SAS No 112

Statement of Accounting Standards 112 goes into effect / becomes effective for periods ending on or after 12-15-06. I have mentioned in recent boot camps that auditors will soon be looking more closely at your internal controls. With this new standard they are now obliged to report any deficiencies to your board and in the auditor's report. From the linked document:

Requires the auditor to communicate control deficiencies that are significant deficiencies or material weaknesses in internal control.

A significant deficiency is a control, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected.

A material weakness is a significant deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Here is a PDP of that tells more about it.

Recently_Issued_Standards_SAS_No_112.pdf (application/pdf Object)

Alan

Giving Forum—Administrative Expenses

More late notices of events - Any foundation folks out there? You might be interested in this upcoming teleconference call put on by The Forum of Regional Associations of Grantmakers.
Giving Forum—Administrative Expenses

Tired of Spam?

Now I know this isn't directly related to nonprofit finance, but is you were to reduce the amount of spam you get, you will have more time to do finance!

If any of you have been to the Boot Camps you know I have mentioned TechSoup before as THE place to go to get software and tech advice. Click the link and you will find out how to get free anti-spam software. Here is a bit of the press release:

TechSoup and Mailshell today announced the fourth annual “Stop Spam Today!” campaign (www.stopspamtoday.org), a nationwide effort to help nonprofits and public libraries fight spam by providing free information, resources, and tools. The campaign culminates on December 6 in a one-day giveaway, during which nonprofits and libraries can visit www.stopspamtoday.org to order free copies of Mailshell’s Anti-Spam Desktop software. More than 275,000 copies of free anti-spam software were distributed during the previous “Stop Spam Today!” events, a testimonial to the ever-increasing need of nonprofits to protect themselves from unwanted software and its associated threats.

Qualified public libraries, nonprofits, and charitable organizations in the U.S. and in Canada that are registered with TechSoup’s product philanthropy service TechSoup Stock are eligible for the give-away. Organizations that are not already registered are strongly encouraged to pre-register at TechSoup Stock (www.techsoup.org/stock) before December 6, 2006. There is no cost to register or to participate in the program. Pre-registration will start the qualification process and will expedite order processing and delivery. On December 6, all registered organizations need to place their software order within 24 hours through www.stopspamtoday.org.

Short notice, sorry about that but go and get it.
Alan

A Recent Question: Fiscal Years

I was emailed this question a while back, "Among nonprofits, is there a preference for using a calendar year over non-calendar fiscal year. If yes, why?" I wrote back that I have asked other about this and I was told no, there is no real preference in general.

Some groups may have their own reasons for wanting a particular fiscal year based on their own operations, maybe they want their year to end shortly after a big event. Anybody ever heard anything else?

Nonprofit Times / Sarbanes Oxley

The NP Times has a free eNewsletter that almost always has something interesting and pertinent to financial management. Below is an excerpt from the latest issue that deals with SOX issues. Below that is the link to take you to sign up for the newsletter.

Tips of the Week

Boards ... 5 Sox-related issues you need to analyze

Very little of the Sarbanes-Oxley Act of 2002 (SOX) applies to nonprofits, but it would be wise for organizations to follow many of the best practices that have emerged from the legislation.

The portions of SOX that affect nonprofits deal with policies about document retention and whistleblower protection. But the sweeping reform that aimed for greater accountability and transparency also offers best practices that can benefit any nonprofit organization.

Peggy M. Jackson and Toni E. Fogarty, in their book "Sarbanes-Oxley and Nonprofit Management," outline some of the initiatives that can improve the performance of a nonprofit board and its staff:

1. Board recruitment and retention. Sitting on a board is no longer a hobby. It's serious work and demands complete attention to the task. Boards shouldn't be rubber stamps for executive directors, and they can't have passive people or those who lack the requisite skills to provide appropriate governance and oversight, according to the authors.
   
2. Audit committee. Nonprofit boards need to have a separate audit committee that includes at least one board member who is a financial expert. The committee must ensure that auditors are not also engaging in additional services, such as consulting, for the nonprofit, and that either the auditing firm, or at least the lead auditor, is rotated every three to five years.
   
3. Financial literacy. A nonprofit might have to create a training program so all board members know how to read financial reports accurately.
   
4. Code of ethics for board and senior management. Boards should adopt a strict policy prohibiting personal loans to any director or officer and a human resources policy that prohibits lending money to the chief executive officer, executive director, chief financial officer or other staff.
   
5. Conflict of interest policy. Any conflict of interest between a board member and a nonprofit should be documented through a conflict of interest statement and process.

Alan
http://ga0.org/nptimes/join.html?r=n7AhNL11eSlCE