Legal Audits for Business and Non-Profit Organizations

Most people in business and industry, and those leading non-profit operations, are acquainted with financial audits.  They may know more than they care to in regards to the standards and practices involved with such audits.  The American Institute of CPA’s for instance, and the Public Company Accounting Oversight Board have issued guidelines and in fact the Accounting and Review Services Committee of the AICPA just recently issued new standard and review guidelines.

Fewer people are familiar with legal audits, we find.  But almost every company and non-profit organization operate in a milieu where regulations and standards and statutes create obligations.  Some companies and non-profits are finding that–despite sometimes tighter government budgets–greater scrutiny by government employees is the order of the day.

Of course, many non-profits and businesses try hard to keep up with various contractual and regulatory obligations–and most do a decent job. But an independent outside audit will review actual or potential violations and because of the distance or independence of the audit team they can often find shortcomings management has overlooked.

Given the drive and passion of most entrepreneurs and non-profit managers, compliance and regulatory issues can take a back seat.  But ignoring these operational aspects and requirements can create real problems as well as a “black-eye” for an organization.  For one such example, see this news item about a facility in Muskegon: http://www.mlive.com/news/muskegon/index.ssf/2014/10/federal_review_finds_muskegon.html#incart_river

Regularly conducting independent, confidential compliance audits is the best way to assess possible compliance risks–and because our firm does it, the work can most always be done in a confidential fashion.  Your business or non-profit, with our help, can then fix things as a result of an audit.  And if you operate in an environment where there are reporting requirements as a result of an audit, we can help you prepare the report.

Legal audits are typically shaped to your specific business and obligations.  They may also be arranged so that, over the course of time, different “parts” of your operations get the scrutiny. The best practice is to make  legal audits pay.  That is, since legal audits will take some time and energy from the business, and since our firm or other firms will most likely be charging you for the audit–you might want to pick out key or core areas or contracts and regulations to focus on for the first audit.  Then a few years down the road, pick other areas for audit.

And despite the costs involved an audit can also “pay” in another way.  This is because, by being proactive, one can often forestall larger problems of which a company or organization is not aware.  It is cheaper and smarter to find and fix problems, rather than by responding to a whistle blower complaint of one kind or another, or dealing with a complaint by a disgruntled employee or  contractor. In that light, legal audits are a smart investment for most companies and non-profits.

Bradley Vauter & Associates, P.C. stands willing to help with a legal audit tailored to your business or organization needs.  Feel free to contact us for our simple handout that outlines some of the areas you should be thinking about in regards to audits–we’ll mail that out free, with no obligation on your part.

In the World of Charitable Non-Profits, Confusion Abounds?

Sometimes goodhearted people find an “unmet” need or a needed service, and start a business.

That’s all well and good–after all, if you or I can make a living helping to provide something others want and can pay for, one could say the needs of everyone are met, and a sort of sweet and simple private market response is the result.

But sometimes, due to economic distortions, barriers to entry, lack of capital by those in need, and for any number of other reasons, the “private market response” is found wanting.

Then, there is a good chance a non-profit organization or association of  some kind will emerge.  It is in  this realm that confusion may abound, and counsel can be important.

For instance, under Michigan general corporation law, any proper purpose can be a reason to form a profit oriented corporation.  But under Michigan non-profit corporate law, the purpose (reason for existence) of the corporation must be spelled out with some detail.  Confusing those two different types of corporations and the organizational documents needed to launch either one, trips people up.  And this can create a mess later.

There are also additional concerns in regards to non-profits and their initial organization and their operations.

First, most non-profits of any size at all, if they are a robust organization, will likely be chasing funds, or grants or donations–or all of the above.  Here some critical thinking is required.  Will there be a need to register with the state to solicit funds?  Will a professional fundraiser be used?  Are charity events like charity gaming and such, contemplated? How big will the organization’s budget grow and how quickly? There are state rules and requirements and registrations for these sorts of concerns.

Second, at the federal level, many non-profits hope to be registered as an exempt organization under IRS rules.  People often call these 501 (c) (3) organizations. If that is to be pursued, extra care in developing the organizational documents for the non-profit corporation (the articles of incorporation and the bylaws) is required.  Why?  Because what is  sufficient to  create a valid Michigan non-profit corporation is not “good enough” standing alone, to also qualify the non-profit as an exempt  organization in  the eyes of the IRS.

Trying to pull all this together, takes experience and some time and patience and thinking. Sometimes the very types of folks who are great at seeing an unmet need–the folks who are often mission driven–are not savvy to the rules and regulations surrounding non-profits. It is important, if they don’t want egg on their face going down the road, that they attend to this properly–and not be cobbling together explanations later on.

I don’t recommend any of the legal paperwork websites which imply they can zoom you through a process for a modest fee.  Rather, there are some organizations or universities that offer some help, and there is information available on state and federal websites too.

Or better yet, focus on your mission and the unmet needs and what you do best, and leave the organizational documents and registries to a decent attorney or law firm with experience in the field already such as ours. We have extensive experience both in the formation of a non-profit and in the ongoing legal needs of a non-profit.   And make sure too, that you keep good financial records–again, perhaps, with the help of a good accountant, at least initially, to get you started on the up and up.

Check out these state websites to learn more:

https://www.michigan.gov/lara/0,4601,7-154-35299_61343_35413_35426-120068–,00.html

http://www.michigan.gov/lara/0,4601,7-154-35299_61343_35413-270656–,00.html

http://www.michigan.gov/ag/0,4534,7-164-17337_18095—,00.html

But see these federal websites too:

http://www.irs.gov/Charities-&-Non-Profits/Application-for-Recognition-of-Exemption

http://www.irs.gov/Charities-&-Non-Profits/Application-Process

http://www.stayexempt.irs.gov/Mini-Courses/Applying_for_Tax_Exempt-An_Overview/applying-for-tax-exempt-organizations.aspx

A few groups that may be able to help in getting you going are:

http://www.mi-community.org/

http://www.law.msu.edu/clinics/sbnp/

Health Care Law and Dementia Testing

How many times have you walked into a room this month, only to wonder why you were there?  Have you misplaced your cell phone or car keys lately?

Well you are not alone.  But that is probably no reason to worry, or seek out an evaluation for dementia, just yet.

But you should know that screening for cognitive impairments can be covered, under Medicare, and some other insurances, and if done as part of the annual wellness check, under Medicare rules, there should be no deductible.

Is screening appropriate for everyone?  Most professionals say no.  If you or your loved one have few signs of trouble, the utility of the testing has been debated, and some think it is unwarranted.

That is not quite the same though, if, as you or a loved one ages, you start to see signs of trouble.

Then such a screening might help in three ways.  First one can establish a sort of “baseline.” And, second, IF the screening indicates a problem, more testing can be done, and perhaps even medicines can be prescribed–medicine for Alzheimer’s are most effective when used early on. Third, before capacity is entirely gone, you can attend to your legal affairs.

For more information see this article from Kaiser Health News:  http://www.kaiserhealthnews.org/Stories/2014/May/06/health-law-requires-medicare-to-cover-dementia-evaluation.aspx

Perhaps too, you have heard of the “mini-mental state” examinations.  Ever wonder what sort of questions might be asked?  You’re in luck–here is an example:  http://www.health.gov.bc.ca/pharmacare/adti/clinician/pdf/ADTI%20SMMSE-GDS%20Reference%20Card.pdf

As you help others or think about helping yourself, remember it is important to take care of most all legal documents before your capacity, or the capacity of a loved one, is seriously questioned.

Don’t Go It Alone

If you are facing a disease process that is likely to greatly alter your ability to help yourself, or your life in general, don’t go it alone.  Sure, sure, in the final analysis, whatever happens, is happening to YOU.

But more likely than not there is a constellation of folks who care and who would or will help. You should take advantage of that, in order to not feel overwhelmed.

The trick is to avoid “burn out” by caregivers, and to get knowledge and perspective for yourself. The road ahead may well be pretty rocky.  So finding even a little guidance from those who have tread the path may make the road ahead seem less rocky.

Virtually every major condition or disease has a “group” or organization.  While such groups may be heavy-handed at times in seeking donations, most give decent information, offer tips, sponsor support groups, talk about treatments, and so on. If you are at all worried about a group, you can pretty readily check out their background and standing with various rating agencies, the Attorney General in your state, or others.

As an attorney, I can often help with some aspects of what you will or your loved ones may face.  But the law only helps so much.  Make an appointment with me of course, early on–but take advantage of what others can offer too.

In early May we will list a number of groups and organizations as part of our web links and resources.

Stay tuned.

End of Life Care–Is Cost In the Mind of the Patient or Doctor?

Do you suspect that the costs of end of life care enters the minds of patients and doctors?  What’s your guess? Most folks would say you guessed right — if you thought costs did enter the mind of patients or doctors.

No one wants to be  “cheap” when it comes to the care of our loved ones.  And we have every right and incentive, to make sure end of life care is appropriate, and paid for, if covered by insurances.  Many of us would gladly reach into our own pocket to add vitality to our life or to preserve the life of a loved one.

But not all medical spending is equal, it seems, and some expensive treatments and approaches, haven’t really proven themselves, yet they do persist. See this article from the NY Times, for instance: http://well.blogs.nytimes.com/2013/07/26/medical-procedures-may-be-useless-or-worse/

And some writers and studies hint that doctors are less likely to choose as many end of life treatments as the average patient.  An interesting write up can be found here:  http://www.sciencebasedmedicine.org/doctors-and-dying/

This is not to say, that treatment for those who wish treatment, isn’t still the order of the day.  And some advocates have been very wary of any legislation that might hasten death or make anything akin to an assisted suicide commonplace.  See this website: http://www.notdeadyet.org

From a public health perspective an analysis of effective spending of monies for health outcomes, is not unwarranted.  And in the past few years, more analysis is likely to emerge, in part because of some federal initiatives from 4 or 5 years ago, and because one goal of the the Affordable Care Act, is to bend the cost curve downward.  This is so because in the last decade or so, medical care costs have increased far far above the rates of inflation. Taming those costs may help us all down the road.  So expect to see more analysis of public health dollar spending effectiveness, and expect to see as well, more focus on treatments and approaches for individual patients.  For instance see: https://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=27 and also:  http://healthaffairs.org/blog/2012/04/13/bending-the-health-care-cost-curve-more-than-meets-the-eye/

It’s all fascinating stuff, and fodder for great discussions.  When we take it down to the individual level, the personal level, the tragedy isn’t what choice we ultimately make, if we make it ourselves.  The tragedy is when we leave substitute decision makers in the lurch when or if we can no longer speak for ourselves.

My parents, now dead, were born in the early 1920’s.  They grew up during the Depression, served in World War II and went on to have children, buy homes, work, etc.  Their medical history was relatively unremarkable, when younger–but the ravages of time did make the last two to five years at the end of their life more challenging.  They availed themselves of many treatments and saw some specialists, as need be.

But they both also made clear that some treatments or some conditions were simply not tolerable…and they let their children know that too.

And my own folks at least, especially my mother, wondered about the wisdom of spending thousands and thousands of “taxpayer” money (meaning, she said, Medicare) with an uncertain prognosis, and for perhaps just a few weeks of life. Of course that was easier for her to say in her mid 80’s since, as she put it, she already had “a good long run,” and pain issues often intruded on her daily life.

But my folks had discussion which helped the children. Knowing how they felt made it “easier” on us, the children, when tough calls near the end of life needed to be made.  Have you been as thoughtful?

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