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Checks and Balances Financial Finesse

Checks and Balances Financial Finesse. Buck Crouch CFPIM, CIRM, CSCP, MBA. Session Agenda. Introductions Financial responsibility Financial status Handling chapter funds Miscellaneous . Introductions. Speaker Attendees: name, chapter, experience, and objectives. Buck Crouch.

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Checks and Balances Financial Finesse

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  1. Checks and BalancesFinancial Finesse Buck Crouch CFPIM, CIRM, CSCP, MBA Southwest District

  2. Session Agenda • Introductions • Financial responsibility • Financial status • Handling chapter funds • Miscellaneous  Southwest District

  3. Introductions • Speaker • Attendees: name, chapter, experience, and objectives Southwest District

  4. Buck Crouch • CFPIM, CIRM, CSCP, MBA • VP Finance - Tucson Chapter • Served on Tucson and San Diego BODs Southwest District

  5. Introductions • Speaker • Attendees: name, chapter, experience, and objectives Southwest District

  6. Financial Responsibility • Chapter board of directors financial responsibility • Appointing a chapter treasurer • Orienting new treasurers • Conflict of interest policy Southwest District

  7. Chapter Board of Directors Financial Responsibility • Stewardship • Compliance with regulations • Reporting to members Financial Responsibility Southwest District

  8. 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 Southwest District

  9. 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 Southwest District

  10. 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 Southwest District

  11. 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? Southwest District

  12. Nonprofit, Tax-Exempt,or Not-for-Profit? • Nonprofit – your state’s designation • Not-for-profit – slang • Tax-exempt – the IRS designation • None of these means “lose money.” • They all mean that your purpose isn’t to distribute profits to owners or members. Financial Status Southwest District

  13. 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 Southwest District

  14. 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 Southwest District

  15. 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 Southwest District

  16. 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 Southwest District

  17. Flow of Financial Information: Cash Receipts and Disbursements Income – Cash or Checks Invoices to be Paid Miscellaneous Transactions Bank Open Invoice File Cash Receipts Journal Cash Disbursement Journal General Journal General Ledger Financial Statements Handling Chapter Funds Southwest District

  18. 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 Southwest District

  19. 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 Southwest District

  20. “Keeping the Books” • Journals • Cash receipt journal • Cash disbursements journal • General journal • General ledger • Trial balance Handling Chapter Funds Southwest District

  21. 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 Southwest District

  22. 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 Southwest District

  23. 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. Southwest District

  24. Insurance for Volunteers • Volunteer Protection Act • Directors and officers (D&O) and general liability insurance • Scope of chapter insurance coverage provided by APICS Southwest District

  25. 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 Southwest District

  26. Directors and Officers and General Liability Insurance • Chapters need to carry insurance! • Directors and officers (D&O) picks up where the Volunteer Act lets off. • If you have employees, you need workers compensation insurance, too. Southwest District

  27. 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 Southwest District

  28. Calendar • 990 return • D&O Insurance • Audit or Financial review • Monthly Statements • Budget Southwest District

  29. Conclusion • Financial responsibility • Financial status • Handling chapter funds • Miscellaneous • Your questions ??? For more information: FINANCE/TREASURER CHAPTER LEADERSHIP HANDBOOK APICS Stock # 01003 Southwest District

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

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