Arizona Chamber Executives Conference 2017 Rob Leslie CPA

Arizona Chamber Executives Conference 2017 Rob Leslie, CPA, CGMA rleslie@eidebailly. com 602. 339. 2805 www. eidebailly. com

Financial Key Elements any Chamber Should Have in Their Optics • Discussion points • Financial Reporting • Internal – What do we need to know? • External – What is the story that our financials tell? • Regulatory Reporting Issues – staying out of harms way! • General Best Practices • Internal Controls • External Influences www. eidebailly. com

Internal Financial Reporting www. eidebailly. com

Internal Financial Reporting • Where does this begin? • Understanding the business model that your chamber works under: • Revenues sources • Membership trends? • Expense parameters • Staffing • Hired • Volunteer/members • Attrition • Budgets • Where do we start from? • Zero based or not? www. eidebailly. com

Internal Financial Reporting • What do we use to track and understand our fiscal performance? • Budget to Actual comparisons • Cash basis versus Accrual basis • How do we handle known changes to budgeted amounts? • Dash Board – who are the users? • Development • Critical indicators • Use – Management vs: Board www. eidebailly. com

Internal Financial Reporting • Internal financial statement – What do they look like? • Who are the Users? – start here! • Management • Board /committees • Outside stakeholder • Level of detail • One report for all users? • Multiple reports with different levels of detail? • Summary reporting www. eidebailly. com

External Financial Reporting www. eidebailly. com

External Financial Reporting • Who Are The Users? • Board • Vendors • Financial institutions • What is the basis used? • Cash • Accrual • Other • What is the Story that is told? • Types of CPA Prepared Financial Statements – what is the difference in types? • • Compilation Reviewed Audited Other types of reporting www. eidebailly. com

External Financial Reporting • Footnotes – What is required and what is optional? • Does your Chamber have affiliate entities? • Foundation • Publications • Building LLC • New Reporting Standards – only for GAAP basis F/S! • Two classes of net assets instead of three • Net Assets with Donor Restrictions • Net Assets without Donor Restrictions • Disclosure of future cash-flows – significant change and requirement! www. eidebailly. com

Regulatory Reporting Issues www. eidebailly. com

Regulatory Reporting Issues • Internal Revenue Service • • • 990 filings – timely and complete? Open for public viewing through Guide. Star Related entities? Unrelated Business Income (UBI) Lobbying and Political Activities • Income tax related to UBI • Payroll Filings and Taxes • In-house prepared • Payroll service company • NEVER borrow from withheld taxes to patch cash flow needs www. eidebailly. com

Regulatory Reporting Issues • State Filings • Corporation commission • Department of Revenue • Sales and use tax • Multistate or other Jurisdiction filings www. eidebailly. com

General Best Practices www. eidebailly. com

General Best Practices • Internal controls – What are these? • Policies and procedures to protect the assets of the entity • What are the assets? • Accounting and reporting controls • General controls • COSO internal control framework – industry best practice! • Their website is full of documents to assist in developing and/or enhancing internal controls • First element of sound internal controls starts with “control environment” – aka “Tone at the Top” • How does your chamber communicate its “tone at the top”? www. eidebailly. com

General Best Practices • What do sound controls help to prevent? – FRAUD • Are Chambers susceptible to fraud? – YES • Example – Utah Chamber • Two types of fraud • Misappropriation of assets – theft of assets • Financial Statement Fraud – most significant in effect in dollars – falsifying overall financial outcome to achieve an end result • Bank requirements to be met • Bonus calculations for executives www. eidebailly. com

General Best Practices • Report to the Nations – fraud report published bi-annually by the Association of Certified Fraud Examiners – Free on their website • Actual cases used • Stratified by: • Types of fraud • Industries (non-profits) • Who are the perpetrators • Average life cycle of a fraud scheme is 18 months • You can’t fully eliminate the risk of fraud but you can mitigate it • Does your Chamber have a Whistle Blower Hotline? Or policy? www. eidebailly. com

General Best Practices • There are many more best practices to discuss, all of these are predicated on: • The size of your Chamber • Staffing • Revenues and types of events and activities www. eidebailly. com

Questions? This presentation is presented with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns, as the contents of this presentation are intended for general informational purposes only. Viewers are urged not to act upon the information contained in this presentation without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and additional information can be submitted to your Eide Bailly representative, or to the presenter of this session. www. eidebailly. com

Thank You! Rob Leslie, CPA CGMA 602. 339. 2805 www. eidebailly. com