Those of us involved with Board Development are always preaching about trends in good governance and recommend such things has having a conflict of interest policy, separate audit committee , whistle blower’s policy, etc. I do get fewer “you can’t be serious” looks than I used to for sure, and more small boards are taking steps in the direction of transparency but I always have to clarify which things they must do to comply with Sarbanes Oxley and which items are a good idea but are not required. All of this good advice is about to get a big boost.
The IRS is asking for comments on a new draft 990 form that will be used for 2008 (filed in 2009). Here are some highlights of new questions asked about your governance:
-the number of “independent” board members of the governing body;
-whether the organization:
*made any significant changes to the organization’s governing documents during
the past year, and if so, to briefly describe the changes
*has a conflict of interest policy, and if so, the number of transactions reviewed by the governing body under the conflict policy during the past year
*has a whistleblower policy
*has a written policy on document retention and destruction
*regularly documents the actions of the governing board and committees
-whether board members, or employees review and prepare the financial statements
-whether an independent accountant provides any services such as a financial review or an independent audit
-whether board members review the IRS Form 990 before it is filed
The IRS says that these questions were added because “in our view and experience, a well managed organization is likely to be a tax compliant organization.”
Find out more about this and other governance issues at nonprofitrisk.org. You can comment on the draft through September 14th.
Marion Conway Consulting