Protecting PORAC’s “Mint” Financial Footing
As mentioned in a previous article, PORAC fared well during our audit of the prior year’s financials. However, we did receive a management letter from the auditor noting two 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, we are not going to be able to resolve the issue of segregation of duties, as that would require a much larger accounting department, which would be cost prohibitive and unnecessary for our organization. We do, however, 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, which is PORAC’s management and oversight of chapter funds. The auditors are concerned that PORAC is not monitoring how chapters spend monies reimbursed to them by PORAC. Furthermore, the auditors noted that some chapters keep large balances of cash, which increases 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 in August to discuss and asked Kim and me to come up with possible solutions to address the concern. As such, Kim and I have been working on 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. These guidelines will be presented to the Fiscal Management Committee in November on Thursday after the Board meeting. Depending on the direction provided by the Fiscal Management Committee, the recommendations may be brought to the Board as early as January for its evaluation and input.
At the October Executive Committee meeting, I discussed the progress of this process with the committee. Executive Director Parks recommended that we gather input from our chapter directors and presidents on the recommended guidelines. This was an excellent idea from Executive Director Parks; however, this process needs to be vetted by the Fiscal Management Committee first. Once we have an approved set of guidelines by the Fiscal Management Committee and the Board of Directors has been given an opportunity to provide their input on the matter, it will be disseminated to our chapter directors for discussion and feedback at their respective chapter meetings.
Kim’s and my thought process for the preliminary guidelines revolves around the chapters using their funds to reinvest in PORAC’s mission and its members at the chapter level, including providing sponsorships to attend PORAC trainings and events, and donations and assistance for local association events held within each chapter. Keeping that in mind, none of the concerns noted by the auditors dealt with how chapters spend their PIC/PAC funds. As such, there will be no proposed changes to how chapters spend those funds.
When it comes to the reporting process, that will possibly take more time, since Kim and I understand that chapter treasurers volunteer their time. Therefore, we need to ensure that we address the concerns of the auditors, but also ensure that we are not overly tasking our chapter treasurers with complex financial requirements. To accomplish this, we are trying to develop a simple form that can be attached to the chapter’s quarterly statements, which would provide a brief explanation of chapter income and expenditures to allow better monitoring by PORAC Headquarters. Ultimately, the goal of our approach is to be able to provide our auditors with the steps taken to satisfy their concerns about how PORAC oversees chapter funds. It’s important to bear in mind that PORAC is 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 fiduciarily responsible.
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.
I am proud of the work being done by the Budget Committee and the rest of your PORAC financial team, consisting of President Mike Durant, Vice President Brent Meyer, and Finance and Administrative Manager Kim Busman. Everyone is working diligently to ensure that PORAC is a force to be reckoned with, along with protecting our members’ monies. I look forward to having the final draft of the 2016 budget for your review at Conference, along with the opportunity to provide you with additional insight on the positive work being accomplished by the 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, and we need to ensure that it continues being financially strong through prudent fiscal management and oversight.