Finance committee responsibilities

The Finance Committee considers how ASURA finances its operations over the long term, and recommends any actions about the means of financing to the Board

General information

The Bylaws define two tasks for the committee:

Conduct an annual review of association expenses
Review the economic viability of the association

Membership

The Financial Operations Manager and Treasurer
Other ASURA members who indicate an interest on annual membership form or have participated in meetings
At least one member who can conduct the annual review of expenses
No minimum or maximum number
No requirement of quorum

Meetings

A meeting is held in October to prepare the Annual Review of Expenses report to be presented at the November Board meeting.
A meeting to discuss the implications of the annual review of the association's financial health.
Other meetings as necessary to carry out the committee’s duties.

Chair responsibilities

The chair is appointed by ASURA Board President and has the following responsibilities:

Coordinates work of committee
The two annual tasks are:
1. preparing and presenting the financial health of the association report
2. preparing and presenting the annual review of expenses report
Assigns a member to work with the Business Manager in preparing the annual review of expenses draft report
Schedules committee meetings
Presides at committee meetings
Provides the Financial Health of the Association report to the September Board meeting
Provides Review of Expenses Report to the November Board Meeting for review and acceptance.
Provides monthly report at ASURA Board meetings as needed
Review the material related to the ASURA Book Drive on both the ASURA web and on the Help for Volunteers website. Note: Any change requests should be sent to the Technology Manager.
Review and update Finance Committee process (i.e., this document). Note: Any change requests should be sent to the Technology Manager.

Expenses - financial health - endowment questions

Conducting annual review of expenditures

In September, the Committee chair asks one or more members, preferably members with a financial or economic background, to conduct a pre-review of annual expenditures. Jerry Snyder has done this review for a number of years. The pre-review addresses all expenditures for the previous fiscal year which ends on June 30.

Collect review documents

ASURA Annual Event Report;
ASURA Financial Report;
ASU Foundation
Summary Balance Sheet / Income Statement (operations); ASU Foundation
Summary Balance Sheet / Income Statement (special projects)
Summary Balance Sheet / Income Statement Adopt-A-Family))
Summary Balance Sheet / Income Statement (Video History)
Summary Balance Sheet / Income Statement (History Book)
ASU Foundation Summary Balance Sheet / Income Statement (pooled endowment and endowment income).

Review of cash balances

The review also verifies that ASURA ending cash balances agree with the underlying Foundation records.

Prepare report for the Board

The pre-review is presented to the committee within 30 days of assignment. If the committee agrees with the review and findings presented, the committee prepares a report of the annual review for the Board, with a finding that the expenditures of the ASURA, after consideration of the comments/explanations on the ASURA financial reports, were reasonable and consistent with the budget (or not).

Present to the Board

The Committee provides the annual review to the Board for consideration during the regular November Board meeting. If the review is acceptable, the Board approves it at the same meeting. If the review is not acceptable to the Board, the Finance Committee will continue working on the annual review and present it for approval at a later meeting, preferably at the December Board meeting.

Financial health

Annual review

It is important to annually establish the financial health of the association to ensure the proposed budget expenditures are acceptable. The biggest single expenditure in the budget is for the Scholarship. The scholarship endowment fund currently cannot entirely fund ASURA's Scholarship; the shot fall is paid out of Operations.

The Finance Committee prepares a financial health report which is presented during the September Board meeting after the proposed budget. The report shows the results for both parts of the health analysis as well as the excess funds that might be available. The report often includes the analysis from several of the preceding years for comparison.

Financial Health Spreadsheet

Sample Financial Health Report

If the association's financial health is fine and the excess funds are large, the Finance Committee may be asked to consider options for reducing the excess.

Longer term review

While no standard process or approach is used to address the association’s long term economic viability all such discussions start with the Annual Review of Financial Health

If the financial health is good and the excess funds are considered to be larger than necessary the committee considers various ways to reduce the excess.
If the financial health is good and the excess funds are not considered to be larger than necessary then there is nothing to do.
If the financial health is not good then the discussion involves deciding what cuts in expenditures or increases in income can be recommended to the Board.
If the financial health is good but the Board would like to embark on a new project that would negatively impact the financial health then the committee needs to discuss possible fund raising ideas for the Board to consider.

Endowment questions and answers

During the required review of the ASURA expenditures for fiscal year ending June 2020 some questions came up regarding the Endowed Scholarship account. The ASU Foundation was contacted and the following information was obtained.

What are the two endowment accounts?

During the Financial Committee's review, they noticed that the Scholarship Endowment account had been divided into two parts, called “Temporarily Restricted” (FD401) and “Permanently Restricted” (FD400). The explanation received from the Foundation about this indicated that the change was caused by a switch to the Workday financial management system. The difference between the two parts is explained, as,

Generally speaking, on a standard endowment, the Gift Value (all gifts deposited to the endowment) is the only ‘permanently restricted’ portion.
The investment returns, payout and fees are almost always ‘temporarily restricted’.
Reinvested payout can go either way, temporary or permanent, depending on the donor's instructions.

Can ASURA request finds in Temporarily Restricted funds be moved to the Spending Account?

No -- Our endowments (FD4XX) follow a set payout schedule so distributions to the spending account happen only once a year except under special circumstances.

We do have a separate class of accounts which we call "quasi" endowments (FD200/240) which are essentially regular spending accounts that are invested the same way as an endowment. This allows the account to get earnings until the funds are spent while also allowing flexible payout options. However, quasi-endowments are not meant to be held in perpetuity like endowment accounts

Note: at the time of the review ASURA had an uncommitted reserve of about $30,000 in its Operations account, the Finance Committee briefly looked into the “quasi-endowments” mentioned above. The committee wanted to determine whether it would make sense to invest the reserve and quickly concluded that a quasi-endowment fund to hold the reserve was not practical for ASURA. In 2014 the Finance Committee had also looked into this question and had arrived at the same conclusion.

Are the funds in both sub-accounts of the endowment treated the same in terms of investment?

Yes -- Investment gains/losses are calculated based on the market value of each account which is FD400 and FD401 combined (or FD440/441 for ASU accounts). All earnings are booked to FD401. We do this in order to keep the gift value separate from any investment returns/fees on our books. There are only a few circumstances when we would book returns and fees to FD400, usually relating to stock gifts and any associated gains/losses before the stock is sold or broker fees that directly impact the gift value.

If ASURA wanted to, could it make a gift from its Operations Account to the endowment?

Yes -- As long as the operations account is set up as an ASUF account we can process it as a transfer. When ASU accounts send money to an ASUF account it has to be cut as a check.

If we wanted to, could we “reinvest” funds in the Spending Account into the Endowment? If so, what is the mechanism for doing it? Can we specify that it goes into the “Temporarily Restricted”, and then if we need it later can we get it back?

Yes and No -- This is very common and we call it reinvested payout. It's managed through our transfer module and is one of the transfer types that can be selected. Normally reinvested payout would be considered temporarily restricted if requested by a unit, unless required by the donor in which case it would be considered permanently restricted. Either way, the reinvested amount could not be withdrawn due to the same limitation as I mentioned above, but it would increase payout every year going forward.

Updated May 1, 2023 by BW McNeill