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CIL Financial Management

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CIL-NET Presents CIL Financial Management Presented by: Melissa & Tim Glisson September 21-22, 2010 * CIL-NET at ILRU CIL-NET at ILRU CIL-NET at ILRU CIL-NET at ... – PowerPoint PPT presentation

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Title: CIL Financial Management


1
CIL-NET Presents
  • CIL Financial Management
  • Presented by
  • Melissa Tim Glisson
  • September 21-22, 2010

2
Introduction - I
The applicant will practice sound fiscal
management Rehab. Act Sec. 725 Standards
Assurances
3
Introduction - II
  • Transparency
  • Accountability
  • ARE KEY !

4
Introduction - III
  • Systems Must Provide
  • Accurate
  • Current
  • Complete Disclosure
  • (OMB A 110)

5
Three Objectives of Financial Management
  • Effective Efficient Operations- You
  • Reliable Financial Reporting- Public
  • Regulatory Compliance- Law

6
Everyone Needs The Basics
  • Board of Directors
  • Executive Director Fiscal Staff
  • Leadership Team
  • Staff

7
Efficient Accounting System
  • User System Friendly
  • Meets Needs of Agency
  • GAAP
  • Fulfills Reporting Requirements

8
Four Money Matters - I
  • Federal funds ONLY for expenditures and
    activities described in goals objectives of
    approved contract.

9
Four Money Matters - II
  • 2. Fiscal control accounting procedures must
    ensure proper disbursement of, and accounting
    for, federal funds.

10
Four Money Matters - III
  • When In DoubtCheck It Out
  • .Get it in Writing!!

11
Four Money Matters - IV
  • Relationships are Critical!
  • Make Them
  • Maintain Them
  • Use Them

12
Chapter One
  • Board of Directors
  • The Governing Body

13
Three Governing Functions
  • Preserve Integrity of the Trust
  • Set Policy
  • Support Promote Organization

14
Preserve Integrity of the TrustOversee / True to
Mission
  • Consumer Control
  • Systems Individual Advocacy
  • Services for All
  • Civil Rights Orientation

15
Question

How does preserving the integrity of the trust
relate to fiscal management?
16
Set Policy
  • Operational decisions
  • Creating fiscal accounting policies to
  • protect assets assure viability
  • Endowment decisions
  • Purchase, sale, or lease of property

17
Support Promote the CIL
  • Agency Ambassadors
  • Community Networking
  • Time, Talent Treasure

18
Board Structure Committees
  • Ad Hoc Committees
  • Standing Committees

19
Ad Hoc Committees
  • Short term
  • Specific task
  • e.g. Executive search, policy, building,
    fundraising
  • Board or non-board members
  • Report to full board

20
Standing Committees
  • Long term
  • Meet regularly
  • Ongoing issues
  • Report to the full board
  • Board members with staff advisory

21
Standing Committees, contd.
  • Executive Committee
  • Program Committee
  • Nominating Committee
  • Development Committee
  • Finance Committee

22
Finance Committee
  • Board members, Treasurer
  • Works with CFO ED
  • Liaison with Auditor
  • Key role in CIL budget policies
  • Reviews monthly financial reports

23
Board of Directors
  • A Board of Directors, by both law and
    organizing documents, is legally liable and
    responsible for ALL CIL Fiduciary Matters!

CIL-NET at ILRU
24
Chapter Two Part I
  • Accounting Basics
  • Regulatory Agencies

25
Why the Basics?
  • Develop and understand budgets
  • Read financial statements
  • Understand contract obligations
  • Respond appropriately to funders

26
What are the Basics?
  • Accrual Basis of Accounting
  • Cash Basis of Accounting
  • Accounting Procedures Manual
  • Allocable
  • Allowable
  • Audit Opinion Clean
  • Cognizant Federal Agency
  • GAAP

27
What are the Basics?, contd.
  • Internal Controls
  • Notes to Financial Statements
  • Operating Budget / Annual Budget
  • Program Budget
  • Program Income
  • Revenue /Expenses
  • Overhead / Indirect costs

28
Non-Profit Accounting vs.For Profit Accounting
  • Meet a social need, NOT to make
  • Heightened Accountability Stewardship
  • Managing of cash balances is essential
  • Donations Fundraising
  • Grant Administration ( ie. Allowable)

29
Regulatory Agencies
State Law
The Act
State Law
34 CFR
364 - 366
EDGAR
74, 75, 77, 82
OMB Circulars
A-110, A-122 A-133
FASB GAAP
30
Chapter Two Part II
  • Fiscal Regulations
  • Cost Allocation Plans

31
CIL Funding
  • Title VII Funding
  • For CILs
  • Title VII Part C
  • General operating to fulfill Sec. 725 The Act
  • Title VII Part B
  • Specific activities to fulfill Sec. 713 The Act

32
Fiscal Regulations
  • CAN WE DO THIS ?
  • MUST WE DO THAT ?
  • Where Do We Look?
  • Why or Why Not?

33
EDGAREducation Department General Administrative
Regulations
  • Part 74 Uniform Administrative
    Requirements
  • Part 75 Federal Grant Programs
  • Part 77 Federal Grant Definitions
  • Part 82 Lobbying Advocacy for D.O.E.
    grantees

33
34
EDGAR 74 - I
  • Uniform Administrative Requirements
  • Standards for Financial Management
  • Program Income Accounting
  • Written Procedures
  • OMB 122 Compliance
  • Record Retention
  • Required filings

34
35
EDGAR 74 - II
  • Financial Management Systems
  • Accurate
  • Current
  • Complete Disclosure
  • Source Documentation - where what

35
36
EDGAR 74 - III
  • Allowable Uses of Program Income
  • Used to further project or program
  • Used to finance non-Federal share
  • Deducted from total allowable costs

36
37
EDGAR 74 - IV
  • Requires written procedures for determining
  • Reasonableness
  • Allocability (Cost Allocation Plan)
  • Allowability

37
38
EDGAR 75
  • Application Notice
  • Selection Procedures
  • Conflict of Interest
  • Use of Consultants
  • More later ...

38
39
OMB Circulars
  • A 110 Uniform Administrative
    Requirements
  • A 122 Cost Principles
  • A 133 Independent Audits

39
40
OMB Circular A-110 Uniform Administrative
Requirements
  • Standards for Financial Management
  • Systems
  • Award payment
  • Cost Sharing or Matching
  • Procurement procedure
  • Financial reporting

41
OMB Circular A-122 Cost Principles - I
  • Determine costs of the award so
  • Grant is managed properly
  • Govt pays its fair share
  • Money is spent legally


41
42
OMB Circular A-122 Cost Principles - II
  • Allowable
  • Allocable
  • Reasonable

43
OMB Circular A-122 Cost Principles - III
  • Allocable Allowable does not mean
  • Reimbursement!!
  • HMMM. The Fun Begins!

44
OMB Circular A-122 Cost Principles - IV
  • Costs are Allowable if
  • Reasonable for the awards performance
  • Adequately documented
  • Consistent
  • In accordance with GAAP
  • Conform to cost limitations / exclusions
  • Time frame appropriate to contract

44
45
OMB Circular A-122 Cost Principles - V
  • Reasonable
  • Costs incurred with proper consideration of the
    circumstances prevailing at the time.

46
OMB Circular A-122 Cost Principles - VI
  • Consider these when making judgments about
    reasonableness
  • Prevailing circumstances
  • Ordinary necessary
  • Laws contracts
  • Responsible and prudent

47
OMB Circular A-122 Cost Principles - VII
  • Allocable
  • Process of assigning a cost, or group of costs,
    to one or more cost objectives, in realistic
    proportion to the benefit provided or other
    equitable relationship.

47
48
OMB Circular A-122 Cost Principles - VIII
  • Direct Cost
  • Can be identified specifically to a final cost
    objective.
  • Project
  • Service
  • Direct activity


48
49
OMB Circular A-122 Cost Principles - IX
Indirect Costs Incurred for common cost
objectives, not assigned to specific cost
objectives.

49
50
OMB Circular A-122 Cost Allocation Plan - I
  • Cost Allocation Plan (CAP)
  • EDGAR 74.21 OMB A-110, A-122 (approved by
    Cognizant Agency)
  • Designed to provide that the Federal Government
    bear its fair share of the costs except where
    restricted or prohibited by law
  • Financial blueprint for agency

50
51
OMB Circular A-122 Cost Allocation Plan - II
  • Methods
  • Simplified Allocation (Indirect Cost Rate)
  • Special Indirect Cost Rate
  • Multiple Allocation Base
  • Direct Allocation

51
52
OMB Circular A-122 Cost Allocation Plan - III
  • Direct Allocation Method
  • Treats all costs as direct except general
    administration general expenses.
  • Most commonly used by CILs
  • Model CAP Appendix G Financial Management Manual

52
53
OMB Circular A-122 Cost Allocation Plan - IV
Costs Direct charged specifically (staff
salaries, supplies, etc.) Joint costs shared
prorated as direct costs to programs (telephone,
facilities, ISP, etc.) Indirect general
administrative general expenses (ED salary,
marketing, etc.)
54
OMB Circular A-122 Cost Allocation Plan - V
  • Cost Computation
  • Ratio of salaries
  • Ratio of FTEs
  • Ratio of program expenses
  • Ratio of program square footage

54
55
OMB Circular A-122 Cost Allocation Plan - VI
  • Supporting Documentation
  • Itemized invoices
  • Time sheets (after the fact)
  • Payroll registers
  • Check register
  • etc.
  • See Appendix L for sample time-sheet

55
56
OMB Circular A-122 Cost Allocation Plan - VII
  • Benefits of CAP
  • Public image
  • Management tool
  • Accurate picture
  • Budget process realistic
  • True costs for services

56
57
Chapters Three Four
  • Business Office Structure
  • Financial Statements

58
Business Office Goal
To Operate with Efficient and Effective Administr
ative Structures
59
Business Office Options
  • Service Bureau
  • Accounting or bookkeeping company performs this
    service for small businesses.
  • Consultant
  • Contracting with CPA or Qualified Person

60
Business Office Options, contd.
  • Collaboration
  • Purchasing services from a non-profit with a
    written service agreement.
  • Administrative Service Organization
  • Collaborate create an organization to provide
    accounting for agencies.

61
Business Office

See Fiscal Staff Job Descriptions
Appendix B
62
Financial Statements
  • Monthly Statements
  • Income Statements

63
FASB 117 Financial Statements
  • Financial Position
  • Activities
  • Functional Expenses
  • Cash Flows
  • Financial Disclosures

63
64
Key Considerations
  • Conform to format of budget
  • Comparison YTD budget
  • Actual and budget
  • Generated monthly (not quarterly)
  • Accurate and timely

65
Review/Analysis
  • Fiscal office prepares statements
  • Review statements with ED
  • Present to Finance Committee
  • Board Treasurer presents to Board
  • Board accepts (or amends or rejects)

66
Questions Worth Asking
  1. Anything unusual/suspicious?
  2. Any significant adjustments?
  3. Anything under/over budget?
  4. Any unusual expenses?
  5. Cash flow to date?
  6. Any up-coming events?
  7. Contract obligations?

67
Notes to Financial Statements
  • Any significant variance should be explained
  • 10 - 15
  • Notes located in the statement
  • Explanations may include
  • Charitable gifts
  • Unanticipated surplus/deficit
  • Vacant positions, program start delays, etc.

68
General Ledger
  • ? Book of final entry summarizing all of
    company's financial transactions, through
    offsetting debit and credit accounts.
  • ? Garbage in, garbage out
  • statements are only as reliable as the
    information used to generate them.
  • ? Helps to explain finances in a way anyone can
    understand
  • ? Sample code listing in Appendix C

69
Monthly Income Statement
Annual Revenue Actual
Balance Variance Budget
Office of Mental Health Homestead PDG SSI /
PA Employment Revenue RPSHP Tioga County Medicaid
Income Shelter Plus Care Aging Youth Probation
Corrections University Madison County Welch
Terrace HUD ( SROs) Rep Payee Revenue Miscellaneou
s Revenue Total Revenue
1,009,725 199,392 383,224 77,486 207,639 243,984 8
27,238 473,460 55,284 178,104 13,313 178,261 39,34
7 86,458 117,231 30,146 4,120,292
1,1139,841 0 451,363 76,263 219,058 248,805 851,56
1 433,324 45,755 173,159 14,167 178,343 41,268 119
,792 109,167 2,974 4,104,840
(130,116) 199,392 (68,139) 1,223 (11,419) (4,821
) (24,323) 40,136 9,529 4,945 (854) (82) (1,921) (
33,334) 8,064 27,172 15,452
2,735,618 0 1,083,271 183,032 525,741 597,133 2,04
3,744 1,039,977 109,811 415,582 34,000 428,023 99,
042 287,500 262,000 7,137 9,851,611
CIL-NET at ILRU
70
Statement of Operations/Activity
  • Summarize income expenses over time
  • 10 variance (needs notes)
  • Always comparative information (Y/TD)

71
Contract Statements
  • Track grant / contract expenses
  • Must use budget / actuals
  • Monthly
  • Managers manage

72
Annual Financial Statements
  • Management Letter
  • Independent auditors report
  • Balance sheet
  • Statement of functional expenses / cash flow
  • Notes to financial statement

73
Chapter Five
  • Cash Flow and Management

74
Building Relationship with a Bank
  • Banks are Good!
  • Board member recruits
  • Work through Finance Committee
  • Remember ethics and complete disclosure good
    bad

75
Factors Affecting Cash Management Managing cash
in flow out flow
  • Timely submission of invoices
  • Stay on top of receivables
  • Updating cash flow reports
  • Timing of large expenditures
  • Timing of payroll changes
  • Passage of state budget

76
Line of Credit (LOC)

  • Secured Loan
  • Collateral is pledged or line remains open (as
    a strategy)
  • Unsecured Loan
  • Time limited promissory note (one time
    arrangement)

77
Line of Credit, contd.
  • Establish a Line of Credit
  • BEFORE
  • you need it!

78
Establishing a LOC

  • Board resolution
  • Board signatures
  • in addition to Executive Directors
  • Amount () determined by
  • agency size
  • operating budget
  • sources of revenue (secure contracts)

79
LOC rules of thumb

  • Keep borrowing to a minimum
  • Terms are negotiable
  • annual fee
  • interest rate
  • Pay off ASAP

80
LOC - FYI

  • Contracts typically dont allow interest as an
    allowable expense
  • Most must be dormant for a minimum of 30 days
    per year
  • (Cant be relying on LOC as a funding source)

81
Cash Flow Statements

  • Excellent internal management tool
  • Project 3 months out, allowing time for
  • adjustment
  • Monthly cash flow statements (MINIMUM)
  • See Appendix E for sample

82
Chapter Six
  • Internal Controls

83
Internal Controls - I

  • Policies Procedures that
  • Protect the assets
  • Provide consistency and operational efficiency
  • Increase fiscal viability
  • Uncover potential liabilities

84
Internal Controls - II
  • OMB Standards
  • Policies to ensure federal funds safeguarded
  • Separation of duties (priority control) for
    approving purchases, check signing, checks
    balances
  • Conflict of interest
  • Independent Audit and more.

85
Benefits of Internal Controls

  • Assure fiscal prudence
  • Safeguard assets
  • Assure fiscal compliance viability
  • Set policy (board responsibility)
  • Create checks and balances
  • Required by funding sources

86
Internal Controls Policies - I

  • Key Policy
  • Segregation of Duties
  • Limits amount of fiscal activity controlled by
    any one person.

87
Internal Control Policies - II

  • Authorizing signatories
  • Separating accounts receivable from accounts
    payable
  • Segregating payroll from Human Resources
  • Balancing cash and checking accounts
  • Creating checks and balances

88
Internal Control Policies - III

  • Inspecting payroll reports
  • Recording cash journal general ledger
  • Passwords whenever possible
  • Petty cash limits
  • Using P.O.s (purchase orders)
  • Regular computer backups - offsite

89
Internal Controls Reporting Level

  • Board monthly financials
  • Compare utilization data
  • Balance GL monthly
  • Quarterly finance committee meetings
  • Time sheets / written OT authorization

90
Internal Controls Board Level

  • Accurate records of income/expenses
  • Cost of programs and services
  • Comparison of income/expenses
  • Segregation of duties

91
Internal Audit

  • Quality assurance process for the accounting
    department
  • Assures timely and accurate recording of
  • information
  • Twice per year per program (minimum)
  • Performed by audit committee, board or
  • auditor

92
Internal Control ChecklistCheck Signing
Payments

  • ? Expenditures approved in advance?
  • ? Requests for checks reviewed?
  • ? Check signer reviews and initials check
    register?
  • ? Larger checks require two signatures?
  • ? Checks pre-numbered?
  • Voided checks on file?
  • Bank statements canceled checks received
  • reconciled?

93
Internal Control ChecklistCheck Signing
Payments, contd.

  • List of unpaid invoices on file and reviewed
  • periodically by ED?
  • ? Purchase orders pre-numbered?
  • Employees submit expenses receipts on-time?
  • See manual Chapter Six for complete checklist.

94
Accounting Procedures Manual

  • Excellent internal control tool
  • Effective training tool
  • Needs board approval
  • Updated annually (at least)
  • Must be used!!

95
ABC CIL Accounting Procedures Manual - Table Of
Contents

  • Cash Receipts
  • Cash Deposits
  • Cash Disbursements
  • Purchasing
  • Fixed Asset Inventory
  • Budgeting
  • Month End Closing
  • Year End Closing

96
Discussion Questions???

  • In the areas we have reviewed, what are the
    financial strengths of your CIL?
  • What areas are in need of improvement?
  • What areas can YOU directly impact?
  • Are there obstacles for becoming a Center with
    effective internal controls?
  • Share Best Practices regarding todays topics

97
Chapter Seven
  • Monitoring Agency Performance

98
Monitoring Agency Performance - I


Sharing Center Financials Who? What? Why?
  • Nature of information
  • Amount you share
  • Frequency

Rule of Thumb Need to Know Basis
99
Monitoring Agency Performance - II


The Fiscal Picture Understanding is Critical!
  • Context
  • Timeliness
  • Pertinent to position
  • Confidentiality

100
Benefits

  • Realities of financial state
  • Staff accountable for budgets
  • Budget/contract obligations
  • Staff empowerment
  • Staff see fiscal cause effect
  • Staff investment
  • Assist in training for promotions

101
Financial Planning

  • You cant do Financial Planning without Agency
    Planning!

102
Agency Plan Supports Fiscal Management

  • Identify and confirm strategy for the
  • future
  • Test objectives
  • Provide context for budgeting
  • Create one integrated plan
  • SWOT (strengths, weaknesses, opportunities,
    threats)

103
Agency Planning BudgetStatic v. Changing

  • Static
  • numbers remain in place and any variance over 10
    is explained in notes
  • Changing
  • budget is adjusted as needed
  • Static Operational
  • annual budget stays the same while operational
    budget reflects changes

104
Comparing Budget to Actual

  • Make decisions take action to correct
  • Audit corrections
  • Provide analysis for each
  • department
  • service
  • location

105
Using the Right Information

  • Analyze monthly / cumulatively
  • Use graphs to interpret
  • Use ratios / indicators
  • Refer to CAP for service costs
  • Summarize detail information
  • Check key internal controls
  • Provide snapshot for overview

106
Chapter Nine
  • Service and Financial Planning

107
Mission StatementStrategic Plan

  • Goals
  • Objectives
  • Financial Parameters / Planning

108
Mission Statement

  • Frames the scope of activities
  • Size - types of contracts sought
  • Scope and complexity of agency
  • Service delivery area

109
Strategic Planning
  • Fiscal Planning
  • (annual budget)
  • Fiscal Year
  • Budget Development
  • Reporting
  • Internal
  • External
  • Projecting
  • Audit
  • Program Planning
  • (services)
  • Contracting
  • Utilization
  • Delivery
  • Data
  • Need/Demand
  • Compliance

109
CIL-NET at ILRU
110
Budget Process

  • Establish fiscal year
  • Annual budget whose responsibility?
  • Board
  • Staff

111
Board Responsibilities

  • Analyze process
  • Quality of plan
  • Accuracy of information
  • Challenge assumptions
  • Adopt budget

112
Staff Responsibilities

  • Gather data for budget
  • Gather staff input
  • Prepare budget proposal

113
Annual Budget

  • A cash or operating budget, which identifies
    the source of revenue and expense that the agency
    will utilize during its upcoming fiscal year.

114
Budget Format

  • Begin with 2 Basic Categories
  • Revenue money earned
  • Expenses outflow of cash

115
Expand Budget Categories

  • Fixed Revenue committed
  • Variable Revenue varies or fluctuates
  • Fixed Cost no fluctuation or variance
  • Variable Cost subject to
  • internal/external factors

116
Budgeting Process

  • Cost/Expenses
  • Revenue
  • Net Operating fund balance
  • (profit or loss)

117
Costs/Expenses

  • Personnel
  • Fringe benefits
  • mandated
  • non-mandated
  • General operating
  • Property
  • Administrative overhead

118
Personnel

  • Salary or Rate of Pay
  • Fringe Benefits
  • Program Area

119
Fringe Benefits

  • Mandated
  • FICA
  • Disability Insurance
  • Workmans Compensation
  • Non-mandated
  • Health/Dental
  • Retirement
  • Education

120
General Operating

  • Costs directly related to program
  • Telephone
  • Staff travel
  • Office supplies
  • Program supplies
  • Program Space
  • Other

121
Property

  • Office Rent
  • Utilities
  • Insurance
  • Capital Improvements

122
Admin. /Indirect- not identified with single
final cost objective

  • Administrative salaries/benefits
  • Office rent (communal)
  • Audit/Legal costs
  • Directors and Officers Insurance
  • Board Retreats/Trainings

123
Process

  • Sub-total cost categories
  • Allocate each cost according to Cost Allocation
    Plan

124
Revenue Fixed Variable

  • State/Federal contracts
  • Other contracts
  • Grants
  • Fund raising
  • Investments
  • Fee-for-service
  • Third party reimbursement

125
Net Operating Fund Balance

  • Profit /Loss
  • Total Revenue Total Expenses Profit Loss
  • If. Projected Loss
  • Only one year
  • Capital operating reserves to offset

126
Reporting

  • Internal monthly statements
  • Actuals Income Revenue
  • Budgeted Income Revenue
  • Variance
  • YTD Actuals
  • YTD Budgeted
  • YTD variance
  • Annual Budget

127
External Reporting

  • Cost Reports
  • income and expenses in required format
  • Annual Reports
  • - marketing publicity vehicles
  • Independent Audit
  • G.A.A.P.
  • IRS compliance

128
Financial Management Goals

  • Developed by Board Staff
  • Adopted by Board
  • An asset to your CIL
  • Broad statements of fiscal philosophy
  • Guide CIL in fiscal matters
  • Provide direction for fiscal decisions

129
Sample Goals

  • Establish financial base to support CIL services
  • Follow prudent and professional practices to
    maintain fiscal stability
  • Adequate capital improvement program
  • Continuous review of budget community input

130
Sample Year One Goals

  • Establish grant management reporting initiative
  • Review and update budgeting process
  • Integrate A/R with G/L closely
  • Other?

131
Chapter Eight
  • Program Start-Up Budgets

132
New Program Development

  • Does program fit the mission?
  • Is program in response to consumer demand/need?
  • Can we do it?
  • support services
  • infrastructure
  • resources
  • Whats the competition?
  • Can we collaborate or cooperate?

133
New Program Funding Scenarios

  • Fee-for-service
  • Contract funded
  • Contract
  • Donations and grant

134
Start Up Budgets - Contain one time expenses

  • Furniture
  • Equipment (computer, copier, adaptive)
  • Training Supplies
  • Training Costs
  • Consulting Fees
  • Other

135
Annual Program Costs Budgets
  • Salaries/Personnel
  • Fringe Benefits
  • Rent/Occupancy
  • Travel
  • Marketing
  • Supplies
  • Telephone, Postage, Printing
  • Dues and Subscriptions

136
Fee for Service Funding
  • Competitive pricing?
  • Scholarships?
  • What does a unit of service cost (CAP)?
  • Can we justify our costs?
  • Documentation to support our costs?

137
Chapter Ten
  • Fiscal Oversight

138
Who is charged with Fiscal Control and Oversight?
  • Each Board Member is charged with Fiscal Control
    and Oversight.
  • ED Leadership Team
  • How Do They Carry This Out?

139
Financial Management Standards
  • Contract Grants Management
  • Reporting
  • Accurate Timely
  • Oversight
  • Internal (administrator)
  • External

140
Finance Committee
  • Active meets once per month
  • Educated / Experienced Committee
  • Members
  • Works with CFO
  • Recommendations go to full board

141
Internal Fiscal Oversight
  • Budget Process
  • Accounting Process
  • Financial Analysis Process

142
Budget Process
  • Reflect CIL Mission and Board Policy
  • Realistic
  • Meeting budget?
  • Increase or decrease revenue reflected in
    budget

143
Accounting Process
  • Accurate record supporting documentation
  • Information on program cost
  • Summary / comparisons
  • Segregation of duties

144
Financial Reports
  • Timely
  • Clear/concise
  • Comprehensive in scope
  • GAAP
  • Comparisons
  • Footnotes
  • Given prior to board meetings

145
External Oversight
  • Contract requirements timely/accurate
  • Independent Auditor
  • IRS 990
  • Payroll reports and taxes

146
TROUBLE ??
  • Cash flow problem
  • Past due bills
  • Excessive debt
  • LOC open
  • Taxes unpaid
  • Build up in receivables
  • Controller competency?
  • Unrealistic financial statements

147
Chapter Eleven
  • Independent Audit

148
OMB Circular A-133 Independent Audits
  • Section 725 of the Act
  • Single Audit Act mandates audit for agencies
    receiving 500,000 or more in federal funds
  • Allowable expense for agencies required
    (133.230)
  • Also EDGAR 34 CFR 74.26

148
149
WHY Independent Audit ??
  • Legal requirement
  • Assurance to donors
  • Quality assurance

150
Independent Audit Musts
  • Performed by CPA
  • Auditor selected by Board
  • Cost an allowable expense
  • CPA Engagement Letter

151
Audits
  • Single Federal Audit
  • Breaks out funding stream
  • Opinion Letter
  • States unqualified/clean or qualified/material
    issues

152
Management Letter
  • Offers suggestions to improve fiscal position
    and/or practices
  • Internal document
  • Board follow-up w/recommendation
  • Quality control for ED CFO

153
Selection of Auditor
  • Board selects!
  • RFP process (3-5 bids)
  • Price is negotiable
  • Engagement letter with details
  • See Chapter 11 for contents of audit

154
Fund Balance How Much?
  • 3 6 months expenses
  • 25 annual budget
  • Board decision
  • risk
  • philosophy
  • policy

155
Increasing the Fund Balance
  • Net Assets
  • CIL solvent for cash flow
  • safety net for operations
  • Earn from investment interest

156
Funds
  • Restricted Fund
  • Balance for a specific purpose.
  • Temporarily Restricted
  • Donor imposed restrictions i.e. time, matching,
    etc.

157
Unrestricted Net Assets
  • Use for any purpose, any time
  • Total assets and ratios measure changes in CILs
    fiscal position, i.e.
  • liquid v. non-liquid
  • restricted v. unrestricted

158
Chapter Twelve
  • Risk Management

159
Two Steps
  • Identify areas of risk
  • Determine level type of insurance

160
Insurance Products
  • Directors Officers protection for Board
  • General Liability
  • Property Casualty
  • Professional Bonding protect staff Center
    from staff practice and theft
  • Errors Omissions unintentional errors

161
Financial Management Policies
  • (Appendix J)
  • Developed by ED CFO
  • Reviewed and adopted by Board
  • Road map for decisions
  • Board Staff accountable

162
Policies Include
  • Resource and planning allocation
  • Accounting and fiscal practices
  • Capital improvement
  • Debt and investment management
  • Organizational management
  • Total Quality Management (TQM)

163
Chapter Thirteen
  • Fundraising Development

164
Question

Does the board have a responsibility to raise
money?
165
Answer

YES !!!
166
Board Role in FR
  • Contribute something!
  • 100 participation
  • Influence others
  • Fiscal responsibility

167
Board Role in FR, contd.
  • Provide donor list
  • Write/sign appeal letters
  • Visit donors
  • Fundraising efforts
  • Attend meetings
  • United Way
  • Foundations, etc.

168
Friends of Committee
  • Expands network
  • Pressure off Board
  • Single focus
  • Creative ideas

169
FR Development Team
  • Executive Director
  • Board members
  • Development Director
  • Grant Writer(s)
  • Marketing Director
  • Special Events Manager
  • Volunteer Coordinator

170
FR Development Opportunities
  • Government funds
  • Foundation proposals
  • Corporate partnerships
  • Special events
  • Direct mail
  • Memberships
  • Planned giving

171
Government Funds
  • Contracts
  • Collaborations
  • Member Items

172
Foundations
  • Independent
  • Company Sponsored
  • Community

173
Corporate Partnerships
  • Direct corporate giving
  • Executive discretionary funds
  • Subsidiary or Plant budget
  • Marketing budget
  • R D budget
  • Employee matching funds

174
Special Events
  • Fund raising
  • Promotion
  • Friend raising
  • Good Neighbor

175
Direct Mail
  • Capital campaign
  • Ongoing appeal
  • Lists are the key!
  • Donors v. Prospects
  • Personal follow-ups

176
Planned Giving
  • Market driven
  • High investment high payoff
  • Existing donors vs. recruitment

177
Why do people give ?
  • Believe in the mission
  • Peer pressure
  • Good for business
  • To give back
  • For fun
  • Benefitted from agency
  • Tax deduction

178
Biggest Obstacle to Raising
  • FEAR of Rejection !

179
How to Raise Money
  • Build Relationships
  • Create Opportunity to Give
  • Ask for Money

180
Discussion Questions???
  • DISCUSS SHARE
  • Ideas for getting the Board involved in raising
    money.
  • Development Fundraising Ideas?
  • Events
  • Campaigns
  • Donations
  • Other?

181
Chapter Fourteen
  • Ethical Dilemmas in Financial Management

182
Why?
  • Unethical people
  • Business as usual
  • Policies not enforced
  • Financial trouble
  • Most likely reason

183
Unethical Practices
  • Forged signatures
  • Fictitious payroll checks
  • Improper use of credit cards
  • Kickbacks
  • Conflict of Interest (many forms)
  • Other

184
Fraud Reduction
  • Zero tolerance
  • Reduce opportunity
  • Audits and reports
  • Question variances
  • Code of conduct
  • Anyone is capable

185
Alternative Ideas
  • Aggressive A/R
  • Cut programs
  • Mergers
  • Restructure
  • Fees
  • Fundraising

186
EDGAR 75 - Conflict of Interest
  • Grantees may not permit a person to make an
    administrative decision if
  • they or family directly benefit
  • they are a public official
  • has family or business relationship
    with the grantee
  • motivated by personal gain

186
187
Conflict of Interest
  • Form 990 asks for written
  • Conflict of Interest Policy
  • Procedures for identifying and dealing
    with conflicts of interest
  • See Appendix K Sample Conflict of Interest
    Policies

187
188
Remember
  • Sound Fiscal Management Helps Avoid Fiscal
    Trouble!

189
CIL-NET
  • Support for development of this training was
    provided by the U.S. Department of Education,
    Rehabilitation Services Administration under
    grant number H132B070002-09. No official
    endorsement of the Department of Education should
    be inferred.

190
CIL-NET
  • Permission is granted for duplication of any
    portion of this PowerPoint presentation, provided
    that the following credit is given
  • Developed by Melissa Glisson and presented as
    part of the CIL-NET, a program of the IL NET, an
    ILRU/NCIL/APRIL National Training and Technical
    Assistance Project.
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