nonprofit audit committees

Nonprofit & Trustees Personal Liabilities: Another Penn State Impact

Nonprofit & Trustees Personal Liabilities: Another Penn State Impact

By Eugene Fram

All nonprofit organizations should continue to follow the news from Penn state, especially with the insurer’s negative reactions to paying claims related to directors & officers personal liability for the Sandusky’s misdeeds.*

To what extent should nonprofits carry Director & Officers (D&O) insurance?

For example, I recently encountered a nonprofit board (more…)

Nonprofit Evidence Based Evaluations: Using Imperfects Metrics Well

Nonprofit Evidence Based Evaluations: Using Imperfects Metrics Well

By: Eugene Fram

The Office of Management and Budget has issued a call for more rigorous program evaluations.  According to Jeffery Zients, acting OMB director,  “Where evidence is strong, we should act on it. Where evidence is suggestive, we should consider it. Where evidence is weak, we should build the knowledge to support better decisions in the future.”[i]  Assuming this directive will trickle down to many nonprofits using federal dollars, using imperfect metrics for evaluations are becoming accepted, especially for smaller nonprofits, which can’t afford statistically significant studies. These resources are needed to deliver services.  In addition, evidence based imperfect metrics can help track progress and drive change. (more…)

A 2012 Agenda for Nonprofit Audit Committees

A 2012 Agenda for Nonprofit Audit Committees

By: Eugene Fram

Nonprofit audit committee members might want to view a video presentation at the Corporate Board Member Website (June 9th) for a list of top issues being faced by for-profit audit committees.  Catherine Bromillow, PwC Center for Board Governance, presents the list. 

Following, in her order of importance (high to low), are those that I feel can apply to nonprofit organizations.

RISK MANAGEMENT – Focusing on the known risks and estimating the unknown ones.  For example, how will the greater use of psychiatric drugs impact nonprofit counseling organizations?

INCREASED USE BY REGULATORS – What use will the IRS make of the governance information now being collected annually via the expanded 990 Forms?  Do volunteer directors know the potential impact of the Intermediate Sanctions Act?

CHANGES IN REGULATIONS & ACCOUNTING STANDARDS – What impact, if any, will Dodd-Frank have on nonprofits?   (Although not directed to nonprofits, Sarbanes-Oxley has had some indirect impacts.)  What changes in accounting standards need to be reviewed by a nonprofit audit committee?

TURBULENT ECONOMIC CONDITIONS – What plans are in place to survive more turbulence in the world economy? 

INTERNAL CONTROL STRUCTURE – How does the internal control structure need to be changed after a merger or acquisition transaction between two nonprofits?

TAX COMPLEXITY- How do changes in state or federal tax regulations impact a nonprofit organization’s business plan?

OPERATION COMPLEXITY – For those nonprofits that operate from multiple sites, the audit committee needs to understand key issues for each site.  Visits to all sites by the committee or individual directors are important.

COMMITTEE EFFECTIVENESS – With frequent rotating membership, how do nonprofit audit committees go about improving their operations?

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Assessing Nonprofit CEO Performance

Assessing Nonprofit CEO Performance

By Eugene Fram

CEO assessment should be very thorough and take place annually.  That doesn’t mean that it always has to take place at one time.  In some situations, assessment occurs throughout the year, depending on how the committee members decide to divide their tasks.

After completing the entire review, the assessment committee should make its report to the full board.   If the review takes place periodically throughout the year, board updates follow a similar pattern.
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NonProfit Management/Governance – Avoiding Fraud – Internal Controls

Nonprofit boards do not have  effective ways to reduce nonprofit fraud is a common misconception among nonprofit board directors.  Board directors should be familiar with seven audit-related topics.  In today’s vigilant environment, the board must be involved.  (more…)