Southern Maryland Electric Cooperative Inc

“The Cooperative made the following change to its bylaws regarding the allocation of nonoperating margins:Section 7.02 Patronage Capital in Connection with Furnishing Electric Distribution Service. The Cooperative shall retain any nonoperating margins as permanent equity, without allocation.”

“Southern Maryland Electric Cooperative is an Electric Membership Corporation that delivers electricity to the members of the Cooperative.”

“Members of the governing board are elected by the membership of the Cooperative. Each member receives one vote. The board has monthly meetings and an annual meeting that is open to the entire membership.”

“The Cooperatives by-laws are voted on by the members of the Cooperative at the annual meeting.”

“A draft copy of the Form 990 is provided to the Board of Directors the week prior to the board meeting. The day of the board meeting, the 990 is presented to the Policy, Audit and Budget Committee by the independent CPA Firm. The Committee then makes a recommendation for approval at the full board meeting that follows. The President & CEO and Senior Vice President & CFO are present at the Board meeting to answer any additional questions the Board members may have regarding the Form. Once approved, the Form 990 is then filed with the Internal Revenue Service.”

“A questionnaire is completed by the directors, officers and key employees of the Cooperative.”

“A salary structure and comparison study is obtained from an independent consultant. The Board of Directors completes an appraisal and discusses with the CEO.”

“A salary structure and comparison study is obtained from an independent consultant.”

“Governing documents and policies are available upon request. Financial data is provided to the membership at the annual meeting. Financial data is also included on the 990 which is available upon request.”

“Contributions in aid of construction not revenue per gaap = -$3443922”

“Distribution of capital credits to members = -$3258421”

“equity investment adjustment to match k-1 = -$7333”

“Net change in donated capital = $1214983”

“Non cash patronage capital allocations not revenue per IRS = $1158438”

“OCI Adjustment = -$2693841”

“990 Part IX Line 4 Benefits Paid to Members reported an incorrect amount on the original return as filed. Amended return reflects the correct amount for this line.”

“Travel costs include the expenses of purchasing, leasing, operating, and repairing any vehicles owned by the organization and used for the organization's activities.”

“Patronage dividends are paid / allocated to members' accounts in accordance with pre-existing obligation in Cooperative's by-laws. The Corporation is obligated to pay by credits (allocate) to a capital account for each patron all such amounts in excess of operating costs and expenses.IRS instructions for line 4 changed in 2011 to include patronage dividends paid by section 501(c)(12) organizations to their members. Accordingly, these amounts are now reported on line 4.”