With A Focus on Financial Statements

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Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

1

December 13, 2008






A Preview of LANWT Board Training

With A Focus on Financial Statements

By Tony Alvarado

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

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Going With The Flow



LANWT OVERSIGHT & POLICY CHALLENGES




GOALS
-

PROGRAMS


















FINANCIAL
-

PERFORMANCE


COMPLIANCE ASSESSMENT









@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

3


Generating

The

Flow


Value of A Team Approach


The Role of the Board


The Role of the Executive Director


The Role of the Governing Documents





@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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Checking

The

Flow


Connecting the Dots


The People


The Process


The Program





STRATEGIC VISION



STAKEHOLDERS + INFRASTRUCTURE + RESOURCES

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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Board

Member

Success

Story

Having a board composed of members who
realize they can do a better job by working with
other board members is a

BIG step in a board’s professional development



@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

6


Board

Member

Success

Story

Having a board composed of members who know
their main duties are policy making and carrying
out oversight fiduciary responsibilities is a

BOLD commitment to the board purposes



@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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Board

Member

Success

Story

Having a board composed of members who know
the success of their roles is directly connected to
skilled preparation & anticipation is a

BOLD recognition of the need for annual training



@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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Goals & Objectives

Board members are
hard working & committed

Board members are
well trained & focused

Board members are

informed & experienced




The ENTIRE Board is


Productive & Successful

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

9


Board

Self
-
Assessment


What do you value?




What do you value in LANWT?




What is the mission of LANWT?


@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

10


Board

Self
-
Assessment







What is the board’s vision for LANWT?



What is the board’s strategy to get there?

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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11


Board

Self
-
Assessment



What financial resources are available?



How stable are those financial resources?



@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

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Board

Self
-
Assessment







If there was one thing you could change
about financial reports to the board, what
would that be?


@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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13

Under The Financial Bubble


CHALLENGES FOR A NON
-
PROFIT ORGANIZATION




TIP # 1
:
Budget Line Items Do Not Always


Match the Chart of Accounts



TIP # 2
:
Current Financial Statements Do Not


Easily Assess Whether You Are


Efficiently Accomplishing Your Mission




@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

14

Under The Financial Bubble


CHALLENGES FOR A NON
-
PROFIT ORGANIZATION



TIP # 3
:
Financial Projections May Not Be


Based on Reliable Assumptions But


Need to be Verified
-
Updated



TIP # 4
:
Knowledge of an Organization’s


Financial Health Should Be Shared By


the Entire Board of Directors




@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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FINANCIAL GEARS










THREATS &
CONFRONTATION

POSITIONAL
BARGAINING

HIGH DEMANDS &
LOW DEMANDS

COOOOPERATION &
COMMON INTERESTSX

STATEMENT OF FINANCIAL POSITION
OR BALANCE SHEET

STATEMENT OF
ACTIVITIES OR
INCOME &
EXPENSES

IRS FORM 990

CASH FLOW STATEMENTS OF
FINANCIAL PERFORMANCE

AUDIT


BUDGET

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

16

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Financial Documents





BUDGET

FINANCIAL
POSITION

STATEMENT OF
ACTIVITIES

AUDIT

For the Future

Present Snapshot

Income/Expense

Not Operational

For the Program as
a Whole

Assets & Liabilities

Budget To Actual

Unqualified
Opinion

For Specific
Projects

Positive Net Assets

Earned Income

Controls in Place
Not Fraud

A Sound Plan for
both Revenue &
Expenses that are
Reasonable

Look at Total Asset
Depreciation
Deferred Revenue


Look at Cash on
Hand


Compare Program
Expenses with
General
Administrative
Expenses

Payroll Expense


Look at Notes


Look at
Management Letter

Financial Items At A Glance

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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The

Alpha

-

5
Approach

Being a board member is great but for those
confusing financial statements that demand so
much time to review without a quick guide



@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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The

Alpha

-

5
Approach

Determine the Cost
Drivers

Balance Sheet Test

Income Statement Test

Which are the top 5 components of
expenses program wide and by
specific projects?

Current ratio of assets over liabilities
& quick ratio of cash & unrestricted $

Budgeted to Actual Revenue &
Expenses (Month & Yr to Date)

If You Want To Track Financial
Trends For Key Drivers

Line items as a % of total revenue &
expense today & 3 prior years

If You Only Had 5 Minutes for
the Board Financial Report

You would want to know about cash
flow from investments
-
grants
-
assets

@2008 Tony Alvarado

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

Copyright © 2006
Thomson Business & Professional Publishing. All rights reserved.

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THANK YOU LANWT BOARD OF DIRECTORS !







Tony Alvarado

December

13, 2008

@2008 Tony Alvarado