During the last legislative session, House File 2455 was passed initiating changes in governmental audit requirements. Currently, all Iowa cities with a population over 2,000 are required to receive an annual audit. Cities with population from 700 to 2,000 are required to be audited once every four years and cities with a population under 700 are not required to be audited, except by petition of the citizens. The Cities had the option to hire a CPA firm or the Auditor of State to perform the audit through the request for proposal process, and cities paid a filing fee based on budgeted expenditures to the State Auditor’s Office with the submission of their report.

In May, the USDA released a listing of the top 100 agricultural cooperatives, highlighting their near record-breaking successes in 2010. According to the listing, the coops had combined revenue of $118 billion, with 23 of the listed 100 coops reporting revenue of more than $1 billion, and 47 more of the coops boasting over $500 million in revenue! Additionally, the asset base and profit margins increased for all 100 coops on the listing.

This past spring, the Financial Accounting Foundation, the parent organization to the Financial Accounting Standards Board (FASB), established the Private Company Council (PCC). The PCC will identify and vote on exceptions and modifications to U.S. GAAP for private companies. Decisions made by the PCC will be endorsed, rather than ratified by FASB. Possible exceptions or modifications to existing GAAP will be determined by the PCC, in consultation with FASB.

The Limited Cooperative association structure would allow you the flexibility to accept outside investor equity. The outside equity may afford your cooperative the advantage of timely opportunities or to balance your debt and equity capital structure. We are not encouraging this structure for all of our cooperatives, but we have seen enough through the last 48 years to know that it is worth considering; particularly as our cooperative clients continue to grow. We are not attorneys, so we would have to direct you to the legal resources to address the details. Contact your Gardiner Thomsen partner or manager if you would like to start the discussion.

One of the best parts of working with our cooperative clients is helping them with the annual decision of how much of their earnings to allocate back to members as patronage dividends. There are rules to follow in order to protect the ability to deduct the allocation for income tax purposes. Many items come into play, such as: is the cooperative "exempt" or "non-exempt" for tax purposes, will patronage dividends be in the form of "qualified" or "non-qualified" allocations, and is the allocation based on "book" income or "tax" income.

On June 16, 2011, the FASB issued ASU 2011-05, eliminating one of the three existing presentation options for other comprehensive income and requiring reclassification adjustments to be reported on the face of the financial statements rather than in the notes as currently permitted. For non-public entities, this amendment is effective for fiscal years ending after December 15, 2012 and is to be applied retrospectively. If no items of other comprehensive income are present in any of the years presented in the financial statements, this standard does not apply.