Standard 11: Financial Statements - Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles. When total annual gross income exceeds $250,000, these statements should be audited in accordance with generally accepted auditing standards. For charities whose annual gross income is less than $250,000, a review by a certified public accountant is sufficient to meet this standard. For charities whose annual gross income is less than $100,000, an internally produced, complete financial statement is sufficient to meet this standard.
LLF does not meet this Standard because acording to its most recent audited financial statements, the auditors stated that:
"We were unable to observe the inventory of donated prosthetics on hand at December 31, 2009 and 2008, stated at $851,750 and $1,062,900 in the accompanying statement of financial position as of December 31, 2009 and 2008, respectively. . . Nor were we able to satisfy ourselves regarding the valuation of the prosthetics donated to the Foundation during 2009, stated as $4,296,800, and the valuation of prosthetics used by the Foundation's clients or donated to other organizations, stated as $4,507,950 in the accompanying statement of activities and changes in net assets for the year ended December 31, 2009."
In response to the Alliance's finding, LFL states:
"During 2010, LFL retained the services of Steakley & Gilbert, PC, a local CPA firm, to conduct an audit of the Foundation as of December 31, 2008 and 2009. This is the first and only audit ever conducted on the books and records for the purposes of publishing the financial condition of the Foundation. Although the CPA firm issued a qualified opinion due to the fact they did not observe the physical inventory at year end, please be advised of the following additional facts and circumstances that may help explain the reasons for the opinion expressed.
1) LFL has grown - especially in the past few years - resulting in a larger workload for its small staff than it's able to handle.
2) LFL management is now aware of the need for internal controls necessary to properly account for the value of its inventory and revenue stream produced from in-kind donations.
3) This year, LFL has begun implementing the procedures necessary to correct these issues and hired additional staff to maintain the accounting records in a timely manner.
4) While the LFL Board of Directors and management remain dedicated to focusing its resources to provide prosthesis care, we also realize the need to comply with certain regulatory bodies that govern not-for-profit foundation.
In summary, LFL has suffered through some severe growing pains as its global outreach continues to help those in need. We will continue to provide those services as we strive to comply with the rules and regulations governing this industry."
Standard 16: Annual Report - Have an annual report available to all, on request, that includes: (a) the organization's mission statement, (b) a summary of the past year's program service accomplishments, (c) a roster of the officers and members of the board of directors, (d) financial information that includes (i) total income in the past fiscal year, (ii) expenses in the same program, fund raising and administrative categories as in the financial statements, and (iii) ending net assets.
LLF does not meet this standard because:
- The organization states it does not have an annual report covering activities conducted in the past year.
Standard 18: Privacy for Written Appeals & Internet Privacy - Address privacy concerns of donors by (a) providing in written appeals, at least annually, a means (e.g., such as a check off box) for both new and continuing donors to inform the charity if they do not want their name and address shared outside the organization, (b) providing a clear, prominent and easily accessible privacy policy on any of its websites that tells visitors (i) what information, if any, is being collected about them by the charity and how this information will be used, (ii) how to contact the charity to review personal information collected and request corrections, (iii) how to inform the charity (e.g., a check off box) that the visitor does not wish his/her personal information to be shared outside the organization, and (iv) what security measures the charity has in place to protect personal information.
LLF does not meet this Standard because the privacy policy on its website, www.limbsforlife.org, does not include:
- What information is being collected and how it is being used.
- What security measures are in place to protect visitors information.