Question
THE HOUSE OF WORSHIP Art Creed, a tax expert, belonged to a congregation called The House of Worship (THW). THW needed to raise funds for
THE HOUSE OF WORSHIP
Art Creed, a tax expert, belonged to a congregation called The House of Worship (THW). THW needed to raise funds for a new building wing and asked to help organize an art auction as a fundraising event. THW was located in an affluent area.
Tony Thanks, a fellow congregant, referred Creed to an art dealer specializing in this sort of fundraiser. Creed was assured by Thanks that his contact from Art for Charity Deduction (ACD), Tina Seller, would raise a significant amount of money on THW's behalf.
The design of the auction was simple. THW would provide the venue, market the event to members and others, and receive 10 percent of the proceeds from the sale in the form of a donation from ACD. Before the auction, ACD provided certified appraisals of the fair market value of the art to be offered at the auction, and it also handled all of the other aspects of the auction.
Many people who purchased art at the auction thought it was a great deal, since they were able to purchase pieces at around 50 percent of the appraised value stated on the certificates. Seller told them they could write off the full fair market value as well, even if they paid less than the appraised amounts, because the appraisals were conservative, and if they held the piece, it would appreciate. The auction was a tremendous success and raised $100,000 for the building addition.
THW's bookkeeper calls you and asks how to record a receipt for the $100,000 raised at the fundraiser. In addition, she asks you to come to the office to review IRS audit notices given to her by Creed regarding some of the buyers of the art.
Have any inappropriate activities taken place? What are the proper recordings? Was ACD legitimate? Could THW have exposed its reputation by doing business with a company that might have used the church's goodwill to perpetrate fraud?
17/ What are the underlying assumptions?
18/ What skills are needed to employ or develop the fact-finding aspects of the case?
19/ What accounting principles and standards may have been violated?
20/ Have any laws been broken?
21/ What documentation is available to prove the case?
22/ What are the potential deceptions between the people and the organization?
23/ Where is there a clear division between the people and the organization?
Please help me thank you so much
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