For Chapter Presidents/Chapter Executives
Updated January 2008
ACC Chapter Operations Check List
Operational Transparency and Legal Compliance
√Non-Profit Corporate Status – Section 1
√Tax Exemption and Compliance, Audit Management, Donor Fund Oversight – Section 2
√Budget, Financial Management and Fiscal Policy Development – Section 3
√D&O Insurance – Section 4
√Chapter Management, Disclosure & RFP Process – Section 5
√Document Management Policy– Section 6
√Ethical and Legal Compliance, and Risk Management– Section 7
January 25, 2008
To: ACC Chapter Presidents & Chapter Executives
The ACC Chapter Operations Checklist has been developed as a tool to help Chapters ensure they are in compliance with laws and regulations affecting them. It also will protect and limit liability for the Chapter officers and Chapter Executive.
Each Chapter President and Chapter Executive is asked to review this list upon any change in leadership and/or management and yearly thereafter to see if there are any outstanding tax, legal or liability issues that need to be addressed. Yearly, Chapter Executives are asked to report to ACC National with a ‘Completed’ or ‘In-progress’ check list. Complete compliance with these legal and financial responsibilities and documentation therein is also a requirement of the Chapter Recognition Program.
Supplementary financial templates have been added to this years checklist as an outcome from the Chapter Finance Workgroup. These new templates were added to help facilitate chapter financial performance and management and are to be used as best practices. Please be reminded that they encompass tall, grande, and venti chapters; each new resource is not applicable to all chapters.
Additionally, there are distinct roles for the Governor/Treasurer and Chapter Council and the Chapter Management (i.e. Executive Director). The Governor/ Treasurer and Chapter Council set the Chapter’s direction, provide oversight and ensure there are adequate controls and policies in place to provide sound financial management and to regularly review and question Chapter Management on the year-to-date and projected financial results of the Chapter’s operations. Management is responsible for the preparation and presentation to the Governor/ Treasurer and Council of periodic performance reporting related to the achievement of strategic/ operational plan objectives, year-to-date actual vs. budget financial performance, forecasted year-end financial performance vs. budget, investment results and cash flow projections.
We thank you for your leadership! Please contact us with any questions or comments. You can reach Chapter Affairs staff at 800-253-4636, Ext. 5413 or feel free to call or email staff directly.
State Nonprofit Corporate Status – Section 1
Important Documents to be Reviewed and Provided to ACC-National*
Copy of IRS determination letter reflecting tax exempt classification is on file at ACC-National* (See section 1-1)
Copy of Articles of Incorporation, as well as any subsequent amendments, reflecting nonprofit corporate status within the state of incorporation is on file at ACC-National* (See section 1-2)
Copy of Employer Identification Number (EIN) (See section 1-3)
Copy of annual corporate report or similar state document indicating that Chapter’s corporate status is current and in good standing with a copy to Chapter President (See section 1-4)
Copy of Chapter Bylaws are on file at ACC-National* (See section 1-5)
Chapter bylaws have been reviewed within past year by Chapter Executive and President to ensure compliance with applicable state and ACC-National requirements (See section 1-6)
Bylaws are posted on the chapter website (See section 1-7)
Tax Compliance and Donor Fund Oversight– Section 2
Annual audit conducted by outside firm (see section 2-1)
A certified public accountant has been appointed by the officers and/or executive committee to complete all annual tax forms and a separate firm has been appointed to perform an audit every three years or before any new chapter executive is contracted (See section 2-1)
Current year Form 990 and 990-T filed with the IRS with chapter officer signature postmarked by May 15 or upon filing (See section 2-1)
Signed copy of 990 Forms mailed to all chapter officers by May 31 or upon filing (See section 2-3)
Signed copy of 990 Forms to ACC-National* by May 31 or upon filing (See section 2-3)
Compliance with fund oversight policy (see section 2-4)
Budget, Financial Management and Fiscal Policy Development – Section 3
Chapter is on a calendar year budget cycle, January 1 – December 31 (See section 3-1)
Copy of budget prepared and presented to officers by Chapter Executive in conjunction with treasurer two months prior to new fiscal year (See section 3-2)
Minutes of council or executive committee meeting reflecting approval of presented budget, along with approved budget, sent to ACC-National* before January 1 (See section 3-2)
Compliance with ACC National Budget Development Process (See section 3-2)
Treasurer has not been in position for more than 6 years consecutively
Treasurer and Chapter President receive monthly updates on budget actuals vs. budgeted amount and balance sheet
President/Treasurer sign all checks over $2,000 (Chapter Executive does not sign checks of more than $2000 in value); checks more than $10,000 require two signatures; in extreme circumstances call Chapter Affairs for alternate procedures
Authorized signatures on file at the bank are President, Treasurer and Chapter Executive
Chapter Executive does not sign check for their own management/administrative fee or any reimbursement
Year end balance sheet is sent to officers and/or executive committee members and ACC-National* by February 15
Develop a fiscal policy in compliance with ACC National (see section 3-3)
D&O Insurance – Section 4
Chapter has purchased Directors and Officers (D&O) insurance for current year (see section 4-1)
List of current officers, council members and committee chairs is forwarded to insurance company with copy to the Chapter President (see section 4-1)
Effective Financial Management, Chapter Management Contract & RFP Process – Section 5
Chapter Executive has a signed contract that is based on ACC Sample Management Contract (see section 5-1)
Chapter Executive contract is on file with ACC-National*
Chapter Executive goes through ACC Review Process once per year (see section 5-2)
Financials are consistently reviewed with appropriate parties (see section 5 -2)
Chapter Executive review is on file with ACC-National*
Chapter Executive disclosure form is on file with ACC-National* (see section 5-3)
Chapter Executive Confidentiality/Nondisclosure Agreement is on file with ACC-National*
(see section 5-3)
Document Management Policy – Section 6
Hardcopies, electronic copies or both of all documents outlined in the Chapter Document and Information Management Policy are on file and available at all times.
All documents outlined in the Chapter Document Management Policy are the property of the Chapter and will be transferred within one month to the new Chapter Executive when new chapter management is established.
Ethical and Legal Compliance, andRisk Management – Section 7
Compliance with ethical and legal policies (see section 7-1)
Chapter Executive has developed a Succession Plan (see section 7-1)
*** PLEASE SEE OSCAR (members.acc.org/oscar) for StrategiC Planning TEMPLATES AND additional financial management tools***
CHAPTER FILINGS CHECKLIST
Reports due to ACC National Chapter Affairs / Reports Chapter President/Council should review *One time filings
(Any changes to these documents would require additional filings.) / IRS Determination letter reflecting tax-exempt status
Articles of Incorporation w/ amendments
Employer Identification Number
Chapter Bylaws
Chapter Executive Contract
January / Approved current budget w/ copy of minutes reflecting budget approval
February / Year-end balance sheet / Year-end balance sheet
March
April
May / Signed copies of 990 & 990-T
June
July
August / Chapter executive to purchase D& O insurance.
Forward list of current officers, council members and committee chairs to insurance company with copy to Chapter President.
September / Update and sign Chapter Executive disclosure/confidentiality forms
October
November / Budget approved for next year / Budget approved for next year
December or
or by Year’s end / Copy of annual corporate report
Copy of Chapter Executive’s review report / Number of years of service of Chapter treasurer reviewed
Year of last audit determined
Chapter bylaws reviewed by Chapter President during year for state and ACC compliance
Copy of annual corporate report to
Chapter President
* not including monthly or periodic financial updates on actuals vs. budget to Chapter President and Treasurer.
Updated January, 2008 *ACC-National denotes Chapter Affairs staff
SECTION 1
1 – 1 IRS DETERMINATION LETTER GRANTING FEDERAL TAX EXEMPT STATUS
- Determination of federal tax exempt status is granted by the Internal Revenue Service (IRS)
- The tax exempt determination letter from the IRS should be kept at all times in the chapter archives
- Contact the IRS for how to receive a copy of this determination letter at if this letter is not available
1 – 2 CORPORATE STATUS
- Incorporation of the chapter as a nonprofit corporate entity generally should take place within the state of operation
- Contact the Secretary of State in the state of operation for verification of incorporation. State websites usually contain this information. See for listing of all state websites
- If the Secretary of State cannot verify the corporate status or verify that the corporation is in good standing, the process either for reincorporating or bringing the entity back into good standing (generally by filing past due annual reports and applicable fees) should begin immediately – contact ACC-National* for assistance
1 – 3 FEDERAL TAX IDENTIFICATION NUMBER
- A Employer Identification Number (EIN) is a 9 digit number that the IRS assigns to all entities and it is required in order to file your annual tax return
- This number can be verified as active by contacting the IRS
- You can get an EIN quickly by applying online at or by phone
1 – 4 CORPORATE STATUS
- Each state has a different method of determining if a nonprofit corporation continues to operate. The most common method is to require every corporation to file an annual with the Secretary of State or other relevant state authority, see for listing of all state websites
- All such annual reports should be copied to the Chapter President and filed in the chapter archives
- If the corporate status has lapsed and is no longer in good standing the Chapter likely will have to file any past reports and submit the accompanying fees, contact ACC-National* for assistance if needed.
1 – 5 BYLAWS FILING WITH NATIONAL
- Current chapter bylaws must be on file at ACC-National*
1 – 6 BYLAWS REVIEW
- Chapter Executive and Chapter President must ensure bylaw compliance with annual business meeting, any mandatory communications and annual report/financial reporting to members-at-large
- A statement must be read at the next Councilors meeting indicating that the Chapter President has reviewed the bylaws and the chapter is in compliance or in the processes of complying
- All bylaws amendments must be approved by the Board of Governors (BOG) Steering Committee. Contact ACC-National* with proposed amendments
1 – 7 BYLAWS WEBSITE POSTING
- All chapter internet sites must include a copy of the chapter bylaws for access by both members and non-members
Updated January, 2008 *ACC-National denotes Chapter Affairs staff
SECTION 2
2 – 1 APPOINTMENT OF ACCOUNTING FIRM
- To ensure transparency and accountability, the council or Chapter President must appoint an independent accounting firm to annually prepare the federal and state tax returns; the accounting firm should not be exclusively chosen by any one person, including the chapter executive or anyone who has daily responsibility for the chapter finances
- No one firm (or in the case of large firms the same audit team operating under the same partner) should perform the audit function for more than three years consecutively
2 -2 AUDITS AND AUDIT MANAGEMENT
Governors/ Treasurers and Chapter Council members have the fiduciary responsibility to safeguard the assets of the Chapter. Having an effective control structure will help achieve this. Conducting an annual audit of the Chapter’s financial statements will:
- Help ensure that the financial control policies are working and strengthen internal control procedures.
- Provide the Chapter Council reassurance that the financial information they are considering as part of their oversight function is accurate, complete and represented fairly.
- In cases where financial problems or irregularities in the financial system have occurred, the Council and the general public may look to an audit to provide assurance that these problems have been resolved.
Requirements for completing an audit vary:
- The College requires Chapters to conduct an audit every three years or before a new chapter executive is contracted.
- There is no Federal requirement for non-profits to conduct an annual financial audit although non-profits which spend $500,000 or more in direct or pass-through Federal funding during a single fiscal year are required to have an audit.
- Many states require an audit for non-profits which receive contributions over a specified amount (the amount varies from state to state) and/or non-profits who hire a paid fundraiser. Governors/ Treasurers should contact their Secretary of State or Office of the Attorney General for regulations in their states.
- Many contributors commonly request audited financial statements. In some cases, they will accept statements prepared in-house. Alternatively, they may accept a CPA review.
If the annual cost of an audit is a financial issue, CPA firms can also review financial statements without rendering a formal opinion. Engaging a CPA firm as tax preparers for the IRS-990 (and IRS-990T) could also serve as an economical financial statement review.
The Chapter Council is ultimately responsible for the hiring of an independent auditor (i.e. one with no conflict of interest in completing the audit or preparing the annual tax filings such as doing no other business for the Chapter from which it achieves financial gain) and the review process of the audited financial statements and auditor observations, as communicated in the Auditor’s Management Letter. Considerations for these two actions should include:
Independent Auditor Selection and Oversight of the Audit Firm
- Review an auditor’s qualifications and independence and select and recommend to the Chapter Council for approval the independent auditor for conducting the audit of financial statements of the Chapter. Such auditors are ultimately accountable to the Council as representatives of the members.
- Oversee the relationship with the independent auditors, including discussing with the auditors the nature and rigor of the audit process, receiving and reviewing audit reports and providing the auditors full access to the Council to report on any and all appropriate matters.
- Obtain annually from the independent auditors a formal written statement describing all relationships between the auditors and the Chapter, consistent with Independence Standards Board Statement Number 1. Actively engage in a dialogue with the independent auditors with respect to any relationships that may impact the objectivity and independence of the auditors and recommend that the Chapter Council take appropriate actions to satisfy itself as to the auditor‘s independence.
- Approve the engagement of the independent auditing firm to perform either non-audit or non-compliance tax services where billings associated with such services exceed $10,000.
- Establish and maintain procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting, or auditing matters and establish and maintain procedures for the confidential, anonymous submission by Chapter employees regarding questionable accounting or auditing matters. (“Whistle-blower“ function)
- Evaluate with management, the performance of the independent auditors and, where appropriate, replace such auditors.
Review of the Independent Audit and Internal Controls
- Review the Audited Financial Statements and discuss them with management and the independent auditor. These discussions should include the matters required to be discussed under Statement of Auditing Standards Number 61 and consideration of the quality of the Chapter’s accounting principles as applied in its financial reporting, including a review of particularly sensitive accounting estimates, reserves and accruals, judgment areas, audit adjustments (whether or not recorded), and other such inquiries as the Governor/ Treasurer or the independent auditors deem appropriate.
- Review the annual Auditor’s Management Letter with the independent auditors and review management’s actions related to issues that may arise in Management Letter.
- Discuss with management and the independent auditors the quality and adequacy of and compliance with the Chapter’s internal controls.
- Discuss/ review with the auditor the general controls, appropriate separation of responsibility, accuracy and correctness of accounting, and internal control function (if applicable).
Sample Request for Proposal Letter for CPA Services
PURPOSE OF THIS TOOL: This tool contains sample language that may be used by an organization requesting a proposal letter from qualified CPA firms when seeking a new service provider. As such, the sample letter may be subject to audit committee review or discussion, if an audit committee exists. This is also available for download on OSCAR.
[Organization Letterhead]
[Date]
[Managing Partner]
[CPA Firm]
[Street Address]
[City, State, Zip]
Dear Sir or Madam:
Our organization is accepting proposals from CPA firms to provide audit (and tax) services for our organization in the future. We invite your firm to submit a proposal to us by June 30, 20XX, for consideration. A description of our organization, the services needed, and other pertinent information follows:
I.Background of Chapter X
Chapter X is a 501(c)(6) trade association, with a related 501(c)(3) foundation, representing Cardiologists. Annual revenues are between 6,000-8,000 per year, and the organization employs 3 people in one location. The organization is membership-based and has 300 members statewide. The organization has a June 30 fiscal year end, with a requirement to file an audited financial statement with the bank and general membership by September 30 of each year.