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November 4, 2008



“It’s a pain,” chuckles CPA Jeff Sabot, not-for-profit practice leader in the Bethesda office of CBIZ MHM, about the new, improved IRS Form 990 that associations will be filing in coming months. Although it’s the tax-exempt return that’s been around for decades, Jeff says the roughly 40-page document is “twice as thick” as last year’s, as the IRS attempts to bring Sarbanes-Oxley type transparency to the non-profit world. He says CPAs are having to bill 10-40 % more hours to fill it out.


Jeff says associations are shopping around more and starting to hire separate firms to handle their financial statements and auditing needs. That’s because Statement of Auditing Standards No. 112 of December ’06 may require auditors to say an association has a “significant control deficiency or material weakness” if the same CPA prepares both the financial statement and the audit. That’s harsh language for publicly disclosed forms. As for Form 990, Jeff says you definitely want professional assistance, since failure to file a complete and accurate return can subject an organization to penalties of $20 to (for larger organizations) $50,000 a day.


Jeff says that since the 990 is available for public inspection and will in many instances find its way online, it will be increasingly used by watchdogs seeking to review association finances and executive comp. But he says it will be difficult for outsiders to interpret because there are no footnotes. Jeff’s advice is to be sure there are more details in the mission statement and to use the additional page (Schedule O) for the association’s accomplishments and related programs. Jeff also says new disclosure requirements for CEO financial packages are leading some associations to hire employee benefits consultants. The consultants are then conducting salary surveys for association boards wanting to keep their salaries in check; they have to report “inured benefits,” which we believe is a fancy term for salaries that are out of line.


A Maryland Terp (class of ’74), Jeff came down from Syosset, Long Island to study accounting and never left. His springboard into association work came with his first client, the Nature Conservancy in 1975, after which he quickly gained referrals to other non-profits like The Conservation Fund, which awarded him this plaque for 20 years of service. When not working for 50-60 non-profit and association clients, Jeff enjoys docking his 18-foot Boston Whaler at Ocean City’s “Secrets” Restaurant for a “quiet dinner” with his wife of 34 years.

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