Financial Management for Geographic Units

Financial Management – August Reporting Overview l The efforts of the all the Geographic Unit officers is appreciated l As of 1 July 2006, 96% of the financial reports (437) have been submitted for review Thank you for your continued efforts

Financial Management – August 2006 IEEE Financial Management l IEEE is responsible for maintaining records for all units worldwide l Compliance with IEEE Policies is important; in particular to IEEE maintaining the Institute’s nonprofit tax-exempt status in the US l IEEE is incorporated in New York State & must comply with both State & US rules and regulations l IEEE’s Fiscal Year is the calendar year (1 January through 31 December) l Updated controls were established in 2005 to ensure that the interests of the IEEE, its units and their officers are protected

Financial Management – August 2006 IEEE Financial Management Geographic Units l Funds for geographic unit activities come directly & mostly from member dues l Treasurers & Section leaders make significant contributions to IEEE’s financial management by maintaining appropriate records & timely annual financial reporting l IEEE Geographic Units are not independent organizations but are essential components of IEEE l Subsections, Chapters & Affinity Groups are sub-units of Sections & their financial activities should be incorporated in the Section’s financials (L-50) l Geographic unit operations & reporting are to be based on the calendar year

Financial Management – August 2006 Exemption from US Federal Income Tax l The IRS has determined that IEEE is exempt from US federal income tax as an organization, described in Section 501(c)(3) of the Internal Revenue Code l In a group ruling, the IRS has determined that IEEE’s US geographic units qualify for federal income tax exemption l No unit should separately apply to the IRS for exemption from US Federal Income Tax l Should any Unit be requested to apply by the IRS, contact the IEEE Tax Compliance staff immediately

Financial Management – August 2006 l All units must prepare & submit an annual Financial Report (L-50) l Electronic submittal recommended (use Excel spreadsheet) l or l Hard copy submittal allowed l Account for all financial activity associated with the unit (revenue & expenses) l Include all unit & subunit data l One L-50 preferred or l Include an L-50 for each subunit l For questions: Unit Financial Reporting

Financial Management – August 2006 l Provide a listing of payments to individuals & unincorporated businesses during the year for services rendered, awards, grants, honorariums, and prizes. l Not required for scholarships and fellowships or for expense reimbursements. l Record the Name – Address – Amount of all payments to Individuals l Information must be provided to Tax Dept at Year end so IRS Form1099 can be issued for US persons or IRS Form 1042 can be issued for non US persons l For questions: Unit Financial Reporting

Financial Management – August 2006 l Bank Information will be collected yearly. l Bank Account Disclosure Form - Account Numbers - Account Singers - Address of Bank l Why? IEEE Auditors might contact your Financial Institution to Confirm Balances l For questions: Unit Financial Reporting

Protection of Funds

Financial Management – August 2006 Heightened Awareness of Corporate Financial Activities l Evidence of this is in the news weekly, even daily l Major changes in corporate financial management processes are being made in response l IEEE is a large corporation & annually must consolidate all of its units’ financial activities into a single financial report; IEEE retains an external auditor to audit its annual financial activities l IEEE recently selected Ernst & Young (E&Y) as its external auditor & IEEE financial activities are being reviewed l E&Y required in 2005 that IEEE consolidate all Section financial activity; Section reserves for 2004 totaled US$14.2 million l We expect E&Y to conduct a bank account balance confirmation process for external accounts every year using information from Bank Account Disclosure Form Information

Financial Management – August 2006 How is IEEE Addressing This for Geographic Units? l IEEE wants to ensure that the corporation, the units & unit officers are protected l To do this, we must ensure that all IEEE Organizational Units are empowered & expected to follow a set of sound financial practices l A volunteer & staff team in RAB is continuing a review of the financial processes of all geographic units l Regional Treasurers are being kept current on progress & provide valuable suggestions & feedback l To this end, Regional Activities has implemented a series of best business practices that are common place in many organizations worldwide l We expect that many of the practices are already included as part of the Sections’ current financial management processes

Financial Management – August 2006 Basic Asset Fund & Cash Controls l Review unit expenses – check register l Review monthly account activity l Submit original bank statements l Bank account signature cards l Annual audit process l Continuity/Volunteer transition

Financial Management – August 2006 Review Unit Expenses – Check Register l Treasurer presents the Section/Chapter check register(s) to the Section ExCom on a periodic basis l Present check register at least 2 times per year l Check register includes: name, date, amount, budget line & purpose for each transaction (for example, expense reimbursement, services provided, etc.) l Request review & approval of check register report l Why? l Independent review of expenses l Ensure Section ExCom is informed & approves unit expenses

Financial Management – August 2006 Review Monthly Account Activity l Section Chair & Treasurer periodically review the original monthly statements of account & compare to recent financial report l Treasurers should be reconciling account activity monthly l Chair/Treasurer receive reminders via SCOOP l Why? l Good practice for unit leaders to review account activity l Emphasize that more than one person has oversight of the financial records

Financial Management – August 2006 Submit Original Bank Statements l Original bank statements for all local accounts (Sections, Chapters, Affinity Groups) must be submitted with the annual financial report (L-50) wherever possible l Section officers may be asked to provide assistance in securing verification of account balances by E&Y or IEEE staff l Why? l To protect the integrity of the bank account information reported annually l Independent confirmation (verification) is required for annual IEEE Audit Note: Not required for Concentration Banking & IEEE Investment Fund participant accounts

Financial Management – August 2006 Bank Account Signature Cards l Units submit signature/bank account card, signed by all authorized unit officers, to IEEE for the required staff signature & directly to bank l Signature Cards are returned directly to the bank with copy to unit officers Why? l Ensure that appropriate authorized signers & accurate signatures are on all accounts l Protection of IEEE assets l Protection of unit Treasurer, Chair & unit ExCom

Financial Management – August 2006 Annual Audits l Ensure that all geographic units conduct local audits on an annual basis l Units that have $100K or more revenue or expenses must continue to have a more formal audit l 18 Geo Units audited based on 2005 financial activities l Getting Started l Implement a process to ensure audits are conducted by local volunteers l Regional Activities has provided materials to help local volunteers conduct an audit – this material is available via SCS web page “Treasurer Best Practices” l Units may be audited as part of the IEEE corporate audit process l E&Y may confirm account balances in local banks used by Sections for financial transactions l Why? l Required for annual IEEE corporate audit l Protection of unit Treasurer, Chair & unit ExCom

Financial Management – August 2006 Continuity & Volunteer Transition l Both outgoing & incoming Section Chairs/ Treasurers sign off on annual L-50 financial report l Process began with 2005 financial report & will continue l Why? l Ensures the smooth transition of officers & mutual understanding of the unit’s financial status by both sets of officers l Protection for both outgoing & incoming Volunteer Officers

Financial Management – August 2006 Recent Modifications l Complete & submit external bank account disclosure form to facilitate possible E&Y requirements l Submit original bank statements for local accounts whenever possible l Submit Conflict Of Interest Forms (Treasurer/Chair) l Signed by outgoing & incoming Section Chairs & Treasurers l To ensure that consolidation can be completed in a timely manner, L-50s are to be submitted by 31 March 2006

Financial Management – August 2006 Summary l Bi-annually: l Review check register l Monthly: l Review accounts l Annually: l Review & update bank signature cards l Conduct local Section audit l Assist in IEEE Audit if requested l Consider Concentration Banking program/ custody account l Easiest way to be compliant with most of the IEEE processes & policies

Financial Management – August 2006 Expected Timeline l September 2006 l Bank Account Disclosure form to be updated & made available to geo units l Unit Treasurers are requested to complete and return as soon as possible but no later than 15 January 2007 l November 2006 l Distribute reminder regarding the collection of taxable payments to individuals l Unit Treasurers are requested to provide information as soon as possible but no later than 15 January 2007 l December 2006 l Financial Report to be updated & made available

Financial Management – August Deadlines l 15 January 2007 l Deadline for providing the list of individuals who received payments in 2006 l Deadline for submission of completed bank account disclosure form for each unit account (including Chapter/Affinity Groups) l 24 February 2007 l Submit completed financial report for 10% bonus l 31 March 2007 l Submit completed financial report for to get rebate

Financial Management – August 2006 Assistance is Available l IEEE Treasurers’ Handbook l l IEEE Policy Manual l l Section 11 addresses financial management issues to be addressed by Chairs & Treasurers l IEEE Financial Operations Manual l nual.pdf l