Addressing the Auditor’s Concerns and Protecting PORAC’s “Mint” Financial Footing
As mentioned in my September article, PORAC fared well during our audit of the prior year’s financials. However, we did receive a management letter from the auditor noting a couple areas of concern. Our Finance and Administrative Manager, Kim Busman, refers to the management letter as a report card of her ability to properly manage PORAC’s finances. Therefore, she equates anything above the segregation of duties issue as needing to be remedied immediately. Based on the size of our organization, however, we are not going to be able to fully resolve the issue of segregation of duties. It would require a much larger accounting department, which would be cost prohibitive and a luxury for our organization. However, we don’t take this issue lightly; as such, we have numerous checks and balances put in place to ensure the organization is protected from being defrauded by one of our own. Those checks and balances include the regular review of our financials by the PORAC President, Vice President, Fiscal Management Committee, Budget Committee, Board of Directors and Treasurer.
Consequently, we arrive at the second noted area of concern: PORAC’s management and oversight of chapter funds. Last year, the auditors were concerned that PORAC was not monitoring how chapters spent their reimbursement monies. Furthermore, the auditors noted that some chapters kept large balances of cash, which, in the long run, could increase PORAC’s risk of fraud. As a result, the issue was deferred to the Fiscal Management Committee to evaluate and come up with a possible solution. The Fiscal Management Committee met and discussed the issue. Kim and I developed guidelines for how PORAC can better monitor our chapters’ general fund income and expenses, along with how those items are documented and reported to PORAC. During the Board meetings, the topic of chapter spending became a lively one; however, we were able to agree on making sure that chapters are using their reimbursement monies for the betterment of our members. For example, the Inland Chapter will usually select an active small association to send to Conference or the Symposium to help develop the association’s leadership and better serve their members, or we will cover the expenses of the chapter’s executive board to attend the Conference or Symposium. Other options consist of practices many of you are currently using, such as supporting member association fundraising events, socials, or, everyone’s favorite, golf tournaments.
I realize that I am taking you back to events from last year; however, I’m doing so to inform you that our auditors were pleased with our efforts in this year’s audit. With that said, I want to thank all the chapters for taking the auditor’s and your financial team’s concerns seriously and helping us show that we are diligently doing what is best for the organization.
For the most part, everyone is doing a great job when it comes to the reporting process. We appreciate everyone’s diligence in completing the reporting form, which helps to provide us with additional information and justification for how your monies are being spent. Kim and I understand that chapter treasurers volunteer their time. Therefore, we need to ensure that we address the concerns of the auditors while not overly tasking our chapter treasurers with complex financial requirements. At the same time, the chapter’s financial practices are not just the responsibility of the chapter treasurer. The chapter executive board and members should be reviewing the chapter’s financials to ensure the chapter is properly spending its monies.
From the results of the audit this year, it appears we achieved our goal of creating a better system to monitor chapter expenses by PORAC Headquarters. As such, we were able to provide our auditors with the steps taken to satisfy their concerns regarding oversight of chapter funds. It’s important to bear in mind that PORAC is ultimately responsible for monitoring its funds at every level and able to show that people tasked with handling members’ monies are being held accountable and that those individuals are being responsible with your monies.
The last issue brought up was looking for an insurance mechanism for our PIC/PAC monies. As we are all aware, PORAC has substantial funds in our PIC/PAC accounts. The auditors were concerned that those monies were not properly insured to prevent loss. Kim and I, along with our PIC/PAC firm, are working on a viable solution for insuring those funds.
Once again, thank you for your efforts. I look forward to being able to provide you with an update on the progress of this issue at Conference, along with the opportunity to provide you with additional insight on the positive work being accomplished by your PORAC financial team. Over the past several years, I have made a commitment to be your “fiscal watchdog,” and I continue to stand by that commitment. PORAC has made great financial strides over the past several years, and we need to ensure that it continues being financially strong through prudent fiscal management and oversight.