TREASURERS’ WORKSHOP
Catherine Oakes, CPA
SCTE
610-524-1725 ext. 242
coakes@scte.org
Table of Contents
I.
II.
History of SCTE
Nonprofit vs. Business
A. Tax-exempt Status
B. Contributions
C. Operating Purpose
D. Ownership
E. Unique Financial Reporting Objective
F.
Unique Accounting & Reporting Practices
1)
2)
3)
III.
GAAP
Sarbanes Oxley
Form 990/990-T
Accounting for Chapters
The History of SCTE
• 1969 – 65 engineers formed the organization – our
Charter Members
• 1975 – Society of Cable Television Engineers
incorporated in New Jersey and applied for taxexempt status under Internal Revenue Code Section
501(c)(6).
• 1995 – Changed name to Society of Cable
Telecommunication Engineers, Inc.
• Today – serves nearly 15,000 members from the
National Office in Exton, PA and has 68 Chapters
throughout the nation.
A Nonprofit’s Place in Economy
Three principal sectors of the Economy:
1. Government
2. Business
3. The Nonprofit
Nonprofit vs. Business
The Key Differences between Nonprofit
Organizations and Businesses:
1.
2.
3.
4.
5.
6.
Tax-exempt Status
Contributions/Donations
Operating Purpose
Absence of Commercial Ownership
Unique Financial Reporting Objectives
Unique Accounting & Reporting Practices
Tax-exempt Status
The role of the Internal Revenue Service with
regard to the nonprofit organization is:
1. Granting the exemption to pay federal income
taxes under IRC 501(c) – 25 different types of
nonprofit organizations.
2. Enforcement – policing the conditions
underlying the favored-status treatment.
SCTE tax-exempt under 501(c)(6)
Code Section 501(c)(6) provides for the
exemption of Business Leagues if:
1. They are not organized for profit
2. No part of their net earnings inure to the
benefit of any shareholder or individual.
IRC Section 501(c)(6)
501(c)(6) provides an exemption for
Business Leagues.
Definition – A Business League is an association
of persons having some common business
interest, the purpose of which is to promote such
common interest and not to engage in a regular
business of a kind ordinarily carried on for profit.
501(c)(6) Requirements
•
•
•
•
Common Business Interest
Primary Purpose is to Promote Exempt Purpose
Not Organized for Profit
No Part of Earnings Inure to the Benefit of any
individual.
• Membership Organization that benefits the
industry and is supported by membership dues.
**EXEMPTION CAN BE REVOKED IF FAIL TO MEET
REQUIREMENTS**
Chapters Exempt Status
Group Exemption issued to SCTE to
include Chapters as exempt under SCTE.
• SCTE Employer Identification Number covers all
Chapters.
• Chapters Financial information consolidated with
SCTE in Audit Report and IRS Form 990.
• Chapters should use SCTE’s full name when
issuing Form W-9 to vendors.
Other Tax Issues
SCTE and Chapters not exempt for:
• Sales Tax
• Employer Tax
• Unrelated Business Income
Contributions
Nonprofit vs. Business – Businesses
normally don’t receive contributions or
donations.
• SCTE and Chapters MUST disclose that contributions
are not tax deductible. Failure to make disclosure will
result in an IRS fine of $1,000 per day, up to $10,000 per
year.
“Contributions or gifts to The Society of Cable
Telecommunication Engineers, Inc. are not deductible as
charitable contributions for Federal Income Tax Purposes”
Operating Purpose
Business mission is to make a profit.
Nonprofit (business league) mission is to
improve business conditions in one or
more “lines of business” within an industry.
“SCTE is organized to develop, increase and spread
both theoretical and practical technical knowledge of
cable telecommunications and broadband
communications systems thereby providing opportunities
for the professional and technical growth of its
membership and the industry.”
Purpose
Primary purpose is to promote tax exempt
mission. ACTIVITIES must promote
improvement to Cable Telecommunications
Engineering Industry.
Secondary purpose can be to generate profit.
Accounting & Reporting Practices
Financial Accounting Standards Board (FASB) and American
Institute of Certified Public Accountants (AICPA) develop
GAAP – Generally Accepted Accounting Principles
– Accrual Basis of Accounting
– Specific Financial Statement Formats for Not-for-profit
Organizations.
Sarbanes-Oxley Act
– Whistleblower Protection
– Destruction of documents to thwart federal government
investigation.
Form 990 & 990-T
– Unrelated Business Income
SARBANES-OXLEY ACT
•
•
•
•
•
•
•
•
Audit Committee
Auditor independence
Conflict of Interest Policy
Insider Transactions (Loans to Executive
Officers & Board Members)
Certified Financial Statements
Financial Disclosure
Whistle-Blower Protection
Internal Controls- (Document Retention Policy)
FORM 990 and FORM 990-T
• Form 990, Return of Organization Exempt
from Income Tax–Due May 15th each year.
• Must be available for public inspection
upon request.
• Form 990-T, Unrelated Business Income
Tax Return.
• Tax paid on Unrelated Business Income
(“UBI”)
Unrelated Business Income
• Revenue that does not promote exempt
purpose.
• SCTE currently pays UBI tax on income
from Advertising and some Merchandise
sales.
• Need to properly track expenses related to
UBI.
• Chapters cannot accept advertising.
Accounting for Chapters
Bank Accounts
• Bank Accounts
Use SCTE EIN, no personal info of anyone.
Reconcile (adjust) the bank balance to match
your register balance.
Reconcile as of the last day of the month.
Provide documentation when submitting
reconciliation to Exton office (copy of bank
statement, reconciliation, list of outstanding
checks).
Accounting for Chapters
Quarterly Financial Reports
• Confirm achievement of SCTE’s exempt
purpose.
• Avoid over use of Miscellaneous
Income/Expense Account. Please be
descript.
• Due to Exton office 30 days after close of
quarter.
• Auditors select Chapters to Audit in detail.
Chapter Accounting Timeline
• Jan. 31st – Bank Reconciliation and 4th quarter
report due.
• Mid-February – Audit begins
• Mid-April – Audit concludes
• April 30th – bank rec. and 1st quarter report due.
• May 15th – Forms 990 & 990-T due.
• July 31st – bank rec. and 2nd quarter report due.
• Oct. 31st – bank rec. and 3rd quarter report due.
Insurance
• Vendor Days
– AON Assn Services Div. 800-424-8830
– Revenue based, $500 minimum premium
– Obtain certificates of insurance from
exhibitors, $1,000,000 per occurrence.