Author Archives: Karan Grewal

Stockpiles of Gold

The board of a Canadian charity is regretting deeming an audit too expensive after realizing that the organization has been using a large amount of revenue to stockpile gold.

 The Toronto Star reported on The Ontario Society (Coalition) of Senior Citizens’ Organizations (OCSCO), a Canadian charity with a mission is to “improve the quality of life for Ontario’s seniors”, has spent large amount of revenue stockpiling gold.

 Frustrated directors say demands that to open the books led to heated arguments with executive director Morris Jesion in the society’s Wilson Ave. boardroom near Bathurst St. An independent audit ordered by a board committee in 2009 was never done because the cost (several thousand dollars) was deemed excessive.

 The society collects about $520,000 each year, from break-open lottery ticket proceeds as well as provincial and federal grants. However, in 2010 nearly $304,000 went to salaries for the executive director, two full-time staff, a part-time bookkeeper and consultants and the society had invested about $216,000 in gold investments.

 The society’s 2010 annual report boasts three pages of programming. It details a workshop in Sudbury to discuss the challenges seniors face in rural areas; computer training for seniors across the Greater Toronto Area; and five multicultural fairs.

 But critics say the society is piggybacking on the success of other groups, which organized and ran several of the events and programs while the society either helped fund or oversee them

To read more about it see The Toronto Star Article.

IRS Audits of Nonprofits Jump by Double Digits Again

The Internal Revenue Service released figures in December 2010 in a new report that show that audits of charities and nonprofits have been increasing since 2008 from 7,861 to 10,187 in 2009, a jump of 30 percent and then again in 2010 to 11,449, an increase of 12 percent. The IRS also reported that it has hired an additional 100 employees since 2008 to handle the increase in audits. This follows the IRS’s stepped-up efforts to oversee nonprofits.

The report described increased IRS scrutiny of activities of nonprofits including:

  • Executive compensation and loans nonprofits made to top officials and whether they paid sufficient employment taxes. In the past the IRS has found unreported loans and has assessed over $5 million in penalties. The IRS has developed a working relationship with the Social Security Administration and state regulators that have made it easier for the IRS to spot potential tax evasion.
  • Consumer credit counseling agencies, with which the IRS has had numerous revocation, termination or proposed revocation of tax-exempt status after past audits.
  • Supporting organizations, which are charities that typically collect and channel money to a specific nonprofit. IRS says that it has noted that some entities have been established for the financial benefit of its officials.
  • The Compliance Questionnaire preliminary results of over 400 educational nonprofit institutions indicating filings for unrelated business tax income which resulted in more than 30 colleges being audited.

In addition, the IRS reports that it believes the full impact of the revised and expanded Form 990 has not yet been fully realized as many smaller organizations took advantage of the 3 year transition window.

Click here to read the full article.

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