On Thu, 21 Jul 2011 18:02:30 -0400, Jimmy Kaplowitz <jimmy@debian.org> wrote: > This would be very useful indeed, so that next year's team can be aware of > additional transparency / appearance-of-impropriety gotchas and avoid them > better than we did. Based on this thread we had at least the appearance of > doing something wrong, even though I know nobody had corrupt intentions and I > don't think anything actually improper or shady happened. I do agree that we had the appearance of impropriety, however I would go one step further and say that there were clearly things done wrong, (although not deliberately). The *appearance* of impropriety is incredibly important to an auditor[0] who might at any point decide to scrutinize SPI as an organization. Regardless if it was intentional or not, its the appearance that matters. Appearance of impropriety would include any board member engaging in any activity that could be seen from the outside as potentially a conflict of interest. Conflict of interest would, without question, include these things, that did happen this time around: . a board member directly rating oneself for travel sponsorship (it doesn't matter why that was done, the fact that it was done is what matters) . having a husband rate a wife and a wife rate a husband (again, it doesn't matter that it wasn't done nefariously, and I really doubt that it was) . having rules that result in exclusion of funds to people who are not part of the process, that are not board members. and then not applying those rules to the people who are part of the process who are board members . having a comittee that appears to execute a process that results in allocation of money between board members. There is nothing legally wrong with having an organization that has no board members doing the above, but there *is* something socially wrong about such a process. micah 0. To be clear to people who are not familar: an IRS audit is a review/examination of an organization's accounts and financial information to ensure information is being reported correctly, according to the US tax laws, to verify the amount of tax reported is accurate. The IRS is the Internal Revenue Service, which is the tax authority in the USA. An organization can be selected for an audit for a number of different reasons, it does not mean that the organization failed in some way or committed in some error[1]. An auditor might be assigned by the IRS to scrutinize SPI and when that happens it means that SPI's financial status as a non-profit organization, and by extension (due to it acting as a fiscal sponsor to other free software projects), other free software projects' financial status would be in potential jeapordy while the auditor attempted to find accounting abuses, nepotism, malfeasance, vested conflict of interest, or fraud (I may have missed one). Selection can include: random selection and computer screening - sometimes returns are selected based solely on a statistical formula. Document matching - when payor records, don't match the information reported. Transactions with other taxpayers, whose returns were selected for audit. Audits are also randomly done, or when fraud has been reported, or when your organization is a particular type of organization that is frequently abused for tax evasion, so closer scrutiny is applied. A 501(c)3 is, due to its special tax free donation status, subject to much closer scruitiny than most other legal corporate structures that exist in the US. These are often commonly called "red flags" that trigger audits
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