Finances – Technical Division and Institutes Roy Hogan rehogan@sandia

2. Finances – Technical Division and Institutes Roy Hogan rehogan@sandia.gov Elio Manes ManesE@asme.org

3. Why talk about finances? • Money lets us do good things! • A financially sound organization benefits everyone! • Stewards of your Division’s resources • Responsibility & accountability

4. Objectives of Division/Institute Finance Session • Overview of ASME Finances • The “Big Picture” of ASME • The ASME budgeting process • How your Unit fits in • Guidance for Unit Leaders • Your financial responsibilities • Your financial resources

5. The “Big Picture” of ASME Finances • Our focus • Putting our money to work to accomplish our Mission and Vision • Our opportunity • Wisely use our Division/Institute’s money to serve our members and the Society as a whole

6. ASME is a “Not-for-Profit” under IRS 501-(c)(3) Regulations • Exempt from payment of federal income and sales taxes (in certain States) • Operated exclusively for purposes of “… scientific, public safety, ….” • Dictates mandatory operational, accounting, and reporting responsibilities and limitations which are applicable to all of us

7. Overview of ASME Finances • ASME operates on a 3-year budget cycle • Driven by 3-year publication & sales of the ASME Boiler Code • Budget is balanced over a 3-year period • Changing to a 2-year budget cycle in 2014-2015 • ASME Fiscal Year  July 1 to June 30 • Nominal annual operating budget is ~$93M

8. Revenue and Expenses(2011 Actuals) Revenues ($101.2 M) Expenses ($92.6M) 8/53

9. Financial Governance • Board of Governors (BOG) • sets policies, strategic direction, and priorities • Committee on Finance & Investment (COFI) • reports to the Board of Governors • responsible for maintaining Society’s financial policies • leads our financial operations and approves an annual operating budget • produces our Annual Report • Knowledge and Community (K&C) Financial Operations Operating Board • prepares and monitors budget for the K&C Sector

10. ASME Annual Report • IRS requires ASME to produce an Annual Report • 501-(c)(3) not for profit • Publication 557 • http://www.irs.gov/ • Link to Annual Report http://files.asme.org/asmeorg/About/30342.pdf

11. ASME Policies – Finance Related • Leadership – President and BOG • http://www.asme.org/about-asme/governance/asme-society-policies • All the way from P-1.1 to P-17.1

12. Society Budget Includes Funds for Operating the Institutes Sector organization and operating units: • Knowledge & Community (K&C) • Institutes • Standards & Certification • Centers • Strategic Management • Publishing & Services • Corporate Support • Four Institutes • International Gas Turbine Institute (IGTI) • International Petroleum Technology Institute (IPTI) • Nanotechnology Institute • Innovative Technologies Institute

13. Society Budget Includes Funds for K&C Volunteer and Staff Support Sector organization and operating units: • Knowledge & Community (K&C) • Institutes • Standards & Certifications • Centers • Strategic Management • Publishing & Services • Corporate Support • Five Vice-Presidencies • Technical Communities • Global Communities • Programs and Activities • Affinity Communities • Financial Operations

14. Financial Operations Board Develops a K&C Budget • Operation of K&C Sector • K&C Board, plus Technical, Global, Affinity, and Programs & Activities Boards and programs • Volunteer/staff travel and expenses • Audio/Visual, meals, telecons, etc. • Division custodial fund activities do NOT roll up into the Society general fund budgeting process

15. Majority of K&C Budget Supports Governance and Operations * K&C Admin includes the K&C Operating Board, Technical Communities, Global Communities, Affinity Communities, Programs & Activities, and Financial Operations Board

16. K&C Budget Feeds into the Overall Society Budget • K&C Financial Operations Board integrates requests from the five vice-presidencies (TC, GC, AC, P&A, FO) in the January/February timeframe • Budget requests prioritized by Sector Management Committee (SMC) & COFI • Final budget approved by the BOG at the Annual Meeting (June)

17. Division Leader’s Responsibilities • Division/Institute Income & Expenses • Conferences, Exhibits, and Events • Custodial and Operating Accounts • Annual Budgets and Reporting • Resources for Division/Institute Leaders Understand and follow Society Policies http://www.asme.org/Governance

18. Volunteer Leaders Represent ASME and our Membership It’s important to remember that our actions will reflect on the reputation of the Society. • Act with integrity and honesty • Practice financial stewardship and accountability • Understand and follow ASME policies • Avoid real or perceived inappropriate, unethical, conflicts-of-interest…. behavior and activities Public respect and trust of ASME has been earned over many years; but it can be easily destroyed!

19. Income and Expenses • Income (Sources of Funds) • Where do Technical Divisions or Institutes get their operating funds? • Expenses (Uses for Funds) • How do Technical Divisions or Institutes use their money?

20. Divisions and Institutes Earn Income Through Programs • Surplus and/or share from Conferences, expositions, short courses, publications, etc. (Pursuant to Policy P-12.1) • Journal revenue sharing • Voluntary member dues contributions • Share of Continuing Education Institute (CEI) programs sponsored/facilitated by a Division • Solicitation of funds from non-ASME sources such as corporate sponsorships (Pursuant to Policy P-2.7)

21. Division & Institute Expenses • Conferences, short courses, etc • Recognition, honors and awards • Speaker programs • Scholarship programs • Student activities, competitions, etc. • Newsletters and other communications • Volunteer travel and support • ASME staff support

22. When are Expenses Covered? ASME units may pay expenses when: • There are sufficient funds in the budget and custodial account to cover the expenses • The expenses have been authorized, are within policy, and are supported with receipts • The expenses are incurred for the benefit of ASME • Expenses are allowed under current ASME Policy • The expenses are consistent with ASME’s 501-(c)(3) tax status It’s your responsibility to know the Society Policies http://www.asme.org/Governance/Society_Policies.cfm

23. Volunteer Travel Expenses • Travel expense support for officers and members to participate in ASME programs (reimbursable pursuant to Policies P-4.5 and P-4.6) • Travel must coincide with activity, be reasonable, and within ASME per-diem • Custodial funds MAY NOT be used to cover actual expenses that are greater than the allowable policy-reimbursable expenses • Members may incur out-of-pocket costs that the Division cannot reimburse!

24. Considerations for Covering Expenses for Invited Speakers • Reimbursement of travel expenses • Reimbursement limited to acceptable expenses • May cover all travel costs • Honorariums • May be awarded in lieu of covering expenses • Must be reported as income to recipient • Both require a written speaker agreement stipulating terms of engagement

25. Requirements for Conferences and Expositions Depend on Finances • ASME Financial responsibility drives requirements • Sponsorship: Total financial responsibility • Co-sponsorship: Joint financial responsibility • Participation: No financial responsibility • Conferences & expositions may • be managed by ASME HQ, ASME units, or non-ASME organizations • have total, shared, or no ASME financial responsibility • All requests for event approvals must be submitted using the online Event Planning and Approval Tool (EPAT)

26. Benefits of the Events Planning and Approval Tool (EPAT) • User friendly • Captures historical data and going forward can prepopulate data • Provides forum for sharing best practices • More efficient than the old CA-1 paper forms • Standardizes information gathering process required by Policy 12.1 • Conference Budget template • Conference Business Plan template

27. EPAT Budget Template (Revenue Tab)

28. EPAT Budget Template (Expense Tab)

29. Collaborations Require Additional Planning and Agreements • Co-sponsored events • require a written agreement of the duties, responsibilities, and disposition of surpluses and losses • Participation events • require a written agreement of the duties, responsibilities, and stating no ASME financial obligations • Prevents misunderstandings and conflicts

30. Planning and conducting an ASME Conference or Event • ASME sponsored and co-sponsored events • Require a business plan and budget • Require approval of ASME Events Committee • Must be budgeted to be self supporting with 15% surplus • Must include Staff support • May include a surcharge to produce operating funds • All income is to be deposited into Custodial Accounts • Must provide a final financial report within 3 months after the Event date • If a final financial report for a preceding conference is not submitted, no future proposals for that Event will be approved. • May require post-event auditing

31. Your Conference or Event May be Audited (Policy 12.1) Required • When ASME has greater than a 50% financial responsibility and where actual or budgeted income or expense is $500,000 or more • Performed by a professional independent auditor • jointly identified by Event Chair and ASME Assistant Treasurer • ASME Assistant Treasurer has final responsibility for the selection • Cost incorporated into Event budget (estimated $10K) Random • When the actual or budgeted income or expense is less than $500,000 • Selected by the COFI and ASME Assistant Treasurer • Cost paid by ASME

32. Additional Considerations for Conferences and Events • All expositions • Shall be conducted in a manner consistent with ASME’s Policy 12.1 and 501-(c)(3) tax status • All contracts • MUST be signed by the Executive Director or the Assistant Treasurer • CANNOT be signed by ASME until an event has been approved in the EPAT by the ASME Events Committee • All income • MUSTbe deposited in the Division’s or Institute’s Custodial Fund

33. Higher-Dollar Activities Require Additional Approvals • When any Division or Institute activity involves total annual expenditures of $100,000 or more (Policy P-2.1) • An itemized budget MUST be prepared and submitted to the Committee on Finance and Investment for review and recommendation to Board of Governors • MUST be approved by the Board of Governors for execution in the subsequent year

34. International Events Require Additional Attention to Finances • North America • Europe • Developing Nations • ASME has consultants available • Work closely with ASME Staff Manager

35. Custodial and Operating Funds • ASME has established policies that facilitate the efficient and timely financial operation of Divisions and Institutes • “Custodial” and “Operating” accounts are available to Divisions and Institutes • The ASME Assistant Treasurer creates monthly Custodial Fund financial reports that are available to Division/Institute Chairs and Treasurers on the ASME website

36. Establishing Division/Institute Custodial or Operating Funds To establish a new Custodial or Operating Fund, a Division or Institute (Policy P-2.1) • MUST show that they have a need to make direct expenditures • MUST have an approved budget • MUST obtain the approval of the Technical Communities Operating Board, and of the Committee on Finance and Investment (COFI)

37. Description of Operating Funds Operating Funds: Money (usually for small, frequent expenses) kept separately in banks or other recognized financial institutions • MUST have receipts available for audits • MUST be reported annually to the Committee on Finance and Investments (COFI) • Names and addresses of the financial institutions • Names of those authorized to make withdrawals • MUST adhere to all ASME Policies and necessary requirements for IRS 501-(c)(3)

38. Annual Planning and Reporting • Divisions should prepare an operating budget • Divisions are required to prepare and submit an Annual Report and Plan to their respective Technical Group Operating Board • Annual Report and Plan • summarizes your Division’s activities • presents goal & plans for the upcoming year • Streamlined, web-based report tool being tested Important communication with your leadership!

39. Using Your Custodial Fund • All monies received by a Division or Institute are to be deposited into the Custodial Fund • Payments from a Custodial Fund • Payments are made from the Custodial Fund on the written request of two members of the Society authorized by the Executive Committee of the Division or Institute (usually the Treasurer and Chair) • Verbal authorizations for payment may be given to staff by two authorized members for expenditures up to $2000, provided that copies of the approved invoices are sent to the authorizing members for their records

40. Description of Custodial Funds • Custodial Funds: • Money generated by an ASME activity • Maintained in the ASME General Fund by the ASME Society’s Treasurer • Invested as part of the General Fund • Investment capital gains (or losses) and income in General Fund allocated to the Division/Institute’s Custodial Fund (monthly)

41. Custodial Fund Reports • Custodial Fund financial reports are available to Chairs and Treasurers • View your Division’s custodial fund report at http://my.asme.org/financials/GLReports.cfm • Check it often! It is your responsibility to be certain that your unit’s accounts are accurate! • Promptly report suspected errors to your Division’s staff manager and to support staff using the Volunteer E-Request Tool (VERT) http://vorequest.asme.org

42. Once you receive access to the custodial fund you can go to the financial reports website and sign in. Please use the email address on your ASME record

43. Enter your personal password that you created for the ASME members-only site. Your password is not your membership number or an ASME generated number.

44. Initial Page of the Financial Tool Select the account you want to view Click on “Generate Report” Note: You will only see your accounts

45. Overview of Revenue and Expenses Blue entries are “hot” and will take you to a more detailed description of the item

46. “Hot Entries” lead to the Details Multiple pages Multiple tabs for different entries

47. Details Transaction Page Can be Printed, Exported, or Saved • From the Detailed Transaction Page you can: • Print your report • Export your financial statement into other file formats (excel, word, adobe) • Save your document

48. Additional Financial Help • For questions related to financial specifics please contact your ASME Staff Manager • For any additional questions about the financial tool or your access • please contact: Deidra Hackley ( hackleyd@asme.org ) • or send your message through the Volunteer E-Request Tool (VERT) at http://vorequest.asme.org

49. ASME Financial Resources • Earnings (or losses) from Division or Institute Custodial Funds • Mingled with ASME General fund • Society resources for innovative initiatives • TCOB New Product Development Fund • Early Career Forum Grant Fund • ASME Program Fund (Policy P-2.5) • ASME Foundation Grants (Policy P-2.11) • ASME Initiative Fund (Enterprise Leadership Team)

50. Additional Resources for Financial Questions and Assistance • Your Vice-President for Financial Operations • Karen Ohland ohlandk@asme.org • TCOB Resources • Conference Planning Committee • Committee on Finance and Administration • Committee on Division Operations and Training • Your Technical Group Operating Board • Volunteer Orientation & Leadership Training (VOLT) • ASME website for forms, templates, best practices, etc http://committees.asme.org/K&C/CPC/Forms_Templates.cfm