Financial Management for Geographic Units. Financial Management – August 2006 2005 Reporting...

Financial Managementfor Geographic Units

Financial Management – August 2006

2005 Reporting Overview

The efforts of the all the Geographic Unit officers is appreciated

As of 1 July 2006, 96% of the financial reports (437) have been submitted for review

Thank you for your continued efforts


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 status in 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 were established in 2005 to ensure that the interests of the IEEE, its units and their officers are protected


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

The IRS has determined that IEEE is exempt from US federal 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


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]

Unit Financial Reporting


Provide a listing of payments to individuals & unincorporated businesses during the year for services rendered, awards, grants, honorariums, and prizes.

Not required for scholarships and fellowships or for expense reimbursements.

Record the Name – Address – Amount of all payments to Individuals

Information must be provided to Tax Dept at Year end so IRS Form1099 can be issued for US persons or IRS Form 1042 can be issued for non US persons




Bank Information will be collected yearly. Bank Account Disclosure Form

- Account Numbers- Account Singers- Address of Bank

Why? IEEE Auditors might contact your Financial Institution to Confirm Balances



Protection of Funds


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 in 2005 that IEEE consolidate all Section financial activity; Section reserves for 2004 totaled US$14.2 million

We expect E&Y to conduct a bank account balance confirmation process for external accounts every year using information from Bank Account Disclosure Form Information


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 continuing a review of the financial processes of all geographic units

Regional Treasurers are being kept current on progress & provide valuable suggestions & feedback

To this end, Regional Activities has implemented a series of best business practices that are common place in many organizations worldwide

We expect that many of the practices are already included as part of the Sections’ current financial management processes


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

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

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 receive reminders via SCOOP

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 Original bank statements for all local accounts

(Sections, Chapters, Affinity Groups) must be submitted with the annual financial report (L-50) wherever possible

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 Units submit signature/bank account card,

signed by all authorized unit officers, to IEEE for the required staff signature & directly to bank

Signature Cards are returned directly to the bank with copy to unit officers

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 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 18 Geo Units audited based on 2005 financial activities

Getting Started Implement a process to ensure audits are conducted by local

volunteers Regional Activities has provided materials to help local volunteers

conduct an audit – this material is available via SCS web page “Treasurer Best Practices”

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 Both outgoing & incoming Section Chairs/

Treasurers sign off on annual L-50 financial report

Process began with 2005 financial report & will continue

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


Recent Modifications

Complete & submit external bank account disclosure form to facilitate possible E&Y requirements

Submit original bank statements for local accounts whenever possible

Submit Conflict Of Interest Forms (Treasurer/Chair) 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 2006


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


Expected Timeline - 2006 September 2006

Bank Account Disclosure form to be updated & made available to geo units

Unit Treasurers are requested to complete and return as soon as possible but no later than 15 January 2007

November 2006 Distribute reminder regarding the collection of taxable

payments to individuals Unit Treasurers are requested to provide information as

soon as possible but no later than 15 January 2007

December 2006 Financial Report to be updated & made available


2007 Deadlines

15 January 2007 Deadline for providing the list of individuals who received

payments in 2006 Deadline for submission of completed bank account

disclosure form for each unit account (including Chapter/Affinity Groups)

24 February 2007 Submit completed financial report for 10% bonus

31 March 2007 Submit completed financial report for to get rebate


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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