Checks and Balances Financial Finesse

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Checks and BalancesFinancial Finesse

• Buck Crouch
• CFPIM, CIRM, CSCP, MBA

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Session Agenda

• Introductions
• Financial responsibility
• Financial status
• Handling chapter funds
• Miscellaneous ?

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Introductions

• Speaker
• Attendees name, chapter, experience, and
  objectives

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Buck Crouch

• CFPIM, CIRM, CSCP, MBA
• VP Finance - Tucson Chapter
• Served on Tucson and San Diego BODs

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Introductions

• Speaker
• Attendees name, chapter, experience, and
  objectives

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Financial Responsibility

• Chapter board of directors financial
  responsibility
• Appointing a chapter treasurer
• Orienting new treasurers
• Conflict of interest policy

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Chapter Board of Directors Financial
Responsibility

• Stewardship
• Compliance with regulations
• Reporting to members

Financial Responsibility
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Appointing a Chapter Treasurer

• High level of responsibility
• Atypical skill set for our members
• Might be a local CPA or business accounting
  manager

Financial Responsibility
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Orienting New Treasurers

• Prepare from day one
• Plan for a successor early
• Use the APICS Handbook
• Ask for help
• Bank account signer changes
• Files and software

Financial Responsibility
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Conflict of Interest Policy

• Develop a conflict of interest policy to identify
  and protect the chapter against any potential
  ethical dilemmas.
• Protect the chapter from any potential perception
  of chapter assets benefiting private individuals.

Financial Responsibility
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Financial Status

• Nonprofit, tax-exempt, or not-for-profit?
• Definition of a professional society
• What is the difference between 501(c)(6) and
  501(c)(3)?
• Is there a limit on how much money chapters may
  have in reserve?

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Nonprofit, Tax-Exempt,or Not-for-Profit?

• Nonprofit your states designation
• Not-for-profit slang
• Tax-exempt the IRS designation
• None of these means lose money.
• They all mean that your purpose isnt to
  distribute profits to owners or members.

Financial Status
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Definition of a Professional Association

• Members have common business interest
• Purpose is to promote that interest
• Not a business ordinarily run for profit
• Improve business conditions, not for individuals
• Not primarily for profits
• No earnings for benefit of individual

Financial Status
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What Is the Difference Between 501(c)(6) and
501(c)(3)?

• The 501 (c)(6) may lobby and contribute to
  political campaigns
• The 501 (c)(3) may not
• Contributions to (3) are deductible
• Designation as (3) is very difficult now

Financial Status
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Is There a Limit on How Much Money Chapters May
Have in Reserve?

• No legal limit with a purpose
• Excessive reserves should drive change
• Why have a reserve?
• Do you have a target?
• What do you do with excess?

Financial Status
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Handling Chapter Funds

• Flow of financial information cash receipts and
  disbursements
• Cash basis vs. accrual basis accounting
• Chart of accounts
• Keeping the books
• Accounting software
• Maintaining financial records

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Flow of Financial Information Cash Receipts and
Disbursements
Income Cash or Checks
Invoices to be Paid
Miscellaneous Transactions
Open Invoice File
Bank
Cash Receipts Journal
Cash Disbursement Journal
General Journal
General Ledger
Financial Statements
Handling Chapter Funds
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Cash Basis vs. Accrual Basis Accounting

• Cash basis is simplest
• Record transaction when the cash happens
• Accrual is more sophisticated
• Record transaction when the activity happens

Handling Chapter Funds
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Chart of Accounts

• Mechanism to categorize transactions
• Assets, liabilities, fund balance, revenue, and
  expenses
• Organized for rollup to financial statements
• Keep it simple, name accounts clearly

Handling Chapter Funds
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Keeping the Books

• Journals
• Cash receipt journal
• Cash disbursements journal
• General journal
• General ledger
• Trial balance

Handling Chapter Funds
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Accounting Software

• It is an option, yet very popular
• Many packages are available
• Keep your version current
• Good data backup practices are vital

Handling Chapter Funds
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Maintaining Financial Records

• Accounting generates and collects paper
• Use of software creates electronic data
• Federal, state, and local regulations
• Neatness counts
• Ask your friendly local CPA for retention rules
• See APICS Handbook for guidelines

Handling Chapter Funds
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Employee vs. Independent Contractor

• The IRS is looking closely at this.
• Where do your instructors fit?
• Do you know the 19 questions?
• Annually file form 1099-MISC for contractors.

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Insurance for Volunteers

• Volunteer Protection Act
• Directors and officers (DO) and general
  liability insurance
• Scope of chapter insurance coverage provided by
  APICS

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Volunteer Protection Act

• The 1997 act protects chapter volunteers but it
  provides no protection to chapters themselves.
• No protection for sexual offenses or civil rights
  violations
• Does not prohibit anyone from bringing suit
• Primarily for 501(c)(3) organizations
• Chapter needs to indemnify volunteers and
  employees

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Directors and Officers and General Liability
Insurance

• Chapters need to carry insurance!
• Directors and officers (DO) picks up where the
  Volunteer Act lets off.
• If you have employees, you need workers
  compensation insurance, too.

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Returns for Tax-Exempt Organizations

• You may not have to pay but most will need to
  file form 990 or 990-EZ
• 990-EZ Revenues between 25,000 and 100,000 and
  assets less than 250,000
• Form 990 Revenues greater than 100,000 or
  assets greater than 250,000
• 15th day of the 5th month after year-end

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Calendar

• 990 return
• DO Insurance
• Audit or Financial review
• Monthly Statements
• Budget

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Conclusion

• Financial responsibility
• Financial status
• Handling chapter funds
• Miscellaneous
• Your questions ???

For more information FINANCE/TREASURER CHAPTER
LEADERSHIP HANDBOOK APICS Stock 01003
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Acknowledgements

• The APICS Membership Division
• Uncle Sam and the Broker
• The Basics of Chapter Organization
• FINANCE/TREASURER CHAPTER LEADERSHIP HANDBOOK