Best Practices for Managing Your Region’s Financial Functions

1. Region Treasurer Training| 2018-2019 Best Practices for Managing Your Region’s Financial Functions Sue Murray, CPA, SIA Chief Operating & Financial Officer

2. Internal Financial Controls • Internal Controls are policies and procedures that are necessary to: • Protect the assets • Create reliable financial reporting • Compliance with laws and regulations • Facilitate effective and efficient operations

3. Procedures • Procedures should cover: • Handling of funds received & expended • Preparation of accurate and timely financial reports • Annual or bi-annual review/audit of financial statements

4. Why have Financial Internal Controls? • Provide members with assurance that money and assets are safe • Help identify a loss quickly to minimize damage • Reduces chances of fraud or theft • Protects our volunteers

5. Essential Internal Controls • Financial policies • Clear role definition • Segregation of duties • Internal financial controls • Handling cash • Bank reconciliation

6. Examples of Internal Financial Controls • Procedures to keep cash and checks safe • Issue financial reports on a regular basis • Annual operating budget approved by your Board • Segregation of duties • Officer review • Two signers on a bank account • Monthly reconciliation of the bank statement • Record retention policy

7. Financial Best Practices • Follow nonprofit best practices: • Clearly written policies & procedures • Transparency, accuracy & careful monitoring • Board & leadership understanding of financial reports • Avoid related party transactions • Periodic outside review by an independent professional

8. Financial Best Practices • Records and receipts for all income and expenses are maintained • All appropriate federal, state, local information returns are filed on time • Legal requirements for charitable registrations have been investigated and filed where required • Purchase D&O insurance (US & Canada)

9. Resources Available • Sample budget • Sample financial statements • Treasurer guidelines • Region audit procedures • Internal control checklist • 501(c)(3) Organizations information (U.S. only)

10. Risk Management

11. Insurance • General liability insurance • Directors & Officers insurance is required for all US and Canadian regions • Optional Crime coverage is available • A copy of all financial agreements over $10,000

12. Insurance Broker • Contact Michelle Evans at Affinity Nonprofits • Michelle.Evans@affinitynonprofits.com • 202-862-5398

13. 501(c)(3) filing requirements • File the 990 by the 15th day of the 5th month after the close of the fiscal year (i.e. 6/30 FYE is due no later than 11/15) • If revenues are less than $50,000 – file the 990N (e-Postcard) • If revenues are over $50,000 but less than $200,000 and total assets are less than $500,000 file Form 990EZ. • Revenues over $200,000 and assets over $500,000 - required to file Form 990.

14. Region Financial Reporting • Annual Financial Statements are due to headquarters by 10/31

15. Region Reporting • What is needed for Healthy Region financial review? • Statement of Financial Position a.k.a. a Balance Sheet (showing assets, liabilities & net worth) • Statement of Activities a.k.a. an Income Statement • Budget Report (some regions include this with the Income Statement) showing budget to actual results

16. Financial Criteria for Healthy Regions • Profitability level – should be positive (Revenues exceed expenses). If you have a deficit, you must have sufficient funds to cover the deficit. • # of months in unrestricted reserves – the ability to cover fixed expenses if revenue goals are not achieved; established an operating reserve to finance growth • Net asset balance – how much is restricted versus unrestricted? • Revenue dispersion – lower dependency by diversification of revenue streams

17. Questions • SueM@Soroptimist.org • 215-893-9000 x 126