Attachment E-1
Board Meeting March 17, 2007
Prepared by Peri Frantz, NSS Secretary-Treasurer
s-t@caves.org, 408 356-8506
Status as of February 21, 2007
Contents:
Overview
Financial Reports
Independent Audit
Finance Committee
Insurance Committee
FY 2007-2008 Proposed Budget
Agents of the Treasurer and NSS Financial Accounts
NSS Office Accounting
Convention Treasurers
NCRC Treasurers
Other Treasurers
Restricted Funds
Acknowledgement of Donations
Financial Web Site
Treasurer’s Department Meeting
The Department of the Secretary-Treasurer consists of the Finance Committee, the Insurance Committee, the Agents of the Treasurer, the Financial Reviewers (formerly called Independent Reconcilers) and the Financial Web Master. The Finance Committee is responsible for accounting, financial reporting, forecasting and assisting the Independent Auditor in the annual audit. The Insurance Committee is responsible for procuring insurance for the Society and riders to cover various NSS activities and interfacing with the insurance companies as needed. The Agents of the Treasurer are those people who have signature authority over one or more of the Society’s financial accounts. This group includes Convention Treasurers, NCRC Treasurers, the NSS Office, and other miscellaneous people. Each of these accounts has a Financial Reviewer who provides independent oversight by reviewing the regular statements and looking for unusual activity. Detailed reports on each of these areas of activity follow.
Due to my father’s death in January, I have not accomplished as much since the Fall Board Meeting as I had hoped to. The most essential tasks, such as the FY 2005/06 Audit and the proposed FY 2007/08 Budget were completed, but my goals of expanding the Finance committee and enhancing internal controls and procedures have not received the attention they merit. Things are, however, settling down, and I expect to be back on track by the summer meeting.
Attachment E-2: NSS Restricted Funds: NSF Held Funds (as of Sept. 30, 2006)
Attachment E-3: NSS Restricted Funds: NSS Held Funds (as of May 1, 2006)
Attachment E-4: NSS Operating Fund: YTD Revenue & Expenses (preliminary as of Jan. 30, 2007)
In addition, the following Financial Reports are available on-line on the NSS Fiscal Information pages:
FY 2005/06 Financial Statements
http://caves.org/nss-business/fiscal-information/prior_statements.html
2006 Audited Financial Statements
http://caves.org/nss-business/fiscal-information/prior_audited.html
Independent Auditor Randall Hunt, of the Watkins Johnsey Professional Group, has completed the fiscal year 2005/2006 audit. A copy of the audited finances is available on the web at http://caves.org/nss-business/fiscal-information/prior_year.html. As of April 30, 2007 the NSS held assets totaling $4,214,007. Total Support and Revenue for the Year was $1,316,539. Expenses were $928,594, for a net gain in Assets of $387,845.
In any audit, the Auditor finds transactions that he believes have been improperly entered and requests changes. For the most part these are judgment calls relating to the classification of various types of assets, and have little impact on the bottom line. Because Dave has not yet made these changes, the FY 2005/06 Financial Statements available on the web do not reflect them. When the changes have been completed, the web will be updated.
As part of the audit, Mr. Hunt prepared the annual IRS tax return, which has been duly filed.
In this year’s audit, as well as last year’s, Mr. Hunt has expressed concerns about “deficiencies in … internal control that … could adversely affect the Society’s ability to ... report financial data …”. These concerns are largely related to the inadequacies of our accounting software, and to the financial affairs that are tracked by spreadsheet rather than an accounting system. New policies and procedures are needed to address these problems.
The Board’s Audit Committee, headed by Kevin Smith, has engaged Watkins Johnsey to conduct our next 3 audits. I plan to meet with Mr. Hunt to discuss the FY 2006/07 audit when I am in Huntsville in April.
Plans:
• Complete the changes requested by the Auditor.
• Development of financial oversight procedures to address the Auditor’s concerns.
• Initiate the FY 2006/07 audit process.
The Finance Committee consists of Chief Accounting Manager, David Irving, NSS Office manager Stephanie Searles, Budget Wrangler J. Brandon Stephens and Restricted Funds Manager Tim Peters. Both Brandon and Tim have joined the committee in the last year. Brandon has come up to speed rapidly on budget issues, however David has thus far been able to provide only minimal training to Tim, a situation he hopes to address in the near future.
I still need to add one or two additional people to assist with month end and year end accounting, however I will continue to delay doing so until Dave has brought Tim up to speed on the Restricted Funds, and has time to train some more helpers.
Plans:
• Continue to expand the Finance Committee and train new members
• Begin documenting all of the varied tasks that Dave Irving does.
• Continue improving the level of financial reporting to the Board.
Ted Kayes, who constitutes a one-man insurance committee, has nothing to report.
Plans: We continue to look for more affordable coverage
The EC’s budget proposal for the coming year is on the agenda for the Spring Board Meeting. The proposed budget is balanced, with expected operating expenditures $565,580, which is in line with other years.
The budget process relies on a template that incorporates data from several years worth of budgets and financial reports, and relies on numerous formulas. Maintaining it is complex and requires a great deal of attention to detail. J. Brandon Stephens did excellent job of wrangling the budget template for this year’s planning, and will stay on to do the job again next year.
Since I was unable to attend the budget meeting, Dave Irving filled in for me. The initial budget was about $18K in the red, and it took considerable negotiating and some hard sacrifices to bring it into balance.
Agents of the Treasurer and NSS Financial Accounts
I continue to make slow progress with the project of updating signature cards on the NSS financial accounts to include Bill Tozer and myself as signatories. Currently 11 accounts are now in compliance and another one is in progress.
Office accounting is proceeding normally, and there is nothing of note to report.
Note: This report covers only Convention finances. See the AVP Report for reports on other aspects of convention planning.
I have prepared a new Convention Budget Template and distributed it to all current and potential Convention Committees. This template should simplify the task of preparing budgets, and make it easier to generate meaningful statistics.
Status:
2006 Convention, Bellingham Washington: Treasurer Marla Pelowski has filed her final report and closed the bank account. The Convention operated at a net loss of $9778.24, almost half of which was due to unexpected and excessive insurance requirements for the campground. This Convention was blind-sided by several large unexpected expenses, and did an excellent job of controlling costs to compensate. We should be pleased that the loss was not greater. The Convention Surplus Fund is more than sufficient to cover the overage.
2007 Convention, Marengo Indiana: I am receiving regular reports from Treasurer Jo Ellen Kimmel. No surprises are expected.
2008 Convention, undetermined: Florida’s bid for the 2008 convention is on the agenda for the Spring Meeting. I have a copy of their proposed budget, which I will review prior to that meeting.
2009 Convention/ 15th International Congress of Speleology (ICS): The ICS Organizing Committee continues to make slow progress towards a budget and a contract with Schreiner University. They are making a serious effort to keep the registrations fees in line with a typical NSS Convention. There have been no major expenditures to date.
2010 Convention, Vermont: I have not yet seen a budget proposal from Vermont, however there is no need to be concerned given the 3-year lead-time.
2011 Convention: TBD: Two separate groups interested in bidding on a 2011 Convention have received a copy of the Budget Template.
Plans:
• Assist the Florida and Vermont convention committees in developing their budgets.
• Provide oversight on the ICS contract with Shreiner University. Assist the Organizing Committee with the continuing refinement of the Congress Budget.
Status: There are currently 10 NCRC Bank Accounts: One for NCRC National, one each for 8 of the NCRC Regions, and one for the 2007 Seminar. Berta Kirchman, the NCRC Financial Officer monitors all of these accounts, and provides a year-end report consolidating all of this diverse activity.
Plans:
• Continue updating signature cards on all outstanding NCRC accounts.
Status: There are 4 miscellaneous bank accounts: Junior Speleological Society (JSS), Fine Art Salon (FAS,) Mammoth Cave National Park (MCNP) Restoration Project, and the NSS Advertising Account. Nothing new to report.
Plans:
• Finish updating signature cards.
• Improve the reporting for the JSS & MCNP accounts.
I received a mid-year report, dated 9/30.2006, from the National Speleological Foundation. This report included only fund balances, with no detail as to deposits, withdrawals, or income, so it is difficult to assess the overall performance of these investments. I expect a complete report following the end of the fiscal year. I have no new data on the NSS-held restricted funds.
There is still a need to improve our procedures for acknowledging donations. I have not had time to address this issue.
Plans:
• Implement procedures to assure that all donations are properly acknowledged and fulfillments are met.
A major revision of the NSS Fiscal Pages at http://caves.org/nss-business/fiscal-information/index.html went live in mid-December. The content has been completely reorganized for ease of access, and much obsolete material has been removed. My thanks to Fiscal Web Master, Robert Sewell for a job well done.
Goals:
• Keep the data on the website current.
• Add a private, password protected, section to the site, so that more sensitive and current information can be posted for the use of the Board.
Treasurer’s Department Meeting
I’ve requested a 2-hour slot for an “NSS Finance Forum” at this year's Convention. This is somewhat akin to Bill Tozer’s President’s Forum, but focused on financial issues.
3-1-07