Fiscal Update & the New 990 The Coalition of Behavioral Health Agencies, Inc April 24, 2008

1. Fiscal Update & the New 990 The Coalition of Behavioral Health Agencies, Inc April 24, 2008

2. Overview of the Not-for-Profit Sector Current Trends: Outcome Measurements and Reporting Enhanced Transparency Increased Oversight and Audit Involvement Increased call for collaboration at all levels Enhanced Corporate Governance More Scrutiny by funders, the press, and watchdog organizations Globalization

3. Overview of the Not-for-Profit Sector Current Trends (Continued): Sector is behind the curve and has limited resources Increased demand for services without adequate funding Need for enhanced discretionary funding Difficult to find quality staff and Board members Greater need for streamlined operations and cost effective services Nonprofit Panel Releases 31 Best Practices (March 2007) Nonprofitpanel.org New 990 released with entirely different focus

4. The New 990 First Full Make-over since 1979 Effective for the 2008 tax year (to be filed in 2009) Three basic principles the IRS considered when revising Form 990: Enhancing transparency by providing the reader with a realistic picture of the organization and its operations, along with the basis for comparing the organization to similar organizations. Promoting compliance by accurately reflecting the organization’s operations and use of assets. Minimizing the burden on filing organizations by simplifying the questions and reducing unwarranted additional recordkeeping or information gathering.

5. The New 990 Core Schedule with approximately 16 supporting schedules to be completed based upon organization’s operations New questions impacting fundraising activities (Part V) New questions impacting governance issues (Part VI) More emphasis on compensation reporting (Part VII and Schedule J) More questions on fundraising and gaming (Schedule G) Disclosures regarding non-cash contributions (Schedule M)

16. New 403(b) Regulations • First major changes in 40 years • Generally effective January 1, 2009 • Result of IRS audits showing plans out of compliance • More in line with 401(k) regulations • Must have a plan document • Optional Features • Loan Provisions • ROTH Provisions • Hardship Withdrawals • Transfers • At a minimum, employees must have the opportunity to make, change, or revoke deferral elections annually • Nondiscrimination and universal availability rules apply

17. New 403(b) Regulations • Employers must provide employees with an annual notice explaining the “effective opportunity” to make or change their contribution to the plan. • Plan transfers to/from other 403(b) plans • Distributions from custodial accounts may be made only upon severance from employment, disability, attainment of age 59½ or death • Plans may be terminated • 403(b) plans must comply with back-up withholding on direct distributions • Employers need to monitor that they don’t cross the line and subject themselves to Title 1 requirements of ERISA, if so they will have 5500 filing requirements and audit requirements for large plans

18. New 403(b) Regulations • All four factors must exist to be exempt: • Participation of employees is completely voluntary • All rights under the annuity contract or custodial account are enforceable solely by the employee or beneficiary of such employee, or by an authorized representative of such employee or beneficiary • The involvement of the employer is limited to certain optional specified activities • The employer receive no direct or indirect consideration or compensation in cash or otherwise other than reasonable reimbursement to cover expenses properly and actually incurred in performing the employer's duties pursuant to the salary reduction agreements. • Example: If an employer makes contributions to a Plan, it is subject to Title 1

19. Raffle Regulations(Not new, just clarified) • Pitfalls for Nonprofits: • Anticipated level of profit will dictate filing/registration requirements • $30,000 (Game of chance ID #, License, and 2% fee and annual report) • Over $5,000 single, between $20,000 and $30,000 cumulative (Game of chance ID # and annual certification) • Under $5,000 single, under $20,000 cumulative (no filing requirements) • Raffle proceeds must be deposited into a separate bank account • Raffle prizes cannot exceed $50,000 (up to $100,000 with prior approval) • Cannot mail raffle tickets • Cannot accept credit cards in payment for raffle tickets • Raffle tickets are a chance to win, not a charitable donation • Prizes are taxable to winners • Net prize over $600, required to file W-2G • Net prize over $5,000 required to withhold 28% and remit as back-up withholding

20. New Auditing Standards SAS 114 Auditors Communication with those Charged with Governance: Supersedes SAS 61 Requires auditor to communicate to those charged with governance matters related to the audit that are, in the auditor’s professional judgment, significant and relevant to the governing body’s oversight of the financial reporting process Identifies specific matters to be communicated within correspondence Needs to be communication during planning (overview of planned scope and timing of audit, representations that will be sought from management) Communication should be in writing Requires the auditor to evaluate the adequacy of the 2-way communication between the auditor and those charged with governance

21. Thank You Kenneth Cerini, CPA, CFP Partner kenc@ceriniandassociates.com (631) 582-1600 x203 Cerini & Associates, LLP 3340 Veterans Memorial Highway Bohemia, NY 11716