Component Finance Knowledge Exchange

1
Component Finance Knowledge Exchange

• 13 May 20079.00 - 10.30
• Facilitator
• Jean-Michel Groleau, PMP
• France Sud Chapter - Treasurer
• Panelists
• Michael B. Flint, PMP
• Southern Ontario Chapter, Canada - President
• Mark Lurch PMP
• ITTelecom SIG - Chair

2
Session Objective

• Increase basic knowledge of not-for-profit
  accounting and reporting requirements
• Understand roles and responsibilities of the
  component finance officer
• Share ideas to improve component financial
  management regardless of size or maturity

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Agenda

• Component Finance Overview
• Group Discussion
• Additional Questions/Summary

4
Not-for-Profit

• Rules will vary from country to country
• Component aims and goals may not be profit
  focused
• Not working for a profit but equally, not
  working to loose money
• Positive cash flow is expected
• Establish a Financial Reserve 3 to 12 months

5
Chapters and Specific Interest Groups (SIG)

• Chapters are
• Local Organizations (face to face)
• Regional membership
• High levels of transactions
• SIGs are
• Virtual organizations (cyberspace meetings)
• Global memberships (multiple countries, culture,
  and languages)
• Low levels of transactions

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What to do first?

• Identify the Financial Officer
• Do a rough estimate on budget based on strategic
  plan
• Determine level of control needed
• Select bank and setup not-for-profit account
• Select accountant/auditor
• Select accounting software

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Identify the Financial Officer

• Regardless of size
• Individual responsible and accountable for the
  financial well-being, including
• Annual Budget
• Collecting and Disbursing Components funds
• Reporting current and future financial status
• Annual Financial Reports and Tax Returns

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Rough estimate of Budget

• Know the strategic plan of the component
• Do the estimate of activities needed
• Small components with say less than 100 members
  will have a budget of about Euros 5,000
• Larger components can be as big as E500,000
• Different approaches will apply, for controls,
  risk management and reporting

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Level of Control Needed
Software Needed

• The level of control changes
• 1,000 budget - Finance Officer issues the
  cheques and accounts for the disbursements
• At 25,000 level - need two signatures and maybe
  part-time bookkeeper
• At 75,000 or more - paid staff an option

• Software tool to maintain records and transaction
  details
• Packages available
• Simply, Quicken
• Must be for Small Business

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Budget Process

• Prioritize your objectives Then work on the
  Budget
• Follow Chart of Accounts
• Base on past 3 years results, plus Strategic and
  Operational Plan for current year
• Develop plan for each Portfolio
• Aim for a gtZero based Balance Budget
• (Expenses plus Reserve Allocation, equals
  Revenue)
• Monitor and record monthly, manage and update
  quarterly

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Chart of Account Summary

• Chart of Accounts
• These setup initially with the help of an
  Accountant/ Adapted from similar component.
• Reviewed annually at Budget time for changes
• Used to actively monitor and control expenditures
  and revenues
• Allocated by Portfolio for easy Portfolio
  Reporting

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Bank Account

• Be selective not all Banks offer the same
  packages
• Emphasize not-for-profit
• Avoid Business Accounts with higher fees

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SIG Bank Accounts

• Managed out of Wachovia Bank in Newtown Square,
  PA
• All transactions go thru PMI HQ except individual
  cheque deposits
• Internet access and cheque writing privilege is
  suggested for at least 2 SIG Bd Officers Chair/VP
  Finance
• Bank Fees are set
• 5 for normal transactions. Higher if wire
  transfers or currency exchanges are enabled

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Accounting software

• You may need a software tool to maintain your
  records and transaction details
• Based on the size and number of transactions- may
  be done manually with simple tools
• Accounting Packages
• QuickBooks Quicken and others.
• Must be designed for Small Business

15
Auditor/Accountant

• Select an Accountant who can be your Auditor
• Valuable support for the Component
• Can be expensive - shop around
• Emphasize not-for-profit

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SIG Accounting Tool
Budget Plan
Expense Input
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SIG Accounting Tool
Monthly Expense Input
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SIG Accounting Tool
SIGMaster FinancePlan
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SIG Accounting Tool
Present how you are doing!!
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Roles and Responsibilities

• Financial Officer
• Bank Account reconciliation
• Negotiation of Banking arrangements, signing
  authorities etc
• Management of the Chart of Accounts, assignment
  of new accounts and sub-accounts as required
• Control of the Accounting software producing
  exports for reporting purposes
• Periodical audit of bookkeeping entries and
  activities

• Review of expenditures against budget commitments
• Export of individual portfolio ledgers for
  reconciliation and explanation
• Projection of cashflows based on actual
  collections and disbursements and forecasted
  activity
• Providing the official explanations for Financial
  transactions for Audit, Fiscal or Annual General
  Meetings

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Topics for Discussion
Jean-Michel Groleau, PMP Treasurer, France Sud
Chapter GROLEAU_at_fr.ibm.com
Michael Flint, PMP President, Southern Ontario
Chapter, Canada michael.flint_at_soc.pmi.on.ca
Mark Lurch, PMP Chair ITTelecom
SIG chair_at_pmi-ittelecom.org
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Topics for Discussion

• How to Monitor Renewal of Memberships on a
  Monthly Basis
• Partnerships with Universities free meeting
  rooms
• National Sponsorships (when there are several
  chapters in a country)
• Banks reserves
• Web Site
• Forums free versus fee
• Software applications to run chapters finance
  versus Excel

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Thank You!

• These materials will be available on the
  Leadership Institute Meeting site
  http//componentleadership.pmi.org/maymeeting2007/