to an external site.) . GuideStar. Retrieved from https://trust.guidestar.org/the-sarbanes-oxley-act-and-implications-for-nonprofit-organizations

https://www.whistleblowers.gov/statutes/sox_amended

 

Forum 4: The Sarbanes-Oxley Act was passed in order to rebuild the public’s trust after several scandals surfaced, named after two Congress members who sponsored it. As another form of compliance, the law states that publicly traded companies will adhere to significant new governance standards that increase board members’ roles in overseeing financial transactions and auditing procedures. This is one aspect of nonprofits that should always be governed accordingly, seeing that nonprofit organizations are held to strict accountability measures, as stakeholders and the government seeks to know how funds are being used and in what ways. Though signed into law in 2002, there have revisions made in 2015 that reflect the practices mentioned in the Sarbanes-Oxley Act.

Of those revisions, one should be highlighted that is of major importance, whistle-blower protection. The Act protects whistle-blowers who risk their careers by reporting suspected illegal activities in the organization. It is illegal for a corporate entity, for-profit and nonprofit alike, to punish the whistleblower in any manner. Whistleblower protections indicate that not only should whistleblowers be protected, but so should the organizations themselves. As it relates to nonprofit organizations, setting an example from the highest part of the hierarchy down displays that there is zero tolerance of retaliation. Like many organizations, at its conception, organizations should make sure that procedures are developed to handle customer complaints as well as an effective way to report prohibited behavior with no means to retaliate. Without using reported information as a way to minimize potential fraud, organizations risk the opportunity of having tax violations or further punishment. Becoming a nonprofit organization comes with the transparency that other organizations may be able to help by collaborating and providing useful guidance that in turn may help organizations become more effective. But, within a collaboration, one technique may or may not work for a given organization.

 

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