Financial Health Report

Peparation

The report is prepared in mid August once the books have closed on the previous financial year and the proposed budget for the upcoming year has been prepared. The Finance Committee has the responsibility of creating the report but works closely with the Business Manager and the Treasurer, both member of the Fiance Committee.

Financial health

By Board policy, ASURA is considered to be financially healthy if:

• current year revenue in the Operations Account is greater than current year expenses in that account and
• there is "an adequate cash reserve" in the Operations Account where an  adequate cash reserve is defined as
  • an amount equal to the current scholarship amount plus one-half of non-scholarship prior year expenses. The cash reserve can be used in the event of large unforeseen, i.e., un-budgeted, expenses or loss of income. After covering these, the reserve should be replenished as soon as possible. 

Prepare report

To prepare the report make the following calculations and fill in a summary table (download sample report table).

1. Take the difference between this year's projected Operations expenses and projected Operations revenue.
2. To calculate the adequate cash reserve add the proposed Scholarship Operations expenditure (this year's budget) with half of (last years Operations expenditures-the Operations expenditure for the Scholarship). 
3. To calculate the excess funds subtract the adequate cash reserve from the current budget's projected end of year net balance for Operations.

The discussion provided depends on the results of the calculations.

• If calculations one and three are possible the association is financially healthy and if the excess funds seems large, the Finance committee can consider what to do if anything with the excess.
• If calculation one is negative what you say depends on how negative and historically what has been the trend. Relatively small negative amounts can often be explained by one time large expenses and overlooked. If the excess funds are large it can be suggested that current excess will handle the shortfall without impacting the adequate cash reserve.
• If calculation three is negative, the association will be to consider cutting back on expenses. 

Update sample report (recommended)

To make it easier to complete the report for the next year it is recommended that the Word version of the current report be used to update the Sample report stored on Wild Apricot's File in the Document folder. Use the update feature to update the file (see Working with Wild Apricot files)