Financial Management for State and Regionals: Best Practices for Busy Leaders Ari Kaufman, Associate Registrar for Operations – Berklee College of Music Chair, AACRAO State & Regional Relations Committee Treasurer, NEACRAO (New England) April 14, 2013

The Reality of Managing the Finances of a State or Regional ACRAO We have full-time jobs as Registrars, Admissions Officers and Enrollment Managers. Board members are almost always spread out in different locations. We are often friends with our fellow board members. Can we ask the hard questions? There is often no instruction manual to tell us all the things we should be doing.

The Reality of Managing the Finances of a State and Regional ACRAO It is often hard to find volunteers to serve the organization. Budgets are limited. Thus robust software for membership tracking is not always possible. State and Regional Presidents usually change from year to year. Cash basis accounting (instead of accrual based) is how we usually record activity.

What “Must” We Be Doing? Incorporation Insurance Receive invoices and pay them Send invoices and deposit checks Manage Bank Accounts Prepare Financial Reports for Meetings File Tax Forms

Incorporate ! Is your ACRAO Incorporated as a Nonprofit? Why is this crucial? Board Members avoid personal liability Tax exempt status Also… Donations received are tax-exempt Lower postage rates

Incorporate ! Keep your incorporation documents up-to-date and in a safe place. Find out how often they need to be renewed. Example: In Massachusetts, we need to file an annual renewal report each year which costs a small fee of $15.00

Insure your ACRAO Make sure you have general liability insurance to protect the assets of the organization against lawsuits due to such things as: Injuries at conferences Property Damage

Insurance Questions How much insurance should you carry? Are legal fees from a lawsuit covered? Should you have special liquor liability insurance? Other kinds of insurance?

Tax Forms Find out which of the three Tax Forms your organization should file annually: Form 990N ( < $50,000 in gross receipts) Form 990EZ ( < $200,000 in gross receipts and total assets < $500,000) Form 990 ( >= $200,000 in gross receipts and total assets >= $500,000)

Filing Tax Returns When is your ACRAO’s Fiscal Year End and when is your Annual Meeting ? If necessary you can get a extension Example: NEACRAO’s Fiscal Year End is June 30. Tax return is due on Nov 15. We ask for a 3 month extension so the tax return can be prepared

Using a Tax Accountant Using a CPA or other qualified tax preparer is a good idea

Day to Day Bookkeeping and Treasurer Duties you Must Do…. Pay outstanding invoices – keep copies of invoices Deposit checks Reconcile bank statements monthly and print out and keep copies of the reconciliations Document business purpose for every check written Update signers on your account each year Safeguarding your assets (check book, credit cards)

Bookkeeping and Treasurer Duties that Should Be Done…. Arrange for an periodic independent review Audit Committee (good) Independent Accountant (better) How often should this be done? Annually? At least once during each Treasurer’s term

Using an Independent Accountant Agreed Upon Procedures Can be tailor made to suit your organization Procedures Could Include: Reviewing a sample of cash disbursements Reviewing your internal controls Reviewing bank statements, reconciliations Reviewing a sample of cash receipts

Using an Audit Committee Members of the State or Regional would comprise this committee Same objectives as using an independent accountant, but less professional expertise How often should this independent review be done? How do you find volunteers for this?

Audit Committee and Board Asking the tough questions of your Treasurer can be interpersonally difficult You don’t enjoy putting people on the spot at a board or annual meeting What are some alternatives? Getting the financials to board members ahead of time and questions back to Treasurer ahead of meeting

Bookkeeping and Treasurer Duties that Should Be Done…. Follow-up with uncollected invoices (i.e. conference attendees that never sent in their checks.) Make deposits in a timely fashion Pay invoices / reimburse people within 30 days Send new membership renewal letters before the end of the current fiscal year

Bookkeeping and Treasurer Duties that Should Be Done…. Segregation of Duties The person receiving cash should not be the person recording the transaction. Access to the bank statement should be available to more than one person Two signatures for checks over a certain dollar amount System to ensure same invoice doesn’t get paid twice Minutes should be maintained Backup copies of accounting files

Bookkeeping and Treasurer Duties that Could Be Done…. Budgeting Preparing a Budget for the upcoming fiscal year Approving a Budget Reviewing underages and overages Why this is hard in a cash basis system What is the risk of not doing budgeting

Bookkeeping and Treasurer Duties that Would Be Done If… Membership Work Following up with each member that has not renewed their dues until a confirmed answer is received. Develop formal procedures to collect late dues. Soliciting new members - colleges in your state or region that are not currently members

Questions?