APICS Leadership Institute

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APICSLeadership Institute
Ken Karp

• Exercise Your Bottom Line

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Session Agenda

• Introductions
• Statements
• Budget
• Internal control

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Introductions

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

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Financial Statements

• Financial statements
• Comparative analysis and variances
• Year-end audit?
• Engaging an auditor

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Basic Financial Statements

• Statement of Position (Balance Sheet)
• Statement of Activities (Income Statement)
• Cash Flow Statement (Statement of Changes in
  Financial Position)

Financial Statements
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Income Statement Types
By Function
By Nature
Revenue Cert Class xxx PDM xxx
Seminars xxx Dues xxx Total
Revenue xxx Expenditures Cert
Class xxx PDM xxx Seminars xxx
Dues xxx Total Program Expenditures xxx
Admin Costs xxx Other xxx Net
Income xxx
Income Tuition xxx Admissions xxx
Product Sales xxx Dues xxx Total
Income xxx Expenses Instructor
Fees xxx Materials xxx Facility
Costs xxx Office Expense xxx
Advertising xxx Travel xxx Total
Expenses xxx Net Income xxx
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Comparative Analysisand Variances

• Compare to prior year
• Compare to budget
• Make reviews timely and frequent
• Use nondollar benchmarks

Financial Statements
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Year End Audit?

• Audit / review / compilation
• Assess the benefits of each
• Balance with the cost and complexity
• Your choice can change over the years

Financial Statements
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Engaging an Auditor

• Plan ahead the auditor will need to schedule
  resources
• Look for experience in similar businesses
• Follow an RFP process to set the right fee
• Clarify rules of engagement
• Long-term engagements are good for you

Financial Statements
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Chapter Budgets

• From strategic plan to financial plan
• How to establish an annual budget
• Comparing budget to actual performance
• Cash flow projections
• Multiyear plan

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From Strategic Plan to Financial Plan

• Start with the future in mind
• A budget is the funding tool
• Build from initiative to overall
• How does the bottom line work out?

Chapter Budgets
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How to Establish anAnnual Budget

• List goals / objectives
• Estimate costs of each item in the list
• Estimate income from the list
• Compare income and costs
• Compare to previous years
• Submit budget to entire BOD

Chapter Budgets
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Comparing Budget to Actual Performance

• Follow up on the difficult preparation task
• Monthly reviews are appropriate
• Watch for timing issues especially if cash
  basis accounting is used
• Be willing and ready to take actions
• Make it part of the treasurers report
• AVOID CHANGING THE BUDGET!

Chapter Budgets
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Cash Flow Projections

• Recognize the difference between annual profit
  and cash position
• Ensure you look at the timing of receipts and
  expenditures

Chapter Budgets
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Multiyear Plan

• How long will your chapter operate?
• How far in advance do you set your strategic
  plan?
• Establish a planning committee to develop this
  financial plan
• Plan at a high level, revenues first
• Revisit the plan each year, keeping it rolling

Chapter Budgets
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Internal Controls

• Banking
• Accepting credit card payments
• Policies and Procedures Manual
• Investment of chapter funds
• Transfer requirements when officers change
• Appointing an Internal Audit Committee
• Procedures for chapter credit from APICS

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Banking

• A chapter needs at least one account
• Obtain your employee identification number (EIN)
  from the IRS
• Determine signature policies
• Element of internal control
• Need to be feasible
• Reconcile the account monthly

Internal Controls
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Accepting Credit Card Payments

• Easy way for customers to pay you
• Listen to customers for level of demand
• There are fees associated
• Adds a need to reconcile when funds are received
• May be a better option out there

Internal Controls
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Policies and Procedures Manual

• Use a manual to guide handling chapter
  transactions
• Safeguarding collections of cash
• Prenumbered receipts
• Separation of duties
• Deposit quickly
• Compare receipt journal to bank deposits
• Authorization of disbursements
• Start with an approved budget
• Use purchase authorization form for large outlays
• Set dollar levels for authorization
• Tie disbursement journal to bank statements
• Keep good records for year-end review / audit

Internal Controls
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Investment of Chapter Funds

• Determine in advance what investments are
  approved by the board
• Set realistic goals, mind your stewardship
• Retain sufficient operating cash
• Take note of FDIC limits
• Good for you! Funds to invest indicate a
  financially healthy operation.

Internal Controls
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Transfer Requirements When Officers Change

• Signature cards
• Corporate resolution papers
• Reconcile the checkbook
• Others?

Internal Controls
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Appointing anInternal Audit Committee

• Review transactions
• Review internal controls
• Report findings and recommendations
• Select independent auditor

Internal Controls
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Procedures forChapter Credit from APICS

• President makes request for billing number
• Address in My Chapter
• Pay on time
• Know your credit limit

Internal Controls
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Conclusion

• Statements
• Budget
• Internal control
• Your questions ???

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

• Presentation Author
• The APICS Membership Division