Attachment E-1
Prepared by Peri Frantz,
NSS Secretary-Treasurer
s-t@caves.org, 408-356-8506
Status as of July 15, 2006
Contents:
Overview
Financial Reports
Finance Committee
Insurance Committee
Registered Agent
NSS Financial Accounts
Convention Treasurers
NCRC Treasurers
Other Treasurers
Restricted Funds
Dorothy D. Pruett Trust
Acknowledgement of Donations
Financial
Web Site
This report, my first report to the Board since taking office as Secretary-Treasurer, is more verbose than I intend future reports to be. However, I think it is important that a new officer establish a baseline of understanding with the Board, from which to move forward. So, please bear with me. Future reports will be more concise.
The last seven months have been a period of transition. Between my election as Secretary-Treasurer in November and assuming office on May 1, I focused on educating myself as to the specific requirements of non-profit accounting, reviewing the Board Manual, establishing communications with committee chairs, agents of the treasurer, and other volunteers in the Department, and learning the peculiarities of the NSS accounting system. I attended the EC’s annual budget meeting, provided Meredith Hall Johnson with updates for the recently released Members Manual, and I began the tedious process of updating the signature cards on the NSS’s 26 bank accounts. Since the beginning of May I have spent a week in Huntsville, assisting Dave Irving and Stephanie Searles with year-end accounting procedures, and am supporting Dave in his task of producing financial reports for the 2005/2006 fiscal year. While in Huntsville I met with independent auditor Randall Hunt, to discuss details of the upcoming audit. Work in progress includes looking for additional volunteers to fill department vacancies, updating the S-T web pages on caves.org, and continuing the signature update process.
Overall, I believe that the transition is going smoothly, and thanks to the unstinting efforts of the department staff, most especially Dave Irving, daily operations are proceeding largely unchanged. However, the learning curve for this position is extremely steep, and I do not expect to have it fully in hand for some time to come. There may be components of the job that I am neglecting because I am not yet aware of them. Obviously, I will correct any such situations as soon as they are brought to my attention.
Looking forward, I have identified several areas where current processes and procedures need improvement. These include providing the Board with more complete and up-to-date financial data, modernizing the office accounting software, and enhancing our fiscal policies and procedures to improve our compliance with Generally Accepted Accounting Procedures (GAAP) and applicable state and federal laws. Achieving these goals will take time, but I hope to be able to report progress on them, along with the more mundane operations of the department.
Attachment E-2: Financial Position as of May 1, 2006: Not available yet.
Attachment E-3: FY 2005-2006 Statement of Activities (Income & Expenses): Not available yet.
Attachment E-4: NSS Operating Fund: YTD Revenue & Expenses (As of May 31, 2006)
Attachment E-5: NSS Restricted Funds Summary: Discussion follows
Currently the Finance Committee consists of Dave Irving and myself. The Finance committee is responsible for reviewing the bookkeeping conducted by the office, conducting month-end and year-end financial procedures, producing financial reports, supporting the annual audit, and preparing the annual budget. This is a colossal and time-consuming job, and the committee is badly understaffed. Compounding this problem, Dave is the only person in the NSS who posses the knowledge and background to do this job. Should Dave become unavailable, Stephanie, Ted Kayes and myself could muddle through, but it would be extremely difficult. I have begun documenting Dave’s activities, but there’s a long way to go.
Achievements:
• FY 2005/06 Books are closed, and preparation of year-end reports is in progress.
• FY 2005/2006 audit is in progress
• FY 2006/07 Account for May is complete and June is in progress.
Problem Areas: I need to locate at least two accounting assistants, and a budget manager.
Goals: Locate additional volunteers. Continue documenting the Dave’s jobs.
Report from Ted Kayes, who constitutes a one-man insurance committee.
Status: Insurance, regrettably, is a large, on going and necessary expense of the Society. Basically there are four kinds of policies:
• General Liability coverage is essential for the operation of an organization of this size. It is also the policy that normally covers the annual Convention liabilities. The Convention represents about 40% of the cost of the policy. It also provides coverage for some regional events and NCRC training (Coverage for underground activities is excluded.)
• Fire policy coverage is primarily for the NSS office and the Smith house.
• Directors and Officers D&O coverage provides liability coverage for Directors, Officers and Committee Chairman, who, when acting in their official capacity do something that causes the organization to be sued. It does cover a few things that the General Liability policy does not.
• Bonding coverage protects the Society against losses caused by employees misappropriating funds.
Problem Areas: The 2006 Convention has a vendor with unrealistic liability insurance requirements. It has been necessary to obtain a special umbrella policy to satisfy this one vender. A binder has been requested. (S-T Note: 6/30/2006 – Ted has obtained the necessary coverage. Cost is $4500.)
Plans: A motion will be submitted to the Board that accident insurance be obtained for future Conventions.
Ted Kayes has investigated the issue of whether the NSS should have a registered agent in DC, and based on the opinions of Joel Stevenson and Bert Ashbrook, has concluded that we do not. No further action is planned.
To date, I have identified 26 accounts that bear the NSS Tax ID Number. These accounts can be loosely grouped into four general categories; NSS operating accounts, NSS Convention accounts; NCRC accounts; and miscellaneous committee accounts.
The NSS operating accounts are used in day-to-day business, are managed through the office, tracked in LedgerMaster, and are relatively easy to monitor. The other accounts support activities conducted away from the office. Although a few of them are tracked in Ledger Master, most are not. These accounts are more difficult to monitor, and must be manually folded into the year-end financial statements.
Each account is managed by one principal signer or treasurer and each has an independent reconciler. By NSS policy, the reconcilers do not have signature authority over the accounts. Their job is to review each monthly statement, looking for anomalies and questionable transactions. At this point, most of these 26 accounts are being monitored in compliance with NSS policy. I have begun tracking the reconciler’s reports, and expect to bring the few outliers into compliance by the next Board meeting.
Also by NSS policy, the signature authority for each of these accounts should include the NSS President and the Secretary-Treasurer. Many of these 26 accounts have not been updated in quite some time. Doing so requires that completely new signature cards be circulated to all signers, not just the new names. Due to Homeland Security requirements, copies of drivers’ licenses and other forms of identification are often needed before the new signature cards can be issued. The process of obtaining the necessary ids, getting the signature cards and circulating them among the 4 or 5 signatories is time consuming and tedious. Stephanie and I went to AmSouth while I was in Huntsville, and began the process for the five accounts there. I have asked the treasurers for each of the other accounts to start the necessary paperwork. Currently, five accounts are in compliance, six are in process and the rest remain to be done. I expect that most will be in compliance by the next Board Meeting.
Note: This section only covers Convention financial reporting. See the AVP Report for general convention reports.
Status:
2005 Convention, Huntsville Alabama: Treasurer Lance Hopenwasser has submitted his final financial report and has closed the bank account. The Convention showed a net profit of $7,392.56.
2006 Convention, Bellingham Washington: This convention is in full swing. Treasurer Marla Pelowski is submitting regular reports. The budget is very tight, and given the additional $4500 for insurance they were recently hit with, they will do well to break even. 2007 Convention, Marengo Indiana: Their budget has been approved, and they have opened a bank account. No transactions to date. Treasurer is Jo Ellen Kimmel.
2008 Convention, undetermined: Florida intends to bid for the 2008 Convention at Bellingham. A preliminary version of their bid from last March includes a first cut at a budget which will require substantial work before it can be approved.
2009 Convention/ 15th International Congress of Speleology: The Congress/ Convention has submitted a preliminary budget for review and comment. The budget is being revised in response to the feedback. Because of the unusual nature of this event, and a need to lock in some sites well ahead of time, the EC approved the dispensing of $5000 in seed money from the International Support Fund prior to budget approval, enabling Treasurers Michael and Melissa Cicherski to opened a bank account.
2010 Convention, Vermont: I have not yet seen a budget proposal from Vermont, however there is no need to be concerned given the 4-year lead-time.
Problem Areas: None
Goals:
• Assist the Florida and Vermont convention committees in developing their budgets.
• Enhance the Convention Budget Template to simplify the budgeting process.
Status: There are currently 10 NCRC Bank Accounts; One for NCRC National, one each for 8 of the NCRC Regions, and one for the 2006 Seminar. A 12th account, for the 2005 Seminar was recently closed. Berta Kirschman, as NCRC Financial Officer, consolidates all of these checkbooks into a single NCRC Report at year-end. Her FY 2005/06 report is outstanding, but expected very soon.
Problem Areas:
• Several of the Regional Coordinators and Treasurers have reported problems with the forwarding of monthly statements from the office. I am working with Stephanie to improve the process.
• Only two of the 10 NCRC accounts have been updated to include Bill Tozer and myself as signers.
Goals:
• Update signature cards on all outstanding NCRC accounts.
•† Improve the forwarding of bank statements.
Status: There are 4 miscellaneous bank accounts: JSS, FAS, MCNP Restoration Project, and the NSS News Advertising Account. I am receiving regular reports on the News Advertising account and the FAS.
Problem Areas: I’m not getting reports on the MCNP Project and JSS accounts.
Goals:
• Finish updating signature cards.
• Get reporting working for the JSS & MCNP accounts.
The NSS manages its money through multiple funds, each of which is designated for a specific purpose. The most active of these is the operating fund, which is used to conduct the ongoing day-to-day business of the Society. Many of the other funds are “restricted”, in that they are intended for use only for a specific purpose. The larger restricted funds and those intended for long-term use are invested through the National Speleological Foundation (NSF). The return on funds invested with the NSF vary by fund, but average about 11%. The smaller funs, and those intended for more immediate usage are retained in the NSS treasury.
During my interview for Secretary-Treasurer, and in conversations with several board members since then, I have heard concerns that the board does not have a clear picture of these resources or their use. To that end, I have created the attached NSS Restricted Funds Summary. This is a draft report, constructed from multiple sources. The data in it still needs to be reviewed for accuracy and completeness. There are also a number of inconsistencies between various sources, which I am seeking to resolve. So, while I hope you find the information useful and of interest, it should not be taken as definitive at this time.
We have received an unrestricted bequest of $18,298.83 as a remainder beneficiary of the Dorothy Pruett Revocable Trust. Lloyd and Dorothy Pruett were NSS members (#3857 & 3858) from 1957 through 1976. This bequest is unrestricted and can be used however we want. Despite a fair bit of time spent investigating, I have learned very little about the Pruetts or what their speleological interests were. There are apparently no heirs or family. The Trustee is court appointed, never knew MS. Pruett, and could shed no light on the situation. I will make a motion concerning the use of this bequest at the Bellingham Board Meeting.
The following chart summarized all activity related to the 2002 purchase of Great-X Cave.
| 193,362.42 | Acquisition Expenses |
| 4252.07 | Other Expenses |
| 20806.45 | Interest Paid |
| (162,932.72) | Donations Received |
| 3393.23 | Held in Great-X Fund |
| 58,881.45 | Mortgage Balance |
Recent traffic on the NSS-Board list has revealed a problem with properly acknowledging donations. Cash donations that are received at the office are properly acknowledged and recorded. Those that come in through other channels are often not. This includes donations made during conventions, donations made through miscellaneous committees, and donations in kind, most particularly auction goods. There is also a problem with fulfillment of premiums, such a plaques, associated with fund raising campaigns.
Goals:
• Implement procedures to assure that all donations are properly acknowledged and fullfillments are met.
The Finance Pages on caves.org were several years out of date and contain a motley collection of documents. I have updated the descriptive text, but have not had time to tackle the fiscal archives. I would like to find a finance Web master to help with this task.
Goals:
• Find a Finance Web Master
• Reorganize the Fiscal Web site into a coherent collection of useful and relevant documents.
7-15-06