Compliance Review

What is a Compliance Review?

A compliance review is the practice of conducting informal audits of current processes to identify whether the process is meeting compliant requirements or if a particular process is insufficient.


Although a compliance review is not intended to discover specific amounts of inurement, distributions for private benefit or expenditures that could raise questions, it is intended to identify procedures for record keeping and documentation that are insufficient, or inconsistently applied, so that they do not support the exempt purpose of the organization. 


Importance of a Compliance Review?

One of the most important goals of our compliance review is to examine the client’s documentation and operations in light of Intermediate Sanctions. Individuals involved with tax-exempt organizations can be exposed to devastating penalties, even when they act in good faith. During a compliance review, we will test the client’s documentation and reviews its operations to ensure all proper procedures have been followed to protect related parties from intermediate sanctions. 


Issues Considered during Compliance Reviews

- Proper Reporting on all applicable tax returns

- Sufficient documentation of reasonable compensation

- Satisfactory evidence that all related- party transactions are conducted at fair market value

- Correct receipting procedures for reporting contributions to donors