Special Focus on Nonprofit Management

By Kennard Wing, Teresa Gordon, Mark Hager, Tom Pollak, and Patrick Rooney

This month, The CPA Journal focuses on nonprofit management and governance, and the CPA’s role in advising organizations in this important but sometimes overlooked sector. In “Functional Expense Reporting for Nonprofits,” the authors examine nonprofit financial reporting, which they describe as a “ticking time bomb” for the profession. Because the reporting of expenses by functional classification can vary considerably, it is difficult for donors and funders to measure a nonprofit’s effectiveness at fulfilling its mission. “Advising Nonprofit Organizations” notes how the Sarbanes-Oxley Act has led to a call for greater accountability within the nonprofit sector as well the corporate sector. The authors discuss how CPAs can identify weaknesses in a nonprofit’s operations and help the organization improve its governance and transparency.

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Publisher's Column

Abusive Tax Shelters

In August 2003, the New York Times reported that abusive tax shelters cost the U.S. federal government $85 billion in lost tax revenue from 1993 through 2003. They also cost state governments an additional $12 billion a year. According to a 2001 report from the Multistate Tax Commission, this represents approximately one-third of states’ tax revenue. KPMG sold tax shelters to at least 350 people, which brought the firm $124 million in fees and cost the Treasury $1.4 billion in unpaid taxes between 1996 and 2002. Full Story

Money Laundering and the CPA

In the ongoing battle to prevent money laundering, perhaps no professional has more at stake than the CPA. The reason is simple: Money laundering usually involves fraudulent financial transactions, and a major component of the CPA’s job is reporting on financial transactions. As a result, whenever money laundering is discovered, you can bet that both the public and the government will be taking a cold, hard look at the work of the CPAs involved.
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On Big GAAP Versus Little GAAP

The following is in response to the article “GAAP Requirements for Nonpublic Companies,” by Jeffrey S. Zanzig and Dale L. Flesher (The CPA Journal, May 2006). I have been a CPA in public accounting, a CFO in industry, and a lender to nonpublic companies for the past 24 years. From the outset, I felt strongly that this whole exercise of rewriting GAAP for nonpublic companies is futile and should be discontinued. Full Story

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