Hughey's Debits & Credits: Bookkeeping. Payroll. Taxes.

All posts tagged Policy 03

Chicken LittleIn smaller nonprofit organizations, outsourced accounting functions are normal because of fund restrictions. Did you hire Chicken Little as your accountant? Keep reading to find out if you did.

A nonprofit organization decided it was time to outsource their accounting and fiscal duties. Once they chose their accountant, a system was created. The director, John, would deliver the organization’s documents monthly to the accountant’s office and in return the accountant would prepare financial statements. One day, John received a letter from the Internal Revenue Service (IRS) stating that the nonprofit had not paid payroll taxes in several quarters. John contacted his accountant immediately to ask about the letter. The accountant said not to worry about it and that he would take care of it. Soon after, an IRS agent arrived to the nonprofit organization’s office asking why the payroll taxes had not been paid. Again, John called the accountant. Once the accountant heard John say that the IRS was at the agency, the accountant became Chicken Little and declined to speak to the IRS on behalf of John’s organization. John later found out that the accountant had not looked at the agency’s documents in months! The documents were in boxes in a corner! Sadly, the organization had been paying the accountant for over 2 years for a job that was not being performed which cost them thousands of dollars in penalties and interest! Read more