Over 20 people filled the seats of the Carbon County Emergency Management Agency/Communications Center in Nesquehoning recently for a fraud prevention seminar, hosted by District Attorney Jean Engler.

The event was geared toward local operating nonprofits.Engler has worked in the criminal justice system for 20 plus years. It's because of that experience that Engler knows the importance of protecting community-run organizations."People in nonprofits work so hard and put so many hours in," she said. "We all work for the community at large and just one person can undo all the good done by so many. It's a shame but it can be prevented."Engler introduced guest speaker John Nonnemacher, a certified public accountant with over 28 years of audit and review work for government, business and individuals."Both of us would be happy if we never saw fraud again. There are specific things that can be done to protect nonprofits," Engler said.Nonnemacher, originally from Jim Thorpe, now works for the Sugarloaf based Snyder and Clemente Accountants but keeps his community business ties strong by working with the nonprofits of the area.Becoming a nonprofitSome of the most common nonprofits are The American Red Cross, fire companies, public-supported charities or community organizations such as Rotary Club that receive the 501(c)(3) tax code.Nonnemacher gave step-by-step instructions on how to register as a nonprofit, how to maintain that status and how to protect the organization's assets."The IRS has a website. You can use the website to see who is eligible, who has had the exempt tax status revoked and who has filed for the status, Exempt Organizations Select Check."Nonnemacher said there are currently 36 tax exempt organizations located in Jim Thorpe on the site. In the state, over 38,700 businesses are registered as tax-exempt organizations.In addition to those exempt status businesses, over 24,000 have lost the status or had it revoked."When fraud occurs, there is a loss of revenue, assets, lots of investigation and litigation costs, and of course disruption of operations," Nonnemacher said. He told the group that nonprofits are more susceptible to fraud for a handful of reasons: excessive control of one individual, organizations tend to be run by unpaid volunteers with boards usually composed of folks with minimal financial expertise.Two-step verificationOne simple step according to the experienced CPA is to have two-signature checks."It can be inconvenient but it works," he said.The issue of checks is important for any profit or nonprofit business. He warns to always know where the physical checkbook is."Keep it in a safe at the headquarters."He also advises to never sign a blank check in advance. To keep up a provable paper trail, he told the volunteer fire departments and PTA members in attendance to always make disbursements with a check."The board has a fiduciary responsibility to the organization."A fiduciary duty is a legal duty to act solely in another party's interests. Parties owning this duty are called fiduciaries. The people to whom they owe a duty are called principals, or in this case organization. He gave the crowd some ideas or red flags to look for: board members living beyond their means, they never take time off, defensive when asked questions and if late charges or penalties for unpaid bills start to rack up."These are things to look for."Electronic identitiesNonnemacher spoke about the importance of the golden EIN number.An EIN number is "like a Social Security Number for an organization and should be put on all the checks," he said.This number is required by the federal government.In the age of the Internet, registering for the golden digits is a matter of navigating the IRS website or

www.pay.gov. A one-time fee of $400 will have to be paid, but as long as an organization files every year, this one time fee buys a lifetime of tax exemption."If you fail to file for three consecutive years the status will be revoked. If you lose the status your contributions are no longer tax deductible as a charity contribution and you will lose Pennsylvania's sales tax exemption, as well as lose access to grants and municipal subsidies," he said.After filing form 1023, filling out three pages of checkbox type questions and paying the fee all information can be submitted electronically."It typically takes about six weeks to receive the status. But once you have it, then you have it."Organizations that attempt to work as nonprofits will have their status revoked before even applying."They will receive a letter from the IRS with a revoked status and that revocation will be posted on the IRS website."