ROAD RUNNERS CLUB OF AMERICA FINANCIAL MANAGEMENT FOR CLUBS & EVENTS

Transcription

1 FINANCIAL MANAGEMENT FOR CLUBS & EVENTS Craig Minyard, RRCA Treasurer

2 FINANCIAL MANAGEMENT FOR CLUBS & EVENTS AGENDA Introduction Financial Oversight Internal Controls RRCA Practices Independent Review Sarbanes-Oxley Budgets Measuring performance Tools Reporting requirements

3 INTRODUCTION

4 FINANCIAL OVERSIGHT WHO S JOB IS IT?

5 BOARD FIDUCIARY OBLIGATIONS

6 WHAT DOES THE BOARD NEED TO KNOW? Important Questions the Board Should be able to answer: Is the organization profitable this month/quarter? Is there a projected loss for the year? Are there any obligations that can t be met? How will a loss be handled? Are revenue sources increasing or decreasing? Is revenue dependent on a single source? Are expenses under control? Are there sufficient cash reserves to meet obligations? How are revenues/expenses tracking against budget? Do Financial plans support mission, strategic plan and vision? What are the financial results of events?

7 YOU DON T HAVE TO BE AN EXPERT

8 BUT YOU DO HAVE TO PAY ATTENTION!

9 BOARD RESPONSIBILITIES The board should ensure there are policies in place to protect the organization from fraud or theft. These policies are often referred to as internal controls. An important aspect of internal controls is segregation of duties. Do you have a Finance Committee, or do you delegate all financial duties to your treasurer?

10 BOARD CONTRACT Adopt a Board Member Contract: Not legally binding Outlines Board Members responsibilities Lays out organization s responsibilities to the Board Member Adopt a Conflicts of Interest Policy that requires disclosure Duty of loyalty to act in the best interest of the organization

11 INTERNAL CONTROLS Policies & Process to protect from fraud or theft: View account activity online Bank account reconciliation by 2 nd party Online accounting access No intermingling personal funds Documentation & reconciliation of income Run Sign Up platform Budgets Financial reporting and reviews

12 SEGREGATION OF DUTIES Get some help! Consider appointing an Assistant Treasurer

13 DOCUMENT FINANCIAL POLICIES Policies to consider: Dual signature checks Set cap on checks Timely bank statement reconciliation Documentation for expenses paid Online access to bank accounts and accounting information Online accounting access Develop a budget and track results against it Financial reporting and reviews Maintain/Update authorized signors Reimbursement policy

14 CONSIDER A FINANCE COMMITTEE RRCA Finance Committee: The primary responsibility of the Finance Committee is to monitor the finances of the RRCA and to safeguard against fraud. The finance committee consists of the Treasurer, the President, the Executive Director, and no less than one person that is a non-board member. RRCA Finance Committee utilizes a cloud for file sharing, allowing all members to have access to agreed upon documents within an agreed upon timeframe.

15 OTHER RRCA FINANCIAL OVERSIGHT PRACTICES The Treasurer has a read-only bank account access for viewing all statements and transactions The Treasurer has read-only access to accounting system reports and transactions The Finance Committee receives copies of the Trial Balance and detailed General Ledger on a quarterly basis. The Finance Committee receives the Balance Sheet and Income & Expense report for each quarter of the fiscal year. This is also sent to the full board for review. Reconciled bank statements are posted each month to verify that the account reconciled to zero without having any odd un-cleared items on the list. The quarterly summary of payroll expenses from the payroll company and the investment acct statements are posted

16 OTHER RRCA FINANCIAL OVERSIGHT PRACTICES Finance Committee members are encouraged to review the detailed GL to look for line items that are significantly over budget without any note justifying the expenses. They look for payments that exceed a couple thousand dollars that are written to an individual or a company that does not seem to fall in line with the budget or operating plan for the year. Finance Committee members are encouraged to review items during that seem irregular. Monthly American Express statements are posted for oversight and review. Reviews are documented via . The Finance Committee reviews the draft audited financial statements and has one-on-one conversations with auditors

17 NO AUDIT? CONSIDER INDEPENDENT REVIEW Engagement/Scope Contacted by President in December 2009 Scope - calendar years 2008/2009 Review focused on procedures and examining documentation not accuracy of financial information previously presented unless otherwise noted

18 INDEPENDENT REVIEW EXAMPLE Procedure Summary Process interview and review with Treasurer Trace financials to 2006 Vouch selected payments to supporting documentation Review bank reconciliation Trace building fund balances to financial records and review account activity Agree selected deposits from deposit detail to bank statements and visa-versa Agreed online check images to check register

19 INDEPENDENT REVIEW EXAMPLE Recommendations Improve cash controls Segregate collections (races/membership dues) Use the Race Reconciliation Template Dual signature on checks Limit balance in operating account Another Director review online bank activity Perform bank reconciliations on a timely basis Another Director could perform Print reconciliation report Provide detailed quarterly and annual financial review Include race analysis Recommended format

20 INDEPENDENT REVIEW EXAMPLE Recommendations (cont) Move accounting system to Quickbooks online Address accounting issues Write off old timing system Capitalize/depreciate new timing system Proper expense categorization Accounting for race change Adhere to policies No receipt/no reimbursement Board approval for RAW Wear purchases > $1,000 Do not pay Texas State sales tax

21 INDEPENDENT REVIEW EXAMPLE Recommendations (cont) Improve RAW Wear controls Improve record keeping Supporting receipts Acknowledgement/receipt of race change Formalize annual budget Committee/Process Document Job Description for Club Treasurer role Designate Assistant Treasurer

22 SARBANES-OXLEY It a federal crime for any organization nonprofit and for-profit to retaliate against a whistleblower that reports illegal activity A board approved whistleblower policy is required for nonprofit. The Act also forbids the purging of documents when an organization under investigation. Include a document retention/destruction policy. The RRCA Board of Directors has adopted a comprehensive Whistleblower Policy and Document Retention and Destruction Policy - both online

23 THE BUDGET

24 ESTABLISHING A BUDGET Start with the Goals, Mission & Vision of the Organization

25 SET A BASELINE Budget should match accounting system Set a timeframe Look at prior results Document assumptions Think about contingency plans for risk Event planning Accounting policies Accrual vs cash To capitalize or not Fund accounting Profit is a good thing

26 PROFITS & EXCESS CASH Accumulated profits building a large cash balance What to do with it? Start with the Mission & Vision Remember the club is a charity Plan for the future Keep a solid cash reserve Support the running community Buy/build a club house Be cautious with pet charities

27 MEASURE AGAINST THE BUDGET Financial Review Operating Statement Year to Date December 31, 2005 and Actual 2006 Actual 2006 Variance to Budget Budget Prior Year Proceeds Membership Dues $ 4, $ 5, $ 4, $ $ Donations Grocery Store RAW Wear Sales 2, , RAW Wear Purchases & Taxes 2, , Net Raw Wear Margin $ Race Fees & Donations 26, , , Race Expenses 11, , (335.56) Proceeds Donations 8, , Net Race Proceeds 6, , , , , NOTE 2 Total Net Proceeds 11, , , , , NOTE 3 Operating & Administrative Expenses Rent 4, , , Administrative (see Note 1 below) 3, , , , NOTE 4 Charitable Contribution 4, (300.00) (4,075.00) RRCA Membership Dues & Insurance 1, , , Total Operating & Administrative Expenses 13, , , (288.46) (2,667.88) Net Income (Loss) $ (1,181.60) $ 6, $ $ 6, $ 8, Note 1: Administrative expenses include club supplies, newsletter printing, postage office expenses, RRCA Convention and Banquet Costs. Note 2: Actual includes BITC, race support fees from the clock rentals, HDH and DT. Note 3: No proceeds distributed from DT. Note 4: Variance detail: Budget Actual Variance Banquet (810) Expense not planned. Other Costs 3,165 3,580 (415) New Tables - $243 Total 3,165 4,390 (1,225)

28 LOOK AT TRENDS OVER TIME Financial Review Race Analysis Bold in the Cold Preliminary Entry Fees $5, $5, $4, $4, $2, $2, Donations Gross Proceeds 5, , , , , , Awards/Giveaways 2, , , , (See Note) 1, (See Note) Food Promotion Race Management Proceeds Distribution Total Expenses 2, , , , , , Total Race Income/(Loss) 2, , , , , Note: The 2005 awards/giveaways includes award costs for 2006 as well and the coffee mugs given to each participant. CONSIDER A RACE DIRECTOR CODE OF ETHICS POLICY

29 INCOME/EXPENSE CATEGORIES Income: Membership dues Individual Family Club Sponsorship Program fees Beginning running Marathon training Youth running Contributions Race Income Entry Fees Sponsorships Donations Miscellaneous Income Expense: Program expenses Race expenses Permit fees Finisher awards Prize money Food Course management Club Management RRCA Membership Dues Insurance Rent Staff Club Events

30 USE AN ACCOUNTING SOFTWARE PACKAGE

31 REPORTING REQUIREMENTS 501(c)(3) organizations with gross revenue of over $25,000 a year are required to file a Form 990 (or Form 990-EZ) with the IRS each year. Organizations with gross revenue less than $25,000 are required to file the 990-n online. If an organization has unrelated business income from items like t-shirt sales you should pay the unrelated business income tax (UBIT) and local sales tax State/local income or business property taxes Payroll taxes for staff Form 1099 for independent contractors earning more than $500 per year Consult with a local auditor or accountant for questions. The RRCA does not file any tax forms, especially form 990, on behalf of our affiliates. Tax filings are the responsibility of each member club and event.