2. 1 Jack R. Hott, Lifetime CPCM, CFCM, Fellow Central Ohio Chapter Date July 27, 2014 Time 8:00 am-9:00am Why it’s Always Important to Watch the Numbers

3. 2 Who’s Job is it to Watch the Chapter Financial Numbers? A.Chapter Treasurer B.Chapter President C.Chapter Leadership Team D.Chapter membership E.Sam and Angie on HQ staff F.All of the above G.Some of the above H.None of the above

4. 3 Duties of the Chapter Treasurer Responsible for managing the chapter’s treasury, the chapter treasurer is typically an elected position. The chapter treasurer’s duties include making deposits, paying bills, and making financial reports. It is important to rotate or change the individual holding the treasurer position each year or two as a measure against complacency or embezzlement. Also, the treasurer should not perform or oversee the annual audit in order to avoid a conflict of interest (e.g., auditing themselves).

5. 4 Other chapter treasurer duties typically include: Maintaining the chapter treasury and financial records; Obtaining and maintaining a Federal Tax ID number for the chapter; Receiving funds from activities and depositing these funds into the chapter’s bank account; Processing credit card payments (a credit card processing account can be set up with assistance from the national office); Producing and providing financial reports to the chapter board of directors each month; Working with chapter leadership team to prepare operating budget and tracking performance to budget Filing the annual financial report with the national office;annual financial reportnational office Absent an audit committee, identifying the individual to conduct the annual audit of the chapter’s financial records; and Working with the national office to obtain free Quicken accounting software.national office

6. 5 How do we watch the numbers? Solid cash and financial management practices

7. 6 Overview of the Cash Management Function Safeguard assets. Deposit funds. Pay bills. Maintain records. Prepare budget. Prepare and submit reports The job is straightforward, but the responsibility and accountability are significant.

8. 7 Safeguard Assets Separation of duties is essential. –Person receiving funds should not be the same person that deposits it or accounts for it. Registrar –Receives the funds on site. –Records who paid what when, and in what form (cash, check, credit card). –Retains a copy of the receipts record. –Signs over funds to Treasurer. Treasurer –Deposits funds in bank. –Records deposits in ledger. –Retains deposit slips in accounting records.

9. 8 Deposit Funds Resist the temptation to “launder” funds. Deposit exactly what you receive. Do not write a personal check to cover cash. Do not use cash received to pay expenses – use checks. Deposit slips should specify amounts for checks and cash. Credit card receipts are deposited directly to your bank account

10. 9 Use of Credit Cards Important to have a credit card processing option Some companies and agencies can only pay for training with a credit card –Used for NES, webinars, seminars, dinner meetings, golf tournaments Can accept company and personal credit cards for payments Credit card receipts are deposited directly to your bank account Have a chapter policy on issuing credit card refunds HQ can assist in recommending a merchant account provider –Remember different providers have different fee structures so need to determine how and how often your chapter will accept credit card payments WorldPay, PayPal, registration company are among the options

11. 10 Use of PayPal Easy to set up, affordable, convenient Allows for Prepayment for Chapter events –Decision to attend made/confirmed Accommodates planning and guarantees –Fee deposited into Chapter’s PayPal account Accommodates government purchase card Accommodates debit and credit cards Payment to vendors facilitated –Chapter may have a no refund policy due to fee charged

12. 11 is a way to send and receive money over the Internet Is great for… –Advance payments –Facilitates early registration –Captures funds into Chapter PayPal account –No need for payer to have a PayPal account –Email notices sent to designated account representative –Making payment to vendors accepting PayPal But… –Money sits in PayPal account until transferred to Chapter bank account –Transaction fee higher than Square 11

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14. 13 Use of “Square” Easy to set up, affordable, and convenient Accommodates payment at the Event –Decision to attend last minute Deposits are direct into Chapter’s account –Accommodates debit and credit cards Sends receipt to Chapter and Attendee –Can’t be used to pay vendors –No penalty for “no show” (unless publicized)

15. 14 is a way to accept credit/ debit cards Is great for… –Payments at the door –Facilitates walk-in registration –Captures funds directly to Chapter bank account –No need for payer to have a Square account –Receipts can be sent to card holder via email at time of payment –Email notices sent to designated account representative But… –Reader can be sensitive / single point of failure –Requires internet connection at site –Single reader supplied with account initiation 14

16. Collection of Chapter Registration Funds via…PayPal and Square Both accommodate Chapter events Both are convenient Both are affordable Each provides a useful payment alternative Valuable Chapter tools

17. 16 Pay Bills Always obtain and retain documentation (ie. invoice). Pay timely to avoid damaging NCMA’s stellar credit rating. Pay via check, credit card or PayPal. Have a policy and procedure in place for approving expenditures. What can individual officer spend w/o higher approval? Who approves expenditures? President? Board? At what levels? Chapter may obtain credit cards or debit cards for its officers. –Warning: This creates risk! NCMA highly discourages this step

18. 17 Maintain Records Check Register – (includes both cash receipts and disbursements) Bank Statements and Reconciliations Monthly Financial Reports – (original to chapter board) Supporting documentation for all income and bank deposits – (e.g. registration lists for paid chapter events reconciled to deposit) Supporting documentation for all payments – (e.g. invoices, expense claims) Chapters are encouraged to use Quicken (provided at no cost by NCMA). Annual Financial Report – (Original sent to National) Annual Audit Report – (Original sent to National) Chapter Property – (purchase, disposal, assigned to) –Establish a chain of custody procedure for year end transfer

19. 18 Establish a Budget A simple forecast of income and expenses. Time phase so you understand your cash flow month-to- month. Monitor progress against budget periodically, and revise forecasts. –Set up process for approval of expenses outside of the approved budget BEFORE the expenditure is incurred –Set up a process for approval of authorized expenses Should be developed with the leadership team as part of annual planning process. Sample budget template on Chapter SharePoint tab of the NCMA Resources page

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21. 20 Prepare and Submit Reports Statement of activities (income statement) must be provided to the chapter’s board each month in a timely manner. Statement of financial position (balance sheet) can be produced less frequently. Chapter Annual Report, including financial report and audit report as attachments, must be submitted to NCMA by August 31. –Report to cover the fiscal period July 1 – June 30 –Important to meet deadline in order to be included in the National Office Group Tax Return.

22. 21 Refunds Issue refunds in the same way that the funds are received. Do not refund a credit card payment via check. You can refund cash via check. Have a NO SHOW Policy! Let the chapter know you have one! Enforce it!

23. 22 Taxes Chapter is a subordinate organization covered under IRS group ruling issued to NCMA. As a 501(c)(6) organization we are normally exempt from federal income taxes. Exception – Unrelated Business Income Tax – e.g. advertising revenue. Chapters should have their own Federal Identification Number, contact National Office for assistance. –Obtained by filing Federal Form SS-4. If contacted by IRS regarding tax audit, filings, or request for information: refer to National Office (CFO).

24. 23 Taxes NCMA pays sales tax Chapters often ask national for a tax exempt certificate to use at hotels and restaurants –We can provide a copy of the IRS letter indicating that NCMA is a 501 © 6 –Payment of sales tax is controlled by each state entity –Vendors may or may not decide to charge sales tax Not within NCMA control

25. 24 Chapter Audits (NCMA Policy 5-7) Chapters shall conduct an audit of their financial records each year. An independent person, who is not a chapter officer or was otherwise involved in the financial management of the chapter during the period being audited, must conduct the audit. The auditor can be any person who has the skills necessary to conduct the audit (professional audit firms are not required). The audit shall address all items specified in NCMA’s “Chapter Financial Audit Form”, found on the Chapter Resources SharePoint page An audit report shall be submitted to the chapter president and the NCMA Chief Financial Officer by August 31 (attached to Chapter Annual Report)

26. 25 Red Flags: Signs of Trouble Financial reports not presented to chapter board of directors each month. Financial reports not submitted to national on time at end of year. Bills not being paid on time. Checks not being deposited timely. Treasurer not returning calls, emails or attending board meetings. Unexpected reductions in bank balances. Avoiding or not cooperating with annual audit. Insistence on remaining treasurer year after year A review of the year end chapter financials shows unusual/non- recurring/material items or expenses exceeding those expected at that revenue level; unusually low revenue levels. “No” answers on the audit checklist on selected questions. NCMA HQ awareness of internal issues at the chapter including information provided to NCMA HQ by chapter members or chapter event attendees.

27. 26 National Office Audit of Chapter Records NCMA now conducting random audits of chapter financial records Chapters can be selected at random, or audit can be based on the red flags Audit conducted by NCMA CFO Chapters can request a CFO audit

28. 27 For further assistance Mr. Sam Smith, CPA NCMA Chief Financial Officer 800/344-8096 x1104 ssmith@ncmahq.org

29. 28 Other accounting and financial assistance: Angie Kays Staff Accountant 571.382.1122 akays@ncmahq.org Mary Beth Lech Chapter Relations Manager 571.382.1119 mlech@ncmahq.org

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31. 30 Pay Pal backup

32. 31 PayPal -- Few Simple Steps Sign up for a PayPal nonprofit business account One day later, log in to your new PayPal account and submit the following through the Resolution Center: –Evidence of your nonprofit’s tax-exempt status (sample: http://resources.ncmahq.org/chapters/rtp/Shared%20Documen ts/Forms/AllItems.aspx) http://resources.ncmahq.org/chapters/rtp/Shared%20Documen ts/Forms/AllItems.aspx –A bank statement or a voided check in your organization’s name –Your organization’s PayPal email account and contact information –A description of your organization and the type of payments it wants to accept through PayPal (such as payments for meetings, events, and fees…AKA Statement of Need (sample included in link))

33. 32 Once PayPal Account Established… Log into your PayPal account Setup and create payment button Copy and paste the code into Chapter’s website – no programming expertise required No credit application; no monthly fees Only pay when you receive funds Fee per Transaction –$0 - $3K: 2.9% + $0.30 Conference Registration: $60.00-($2.04 + $0.30 = $2.34)= $57.96 Monthly Meeting: $10.00-($0.29 + $0.30 = $0.59)= $9.41 –Greater than $3K<$10K = 2.5%; over 2.2% both +$0.30

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37. 36 Square -- Few Simple Steps Sign up for a Square business account –Enter an email address and create a password –Need Federal Tax ID number for the Chapter –Input shipping address for receipt of card reader Arrives in approximately one week –Answer questions for identity –Enter bank account information for deposits –FAQs: https://squareup.com/help/en-us/https://squareup.com/help/en-us/

38. 37 Once Square Account Established and Reader is received… Connect Reader to Smart Phone or iPad Log into your Square application (email and password) Start swiping! No credit application; no monthly fees Only pay when you receive funds Flat 2.75% fee per transaction –Conference Registration: $60.00 - $1.65 = $58.35 –Monthly Meeting: $10.00 - $0.28 = $9.72

39. 38 Receipt of Payment Email Notification From: Square To: abrigida Sent: Thu, Oct 11, 2012 5:43 pm Subject: Square Payment #h8AdUutJjlEwVRN0zGBnoreply@messaging.squareup.comabrigida@aol.com Hello, National Contract Management Association, RTP Chapter. You accepted $10.00 from a card ending in 7581. You can see more about this payment at https://squareup.com/payment/h8AdUutJjlEwVRN0zGB https://squareup.com/payment/h8AdUutJjlEwVRN0zGB As of this payment, your Square balance is $34.03. Thank you! https://squareup.com/ 38

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