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Key Review Points of Form 990

A not-for-profit organization’s Form 990 is more than just an annual filing requirement; it can be used as an informative document to external users, as a year-to-year comparative document for management, or even as a marketing reference for potential donors.

As a best practice recommendation, all not-for-profit organizations should establish a committee to be responsible for oversight and review of the Form 990 after the initial preparation. However, with a lengthy Form 990 and a continuously busy governing board, it can be hard to find the time to perform a thorough review. While completing a thorough review is always recommended, here are five key areas of the Form 990 that should warrant extra attention:

  1. The Mission Statement: Is the mission statement updated, accurate, strong, and descriptive? Is there enough detail to entice potential donors to your cause?
  2. Program Descriptions: Does the program description reflect the true work that was completed in the past year? Are there new programs to consider adding for the year? Could you provide extra detail through statistics? Furthermore, does the amount of program expenses, compared to total expenses, provide the appearance of efficiently using funds to complete the organization’s mission?
  3. Governing Policies: Does the organization have sufficient policies in place related to the “Governance, Management, and Disclosure” section on page 6 of the Form 990? Is there an opportunity for improvement?
  4. Employee Listing: Is the listing of officers, directors, and other types of employees found on page 7 updated and accurate? Is the compensation for employees listed an expected amount?
  5. Applicable Schedules: Are the completed applicable schedules expected, or were some a surprise? Does management have an understanding of the reason for the supplemental schedules?

While the external preparers of your Form 990 are familiar with the document, it’s important that an organization’s management and Board be familiar and able to understand the process, as well. If your organization would benefit from help understanding the Form 990, YHB would be glad to share our expertise.


About the Author

Allison Compher is an Associate on our Not-For-Profit team. During her time at YHB, Allison has focused on providing services to not-for-profits and closely held businesses, providing a range of audit and tax services.