Trout Unlimited (National Office)

As part of our evaluation of Trout Unlimited (TU), CharityWatch analyzed the Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance. Additionally, CharityWatch analyzed the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters based on an Audit of Financial Statements performed in accordance with Government Auditing Standards.

According to the Schedule of Findings and Questioned Costs, Section I - Summary of Auditor's Results of the Independent Auditor's Report for fiscal 2024, a Significant Deficiency was identified in relation to TU's Financial Statements pertaining to its federal awards:

According to Section II - Financial Statement Findings - Finding 2024-001 - Misclassification of Revenue:

"Criteria: Recipients of Federal funds are required to establish internal controls that should be in compliance with guidance in the "Integral Control Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Condition: During the course of the year, management determined that certain historic agreements and other arrangements were not classified properly given the current circumstances.

Context: Failure to accurately identify donor-restricted funds may result in the mismanagement of these resources.

Effect: Approximately $349,000 in support with donor restrictions was reclassified to without donor restrictions.

Cause: Adequate internal controls, including a comprehensive review of revenue classification, were not in place when the support was initially recognized, resulting in improper identification of donor restricted funds.

Identification of Repeat Finding: 2023-001

Recommendation: We recommend TU enhance the policies and procedures governing internal controls related to the identification and monitoring of donor-restricted funds and other arrangements whereby funds may constitute an agency only arrangement. This entails enhanced documentation about the accounting positions taken on a variety of revenue arrangements.

Views of Responsible Officials and Planned Corrective Actions: The identified misclassifications were related to historical balances from previous years. The current year’s revenue was accurately classified. In FY24, TU initiated a formalized review process for proper recording and classification of pledges and implemented quarterly pledge review meetings between the Accounting and Development teams. TU’s new financial system has improved visibility on restrictions through segmentation attached at the transaction level. New revenue will continue to be assessed and classified according to these reviews..."

According to Section IV - Prior Year Findings and Questioned Costs with Current Year Status - Finding 2023-001 - Misclassification of Revenue:

"Condition: During the audit, it came to our attention that approximately $1,000,000 in revenue with donor restrictions was erroneously classified as revenue without donor restrictions during fiscal year 2022.

Recommendation: We recommend TU enhance the policies and procedures governing internal controls related to the identification and monitoring of donor-restricted funds. This entails the identification and tracking of donor-restricted funds, thereby ensuring they are used in accordance with the donors' intended purposes.

Current Year Status: See Finding 2024-001."

During a financial audit, auditors conduct various forms of sampling, which involves checking a portion of an organization's financial transactions to ensure that they are accurately recognized and recorded, that sufficient documentation exists to substantiate them, and that proper internal controls are being maintained by an organization's management. Samples are planned, selected, and evaluated for the purpose of providing an organization's auditors with statistically representative data adequate for inferring the overall accuracy of the reporting. An audit does not entail the auditors checking 100% of an organization's financial transactions to confirm the accuracy of the total of the reporting. For this reason, errors may exist in an organization's financial reporting that go undetected by its auditors.

CharityWatch's rating of Trout Unlimited (TU) is for the National Office based in Arlington, VA (tax ID #38-1612715). The rating does not include the financial activities of the locally-based Trout Unlimited chapters and councils. TU has "approximately 340,000 members and supporters in over 400 chapters and councils nationwide," according the TU audit of March 31, 2024 (Note 1 re: Organization).

According to the Trout Unlimited (TU) audit of March 31, 2024 (Note 11, Agency Transactions):

"TU serves as a fiscal agent to manage various fiscal matters related to grants applied for an[d]  received by the Minnesota Council, (MN Council) a separate 501(c)(3) organization. Transactions related to the MN Council are recorded as both revenue and expense within TU's financial statements and reversed at the end of the year. MN Council revenue and expenses incurred by TU totaled $2,108,345 and $1,637,965 for the years ended March 31, 2024 and 2023, respectively.

Additionally, during the year ended March 31, 2024, TU established an administrative service agreement with another council, whereby salary and benefit costs are directly reimbursed and recorded as an offsetting reduction to the expenditures. The amounts totaled $1,544,735 for the year ended March 31, 2024."

According to the Trout Unlimited (TU) tax filing for the fiscal year ended March 31, 2024, TU reports re: Compensation, Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees (IRS Form 990, Schedule J, Part II):

TU reports providing "bonus & incentive compensation" during 2023 to Christopher Wood, President & CEO, in the amount of $30,000. Wood's total reported compensation was $496,625.