By Douglas A. Boedeker, CPA, CMA
By now, we all know that most nonprofits will be implementing the provisions of the Financial Accounting Standards Board’s Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, beginning with the year ending December 31, 2009.
Naturally, FIN 48 will be a hot topic of discussion between clients and independent auditors. That is to say, auditors will want to be certain that management has undertaken a thorough review of the organization’s income tax positions. Management’s income tax position review will then be utilized by the auditors when they determine whether the organization’s FIN 48 accrual (or lack thereof) is fairly stated.
Oftentimes, the most difficult part of any new process is simply getting started. Thus, we have prepared a sample documentation memo presenting one management team’s assessment of its exposure to FIN 48 accruals. Given the wide range of organizations and potential tax positions, this memo is not meant to be an all-encompassing template that will meet the needs of every situation. Rather, this memo should be viewed as a starting point or framework for management to use when documenting its conclusions under FIN 48. Remember, the most important thing about FIN 48 is to get the documentation process started as soon as possible. An early start to the FIN 48 assessment will help to avoid potentially nasty surprises during the year-end audit.Click here to download the Sample FIN 48 Documentation Memo.