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Chapter  Board  Treasurers
 

Chapter Board Treasurers

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    Chapter  Board  Treasurers Chapter Board Treasurers Presentation Transcript

    • National Association of Social Workers Financial Management for Chapters Developed by the Administrative Division, Adapted by Chapter Services August 2002 NATIONAL ASSOCIATION OF SOCIAL WORKERS 1
    • Responsibilities of a Chapter Treasurer s Key volunteer financial manager s Reports on financial activity of chapter s Presents budget to the Board s Keeps full and accurate accounts of financial records s Source: Lang, Andrew, “Financial Responsibilities of Nonprofit Boards” NATIONAL ASSOCIATION OF SOCIAL WORKERS 2
    • Responsibilities of a Chapter Treasurer (cont’d) s Serves as a member of the Board of Directors. s Has signature registered with bank servicing chapter. s In collaboration with the chapter executive director and president, prepares the annual budget for presentation to the board. NATIONAL ASSOCIATION OF SOCIAL WORKERS 3
    • Responsibilities of a Chapter Treasurer (cont’d) s Provide information to the board regarding budgetary restrictions and budgetary restriction and alert the board when projects or programs are in danger of going over budget. s Propose cost cutting measures and budget increases based on knowledge of financial matters. NATIONAL ASSOCIATION OF SOCIAL WORKERS 4
    • Definitions of Key Terms The following key terms are defined: s Accounting s Asset and Liability s Budget Process s Credit and Debit s Revenue and Expense s Fiduciary NATIONAL ASSOCIATION OF SOCIAL WORKERS 5
    • Accounting s The art of recording, classifying, and summarizing in a significant manner, transactions and events of a financial character, and interpreting the results thereof. NATIONAL ASSOCIATION OF SOCIAL WORKERS 6
    • Asset s Anything of value that is owned. It may be physical in character, such as land, machinery, equipment, and cash. Assets may also be intangible, such as a legal claim or right against contributors or funders, generally called accounts receivable. NATIONAL ASSOCIATION OF SOCIAL WORKERS 7
    • Liability s A debt or an obligation owed by the chapter to its creditors. Examples include wages owed to employees, related withholding owed to tax agencies, and amounts owed to creditors, generally called accounts payable. NATIONAL ASSOCIATION OF SOCIAL WORKERS 8
    • Budget Process s A plan for what the chapter is hoping to achieve during a future predesignated period and how the dollar amounts will be distributed to achieve those goals and objectives. s A tool for monitoring financial activities during the budget period and help in managing the affairs of the chapter. NATIONAL ASSOCIATION OF SOCIAL WORKERS 9
    • Credit and Debit s Credit - one of the amounts in a double-entry accounting system. At least one component of every accounting transaction (journal entry) is a credit amount. Credits increase liabilities and equity and decrease assets. Credits are entered on the right-hand side of a two-column journal or ledger. s Debit -one of the amounts in a double-entry accounting system. At least one component of every accounting transaction (journal entry) is a debit amount. Debits increase assets and decrease liabilities and equity. Debits are entered on the left-hand side of a two-column journal or ledger. NATIONAL ASSOCIATION OF SOCIAL WORKERS 10
    • Revenue and Expense s Revenue - income for the chapter, such as membership dues, advertisements, fees, and interest earned. s Expense - represents an outflow of a chapter’s resources (not always cash) for operational costs for goods or services. NATIONAL ASSOCIATION OF SOCIAL WORKERS 11
    • Fiduciary s A person who serves or has the characteristics of a trustee with respect to the trust and confidence required for the position, institution, or fund. This person must also possess scrupulous good faith and candor. NATIONAL ASSOCIATION OF SOCIAL WORKERS 12
    • Fiscal Integrity s Taking those necessary steps to ensure that the chapter is financially sound in the short-term and plan wisely for the long-term s Some of those steps would include: – auditing financial management operations – establishing financial parameters – determining the soundness of insurance coverage. NATIONAL ASSOCIATION OF SOCIAL WORKERS 13
    • Double-Entry Basis of Accounting s When a debit is recorded, it must be offset by a credit because fundamental accounting principles require that debits (left) should equal credits (right) and that assets should equal liabilities plus fund balance. NATIONAL ASSOCIATION OF SOCIAL WORKERS 14
    • Double-Entry Accounting s DEBIT s CREDIT – Increases Assets – Decreases Assets – Decreases Liabilities – Increases & Deferred Income Liabilities & – Increases Expenses Deferred Income – Decreases Revenue – Increases Net Assets (fund balance) – Decreases Expenses – Increases Revenues (earned income) NATIONAL ASSOCIATION OF SOCIAL WORKERS 15
    • What is a Budget? s A plan of action for future financial activity usually expressed in dollars. s A tool to measure the financial commitments needed to support the activities necessary in reaching the chapter’s goals. s An important internal control mechanism that can alert management to changes in operating effectiveness. NATIONAL ASSOCIATION OF SOCIAL WORKERS 16
    • The Budgeting Process s Budgets are based s It is better to prepare on educated a budget on limited guesses; therefore cost data than not to the better your cost budget at all. history and Working with limited accounting system, data will allow you to the better your adjust your guesses about the projections. future. NATIONAL ASSOCIATION OF SOCIAL WORKERS 17
    • Steps in Preparing a Budget s Clarify the overall goals and objectives for the year. s Review the current year’s budget. s Identify expenditures that are not recurring every year. s Gain specific input from chapter board/committee chairs and staff. s Estimate expenses. NATIONAL ASSOCIATION OF SOCIAL WORKERS 18
    • Steps in Preparing a Budget (cont’d) s Estimate income and expenses. s Review and approve the proposed budget with the chapter board. s Monitor and make adjustments to the budget as necessary. s Use the budget as the basis for year-end reports. NATIONAL ASSOCIATION OF SOCIAL WORKERS 19
    • A Budget Should Be s based on the s a realistic chapter’s plan for assessment of future activities. the future s broken down into revenues and periods expenses corresponding to s actively those of the reviewed as the financial budget period statements progresses s based on s capable of being historical modified information NATIONAL ASSOCIATION OF SOCIAL WORKERS 20
    • A Budget Should Not Be s inflexible s a statement of s a guideline as to the hopes and the amount of aspirations of money that must the chapter be spent by a s the sole criterion certain year for accepting or s several pieces of rejecting an paper developed activity or each year to be expense item filed until next year NATIONAL ASSOCIATION OF SOCIAL WORKERS 21
    • Benefits of a Budget s Coordination: improves coordination among board and committees in a chapter s Communication: allows interchange of ideas and information to achieve mutual understanding NATIONAL ASSOCIATION OF SOCIAL WORKERS 22
    • Benefits of a Budget (cont’d) s Control: the difference or variances between actual results and budgeted amounts serve as feedback that enables management to improve performance through corrective action NATIONAL ASSOCIATION OF SOCIAL WORKERS 23
    • Statement of Financial Position s Assets – Cash in Bank $130,000 – Investments 50,000 – Accounts Receivable 25,000 s Other Assets – Prepaid expenses 1,000 – Investments 5,000 Total Assets $211,000 NATIONAL ASSOCIATION OF SOCIAL WORKERS 24
    • Liabilities, Deferred Revenue,and Net Assets s Liabilities – Accounts payable $30,000 – Payroll taxes 5,000 Current Liabilities – Other accrued expenses 1,000 – Total Current Liabilities $36,000 s Deferred revenue 150,000 – Membership dues 5,000 Long-term Liabilities – Subscriptions 2,500 – Credit Card program 2,500 s Total deferred revenue 160,000 s Total liabilities and deferred revenue 196,000 s Net Assets s Unrestricted 15,000 s Total liabilities, deferred revenue s and net assets $211,000 NATIONAL ASSOCIATION OF SOCIAL WORKERS 25
    • Cash Flow Analysis - s Allows chapters to identify and monitor resources available, resources needed to meet obligations as they become due, and excess cash that can be invested for short and/or long periods of time. NATIONAL ASSOCIATION OF SOCIAL WORKERS 26
    • Cash Flow Formula The formula for a cash flow budget is simple: s Cash balance, beginning $_________ s Plus cash received during month +_________ s = Cash available for the month = s Less cash disbursed during month - ________ s = Cash available, end of month =________ NATIONAL ASSOCIATION OF SOCIAL WORKERS 27
    • Regular Board Financial Review NATIONAL ASSOCIATION OF SOCIAL WORKERS 28
    • Factors to Consider When Reviewing Financial Information s Is the Chapter operating according to plan? – Is the strategic plan being followed? – Are the goals of the budget being met? s Are there a variety of income sources? – An entity with substantial income from a variety of sources is less likely to have trouble than one that gets the majority of its income from one source. – Has the cash flow from the sources of income been steady and dependable over a given period of time? s Are income and expenses exhibiting appropriate trends? – Are critical income sources growing or declining? – Are major expenses maintaining steady relationships to income? – Are dues and/or fees income increasing or decreasing? Why? NATIONAL ASSOCIATION OF SOCIAL WORKERS 29
    • Comparative Analysis s Most commonly used method of financial review s Figures must be provided for two different time periods for the same type of financial statement s Compare information for similar time periods s Be certain that information for all line items have been calculated the same way s Observe trends and determine: – Is this a positive or negative trend? – Are there related items whose trends should be considered? – Is some action warranted? NATIONAL ASSOCIATION OF SOCIAL WORKERS 30
    • Comparative Statement of Activities As of March 31, 2001 and March 31, 2002 Actual YTD YTD Mar ’02 March March Over/ 2001 2002 Under Mar ‘01 Budget Actual Budget Actual $ 90,218 $ 88,900 $94,204 $ 92,372 $3,427 Dues Revenue $ 80,985 $ 82,904 $93,483 $ 91,082 $8,178 Non-Dues Revenue Total Revenue $171,176 $171,804 $187,687 $183,454 $11,650 Total Expenses $169,185 $170,104 $186,612 $182,636 $12,532 Excess/(Deficit) $ 1,991 $ 1,700 $ 1,075 $ 818 $(882) NATIONAL ASSOCIATION OF SOCIAL WORKERS 31
    • Earned/Deferred Revenue for NASW Chapters NATIONAL ASSOCIATION OF SOCIAL WORKERS 32
    • The Accounting of Membership Dues Accounting for a Membership Dues Payment During the First Month of a Membership Cycle $166.00 NATIONAL ASSOCIATION OF SOCIAL WORKERS 33
    • The Accounting of Membership Dues Accounting for a Membership Dues Payment During the First Month of a Membership Cycle 3% $4.98 to Chapter Development Fund $166.00 NATIONAL ASSOCIATION OF SOCIAL WORKERS 34
    • The Accounting of Membership Dues Accounting for a Membership Dues Payment During the First Month of a Membership Cycle 3% $4.98 to Chapter Development $161.02 Fund $166.00 NATIONAL ASSOCIATION OF SOCIAL WORKERS 35
    • The Accounting of Membership Dues Accounting for a Membership Dues Payment During the First Month of a Membership Cycle $80.51 to Chapter 3% 50% $4.98 to Chapter Development $161.02 Fund $166.00 50% $80.51 to National Office NATIONAL ASSOCIATION OF SOCIAL WORKERS 36
    • The Accounting of Membership Dues Accounting for a Membership Dues Payment During the First Month of a Membership Cycle 1/12 $6.71 to Chapter Earned Income $80.51 to 11/12 Chapter $73.80 to 50% Chapter 3% Deferred Income $4.98 to Chapter Development $161.02 1/12 Fund $6.71 to National $166.00 50% Office $80.51 to Earned National Income Office 11/12 $73.80 to National Office Deferred Income NATIONAL ASSOCIATION OF SOCIAL WORKERS 37
    • Accounting for Earned and Deferred Income Deferred income Earned income J F M A M J J A S O N D 1/12 of cash payment $6.71 $ 6.71 $6.71 $6.71 $6.71 $6.71 $6.71 $6.71 $6.71 $6.71 $6.71 $6.71 Deferred income $73.80 $67.09 $60.38 $53.67 $46.96 $40.25 $33.54 $26.83 $20.12 $13.41 $6.71 $0.00 Earned income $6.71 $13.42 $20.13 $26.84 $33.55 $40.26 $46.97 $53.68 $60.39 $67.10 $73.81 $80.51 Earned/Deferred Earned/Deferred balances at end of balances at beginning of accounting period accounting period
    • Quiz - A Hypothetical Chapter s the chapter has three members s the dues are $120 annually s the chapter earns dues at the rate of 1/12 per month or $10 per month for each member s member A pays his dues in April member B pays her dues in May member C pays her dues in June s the fiscal year ends in June NATIONAL ASSOCIATION OF SOCIAL WORKERS 39
    • Quiz - How much cash did the chapter receive during the year? s A - $360 s B - $240 s C - $ 60 NATIONAL ASSOCIATION OF SOCIAL WORKERS 40
    • Quiz - How much did the chapter earn during the year? s A - $120 s B - $ 60 s C - $360 NATIONAL ASSOCIATION OF SOCIAL WORKERS 41
    • Quiz Answers Cash Received April May June Total Member A $120 $120 Member B $120 $120 Member C $120 $120 $120 $120 $120 $360 Earnings April May June Total Member A $10 $10 $10 $30 Member B $0 $10 $10 $20 Member C $0 $0 $10 $10 $10 $20 $30 $60 NATIONAL ASSOCIATION OF SOCIAL WORKERS 42
    • Chapter Rebates s The amount of a chapter’s rebate is not determined based solely on the number of members. The amount of a chapter’s rebate is determined based on the net effect of the following factors: Number of Members NATIONAL ASSOCIATION OF SOCIAL WORKERS 43
    • Chapter Rebates s The amount of a chapter’s rebate is not determined based solely on the number of members. The amount of a chapter’s rebate is determined based on the net effect of the following factors: Number of Members Mix of Member Categories NATIONAL ASSOCIATION OF SOCIAL WORKERS 44
    • Chapter Rebates s The number of members in the various categories is an important determinant in the amount of chapter dues revenue chapters actually will receive. Chapter Chapter Chapter A B C Category Rate Share # Members $ # Members $ # Members $ Full Regular $160 $77.60 75 $5,820 50 $3,880 25 $1,940 Transitional $80 $38.80 10 $388 25 $970 75 $2,910 Student $40 $19.40 15 $291 25 $485 25 $485 Total Members 100 100 125 Total Dollars $6,499 $5,335 $5,335 NATIONAL ASSOCIATION OF SOCIAL WORKERS 45
    • Chapter Rebates s The amount of a chapter’s rebate is not determined based solely on the number of members. The amount of a chapter’s rebate is determined based on the net effect of the following factors: Number of Members Mix of Member Categories Member Payment Patterns NATIONAL ASSOCIATION OF SOCIAL WORKERS 46
    • Chapter Rebates s Chapters actual revenue is a function of the number of members who actually pay, not the number of members. Chapter A Category Rate Share # Members Anticipated $ # Paying Members Actual $ Full Regular $160 $77.60 75 $5,820 60 $4,656 Transitional $80 $38.80 10 $388 9 $349 Student $40 $19.40 15 $291 12 $233 Total Members 100 81 Total Dollars $6,499 $5,238 NATIONAL ASSOCIATION OF SOCIAL WORKERS 47
    • Chapter Rebates s Chapters actual revenue is a function of the number of members who actually pay, not the number of members. Chapter B Category Rate Share # Members Anticipated $ # Paying Members Actual $ Full Regular $160 $77.60 75 $5,820 50 $3,880 Transitional $80 $38.80 10 $388 2 $78 Student $40 $19.40 15 $291 15 $291 Total Members 100 67 Total Dollars $6,499 $4,249 NATIONAL ASSOCIATION OF SOCIAL WORKERS 48
    • Chapter Rebates s The amount of a chapter’s rebate is not determined based solely on the number of members. The amount of a chapter’s rebate is determined based on the net effect of the following factors: Number of Members Mix of Member Member Categories Payment Cycle Member Payment Patterns NATIONAL ASSOCIATION OF SOCIAL WORKERS 49
    • Chapter Rebates s When members’ renewal date occurs impacts the flow of revenue to chapters. Jul Aug Sep Oct Nov Dec Total Chapter A 6 10 13 8 7 5 49 $466 $776 $1,009 $621 $543 $388 $3,802 Chapter B 5 12 8 13 5 6 49 $388 $931 $621 $1,009 $388 $466 $3,802 NATIONAL ASSOCIATION OF SOCIAL WORKERS 50
    • s Chapter Rebates The amount of a chapter’s rebate is not determined based solely on the number of members. The amount of a chapter’s rebate is determined based on the net effect of the following factors: Number of Inactive Members Number of Member Members Payment Cycle Mix of Member Categories Member Payment Patterns NATIONAL ASSOCIATION OF SOCIAL WORKERS 51
    • Chapter Rebates s Chapters’ anticipated revenue is reduced in direct relation to the number of inactive members Chapter B Category Rate Share # Members Anticipated $ # Paying Members Actual $ Full Regular $160 $77.60 75 $5,820 50 $3,880 Transitional $80 $38.80 10 $388 2 $78 Student $40 $19.40 15 $291 15 $291 Total Members 100 67 Total Dollars $6,499 $4,249 NATIONAL ASSOCIATION OF SOCIAL WORKERS 52
    • A Year in Review: Quarterly Fiduciary Responsibilities NATIONAL ASSOCIATION OF SOCIAL WORKERS 53
    • Fiduciary Responsibilities: First Quarter s Orient new board members to role in fiscal operating procedures. s Review chapter financial policies with new board s Board receives unaudited year end financial report s Board adopts charge to finance committee. NATIONAL ASSOCIATION OF SOCIAL WORKERS 54
    • Second Quarter s Audit and management letter presented by auditor or treasurer. s Board takes action to address concerns identified in management letter. s Has 990 tax form been filed? s Review quarterly report presented by Treasurer. Note any significant deviations from projections. NATIONAL ASSOCIATION OF SOCIAL WORKERS 55
    • Third Quarter s Review quarterly financial report by treasurer and note any significant deviation from projections. s What trends, if any, have developed during past six months? s Treasurer needs to review chapter’s budget development process and timetable. NATIONAL ASSOCIATION OF SOCIAL WORKERS 56
    • Fourth Quarter s Board reviews quarterly financial report presented by treasurer and note any significant deviations from projections. s Treasurer and finance committee should work with the executive director on cash flow and trends. s Treasurer presents the finance committee proposed budget. s Board reviews and adopts the budget. NATIONAL ASSOCIATION OF SOCIAL WORKERS 57
    • Questions and Answers NATIONAL ASSOCIATION OF SOCIAL WORKERS 58