Finance Committee Reportto the

National Executive Committee

4 May 2012

Finance Committee approved minutes from its meeting on 3 November 2011

Approval of Minutes

CAPR 173-1 requires Wings/Regions/Units to develop Financial Management Procedures for:

Expense approval Recurring expenses Credit card authorizations Bank transfers Travel

With the exception of travel, all requirements could be met using a standardized form.

Utilizing a standard form will simplify the financial process for units

FINANCIAL MANAGEMENT PROCEDURES

Finance Committee recommends that:

The NEC mandate use of a standardized form to eliminate the requirement for Wings/Regions/Units to develop their own Financial Management Procedures for expense approvals, recurring expenses, credit card authorizations, and bank transfers.

FINANCIAL MANAGEMENT PROCEDURES

Cash advances are allowed per CAPR 173-1

Current regulation does not provide sufficient guidance on terms of the advance

Some advances have been treated as “petty cash”

Purpose for the advance changes

CASH ADVANCES

Finance Committee recommends that:

The NEC authorize a change to CAPR 173-1 to limit the term of a cash advance to 60 days and limit advances to one per member at a time.

CASH ADVANCES

CAPR 173-1 currently requires units to send all donation checks to Wing HQ for deposit

Both Wings and Units have requested a change to the regulation to allow the Units to deposit checks locally and forward a copy of the check and supporting documentation to the Wing

Changing this process will still allow Wing oversight for issuance of donation letters by the Commander

DONATIONS

Finance Committee recommends that:

The NEC support a change to CAPR 173-1 to allow Units to deposit donations locally and forward a copy of the check and/or supporting documentation to the Wing.

DONATIONS

CAPR 173-1 does not provide specific guidance on the action to be taken if a cardholder fails to comply with credit card reporting requirements

New language in the regulation ensures corporate policies are standardized

New policy will also support the use of the Consolidated Financial Form which only requires a list of authorized card holders

CREDIT CARD POLICY

Policy details reporting requirements

Documentary evidence showing the amount, date, place, and essential character of each expense within 21 days after the date of the billing statement

Meals on travel, except for meals associated with business entertainment, are not allowed if individual elects per diem

Noncompliance with reporting or personal use requirements is grounds for cancelling the credit card

Credit card revoked upon the third such incident

CREDIT CARD POLICY

Finance Committee recommends that:

The NEC approve the revised credit card policy.

CREDIT CARD POLICY

CAPR 173-1 requires additional information on the WFA audit function to include unit audits

New language in the regulation will provide clarity regarding the purpose of the function of the WFA

WFA’s now audit all assets, including financial assets as well as supplies and equipment documented in ORMS

WING FINANCIAL ANALYST

Finance Committee recommends that:

The NEC authorize a change to CAPR 173-1 to provide additional detail on the Wing Financial Analyst’s expanded role that now includes audit of all assets including supplies and equipment recorded in ORMS as well as financial assets.

WING FINANCIAL ANALYST

Due to confusion about policy requirements in CAP 173-1, additional guidance will be included in the regulation regarding:

W-9 reporting Internal Financial Review Business meals and entertainment Changing reference from NovelAspect to Smart Vault

ADDITIONAL GUIDANCE

CAPR 173-3 currently authorizes reimbursement to members for “Automotive fuel and lubricants actually used while enroute to/from and while performing the mission.”

Vehicle lubricants, such as oil, are not mission specific.

Some questionable claims have been filed for lubricants.

VEHICLE REIMBURSEMENTS

Finance Committee recommends that:

The NEC authorize a change to CAPR 173-3 to eliminate reimbursements for privately owned vehicle lubricants.

Note: Reimbursement for aircraft lubricants continues. Reimbursement for aircraft and vehicle fuel continues.

VEHICLE REIMBURSEMENTS

CAP’S affinity card agreement with Bank of America has expired

CAP/PA has been researching a replacement card for the membership

USAA has prepared a proposal for a new affinity card agreement

Proposal is on the NEC agenda for consideration

USAA AGREEMENT

Finance Committee recommends that:

The NEC approve the new USAA affinity card proposal.

USAA AGREEMENT

Item has been withdrawn.

SER REQUEST

Item has been withdrawn.

MEMBERSHIP DUES

Item has been withdrawn.

SOUTH CAROLINA WING ADVANCE

Funds previously restricted by NEC to support Region Training Centers NESA, Blue Beret, and Hawk Mountain

In FY12 NEC authorized $25,000 for volunteer staff support

Proposal now is to authorize in FY12 $10,000 for each region restricted to direct support of cadets and cadet program activities

$10,650 has also been requested for Blue Beret facility repairs and improvements

VANGUARD FUNDS

Analysis of VSI--Vanguard Funds

Fund Code 350

Projected through 09/30/12

Balance 09/30/11 $110,151.61

FY 12 Income: Deposit date

October $ 10,314.24 12/6/2011

November $ 10,142.53 1/4/2012

December $ 11,845.53 2/3/2012

January $ 8,467.81 3/8/2012

February $ 11,310.40 4/24/2012

March $ 12,306.43 Anticipated

April $ 10,416.00 PROJECTED

May $ 10,416.00 PROJECTED

June $ 10,416.00 PROJECTED

July $ 10,416.00 PROJECTED

August $ 10,416.00 PROJECTED

September $ 10,416.00 PROJECTED

$126,882.94

FY 12 Expenses:

Travel $ 12,500.00 (Addl $12,500 from corp budget)

NESA - Camp Atterbury $ -

Hawk Mountain $ -

Oshkosh $ -

Vehicle Wrap $ -

$ 12,500.00

Total Obligations $ -

Projected Balance at 09/30/12 $224,534.55

VANGUARD FUNDS

Total of $224,534 available after funding remaining volunteer staff support

Current requests $80,000 – Cadet support to regions $10,650 – Blue Beret facility

Leaving $133,884 available in FY12

VANGUARD FUNDS

Finance Committee recommends that:

The NEC approve spending $80,000 in FY12 from Vanguard funds as a $10,000 grant to each region for direct support of cadets and cadet program activities excluding expenses for any senior members.

VANGUARD FUNDS

Finance Committee recommends that:

The NEC approve spending $10,650 in FY12 from Vanguard funds for Blue Beret facility repairs and improvements as requested.

VANGUARD FUNDS

UNIT VISITS 198 Units visited since 1 June 2010

16% of units had no reportable issues

ORMS Value of total items reviewed:

Aircraft $3,414,153Vehicle 1,181,491Supplies & Equipment 1,126,737Communications 2,050,205Total Value $7,772,586

ORMS ISSUES NOTED AT UNIT VISITS

Top Five ORMS Issues at Units

Finding % of units visited

Non-tagged Items 34%Items not found 24%Assigned items not present 22%Not updating ORMS timely 14%Items on site not in ORMS 14%

FINANCE ISSUES NOTED AT UNIT VISITS

Top Five Financial Issues at Units

Finding % of units visited

Missing Finance Committee minutes 32% No budget 12%Budget not balanced or reviewed 9%Year-end reporting not correct 5%Late year-end reporting 4%

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

0

5

10

15

20

25

30

35

Low Successful High

WING ACCOUNTABILITY MATRIXAs of 30 Apr 2012

FY12 Financial Plans Update

FY12 CORPORATE BUDGET EXECUTIONAs of 26 Apr 12

FY11 FY12

BUDGET $2,421,754 $2,520,505

INCOME $ 1,392,223 $1,346,711 57% 53%

EXPENSES $ 1,093,997 $1,018,153 45% 41%

Straight Line Execution 55%Historical 52% RevenueHistorical 42% Expenditures

Sidebar: Explanation of change to accounting procedures for dues

BUDGET EXECUTED %O&M 27,838,000 14,123,456 51DDR 450,000 174,217 39

Straight Line Execution: 55% Historical Execution: 51%

A/C Procurement FY10 FY11 FY12Budgeted 6,406,000 2,424,000 8,990,000Expensed 6,406,000 2,424,000 8,663,814

Balance - 0 - - 0 - 325,186 100% 100% 97%

Vehicle Procurement FY10 FY11 FY12Budgeted 1,065,855 902,000 917,000Expensed 883,128 857,640 -0-

Balance 187,727* 12,665 917,000 83% 99% 0%

FY12 APPROPRIATED BUDGET EXECUTION

As of 26 Apr 12

PROGRAM INCOME FUNDS:

CASH ON HAND EXECUTED BALANCE

201 A/C Sales 619,843 619,843 - 0 -

202 Vehicle Sales 3,440 - 0 - 3,440

203 CMx Funds 936,995 151,515 785,480

204 Comm & IT 15,178 - 0 - 15,178*

205 ARCHER 46,375 - 0 - 46,375*

*Pending execution for SDIS/ADIS Laptop computers

FY12 APPROPRIATED BUDGET EXECUTION

As of 26 Apr 12

NAVISION WMIRS (% Actually Paid) (% Spent & Obligated)

AF Missions 30% 33%Counterdrug 4% 7%AF Training 21% 52%Cadet O-Flights 29% 41%CMx Ferry Flights 42% 49%

Cadet Orientation Flight Goal - 37,300* Flights Flights as of 30 Apr 12 - 15,448 Flights

Percentage Complete - 41.4%* 52% increase from prior year

FY12 Mission Execution – WMIRS vs. NAVISION

As of 30 Apr 12

Glider budget was established to provide additional resources and ensure gliders are maintained to a national standard

Current budget is $140k

Requests for glider MX to date total $34,227

Balance remaining is $105,773

FY12 GLIDER MX UPDATE

Restricted Unrestricted

Beginning Cost 177,291 5,002,376(30-September-2011)

Interest & Dividends 3,798 116,312Investment Fees (625)

(15,434)Realized G(L) from Sales -0-

(201,531)

Ending Cost 180,4644,901,722

Market Value 182,967 5,059,230

Unrealized Gain (Loss) 2,504 157,508

INVESTMENTS As of 31 March 2012

Restricted Unrestricted

Change in Market Value 10.71% 13.38%(Excludes Interest and Dividends)

Interest & Dividends 2.34% 2.56%

Total Return 13.05% 15.94%(Includes Interest and Dividends)

Gain (Loss) on Sales + Fees (0.38)% (4.77%)

Net Return 12.66% 11.17%

Weighted Return of Indexes: 12.95%(35.75% Wilshire 5000; 19.25% MSCI ACWI, ex US; 40% Barclays Aggregate; 5% Citigroup 3mo Treasury)

INVESTMENTS As of 31 March 2012

Proposed FY13 Corporate Financial Plan

27%5%

3%

12%

3%6% 3%

22%

18%

Cadets/Summer ActivitiesSenior ActivitiesA.E. ProgramsPA & Mbrship DvpmtOperations Special Events Contingency & Cadet Ins. ReserveCorporate TravelO & M NHQ

FY13 - EXPENSE PROJECTION $2,682,667

39%

47%

1%3%

4%

4%

3%

Cadets Seniors

PA & Mbrship Development Operations

Special Events Vanguard Income

Interest & Misc. Income

FY-13 - INCOME PROJECTION $2,538,400

VANGUARD

FY13 CORPORATE FINANCIAL PLAN

FY13 CORPORATE FINANCIAL PLANThe Historical Perspective

FY10 FY11 FY12 FY13 (Actual $) (Actual $) (Projected $) (Projected $)

Income 2,431,950 2,452,164 2,520,505 2,538,400% Increase from prior year 1% 1% 1%

Membership Income Projections (Figures are based on data as of 1 Mar of full paying memberships)

FY10 FY11 FY12 FY13Senior Mbrs 32,459 32,202 33,413 32,542Cadet Mbrs 22,891 25,160 25,488 25,080

55,350 57,362 57,559 57,622

Revenue Projection: $2,538,400

Expense Requests: $2,682.667

Opening Delta: $ 144,267

FMB Recommendations:* $ -29,200

Finance Committee Delta: $ 115,067

*moved to unfunded list

FY13 CORPORATE FINANCIAL PLANThe Beginning – From Basic requests

FM – Investment Cmt/FM Summit Travel $ 5,000PA – National Curator Expenses $ 2,000NEC Committee Expenses $ 5,000Wreaths Across America $ 2,000CP - Supplies $ 500CP - Summit $ 1,000Nat’l Cadet Competition $ 2,000Overseas Cadet O-Flights $ 9,200LG - Corporate Mail-outs $ 2,000LG – Mbr. packet pgrm. – Salaries & Benefits $ 500TOTAL $29,200

FY13 CORPORATE FINANCIAL PLANFMB Recommended Unfunded

EXPENSE INCREASES – $$ Amount of Variance ($3k or greater from prior yr.):

Nat’l Vice Commander + $ 3,000Nat’l Chief of Staff Travel + $ 4,000Nat’l Staff Travel + $11,150Nat’l Staff – Operating Funds* + $ 1,350Nat’l Safety Officer Travel + $ 3,000Dep. Ch of Chaplains Travel* + $ 4,000Dep. Asst to Ch. Of Chaplains Travel* + $ 1,500Chief Emeritus CAP Chaplain Travel* + $ 1,400Chaplain Staff Colleges + $ 8,000Sec. of the CCAC + $ 3,000

* Indicates New Initiative for FY 13

FY13 CORPORATE FINANCIAL PLANNew Initiatives & Significant Changes

EXPENSE INCREASES – $$ Amount of Variance ($3k or greater from prior yr.):

Nat’l Diversity Officer Section* +$ 22,045NER CC Travel + $ 3,690Corporate Development Section* + $89,450Sr. Mbr Accident Medical Claims + $ 5,000Misc. Bank Expenses + $ 8,000Cash Reserves + $53,448Nat’l Staff College + $ 4,752

* Indicates New Initiative for FY 13

FY13 CORPORATE FINANCIAL PLANNew Initiatives & Significant Changes

CORPORATE BUDGET – TRAVEL

FY08 FY09 FY10 FY11 FY12 FY13 300,000.00

320,000.00

340,000.00

360,000.00

380,000.00

400,000.00

420,000.00

440,000.00

Annual Travel Analysis – Total Dollars

CORPORATE BUDGET – AEROSPACE EDUCATION

FY08 FY09 FY10 FY11 FY12 FY13 20,000.00

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

50,000.00

55,000.00

60,000.00

65,000.00

70,000.00

ACE* AE

AEROSPACE ED. & A.C.E. PROGRAM HISTORICAL EXPENSE ANALYSIS

*NOTE: ACE received $14,500 in grant funds in FY11 and $15,000 in FY 12

6,259 A.C.E. Students

10,621 A.C.E. Students

17,849 A.C.E. Students

CORPORATE BUDGET – CADET PROGRAMS

FY08 FY09 FY10 FY11 FY12 FY13 550,000.00

600,000.00

650,000.00

700,000.00

750,000.00

800,000.00

850,000.00

900,000.00

CADET PROGRAM HISTORICAL EXPENSE ANALYSIS

EXPENSES

Move more items to unfunded list

Cut expenses

Increase income

Use Vanguard funds

?

FY13 CORPORATE BUDGET OPTIONS

Move to unfunded list:Deputy Chief of Chaplains $ 2,000Chief Emeritus, CAP Chaplain Corps $ 1,400Secretary of the CCAC $ 2,000National Diversity Officer – Supplies $ 5,606National Diversity Officer – Postage $ 939National Diversity Officer – Travel $ 13,500Northeast Region – Travel $ 3,690Miscellaneous Bank Expenses $ 8,000Cash Reserve $ 60,000TOTAL MOVED TO UNFUNDED $ 97,135

Combination of and in this order: $ 17,932(1) Expense reductions from national activities(2) Income increases from national activities(3) Balance paid from Vanguard funds

_______TOTAL MOVED OR FUNDED $ 115,067

Which balances the FY13 Corporate Financial Plan.

FY13 CORPORATE FINANCIAL PLANFinance Committee Recommendations

Finance Committee recommends that:

The NEC accept the proposed FY13 corporate budget and forward it to the Board of Governors for approval.

FY13 CORPORATE FINANCIAL PLAN