Even though Form LM-2 is due within 90 days after year-end, preparation for the form occurs over the course of the year. You can do several things to facilitate year-end reporting—here are our top five suggestions.
Five Simple Things You Can Do
1. Be Prepared
If your CPA firm requests that you complete a questionnaire and prepare supporting schedules to assist in Form LM-2 preparation, have all requested items ready ahead of time to ensure a smoother process. To refresh your memory, scan through the prior year's Form LM-2. Also refer to Lindquist’s list of Commonly Requested Supporting Schedules for Form LM-2.
2. Code As You Go
Information for disbursements is generally extracted from your organization's accounting software. When disbursements are made during the year, code them to the proper LM-2 category (i.e., representational activities; political activities and lobbying; contributions, gifts and grants; general overhead; union administration; direct line item; or disbursement to officer/employee) at the time the check is written and include documentation for the purpose of the disbursement in the description or memo section of the accounting software. Also maintain contact with your CPA firm throughout the year and discuss any questions that arise throughout this process.
3. Maintain Up-to-Date Vendor Information
Make sure you maintain complete information for all vendors (i.e., name, address and vendor type). You must report separately vendors who received over $5,000, individually or in the aggregate, on Form LM-2.
4. Review Your Work
Recordkeeping for Form LM-2 reporting occurs throughout the year; however, at the end of the year, you should do one last review of the coding before handing the records over to the CPA firm. Print the LM-2 classification report from the accounting software and scan the classifications for reasonableness.
5. Obtain ID and Password
Once the Form LM-2 has been prepared, your organization will be required to file it electronically. Make sure the President and Treasurer each have an Electronic Forms System user ID and password to sign the form. For additional information, refer to our prior Lindquist Solutions article, New Web-Based Reporting System for Forms LM-2, LM-3 and LM-4.
The Finish Line
Form LM-2 requires a quick turnaround. Your cooperation in supplying the requested information will facilitate Form LM-2 preparation, which can ultimately reduce the costs. By working together, you and your CPA firm can also identify ways to improve operating efficiency and reduce the risk of errors.
Jasmine S. Baker, CPA, is a manager in the San Ramon, California, office of Lindquist LLP. She has seven years of experience with audit and accounting services for labor organizations and employee benefit plans. As a manager, Jasmine trains staff and helps develop technical guidance for the firm. She also participates in the firm's audit technology group, which evaluates and promotes efficient use of technology in the audit process. Jasmine is a member of the American Institute of Certified Public Accountants. She received a bachelor of science degree in accounting from St. Mary's College.
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