Chapter Financial Management Michael Kerns Past President – National Capital Chapter Bruce Sufranski ASSE Director of Finance/Controller October 5, 2012 Financial Management: Agenda Treasurer Roles Chapter Leadership Financial Manager Treasurer Responsibilities Strategic Planning Financial Management – Focus of today’s session Treasurer’s Roles: Chapter Leadership Executive Committee Leadership Role: “Beyond Bean Counting” Participate in all chapter business decisions Focus on Membership Value / Experience To maintain chapter’s financial well being, must be an active participant on Executive Committee Treasurer’s Roles: Chapter Leadership Strategic Planning – long term view Set Chapter Direction and Priorities Assess Financial Impact of Business Decisions Are we providing best value for our Members Do revenues exceed expenses Special project initiatives How to pay for it Plan for the Long-Term Develop healthy and sustainable Chapter Financial health is key component Treasurer’s Roles: Financial Manager Financial Management: Responsibilities “Counting the Beans” Safeguard chapter assets Financial Control: annual chapter budget Financial Reporting: monthly/ quarterly/ annually Financial Compliance: IRS tax filings / other requirements Financial Management – General Concepts Use Sound Accounting Practices to Record Transactions GAAP requires “accrual accounting” (probably need to be an accountant) Most chapters use “cash basis” accounting (like keeping your check book) Cash comes in = revenue Cash goes out = expense Keys: Consistency/ Accuracy/ Transparency Financial Management – General Concepts Obtain financial records/ tax returns from predecessor History provides important starting point Financial Audit Prepare Monthly Financial Reports Require Executive Committee Participation Review financial reports Review bank statements Financial Management: Safeguard ChapterResponsibilities Assets Guard against loss, theft, fraud, etc. Chapter Annual Budgeting Short-term view (next 12 Months) Monthly/ Quarterly/ Annual Reporting How is Chapter doing? Reports to Chapter Executive Committee Reports to HQ IRS Tax Filings Stay in compliance Safeguarding Chapter Assets What are your Chapter’s Assets Savings/checking account Investment account (if any) Fixed assets (if any) How do you safeguard assets? Proper procedures for handling cash receipts Proper procedures for handling cash disbursements Two Signatures required on checks Monthly financial reports Executive Committee review of financial reports and bank statements (Guest Access) Financial Control: Budgeting Budgeting is key step in financial control Forces critical evaluation of where resources are going Establishes guidelines for expenditures Requires discipline Budgeting leads to review of activities Value added vs non-value added Budgets: An Example REVENUE Cash Receipts Dues Mtg Fees Advertising Conf/Sem Special Proj Interest Other Total Revenue (Receipts) EXPENSES Cash Disbursements MEETINGS Meals Spkr Gifts Other CONF/SEM Meals/Break Spkr Exp Bks/Material Other NEWLETTER Printing Postage Other TRAVEL Officers Other PUBLICITY SPCL PROJ ADMIN SCHOLARSH OTHER Total Expenses (Disbursements) NET INCOME Excess Revenue over Expenses APR 300 MAY 500 JUN 400 400 JUL 200 200 AUG 200 200 45 300 500 SEP 200 800 OCT 200 100 NOV 200 100 2000 3000 45 DEC 200 200 JAN 200 200 FEB 200 200 45 845 400 400 1045 2300 3300 445 400 400 335 25 170 170 650 50 100 80 80 170 170 170 ANNUAL MAR BUDGET 200 3000 300 2700 0 5000 0 45 180 0 545 10880 245 25 2000 700 500 500 100 60 100 60 100 60 100 60 100 60 825 100 60 100 60 100 60 2240 100 100 2000 700 500 500 100 60 25 100 60 100 60 25 100 60 1200 720 0 525 30 30 30 30 30 30 30 30 30 30 30 250 190 190 1375 360 360 1015 670 3970 360 385 360 1205 1400 0 400 0 580 0 0 10440 110 310 -530 40 40 30 1630 -670 85 15 40 -660 440 400 11 Treasurer Responsibilities Processes all receipts and disbursements of funds. Transfers funds into authorized accounts as needed. Receives and reconciles bank statements monthly. Processes requests for reimbursement of chapter business expenses. Reviews invoices for payment. With the President and approved by the Executive Committee, prepares the annual budget. Prepares all financial reports monthly / compares actual to budget Prepares/files annual tax returns Treasurer Responsibilities Processes cash disbursements: NEVER WRITE A CHECK TO YOURSELF Treasurer Responsibilities: Auditing General Guidelines: Assures records are in good order and up-to-date Benefit to treasurer: documentation that good procedures are consistently followed Internal audit: Completed annually near year end or after President/Treasurer leaves office Results communicated to Chapter/Region executive committeedeficiencies corrected Audit Procedures See website for detailed audit checklist Treasurer Responsibilities: Auditing Some Possible Warning Signs: Are financial records organized and readily available? Is the past treasurer accessible? Have bank statements been reconciled? Have cash / check receipts been deposited? Do cash disbursements (checks written) include proper support? (e.g., approved invoices) Does the chapter executive committee review the financial statements regularly? Critical ASSE Dates APRIL – Beginning of fiscal year 15th – Previous month financial report MAY – Previous month financial report 31st – Previous fiscal year financial report to ASSE JUNE – Previous month financial report Quarter 1 1st 15th 15th Quarter 2 JULY 15th – Previous month financial report AUGUST 15th – IRS deadline For 990, 990EZ, 990N & 990T 15th – Previous month financial report 15th – Proof of tax filing or extension to ASSE SEPTEMBER 15th – Previous month financial report Quarter 3 OCTOBER 15th – Previous month financial report NOVEMBER 15th – Previous month financial report DECEMBER 15th – Previous month financial report Quarter 4 15th JANUARY – Previous month financial report 1st FEBRUARY – Executive Committee approval of next years budget 15th – Previous month financial report MARCH – Chapter dues notification due to ASSE 15th – Previous month financial report 31st – End of fiscal year 1st Treasurer Responsibilities: Reporting Financial Reports – Monthly – General Guidelines: Treasurer prepares a monthly financial report for the Executive Board. The reports should include: Income Statement: Revenues and Expenses Balance Sheet: Assets and Liabilities Highlight areas of concern Minutes from each Executive Board meeting should reflect the submittal, review, and approval of financial report. Treasurer should also ensure that Executive Board receives/reviews all bank statements on a regular basis Annual Financial Report Submitted to ASSE HQ Excel spreadsheet American Society of Safety Engineers _________________ Chapter Annual Financial Report Electronically available on ASSE Officer Central Website Period Ending March 31, 2011 INCOME STATEMENT REVENUES (Cash Receipts) Dues $ - Meeting Fees $ - Conference/Seminars $ - Special Project $ - Interest $ - Advertising $ - $ - $ - Other $ - Gross (total) revenue from Sections $ - $ - Lunch/Dinner Speaker Gifts $ - Other $ - $ - $ - Books & Materials $ - Other $ - $ - $ - $ - $ - $ - Publicity $ - Special Project $ - Administrative $ - Scholarship $ - Bank Fees $ - Web Hosting $ - Other $ - Gross (total) expense from Sections $ Sale of Product ** Sale of Services (Unrelated Business) (Unrelated Business) (Unrelated Business) REVENUE (Total Receipts) $ - EXPENSES (Total Disbursements) $ - $ - EXPENSES (Cash Disbursements) MEETINGS: CONF/SEMINAR: NEWSLETTER: Meals/Breaks Speaker Expenses Printing Postage & Mailing Other TRAVEL: Officers Other - NET INCOME (Excess Receipts over Disbursements) PREVIOUS YEAR CASH BALANCE - Total Assets from Previous Year NEW CASH BALANCE - Previous Year Cash Balance plus Net Income $0.00 Total Assets as of March 31, 2011 / Bank Balance Savings $0.00 Checking $0.00 Other/CD $0.00 Deposit In Transit $0.00 (Outstanding Checks) $0.00 NEW CASH BALANCE = Total Bank Balance MUST MATCH $0.00 Only one of the following choices should be checked 'yes': Is the average of Chapter’s Gross Receipts for this Fiscal Year and the prior two years less than or equal to $50,000? Is the Chapter’s Gross Receipts for this Fiscal Year between $50,000 and $200,000 and total assets less than $500,000? Is the Chapter’s Gross Receipts for this Fiscal Year greater than or equal to $200,000 or total assets greater than or equal to $500,000? (If so, a 990N must be filed). (If so, a 990EZ must be filed) (If so, a 990 must be filed) Has or will either a 990N, 990EZ, or 990 been filed for fiscal year 2011 (tax return year 2010)? Is the Chapter’s total unrelated business income (advertising, etc…) less than $1,000 **? (Note: If more than $1,000 a 990T form MUST be filed). This report includes the financial activities of all Sections chartered for the Chapter. ** Does not generate UBIT if (1) includes an educational/information message on the product or (2) is accompanied by literature which describes the organization's programs and mission. Chapter Treasurer (Print and Sign Name) Date REPORT DUE 5/31/2011 Yes____ No____ Yes____ No____ Yes____ No____ Yes____ No____ Yes____ No____ Yes____ No____ Annual Financial Report - Samples Shown below are actual financial reports submitted ASSE HQ using the Excel spreadsheet: Critical Chapter Financial Reports By March 1: Chapter Dues Change Notification Due IF changing, notify HQ - email the following information to: [email protected] Chapter Name/ your name & title New Dues Amount / Old Dues Amount Date when Chapter approved new dues amount By May 31: Upload annual financial report to http://www.asse.org/committees/finance-reports.asp By August 15: File tax return(s) with the IRS Copy of the Chapter’s tax return, proof of filing, or proof of extension General Chapter Financial Information • ASSE is tax exempt - Section 501(C) 6 • Exempt from Federal income tax • Each chapter is incorporated in the State of Illinois • Has its own Federal tax identification number • Critical to use correct tax id on IRS tax returns • May be tax exempt for your state • Check with your state tax authority 21 Chapter IRS Responsibilities File appropriate tax return Use correct tax id number-THIS IS CRITICAL Keep good records-pay attention to deadline Consider hiring a tax accountant if chapter is large Resources IRS Website (www.irs.gov) and help line “Chapter Tax Responsibilities” webinar-4/25/12 ASSE Director of Finance, Bruce Sufranski [email protected] IRS Filings – Tax Year 2010 and Later Required Form Depends on Chapter Size Gross Receipts <= $50,000 File Form 990N (ePostcard) Gross Receipts between $50,000 and $200,000 and Total Assets < $500,000 File Form 990EZ or Form 990 Gross Receipts =>$200,000 OR Total Assets =>$500,000 File Form 990 Unrelated Business Income >$1000 File Form 990T Taxes: Common Misconceptions ASSE is exempt from state sales tax. NO - Most states do not exempt from sales tax. All income is free from federal income tax. NO - Revenue from unrelated activities is taxable. Ex. Advertising, Sale of services, certain product sales, etc. Donations to ASSE are tax deductible. NO - ASSE is not a charitable organization. However, the ASSE Foundation IS a charitable organization and therefore donations to the Foundation are tax deductible. Questions? Chapter Financial Guidelines Reduce risk of unlawful or unethical transactions. Reduce the risk of civil liability to Officers. Provide Best Practice Accounting Guidelines for Chapters to adopt. Provide “Transparency” of Financial Management of Chapter’s funds. Musts & Shalls •No monies obtained by the Chapter will be deposited into a personal bank account or any other account, which has not been approved by the Executive Committee. (cash receipts-A) •All cash accounts owned by the Chapter will be held in financial institutions, which are federally insured and have been approved by the Executive Committee. (cash receipts-B) •All disbursements must be pre-approved by a quorum of the Executive Committee. (cash disbursements-A) •Checks shall never be written directly to an individual by the same individual. (cash disbursements-B) •Approval for an expense by the member must be indicated on the check request voucher, or at minimum, by e-mail. (cash disbursements-H) •Checks shall never be cashed through the petty cash fund. (petty cash-A) •A single disbursement from petty cash shall never exceed a pre-set level, determined by th Chapter Executive Committee, such as $20. (petty cash-B) Musts & Shalls •The petty cash fund shall be operated on an impress basis which means the amount of the petty cash fund should remain constant: (example- change for meetings/PDCs) (petty cash-C) •When it is time to replenish the petty cash fund, the Treasurer shall total out the expenses made and identify those expenses by general ledger account number. (petty cash-C1) •In the absence of backup materials, receipts for the purchase must be provided to the Treasurer for attachment to the check request within two weeks from the check date. (purchases-A3) •No alcohol may be included on an expense report. (purchases-C3) •All contracts to exceed $1,500 over the course of the year must be approved by the Chapter Executive Committee and the contract approved by the Region VP. (purchases-E1) •Any contract potential conflict of interest must be presented to the Chapter Executive Committee before the contract is accepted. (purchases-E2) •The Minutes from each Chapter Executive Committee meeting shall reflect the submittal and approval of the monthly financial report by the committee. (financial reporting-1) Musts & Shalls •The Chapter Executive Committee shall approve new signers to each bank account. (new chapter checklist-A) •The Chapter Executive Committee shall approve any new and necessary bank accounts. (new chapter checklist-B) •As required, new signers shall complete the appropriate signature card and Chapter resolutions. (new chapter checklist-C) •The President shall represent the Chapter at meetings and conferences, unless other attendees are needed. (travel-B1) •The dates, location, and reason for travel must be identified and approved by the Chapter Executive Committee. (travel-B2) •The vote to approve the travel shall include a discussion on the requested approximate travel expenses to be covered. (travel-B3) Financial “Red Flags” Exercise •Does the Chapter use a bank account authorized by the Executive Committee? •Does more than one person have access to the Chapter bank account? •Is the Chapter bank account in the Chapter’s name? •Is the Chapter Articles of Incorporation up to date? •Are more than one Officer listed on the bank signature cards? •Does the Chapter use attendance records at events where money is received? •Does the Chapter use a cash receipt book to record cash receivables? •Does the Chapter conduct an annual internal audit? •Does the Chapter audit cash receipts against the deposit slips and attendance records? •Does the audit committee include members other than President and Treasurer? •Does the Treasurer provide monthly financial reports? Financial “Red Flags” Exercise •Does the Treasurer respond to check requests and issue checks timely? •Is the Treasurer employed? •Does the Chapter use electronic banking and email alerts? •Does more than one officer have access to an authorized Chapter P.O. Box? •Does more than one officer have access to Chapter bank statements? •Does the Treasurer attend regular Executive Board meetings? •Does more than one officer have access to other accounts (PayPal, Cvent)? Forms Officer Turnover Checklist Check Request Travel Reimbursement Monthly Financial Report Cash Receipt Asset Log Meeting Attendance Log (used to reconcile with cash receipts) Internal audit checklist Financial Red-Flag Checklist Resources Accounting Standard Operating Guidelines Policies and procedures Electronic Banking Email alerts, electronic statements Internal Financial Audits Audit checklist 3rd Party CPA Firm Officer Training Leadership Training Officer Central Regional Operating Committee meetings ROCs Chapter Treasurers: Resources Many tools and resources to help do your job Obtain records from your predecessor! ASSE Website – Officer Central Treasurer Training Financial Planning Checklist Budgeting Audit Guidelines Travel Expense Guidelines ASSE Finance Staff Other Chapter Treasurers Questions?