financial management for geographic units ieee sections congress october 2005
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Financial Management for Geographic Units IEEE Sections Congress October 2005

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Financial Management for Geographic Units IEEE Sections Congress October 2005 Agenda Overview – IEEE Finances Geographic Unit Funding Q&A Protection of Funds Q&A IEEE Finances 2004 Actual Financial Overview Revenue US$277.0 million (Includes investment returns)

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agenda
Agenda
  • Overview – IEEE Finances
  • Geographic Unit Funding
  • Q&A
  • Protection of Funds
  • Q&A
ieee finances 2004 actual financial overview
IEEE Finances2004 Actual Financial Overview
  • Revenue US$277.0 million

(Includes investment returns)

  • Expenses US$255.0 million
  • Net Surplus US$ 22.0 million
  • Net Assets (Reserves) US$138.6 million
2004 ieee revenue
2004 IEEE Revenue

US$277.0M Total

$128.5M

$80.6M

$45.1M

$13.2M

$9.6M

2004 ieee expenses
2004 IEEE Expenses

US$255.0M Total

$113.3M

$73.9M

$48.6M

$9.2M

$7.6M

$2.4M

ieee financial management
IEEE Financial Management
  • IEEE is responsible for maintaining records for all units worldwide
  • Compliance with IEEE Policies is important; in particular to IEEE maintaining the Institute’s nonprofit tax-exempt statusin the US
  • IEEE is incorporated in New York State & must comply with both State & US rules and regulations
  • IEEE’s Fiscal Year is the calendar year (1 January through 31 December)
  • Updated controls are being established to ensure that the interests of the IEEE, its units and their officers are protected
ieee financial management geographic units
IEEE Financial ManagementGeographic Units
  • Funds for geographic unit activities come directly & mostly from member dues
  • Treasurers & Section leaders make significant contributions to IEEE’s financial management by maintaining appropriate records & timely annual financial reporting
  • IEEE Geographic Units are not independent organizations but are essential components of IEEE
  • Subsections, Chapters & Affinity Groups are sub-units of Sections & their financial activities should be incorporated in the Section’s financials (L-50)
  • Geographic unit operations & reporting are to be based on the calendar year
exemption from us federal income tax
Exemption from US Federal Income Tax
  • The IRS has determined that IEEE is exempt from USfederal income tax as an organization, described in Section 501(c)(3) of the Internal Revenue Code
  • In a group ruling, the IRS has determined that IEEE’s US geographic units qualify for federal income tax exemption
  • No unit should separately apply to the IRS for exemption from US Federal Income Tax
  • Should any Unit be requested to apply by the IRS, contact the IEEE Tax Compliance staff immediately
managing section assets where is the money kept
Managing Section AssetsWhere is the Money Kept?
  • Concentration Banking program
  • Checking account in local bank
  • Custody Accounts (Regions 8-10)
  • IEEE Investment Fund
  • There are 971 accounts for 389 geographic units
    • 595 local bank accounts, cash & investment
    • 315 Concentration Banking accounts
    • 61 geographic unit participants in the IEEE Investment Fund
concentration banking program details
Concentration Banking Program Details
  • Wachovia Bank
  • Local unit retains control of funds
  • No monthly service charges or “per-check” fees
  • 6-month CD rate paid on daily account balances
  • Access monthly statements & cancelled checks online
  • Custody accounts maintained for non-US units
  • Units not required to submit bank statements with their annual financial report (L-50) for these accounts
unit local bank accounts
Unit Local Bank Accounts
  • Must be opened in the legal name “Institute of Electrical and Electronics Engineers, Incorporated _______ Section (or Chapter)”
  • IEEE policy specifies that 2 local volunteers must be authorized signers on each account plus the IEEE Staff Director, Financial Services as an alternate signatory
  • Exemptions can be filed with RAB where local laws do not allow for IEEE Staff Director on accounts
  • Units submit signature/bank account card, signed by all authorized unit officers to the IEEE Regional Activities Department
  • IEEE staff will secure the signature of Staff Director, Financial Services & forward the card directly to the bank, with copies to authorized signers
custody accounts
Custody Accounts
  • Used in countries in Regions 8-10 to address:
    • Difficulties in exchanging currency
    • High fluctuations in exchange rates
  • Rebate is deposited to Section’s custody account
  • At the Section’s request, IEEE pays membership & renewal fees from this account, based on membership forms submitted by the Section
  • Accounts are interest bearing on their monthly balances
  • 47 active custody accounts
geographic unit funding

Geographic Unit Funding

IEEE Sections Congress – October 2005

section rebate program
Section Rebate Program
  • Each Section receives US$2,000 plus
    • $3/member (including Students)
    • $4/Senior Member & Fellow
    • $1.50/Affiliate
    • $200/eligible Chapter & Affinity Group
    • $500/eligible Subsection
    • 10% bonus for reporting on time (Feb)
    • Activity bonus possible
  • Unit & subunits must comply with activity & annual reporting requirements
additional funding sources
Additional Funding Sources
  • Region - Section Support Via Regions (SSVR)
  • Societies - Each Society has its own programs to support Section Chapter activities
  • Workshops/Tutorial/Conferences
  • Other IEEE Units (IEEE-USA, Life Members Committee) & programs
  • External Sources (industry support)
appropriate use of funds
Appropriate Use of Funds
  • Technical, Non-Technical & Administrative meetings
  • Newsletters
  • Student Branch support
  • Distinguished Lecturers
  • Subsection, Chapter & Affinity Group support
  • Recognition Supplies (banners, plaques, pins, certificates)
  • Donations, with prior authorization from the IEEE Executive Committee
inappropriate use of funds
Inappropriate Use of Funds
  • Electioneering of any kind
  • Personal or commercial loans
  • Purchase of real estate, without prior authorization from the IEEE Executive Committee
  • Investment of surplus funds in any investment vehicle other than IEEE Investment Fund
contract administration
Contract Administration
  • Contracts in excess of US$5,000 & less than US$25,000 can be executed (signed) locally with a copy sent to IEEE Procurement Department.
  • All contracts with a stated or expected value at or above US$25,000 ... negotiated & approved locally, executed (signed) at the Operations Center after review by subject matter experts.
  • Review by subject matter experts:
    • Staff, Legal, Volunteers (as appropriate)

www.ieee.org/contractsonline

[email protected]

unit financial reporting
Unit Financial Reporting
  • All units must prepare & submit an annual Financial Report (L-50)
  • Electronic submittal recommended (use Excel spreadsheet)
    • http://www.ieee.org/scsreports or
    • Hard copy submittal allowed
  • Account for all financial activity associated with the unit (revenue & expenses)
  • Include all unit & subunit data
    • One L-50 preferred or
    • Include an L-50 for each subunit
  • For questions: [email protected]
protection of funds

Protection of Funds

IEEE Sections Congress – October 2005

heightened awareness of corporate financial activities
Heightened Awareness of Corporate Financial Activities
  • Evidence of this is in the news weekly, even daily
  • Major changes in corporate financial management processes are being made in response
  • IEEE is a large corporation & annually must consolidate all of its units’ financial activities into a single financial report; IEEE retains an external auditor to audit its annual financial activities
  • IEEE recently selected Ernst & Young (E&Y) as its external auditor & IEEE financial activities are being reviewed
  • E&Y required this year that IEEE consolidate all Section financial activity; Section reserves for 2004 totaled US$14.2 million
  • As part of this decision, E&Y conducted a bank account balance confirmation process for external accounts of several Sections (Thank you to all who assisted with this process)
  • We expect E&Y to continue & expand on this process in the future
how is ieee addressing this for geographic units
How is IEEE Addressing This for Geographic Units?
  • IEEE wants to ensure that the corporation, the units & unit officers are protected
  • To do this, we must ensure that all IEEE Organizational Units are empowered & expected to follow a set of sound financial practices
  • A volunteer & staff team in RAB is looking at the financial processes of all geographic units
    • Regional Treasurers are being kept current on progress & provide valuable suggestions & feedback
  • To this end, Regional Activities will be considering & implementing a series of best business practices that are common place in many organizations worldwide
  • These practices are presented in this part of the financial management presentation
  • We expect that many of the practices are already included as part of the Sections’ current financial management processes
regional activities budget management philosophy
Regional ActivitiesBudget Management Philosophy
  • Keep the funds as close to the member as possible
  • Budget is managed by Volunteers
    • RAB Finance Committee reviews and endorses
    • Region Treasurers are corresponding members of RAB FinCom
    • RAB Committee Chairs provide oversight and endorsement of items included in RA Budget
    • 10 Region Directors/BoD members elected by the membership endorse the budget
  • Maintain metrics to ensure effective processes
basic asset fund cash controls
Basic Asset Fund & Cash Controls
  • Review unit expenses – check register
  • Review monthly account activity
  • Submit original bank statements
  • Bank account signature cards
  • Annual audit process
  • Continuity/Volunteer transition
review unit expenses check register
Review Unit Expenses –Check Register
  • Treasurer presents the Section/Chapter check register(s) to the Section ExCom on a periodic basis
    • Present check register at least 2 times per year
    • Check register includes: name, date, amount, budget line & purpose for each transaction (for example, expense reimbursement, services provided, etc.)
    • Request review & approval of check register report
  • Why?
    • Independent review of expenses
    • Ensure Section ExCom is informed & approves unit expenses
review monthly account activity
Review Monthly Account Activity
  • Section Chair & Treasurer periodically review the original monthly statements of account & compare to recent financial report
  • Treasurers should be reconciling account activity monthly
  • Chair/Treasurer will receive initial reminder from IEEE Regional Activities Department mid-November 2005
  • Why?
    • Good practice for unit leaders to review account activity
    • Emphasize that more than one person has oversight of the financial records
submit original bank statements
Submit Original Bank Statements
  • Original bank statements for all local accounts (Sections, Chapters, Affinity Groups) must be submitted with the annual financial report (L-50)
  • Section officers may be asked to provide assistance in securing verification of account balances by E&Y or IEEE staff
  • Why?
    • To protect the integrity of the bank account information reported annually
    • Independent confirmation (verification) is required for annual IEEE Audit

Note: Not required for Concentration Banking & IEEE Investment Fund participant accounts

bank account signature cards
Bank Account Signature Cards
  • Units submit signature/bank account card, signed by all authorized unit officers, to IEEE for the required staff signature & directly to bank
  • Why?
    • Ensure that appropriate authorized signers & accurate signatures are on all accounts
    • Protection of IEEE assets
    • Protection of unit Treasurer, Chair & unit ExCom
annual audits
Annual Audits
  • Ensure that all geographic units conduct local audits on an annual basis
    • Units that have $100K or more revenue or expenses must continue to have a more formal audit
  • Getting Started
    • Implement a process to ensure audits are conducted by local volunteers (Pilot)
    • Units may be audited as part of the IEEE corporate audit process
    • E&Y may confirm account balances in local banks used by Sections for financial transactions
  • Why?
    • Required for annual IEEE corporate audit
    • Protection of unit Treasurer, Chair & unit ExCom
continuity volunteer transition
Continuity & Volunteer Transition
  • Both outgoing & incoming Section Chairs/ Treasurers sign off on annual L-50 financial report
  • Begin with 2005 Financial Report signed by 2005 & 2006 Chairs & Treasurers
  • Why?
    • Ensures the smooth transition of officers & mutual understanding of the unit’s financial status by both sets of officers
    • Protection for both outgoing & incoming Volunteer Officers
2005 l 50 changes
2005 L-50 Changes
  • Complete & submit external account balance confirmation form to facilitate possible E&Y requirements
  • Submit original bank statements for local accounts
  • Signed by outgoing & incoming Section Chairs & Treasurers
  • To ensure that consolidation can be completed in a timely manner, L-50s are to be submitted by 31 March instead of 30 June (Pending RAB approval in Nov 2005)
summary
Summary
  • Bi-annually:
    • Review check register
  • Monthly:
    • Review accounts
  • Annually:
    • Review & update bank signature cards
    • Conduct local Section audit
    • Assist in IEEE Audit if requested
  • Consider Concentration Banking program/ custody account
    • Easiest way to be compliant with most of the IEEE processes & policies
assistance is available
Assistance is Available
  • IEEE Treasurers’ Handbook
    • http://www.ieee.org/treasurers
  • IEEE Policy Manual
    • http://www.ieee.org/policies
    • Section 11 addresses financial management issues to be addressed by Chairs & Treasurers
  • IEEE Financial Operations Manual
    • http://www.ieee.org/about/whatis/policies/finopsmanual.pdf
  • [email protected]
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