1 Jack R. Hott, Lifetime CPCM, CFCM, Fellow Central Ohio Chapter Date July 27, 2014 Time 8:00 am-9:00am Why it’s Always Important to Watch the Numbers.

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Jack R. Hott, Lifetime CPCM, CFCM, Fellow

Central Ohio Chapter

Date July 27, 2014

Time 8:00 am-9:00am

Why it’s Always Important to Watch the Numbers

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Who’s Job is it to Watch the Chapter Financial Numbers?

A. Chapter Treasurer

B. Chapter President

C. Chapter Leadership Team

D. Chapter membership

E. Sam and Angie on HQ staff

F. All of the above

G. Some of the above

H. None of the above

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Duties of the Chapter Treasurer

• Responsible for managing the chapter’s treasury, the chapter treasurer is typically an elected position. The chapter treasurer’s duties include making deposits, paying bills, and making financial reports.

• It is important to rotate or change the individual holding the treasurer position each year or two as a measure against complacency or embezzlement.

• Also, the treasurer should not perform or oversee the annual audit in order to avoid a conflict of interest (e.g., auditing themselves).

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Other chapter treasurer duties typically include:• Maintaining the chapter treasury and financial records;• Obtaining and maintaining a Federal Tax ID number for the chapter;• Receiving funds from activities and depositing these funds into the chapter’s

bank account;• Processing credit card payments (a credit card processing account can be

set up with assistance from the national office);• Producing and providing financial reports to the chapter board of directors

each month;• Working with chapter leadership team to prepare operating budget and

tracking performance to budget• Filing the annual financial report with the national office;• Absent an audit committee, identifying the individual to conduct the annual

audit of the chapter’s financial records; and• Working with the national office to obtain free Quicken accounting software.

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How do we watch the numbers?

• Solid cash and financial management practices

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Overview of the Cash Management Function

• Safeguard assets.

• Deposit funds.

• Pay bills.

• Maintain records.

• Prepare budget.

• Prepare and submit reportsThe job is straightforward, but the responsibility and accountability are significant.

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Safeguard Assets

• Separation of duties is essential.– Person receiving funds should not be the same person that

deposits it or accounts for it.

• Registrar– Receives the funds on site.

– Records who paid what when, and in what form (cash, check, credit card).

– Retains a copy of the receipts record.

– Signs over funds to Treasurer.

• Treasurer– Deposits funds in bank.

– Records deposits in ledger.

– Retains deposit slips in accounting records.

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Deposit Funds

• Resist the temptation to “launder” funds.• Deposit exactly what you receive.• Do not write a personal check to cover cash.• Do not use cash received to pay expenses – use

checks.• Deposit slips should specify amounts for checks and

cash.• Credit card receipts are deposited directly to your

bank account

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Use of Credit Cards

• Important to have a credit card processing option• Some companies and agencies can only pay for training with

a credit card– Used for NES, webinars, seminars, dinner meetings, golf

tournaments• Can accept company and personal credit cards for payments• Credit card receipts are deposited directly to your bank

account• Have a chapter policy on issuing credit card refunds• HQ can assist in recommending a merchant account provider

– Remember different providers have different fee structures so need to determine how and how often your chapter will accept credit card payments

• WorldPay, PayPal, registration company are among the options

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Use of PayPal

• Easy to set up, affordable, convenient• Allows for Prepayment for Chapter events

– Decision to attend made/confirmed• Accommodates planning and guarantees

– Fee deposited into Chapter’s PayPal account• Accommodates government purchase card• Accommodates debit and credit cards• Payment to vendors facilitated

– Chapter may have a no refund policy due to fee charged

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is a way to send and receive money over the Internet

• Is great for…– Advance payments– Facilitates early registration– Captures funds into Chapter PayPal account – No need for payer to have a PayPal account – Email notices sent to designated account representative– Making payment to vendors accepting PayPal

• But…– Money sits in PayPal account until transferred to Chapter bank

account– Transaction fee higher than Square

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Use of “Square”

• Easy to set up, affordable, and convenient• Accommodates payment at the Event

– Decision to attend last minute

• Deposits are direct into Chapter’s account– Accommodates debit and credit cards

• Sends receipt to Chapter and Attendee

– Can’t be used to pay vendors – No penalty for “no show” (unless publicized)

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is a way to accept credit/debit cards

• Is great for…– Payments at the door– Facilitates walk-in registration– Captures funds directly to Chapter bank account– No need for payer to have a Square account – Receipts can be sent to card holder via email at time of payment– Email notices sent to designated account representative

• But…– Reader can be sensitive / single point of failure– Requires internet connection at site– Single reader supplied with account initiation

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Collection of Chapter Registration Fundsvia…PayPal and Square

• Both accommodate Chapter events

• Both are convenient

• Both are affordable

• Each provides a useful payment alternative

• Valuable Chapter tools

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Pay Bills

• Always obtain and retain documentation (ie. invoice).• Pay timely to avoid damaging NCMA’s stellar credit rating.• Pay via check, credit card or PayPal.• Have a policy and procedure in place for approving

expenditures.• What can individual officer spend w/o higher approval?• Who approves expenditures? President? Board? At what

levels?• Chapter may obtain credit cards or debit cards for its officers.

– Warning: This creates risk! NCMA highly discourages this step

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Maintain Records• Check Register – (includes both cash receipts and

disbursements)• Bank Statements and Reconciliations• Monthly Financial Reports – (original to chapter board)• Supporting documentation for all income and bank deposits –

(e.g. registration lists for paid chapter events reconciled to deposit)

• Supporting documentation for all payments – (e.g. invoices, expense claims)

• Chapters are encouraged to use Quicken (provided at no cost by NCMA).

• Annual Financial Report – (Original sent to National)• Annual Audit Report – (Original sent to National)• Chapter Property – (purchase, disposal, assigned to)– Establish a chain of custody procedure for year end transfer

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Establish a Budget

• A simple forecast of income and expenses.

• Time phase so you understand your cash flow month-to-month.

• Monitor progress against budget periodically, and revise forecasts.– Set up process for approval of expenses outside of the approved

budget BEFORE the expenditure is incurred

– Set up a process for approval of authorized expenses

• Should be developed with the leadership team as part of annual planning process.

• Sample budget template on Chapter SharePoint tab of the NCMA Resources page

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Prepare and Submit Reports

• Statement of activities (income statement) must be provided to the chapter’s board each month in a timely manner.

• Statement of financial position (balance sheet) can be produced less frequently.

• Chapter Annual Report, including financial report and audit report as attachments, must be submitted to NCMA by August 31.– Report to cover the fiscal period July 1 – June 30

– Important to meet deadline in order to be included in the National Office Group Tax Return.

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Refunds

• Issue refunds in the same way that the funds are received.

• Do not refund a credit card payment via check.• You can refund cash via check.

Have a NO SHOW Policy!

Let the chapter know you have one!

Enforce it!

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Taxes

• Chapter is a subordinate organization covered under IRS group ruling issued to NCMA.

• As a 501(c)(6) organization we are normally exempt from federal income taxes.

• Exception – Unrelated Business Income Tax – e.g. advertising revenue.

• Chapters should have their own Federal Identification Number, contact National Office for assistance.– Obtained by filing Federal Form SS-4.

• If contacted by IRS regarding tax audit, filings, or request for information: refer to National Office (CFO).

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Taxes

• NCMA pays sales tax• Chapters often ask national for a tax exempt

certificate to use at hotels and restaurants– We can provide a copy of the IRS letter indicating

that NCMA is a 501 © 6– Payment of sales tax is controlled by each state

entity– Vendors may or may not decide to charge sales

tax• Not within NCMA control

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Chapter Audits (NCMA Policy 5-7)

• Chapters shall conduct an audit of their financial records each year.

• An independent person, who is not a chapter officer or was otherwise involved in the financial management of the chapter during the period being audited, must conduct the audit.

• The auditor can be any person who has the skills necessary to conduct the audit (professional audit firms are not required).

• The audit shall address all items specified in NCMA’s “Chapter Financial Audit Form”, found on the Chapter Resources SharePoint page

• An audit report shall be submitted to the chapter president and the NCMA Chief Financial Officer by August 31 (attached to Chapter Annual Report)

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Red Flags: Signs of Trouble

• Financial reports not presented to chapter board of directors each month.

• Financial reports not submitted to national on time at end of year.

• Bills not being paid on time.

• Checks not being deposited timely.

• Treasurer not returning calls, emails or attending board meetings.

• Unexpected reductions in bank balances.

• Avoiding or not cooperating with annual audit.

• Insistence on remaining treasurer year after year

• A review of the year end chapter financials shows unusual/non-recurring/material items or expenses exceeding those expected at that revenue level; unusually low revenue levels.

• “No” answers on the audit checklist on selected questions.

• NCMA HQ awareness of internal issues at the chapter including information provided to NCMA HQ by chapter members or chapter event attendees.

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National Office Audit of Chapter Records• NCMA now conducting random audits of chapter

financial records• Chapters can be selected at random, or audit can be

based on the red flags• Audit conducted by NCMA CFO• Chapters can request a CFO audit

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For further assistance

Mr. Sam Smith, CPA

NCMA Chief Financial Officer

800/344-8096 x1104

[email protected]

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Other accounting and financial assistance:

Angie KaysStaff Accountant

571.382.1122

[email protected]

Mary Beth LechChapter Relations Manager

571.382.1119

[email protected]

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Pay Pal backup

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PayPal -- Few Simple Steps• Sign up for a PayPal nonprofit business account• One day later, log in to your new PayPal account and

submit the following through the Resolution Center:– Evidence of your nonprofit’s tax-exempt status (sample:

http://resources.ncmahq.org/chapters/rtp/Shared%20Documents/Forms/AllItems.aspx)

– A bank statement or a voided check in your organization’s name

– Your organization’s PayPal email account and contact information

– A description of your organization and the type of payments it wants to accept through PayPal (such as payments for meetings, events, and fees…AKA Statement of Need (sample included in link))

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Once PayPal Account Established…

• Log into your PayPal account• Setup and create payment button• Copy and paste the code into Chapter’s website – no

programming expertise required• No credit application; no monthly fees• Only pay when you receive funds• Fee per Transaction

– $0 - $3K: 2.9% + $0.30• Conference Registration: $60.00-($2.04 + $0.30 = $2.34)= $57.96

• Monthly Meeting: $10.00-($0.29 + $0.30 = $0.59)= $9.41

– Greater than $3K<$10K = 2.5%; over 2.2% both +$0.30

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Square -- Few Simple Steps

• Sign up for a Square business account– Enter an email address and create a password– Need Federal Tax ID number for the Chapter– Input shipping address for receipt of card reader

• Arrives in approximately one week– Answer questions for identity – Enter bank account information for deposits– FAQs: https://squareup.com/help/en-us/

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Once Square Account Established and Reader is received…

• Connect Reader to Smart Phone or iPad• Log into your Square application (email and

password)• Start swiping!• No credit application; no monthly fees• Only pay when you receive funds• Flat 2.75% fee per transaction

– Conference Registration: $60.00 - $1.65 = $58.35– Monthly Meeting: $10.00 - $0.28 = $9.72

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Receipt of Payment Email NotificationFrom: Square <[email protected]>To: abrigida <[email protected]>Sent: Thu, Oct 11, 2012 5:43 pmSubject: Square Payment #h8AdUutJjlEwVRN0zGB

Hello, National Contract Management Association, RTP Chapter. 

You accepted $10.00 from a card ending in 7581. 

You can see more about this payment at https://squareup.com/payment/h8AdUutJjlEwVRN0zGB

As of this payment, your Square balance is $34.03. 

Thank you!

https://squareup.com/39

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