New Report Examines Questionable Accounting Practices at United Way

Double booking of revenues, counting revenues targeted to other organizations, and booking volunteer’s time as contribution revenues are all accounting practices that are now being questioned at the United Way, according to a report by the New York Times.

Brian A. Gallagher, president of the United Way of America, indicated that while some of the practices in question conform to GAAP, the post-Enron scrutiny of accounting practices require that the organization now respond to the issues in question.

Many of the practices result in inflated revenues for the local member organizations. The concern is that donors are entitled to know what percent of their contributions are going to the charity and what percent are going to administrative costs, and the inflated revenues tend to show a smaller percentage going to administrative overhead.

Among the issues being questioned:

  • Double Counting: Occurs when two or more United Way affiliates claim the same contribution as their own.

  • Third Party Campaigns: The full amount raised by in-house corporate campaigns which raise money from employees for multiple charities are sometimes 100% recognized as United Way revenues, even when less than 100% of these funds are earmarked for the United Way.

  • Valuation of Donated Goods: Concerns are being raised on how United Way members value donated goods and services which are then counted towards contribution totals.

  • Counting Volunteer Time: United Way encourages its members to report their volunteer time at $14.83 per hour and count those hours towards the total contributions. FASB allows this practice only for certain volunteer activities, but often all of the volunteer time is counted.

  • Unrestricted Gift Allocations: Restricted gifts have limits as to where the money is to be allocated – including administrative overhead – but unrestricted gifts often are tapped for a larger overhead contribution, thereby skewing the administrative costs percentages.

Member organizations of the United Way are independent organizations, not subject to uniform reporting guidelines, practices, or even accounting software. Member organizations assert that this independence allows them to better react to their local community’s needs without worrying about “big brother” oversight. The tug-of-war between the independence of the organizations and the centralized control of the national United Way organization will continue to be debated.

You may like these other stories...

A proposal issued by the Governmental Accounting Standards Board (GASB) last week explains how fair value measurement should be defined for state and local government financial reporting.The exposure draft, Fair Value...
By Jason Bramwell The board of trustees of the Financial Accounting Foundation (FAF) finalized a new policy on November 19 that provides the Governmental Accounting Standards Board (GASB) with direction on what...
By Jason Bramwell The Governmental Accounting Standards Board (GASB) is now offering a free online toolkit designed to assist preparers and auditors of state and local government pension plans with implementing new...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30
Many Excel users have a love-hate relationship with workbook links. For the uninitiated, workbook links allow you to connect one Microsoft Excel spreadsheet to other spreadsheets, Word documents, databases, and even web pages.