NSP2 Financial Management: “ARE WE DOING THE RIGHT STUFF?”

honeydewscreenGestion

9 nov. 2013 (il y a 7 années et 10 mois)

275 vue(s)

THE A
-
B
-
C’s OF COMPLIANCE

Matching The
A
sk to The
B
ooks to The
C
ontract







Joanne Montagner
-
Hull CPA







September 30, 2013

Goals of This Session


A frank discussion on
the proven required
connections between
the development cycle,
the accounting cycle, &
the compliance


Do the right thing, your
organization can keep
doing the good works


Don’t


and it won’t


Ground Rules


No question is dumb except
the one (s) not asked; but, in
interests of time, let’s use the
software to send in questions


All in this together, alone


No grades here; you are safe
here


Participants on this webinar
are from varied backgrounds,
varied positions…


Participant Mix


From all across the US


As of last week,


Program officers 37%


Finance folk 20%


Leadership (including
board) 18%


Development 8%


Other CDC positions 17%



Assumptions of Participant Skills


That each of you has at least one program that
mandates contract compliance where failure
would require repayment of funds


That each of you is in control of at least one
critical part of the contract compliance, or


You are supervising the people who are directly in
control of all the compliance


That most if not all of you are either subject to an
A
-
133 audit already are will be.


RIGHT?


Over
-
Arching Theme


“Begin with the end in
mind”


This is what should be
driving your
procedures, your
methods, your
processes


But you do NOT want
this end like…

Big Brothers, Big Sisters
-

Philadelphia


What you see in the
newspaper simply says,
“Youth agency closed:
Lack of funding
shutters… Board
decided to close at end
of December.. Most of
staff resigned first week
of December



But here’s the rest of the story..


23 million of spending
disallowed


But it was already spent


So what would YOU do
if you were the board,
responsible for the
behaviors of results of
the organization? Yes,
you too would board it
up.



1
st



The Explanation of Ask vs. Books
vs. Contract

Compliance Requires Health:

You cannot just “start” to perform.
This behavior requires HABITS.

Compliance
Requires Health:

A weaker
organization
struggles to
fulfill the
challenges of
contract
compliance

PART 1: Assessing NPO Financial Strength


Sufficient unrestricted cash


Sufficient working capital


Healthy revenue mix


Diverse “customer” base


Assets managed


Risks managed


Quality, followed P&P to
minimize risk


Adequate, quality oversight


Depth of staff & capacity


Financial Health


Know it before you
enter…


Do NOT wait until you
enter..


Check things out ahead
of time


Last two years’ audits


Last two years’ Form
990


Clean opinions?


A
-
133 = No findings?


Financial Health .. before you enter…


How many months of
cash on hand?


How dependent on
funding sources?


How late was audit?


How many audit
“issues”? Seriousness?


How many financial
folks vs. complexities &
# of programs?
(Adequate capacity?)


How About YOU?


Do you feel confident, “kingly” about
making such assessments?


Can you “read” an audit & 990 and see


items and


items?


Can you see the warning signs?

PART 2: Assessing NPO Financial Capacity


Depth of staff


Fullness & structure of
policies & procedures


Depth of oversight


Depth of management


Are complexity of
programs understood &
planned for success?


Program data


capture &
reporting


PART 2: Assessing NPO Financial Capacity


How many self
-
standing
programs does NPO have?


Does its processes &
procedures gather
documentation, FOR EACH,
FROM EACH CONTROL
POINT, BEFORE any $ is
spent?


Usually 70
-
80% of $ for
human performance




Are you getting what you
need


before hand?


Spending on HUMANS Means
DOCUMENTATION!


Staffing




Timesheets, timely &
personally completed


reflecting all time;
signed as accurate;
approved by manager; in
B4 needed!


Processes to ensure no
conflicts of interest,
adequate qualifications,
adequate background
checks


Benefits? Drug free?



Consultants




Qualifications


Bidding process


Form W
-
9


Documentation of
insurance, licensing, etc.


Invoices for time
incurred at agreed
-
to
rate

Spending on HUMANS Means
DOCUMENTATION!
(con’t)


Contractors




Qualifications


Bidding process


Form W
-
9


Documentation of
licensing, insurance,
bonding, workers’
compensation


Licensed staff? Background
checks? Drug free?


Occupational health/safety
performance



Contract (including
Certificate of Insurance
and other such
requirements)


Billing processes per
contact with performance
proof & lien releases


Inspections satisfied


Documented change
orders


Retainage

Financial Capacity Equals Depth


Grave
misunderstanding
that financial is 2
-
dimensional.


Financial reporting
must be 3
-
dimensional.


Just like buildings,
many features
-

height, layout,
materials, design of
space, change affect

Financial Capacity Equals Depth


Multi
-
program
organizations must
have p&l reporting
for each program


A
-
133 requires this;
cash & accrual basis,
by federal budget
line
-
item number


(This chart is highly simplistic.
Accounts families, individual
expense accounts, & underlying
supporting documentation not
listed here.)

CDBG

S

4

HHS1

HHS2

Other

Staff

Direct

Indirect

Financial Capacity Also Means

Balance Sheet Management


Does the contract require:


Separated, segregated cash?


If fixed assets purchased, must
they be separately tagged as
Property of Federal
Government? (meaning, you
must give it back at some point?
Insured in between time? Etc.)


No encumbrances permitted on
fixed assets? That means no
borrowing!


Payroll tax impounds? Workers’
Comp impounds?

Financial Capacity Really Means…

Does all your
applicable,
involved staff
know exactly what
the contract
actually says? Do
you?

A Sample Program: Beginning with the
End in Mind

Real Life; Facts:


10 person NPO with ½
time bookkeeper w/o
accounting degree


Founder left $300k
debt, defunded by key
funders; “game player”


ED sets goal of 5 years
to 1mill gov’t grant

First Year


Begins building Finance
Committee & Board;
seeks his own training,
mentors


Sits w/ key funders, gets
advice; follows it


Many sits with Bkpr +
staff, shares objective,
sets goals; gets buy
-
in

First Year

(con’t)


Holds staff comp. while
implementing year end
bonus plan


Fully implements payroll
service with impounds


Actively seeks formal
training for bookkeeper


Changes to “stronger”
audit firm

First Year

(con’t)


Chart of accounts
reworked; implemented
“program” tracking for
ALL programs


No bill processed,
recorded or paid (all 3)
without required
approval, account &
program

First Year

(con’t)


Establishes annual
budget process w/ full
staff; monthly full F/S
issuance, accrual basis,
with remainder of year
forecast


Full f/s package
reviewed in detail with
Fin Com, monthly

Second Year


Debt restructured;
10 year repayment
plan implemented


Finance Com. builds
Financial P&P


Timesheets,
payment request
forms, vendor
RFQ/RFP process
starts

Second Year
(con’t)


No payments issued
without key
documentation in
hand; no exceptions


Timesheets &
vendor sign
-
offs
with Penalty of
Perjury clause


Raising cash reserve

Third Year


Wins 2 $35K gov’t
contracts, foundation
support has tripled


All funders very
excited about NPO
deliverables in
community; more
applications in


Strategic plan

Third Year
(con’t)


Audits now
formality; all done
by end of 4
th

month


Continually
increasing programs
with high
performance &
audit marks


All staff share in



Fourth Year


Development support
& earned income in
better mix; income =
over double last year
of founder


Major players coming
to board


Consistent restricted
gift performance

Fourth Year
(con’t)


Budget process now
extensive; starts
with top
-
down,
then bottom
-
up
with full staff buy
-
in; takes 3 months


Consistent
performance on
restricted gifts


Fifth Year


Great Recession hits


Continued consistent
behavior


More gifts, more
programs


Profit & cash
increases


Application for $1.7
mill to State



Sixth Year


Continued
consistent behavior


More income, more
programs, more
profit, more cash


Staff salaries still in
lower ½; bonuses
bring into middle of
upper ½


Sixth Year

(con’t)


But staff love it
there
-
all known as
“winners,” great @
what they do


Very low staff
turnover


State awards 1.5
million


Seventh Year



Full A
-
133 audit,
perfectly clean


State audit of
documents,
perfectly clean


All examiners loved
102 page Fin’l P&P
AND how well it
was followed


What did they do right?

So…


What did YOU catch
them doing right?


What would you
have done
differently?


What did YOU do to
get YOU caught
doing it right?

Questions?

joannemh@yourbeancounters.com