Obtain the necessary bank authorizations, IRS identificatio

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• FINANCES
• Section Vitality Training Modules

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Objectives

• The Participant will be able to
• Obtain the necessary bank authorizations, IRS
  identification and federal Tax exemption.
• Lead the Executive Council in the preparation of
  a budget.
• Keep the sections books and provide reports to
  the Executive Council.
• Prepare the Sections Finance Report and conduct
  necessary end of year activity.

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Objectives-2

• Lead the Executive Council in the development of
  section financial policy.
• Prepare a financial starting point if the section
  has been inactive.

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AGENDA

• Getting Started
• Budgeting
• During the Year
• End of Year Activity
• Financial Policy
• Operation Kickstart
• Where to go for Assistance
• Appendix

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Getting Started

• Have a conference with the previous Treasurer and
  transfer section financial records.
• All records from the previous year including bank
  statements
• Previous Section Finance Reports
• Bank names and account numbers
• Employer Identification Number (EIN)
• Investment locations and account numbers

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Getting Started-2

• Review the beginning of the year account
  balances, accounts receivable and payable details
  and reconcile to the data provided in the Section
  Finance Report.
• Review last years bank and investment account
  signature cards and determine who will have
  signature authority for the coming year.
  Recommend the Treasurer and one additional
  Officer.

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Getting Started-3

• As a guide, require one signature (Treasurer) for
  the checking account and two (President and
  Treasurer) for the investment accounts.
• If your section has been inactive or does not
  have complete financial records see Operation
  Kickstart, then return here.

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Budgeting

• Planning the budget for the year is a Group
  Sport. It should involve the Executive Council
  and all Special Event Chairs.
• The chart of accounts or budget format should
  parallel the Section Finance Report data
  requirements.
• Large or very active sections will have a more
  complex chart of accounts.

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Sample Chart of Accounts
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Sample Balance Sheet
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Net versus Cash Flow

• Net versus Cash Flow
• The Section Finance Report form instructions and
  the Section Manual direct you to include only net
  income or expense for special events or
  activities. For budgeting and tracking purposes
  you should keep track of the total cash flow in
  order to understand the true magnitude and
  composition of an activity. Summarize for
  reporting purposes.

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• Exercise 1

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During The Year

• The Journal
• A journal is a record of receipts/deposits and
  disbursements in the order in which they occur.
• The Ledger
• Provides a means to group various sources of
  income and expenses.
• For our purposes, the section journal is the
  check book with appropriate notes about the
  purpose of the transaction. Details of combined
  payments and deposits are essential.

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During the Year-2

• The section ledger can be a spread sheet such as
  the Sample Chart of Accounts which mirrors the
  finance report format and records the budget plan
  and actuals. This spread sheet plus a balance
  sheet can be used to provide interim reporting.
  The level of detail of the ledger should
  reflect only what the section needs for
  management and reporting requirements.

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During the Year-3

• If the section has a significant number of
  accounts receivable or payable a separate journal
  (i.e listing) should be kept.
• Reports to the Executive Council
• Be provided at each Executive Council Meeting or
  at least quarterly.
• Should report in ledger format and show plans
  versus actuals and the status of bank and
  investment accounts. Accounts receivable and
  accounts payable should be included as income and
  expenses respectively.

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Investments

• The initial requirement for an investment is to
  not leave funds in excess of current operating
  requirements in the checking account.
• Funds in excess of current operating
  requirements should be invested in a liquid
  vehicle such as a money market account.
• If the Section receives a SWE Program Development
  Grant, review the need for the funds and invest
  accordingly.

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Investments-2

• When available funds exceed a reasonable
  operating cushion, longer term investment
  approaches can be considered.
• Longer term investments should be approached with
  care. An approach is to empower an Investment
  Committee made up of the Treasurer and members
  who have investment experience. The Executive
  Council should establish a philosophy for the
  committee to administer.

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• Exercise 2

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End of the Year Activity (EOY)

• Section Financial Report
• If you change last years data make sure you
  explain the change.
• Reconcile the bank account before starting on the
  report.
• Use the Ledger to complete the first page of
  the report. Summarize as appropriate.
• Remember to include accounts receivable as income
  and accounts payable as expenses.
• Use bank and investment account data and accounts
  receivable and payable to complete page two of
  the report.

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(EOY) Taxes

• Local sections are responsible for the
  determination and payment of all appropriate
  taxes.
• See Appendix for a discussion of state and
  Federal taxes.

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(EOY) Records Retention

• The Finance Committee is developing a Section
  Finance Guide which will address this issue. As
  an interim guide the following retention
  schedule is suggested
• Hold for Three to Five Years
• Deposit slips
• Officer travel records/reimbursements
• General Correspondence
• Section bills and receipts including
  disbursements to members

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(EOY) Records Retention-2

• Hold for Five to Seven Years
• Bank statements
• Paid and canceled checks
• Accounts receivable records
• Investment records
• Grant records

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(EOY) Records Retention-3

• Hold Permanently
• Year-end financial reports
• General Ledger and Journal
• EIN and SS-4 Request Form
• Copy of the Societys 501(c)(03) Group Exemption
  Determination Letter from the IRS (circa 1992)

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(EOY) Audit

• Purpose
• Safeguard the assets of the organization
• Ensure accuracy of the records
• Ensure compliance with policies, laws,
  regulations, and sound business practice
• Audit Committee
• Appointed
• Should include a previous treasurer or someone
  with financial experience

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Audit Activities

• For each account
• Review deposits and withdrawals
• Confirm current balance
• Review any adjustments
• Review any cash withdrawals or checks made to
  individuals (compare to expense reports, etc.)
• Compare ledger to budgeted income and expense

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Audit Report

• Report to Executive Council
• Any Anomalies
• Any activity not in compliance with budget or
  written direction
• Any absence of documentation (expense reports,
  invoices, bank statements, etc.)
• Recommendations for improvement in procedures

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• Exercise 3

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Financial Policy

• Financial Responsibilities
• Each elected officer of the section is
  responsible for the financial affairs of the
  section. The Treasurer has the lead
  responsibility, but all the officers are
  responsible for the prudent use of the sections
  resources. Each section activity should be
  assigned to a specific Officer and documented in
  a responsibility matrix.
• Spending Guidelines
• The section should develop and document a
  spending philosophy to provide guidelines for all
  members of the section.

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Financial Policy-2

• Suggested areas of guidance are
• A limit on spending above the budget amount.
• A reimbursement process with a simple form (See
  Sample Voucher).
• A requirement for Executive Council approval of
  Special Event budgets before commitments can be
  made on behalf of the Section.
• A requirement for Executive Council approval of
  new budget items during the year.
• A Presidents Discretionary Fund for quick
  response low dollar amount items.

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Finance Policy-3

• The section philosophy about using the assets of
  the section to accomplish the goals and purposes
  of the Society. Members should be encouraged to
  bring new ideas forward.
• Its ok to spend more than you make in a given
  year if you have reserves. Sections are
  encouraged to spend large reserves to meet
  Society goals and not let them gather dust when
  young women are in need of encouragement toward
  the study and pursuit of careers in Science,
  Engineering, Math and Technology.

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Operation KickstartHow to get Restarted

• If you do not have complete records and have been
  inactive for some time you will need to
  kickstart your way to a current status.
• Get the last Section Finance Report of record
  from Headquarters.
• Check with Headquarters about dues rebates
  withheld.
• Get previous end of year bank statements. (These
  may cost a little.)

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Operation Kickstart-2

• Review checkbooks and section records you can
  find.
• Reconstruct the Section Finance Report for the
  previous year. This becomes your point of
  departure for the future.
• File the reconstructed Section Finance Report for
  the previous year with the Region Director and
  Headquarters. Include a request to Headquarters
  for payment of the previous years rebates.

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Where to go for More!

• SWE National Treasurer (treasurer_at_swe.org)
• SWE National Finance Committee Chair - Marcia
  Lampela (mlampela_at_ats.bwauto.com)
• SWE National Finance Committee Member- Kam Kersey
  (kam.kersey_at_swe.org)
• Past Section Treasurers
• IRS - web page www.irs.treas.gov
• Form SS-4 and instructions
• Finance Report Forms www.swe.org/SWE/Treasurer/Fin
  anceReports.html

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Questions ?
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Appendix

• Definitions
• Sample Disbursement Voucher
• Taxes
• Donor Acknowledgement Discussion
• Sample Donor Letter

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Definitions

• Journal- A record of receipts/deposits and
  disbursements in the order in which they occur.
• Ledger- Provides a means to group various sources
  of income and expenses.
• Chart of Accounts- Provides a framework for
  budget preparation and tracking. Each account is
  assigned a title/number and is classified under a
  category such as assets, liabilities, revenue,
  expenses etc.

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Definitions-2

• Receivable- An amount which individuals or
  companies have promised to give you but which you
  have not yet received.
• Payable- An amount of expense that you have
  incurred but not yet paid.
• Debit - An expense item, a charge to the bank
  account.
• Credit- An income item, a deposit to the bank
  account.

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Definitions-3

• Cost of Goods Sold- Cost of merchandise plus the
  cost of shipping, storage, etc.
• Inventory- An amount equal to the number of items
  in the inventory multiplied times the unit cost
  of goods sold.

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Sample Request for Reimbursement
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Taxes etc.

• Employer Identification Number (EIN)
• Every section should have its own EIN. It is
  required for reporting interest income by the
  bank and for the section to be included under the
  Societys Federal Tax Exemption. Do not use the
  EIN of the Society. To have an EIN assigned by
  the IRS, complete IRS form SS-4 and mail it to
  the IRS.

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Taxes etc.- 2

• State Sales Taxes
• Each state has its own regulations regarding
  sales taxes. Your section is not automatically
  exempt from sales taxes. You must explore your
  particular situation to determine your status.
  Your Federal Tax status may help you to obtain
  state sales tax exemption.

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Taxes etc.- 3

• Federal Taxes
• The Society is a 501(c)(03) tax exempt
  organization per IRS regulation. In addition the
  individual sections and Regions are also exempt
  from Federal Taxes if they have been included in
  the Societys Group Exemption. Contact
  Headquarters to confirm your inclusion in the
  group exemption.
• In most states your inclusion under the Societys
  Federal Group Exemption will exempt you from
  state income taxes. You should check your state
  requirements.

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Taxes etc.- 4

• If you average over 25,000 a year of net income
  over a three year period, you are required to
  file a 990/990EZ Report with the IRS. This is a
  requirement set out in the IRS Determination
  Letter of 1992 which grants the Societys Group
  Exemption. Should this condition occur, contact
  the Finance Committee for further assistance.
• If you receive a request from the IRS for a 990
  Report and you do not exceed the 25,000 three
  year average, check the box which indicates you
  do not meet the reporting requirement and sign
  and return the form to IRS.

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Taxes etc.- 5

• Donation Acknowledgement
• All donations to the section should be
  acknowledged with a thank you letter.
• Assuming you are covered under the Societys
  Federal Tax exemption, you are required to
  acknowledge any donation greater than 250. A
  discussion of this requirement and a sample
  acknowledgement letter are included in the
  Appendix.

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Donor Acknowledgement

• Donor Acknowledgement
• When you receive donations over 250, you will
  need to send an acknowledgement letter to the
  donor. Some companies will require a form W-9
  and will send you a form 1099 with a copy to the
  IRS. Not to panic, this is just their way of
  staying straight with the IRS about their
  charitable donations.

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Donor Acknowledgement-2

• The instructions for IRS Form 990/990EZ, under
  section L. Contributions, set out a requirement
  for tax exempt organizations to prepare an
  acknowledgement to substantiate contributions
  for all donors who contribute 250 or more. In
  the case of scholarship donations for which no
  goods or services were provided to the donor, the
  acknowledgement can be fairly straight forward.

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Donor Acknowledgement-3

• There are several requirements the
  acknowledgement must meet
• Be written
• Be contemporaneous ( be timely for the donor to
  use in his/her tax return preparation)
• State the amount of any cash the organization
  received
• State whether or not the organization gave the
  donor any goods or services for the donors
  contribution.

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Donor Acknowledgement-4

• The acknowledgement for cases where goods or
  services are provided to a donor is a bit more
  complicated. The process involves establishing a
  value for those goods or services above a
  threshold of goods or services of insubstantial
  value or certain membership benefits. If for
  example you ran a golf tournament and the
  participants paid 300 for the event. If they
  received 100 in green fees, cart fees and food,
  you would have to provide data in the letter
  which acknowledges a good faith estimate of the
  goods or services received and the donor would
  subtract that amount when claiming a tax
  deduction.

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Donor Acknowledgement-5

• .Those sections that have the more complex
  donation situations should seek advice from a
  CPA. Those sections dealing with simple
  scholarship donations can use something similar
  to the sample letter shown below.

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Sample Donor Letter

• Dear Donor, Date
• Thank you for your contribution of xxxx to the
  Society of Women Engineers Section Name
  Scholarship Program.
• There are many ways to support the Society, but
  financial assistance is one of the most critical.
  Without contributions from individuals like you,
  the Societys mission would be compromised.
  Through the loyal support of members and friends,
  however, we are making great strides toward our
  goals of supporting women of all ages, in their
  quest for successful careers in engineering.

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Sample Donor Letter-2

• Please know that you are an important reason for
  our continued success. Thank you again.
• Sincerely yours,
• President or Scholarship Chair
• Tax Note This letter acknowledges that you did
  not receive any goods or services from the
  Society of Women Engineers in return for your
  contribution. Please save this acknowledgement
  for your tax records.