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ExpressTaxExempt Blog

Thursday, July 30, 2015

Legal Audits pt. 2




We are back! In the last blog, we discussed legal audits of nonprofits and tax-exempt organizations, and the key areas regarding a standard legal audit. If you’re joining for the first time, feel free to catch up with the previous blog: Legal Audits pt. 1. For everyone else, let’s continue.

State Taxation Issues
You should regularly review any property tax or sales tax exemptions to determine whether your organization still qualifies. Another good idea is to consider which qualifying exemptions your organization hasn’t applied for yet.

State Charitable Solicitation Requirements
Your organization’s legal audit won’t be complete without a review of your compliance with various regulations that govern fundraising. This calls for a look into the jurisdictions where your organization is actively fundraising. When the areas in which you’re soliciting are known, the next task is to examine the status of your organization’s registration in each area.

Gift Administration Issues
Many organizations don’t efficiently monitor their restrictions with gifts; however, a legal audit normally reviews gift acceptance policies and substantiation along with acknowledgement forms. It would best for you to look over your gift instruments to make sure that funds are rightfully classified in regard to time, restrictions, and terms.
Insurance Policies
Of course, you should regularly go over your organization’s insurance policies. These include
  • General Liability 
  • Officers and Director’s Liability
  • Errors and Omissions, etc.
Make sure that your organization’s activities are properly covered.

Volunteer and Participant Waivers
You should have waivers and participation agreements that release your organization from liabilities or risks with volunteers and participants. The audit will see if your agreements exists, if they’re adequate, and if procedures are in place to guarantee that your waivers are used.

Contractual Obligations
If you have significant contracts, they need to be reviewed to ensure that notice and termination dates are honored, and that there is compliance with restrictive covenants.

Depending on the activities and size of your organization, a legal audit may also look into your personnel policies, intellectual property issues, real estate issues, etc. Similar to a financial audit, a legal audit can be customized to cover an area of particular concern. You should be aware that audits can either be done all at once or over time in phases. Keep in mind that a periodic overview of the legal matters is critical to the integrity of your nonprofit or tax-exempt organization.

One of the ways to make sure that your organization is in compliance is to always file the required tax returns, and you can do so with Express990 - easy, quickly, and accurately. We offer support for any of the 990 forms for tax-exempt organizations and you can e-file your Form 990-N (e-Postcard) FREE for the current tax year.

For any questions or assistance with our service to e-file, feel free to contact our live, expert help at our headquarters in Rock Hill, South Carolina.

Phone: (704) 839-2321 (Monday - Friday, 9am - 6pm, Eastern Standard Time)
Email: support@expresstaxexempt.com
Live Chat: www.expresstaxexempt.com


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