Financial Managementfor State and Regionals:

Best Practices for Busy Leaders

Ari Kaufman, Associate Registrar for Operations – Berklee College of MusicChair, AACRAO State & Regional Relations Committee

Treasurer, NEACRAO (New England)April 14, 2013

The Reality of Managing the Finances of a State or Regional ACRAOWe 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 ACRAOIt 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?IncorporationInsuranceReceive invoices and pay themSend invoices and deposit checksManage Bank AccountsPrepare Financial Reports for MeetingsFile 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 ACRAOMake 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 QuestionsHow much insurance should you carry?Are legal fees from a lawsuit covered?Should you have special liquor liability

insurance?Other kinds of insurance?

Tax FormsFind 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 ReturnsWhen is your ACRAO’s Fiscal Year End and

when is your Annual Meeting ?If necessary you can get a extensionExample: 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 AccountantUsing 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 invoicesDeposit checksReconcile bank statements monthly and print out

and keep copies of the reconciliationsDocument business purpose for every check

writtenUpdate signers on your account each yearSafeguarding 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 AccountantAgreed Upon ProceduresCan be tailor made to suit your organizationProcedures Could Include:

Reviewing a sample of cash disbursementsReviewing your internal controlsReviewing bank statements, reconciliationsReviewing a sample of cash receipts

Using an Audit CommitteeMembers of the State or Regional would

comprise this committeeSame objectives as using an independent

accountant, but less professional expertiseHow often should this independent review be

done?How do you find volunteers for this?

Audit Committee and BoardAsking the tough questions of your Treasurer

can be interpersonally difficultYou don’t enjoy putting people on the spot at

a board or annual meetingWhat 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….

BudgetingPreparing a Budget for the upcoming fiscal

yearApproving a BudgetReviewing underages and overagesWhy this is hard in a cash basis systemWhat is the risk of not doing budgeting

Bookkeeping and Treasurer Duties that Would Be Done If…Membership WorkFollowing 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?