JV CPA PLLC is transitioning to a virtual/remote work environment

Due to the new dynamics of today's business environment and to have the best life-work situation for our staff, we are transitioning 100% virtual offices. After 22 years, we are closing our physical office and our staff will be working remoting. The last few years have proved that it is a more efficient model for us and will not affect our quality client services in the slightest. Most of our physical meetings already take place at client locations; but otherwise we will arrange convenient locations for other in-person meetings. Please use the below address for all physical mail or delivery services (FedEx , UPS, messengers etc.) and we will receive it promptly.

To ensure timely delivery, please use the following new mailing address:

John Vazzana CPA PLLC

Ste 164

6904 Colonial Road

Brooklyn New York 11209

NYS Charities Bureau Guidance (and Extensions) due to COVID-19

The Charities Bureau currently grants to all registered charities an automatic six-month extension of the deadline for filing an annual financial report. Therefore, for example, organizations whose year-end was June 30, 2019 are required to file their annual financial reports by May 15, 2020. However, any organization whose filing deadline, including the automatic six-month extension, falls after February 15, 2020 will be given an additional six-month extension to file its annual financial reports.

COVID-19 Due Date Chart

What Is the Difference Between a Compilation, a Review and an Audit? A Comparative Overview (updated)

Compilation and review engagements are similar to audit engagements in a few ways. In all three types of engagements, the CPA performs certain procedures in accordance with professional standards before issuing a report on a set of client financial statements. The major difference between those engagements is the level of assurance the CPA provides in the report.

An audit provides the highest level of assurance. In an audit engagement the CPA will carry out procedures to obtain an understanding of internal controls, and perform substantive tests of transactions. They will also use analytical procedures on financial data and perform tests of details on account balances. In order to get this understanding of internal controls, the auditor will examine the organization’s operations. That would include documenting control procedures (e.g. cash receipts, cash disbursements, payroll), the approval process, accounting procedures and governance. An audit extends the work beyond the numbers on the financial statements. You can consider an audit as half financial and half operational. Most audits would require onsite visits and inspections, interviews with staff and governance, and confirmations with outside parties. These intense procedures are what makes the Audit Report on the financial statements such a higher level of assurance. Additionally, the auditor is required to report certain types of deficiencies in the organization’s internal controls in letter format (to management and the board). This letter, known as a management letter or internal control letter, is not part of the Audit Report attached to the financial statements , but is often requested by funders and other interested parties. Some states (currently not New York) require any written communications from the auditor to be submitted annually, this would include the management letter. All the audit procedures , including those mentioned above, have to be documented in detail. Auditors are also audited in a process called “Peer Review”. During a Peer Review, the Auditor’s workpapers are examined to make sure all procedures are done and documented correctly. The high assurance stakeholders get from an audit comes at a high cost. The service is time intensive and requires specialized skills which adds up to ever increasing fees for the organization needing such a service. Being in a specialized industry, such as Nonprofit, only adds to the cost.

A Review Report expresses limited assurance that there are no material modifications that should be made to a set of financial statements in order for them to be in conformity with a particular basis of accounting. A Review Report provides less assurance than an Audit Report, but also requires less work by the CPA, which results in a lower fee. In a review engagement, the CPA will use analytical and other procedures on the financial data.

A Compilation Report does not express an opinion or provide any assurance about the fairness of a set of financial statements. In this type of engagement, the CPA merely submits client information in the form of financial statements, and is not required to perform any verification procedures.

Not For Profit Organizations are often required to have a CPA Audit or Review because of state requirement or at the request of funders. 

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We have useful guide to understanding the different levels of service the Certified Public Accountant performs.

Download the PDF version here

NYS Charities Bureau clarifies Form 990 Schedule B is required with annual filings

For the Office of the New York State Attorney General - Charities Bureau

Issue date: November 2019

ORGANIZATIONS REGISTERED WITH THE CHARITIES BUREAU MUST FILE

COMPLETE SCHEDULE B TO IRS FORM 990, INCLUDING NAMES AND ADDRESSES OF CONTRIBUTORS

The Attorney General’s Charities Bureau has received inquiries asking whether organizations that register with the Charities Bureau must submit a copy of the complete Schedule B (List of Contributors) to their Internal Revenue Service Form 990. This guidance confirms that there has been no change to the New York filing requirements for organizations that also file a federal Form 990: New York registrants must attach complete copies of all schedules to their federal form as part of their annual, New York CHAR 500 filing, including (if applicable) a Schedule B that lists the names and addresses of the organization’s substantial contributors and the amounts they contributed. The recent federal developments that highlighted this issue are described below.

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In July 2018, the United States Treasury Department issued Revenue Procedure 2018-38, which provided that “tax-exempt organizations required to file the Form 990 or Form 990-EZ, other than those [exempt from taxation pursuant to §501(c)(3) of the Internal Revenue Code], will no longer be required to provide names and addresses of contributors on their Forms 990 or Forms 990-EZ and thus will not be required to complete these portions of their Schedules B.” The Revenue Procedure was announced without any prior public notice or opportunity for comment, and its text indicated that the new filing standards would take effect in December 2018. Some organizations began citing the Revenue Procedure to claim that they were no longer required to include the names and addresses of their contributors on the copy of their Form 990 Schedule B that they filed in New York.

In July of this year, the U.S. District Court for the District of Montana held in Bullock, et al. v. IRS, No. 4:18–cv–00103–BMM (D. Mont. July 30, 2019), that the adoption of Revenue Procedure 2018-38 by the Internal Revenue Service was unlawful because it failed to satisfy Administrative Procedure Act standards that require public notice-and-comment for substantive agency rule-making. The Bullock decision set aside Revenue Procedure 2018-38: the Revenue Procedure is therefore not in effect and all organizations that file a Schedule B with the IRS must include complete contributor information on that form. Organizations registering with the

Charities Bureau in New York MUST include the same complete Schedule B – with names and addresses of contributors - in their annual financial reports.

Since July, the Treasury Department has taken steps to address the Bullock decision with a formal rule-making. On September 10, 2019, the Department of the Treasury issued a

Notice of Proposed Rule-making that included the full text of new, proposed regulations modeled after Revenue Procedure 2018-38. These regulations, if adopted, would continue to require 501(c)(3) organizations to file a complete Schedule B but would exempt other 501(c) tax-exempt organizations (such as 501(c)(4) social welfare organizations) from including the names and addresses of their substantial contributors in Schedule B to IRS Form 990.

Unless and until new Form 990 filing rules are adopted by the Internal Revenue Service after review and analysis of all public comments, all organizations required to register with the Attorney General’s Charities Bureau must continue to file all of the following documents as their required Annual Financial Report:

 New York Form CHAR500

 IRS Form 990, 990EZ of 990PF, with complete copies of all schedules, including Schedule B (NOTE - Schedule B is exempt from public disclosure by the Office of the Attorney General)

 A Certified Public Accountant’s Review or Audit Report if required based on gross revenue.

Additional guidance for charities as well as information about

registration and annual financial filings are posted at www.charitiesnys.com