Part 1 – GOVERNANCE
SECTION: Financial Administration
POL 1-023 Pr
Financial planning
Effective date: July 1, 2009
Approval date: May 3, 2009
Last revised: October 17, 2003
Cancelled date:
Reference: Bylaw III, IV Sec.5(C), VII Sec.5(4)
Cross reference:
PROCEDURES
The Committee that oversees Association governance is responsible for the tasks associated with the financial planning process. Financial planning will include a process for Board committees to request funding for unanticipated projects.
The Treasurer, assisted by the Finance Department, is responsible for advising the Board of Directors regarding the budget, dues structure and other financial matters. The Executive Director provides input and operational direction regarding the Financial Planning process.
Responsibilities of the parent committee:
1. Review financial statements and year-end projections regularly.
2. Review high-risk revenue streams.
3. Approve new or unanticipated projects/programs. Retire existing projects/programs, as appropriate.
4. Review spending beyond the Executive Limitations Policy.
5. Review and approve the proposed operating budget (including the Adaptive Budget and any equity spending request) prior to submission of the budget to the Board of Directors for final approval.
6. Review and resolve other notable financial items or issues.
Meetings of the parent committee:
1. Regular meetings using technologies to share and collaborate regarding financial information.
2. Annual in-person meetings at the Annual Conference and later to review the proposed budget.
Financial statement reporting (including year-end projections):
1. The Treasurer will conduct a status call with the parent committee to review the financial reports and to answer any questions.
Budgeting:
1. The Executive Director and the Director of Finance will deliver to the parent Committee a draft budget that is balanced, reflecting any projects or items cut from the budget that had been identified by the strategic planning process as priorities for the relevant fiscal year.
2. Headquarters Directors and senior staff meet to review the Association’s strategic plan (“Plan”) annually for the upcoming fiscal year. Discussions include:
(a) Board expectations for the upcoming fiscal year and how Plan objectives will be accomplished.
(b) Trends in the economy (vendors, members spending).
(c) What new projects are needed to support the Plan.
(d) Revisions to current projects in the Plan.
(d) Retirement of projects no longer needed to support the Plan.
3. The annual budget will include:
(a) Detailed budgets for:
- All Headquarters departments’ administrative and operating expenses and revenues.
- All Headquarters departments’ projects and programs, including travel, lodging and other related expenses and revenues.
- Elected officers and directors, committees, and region managers and coordinators.
- The annual conference, specifying all related expenses and revenue.
(b) Project Initiation documents that identify scope, cost and impact to ARMA for new initiatives, one-time projects and/or capital projects.
(c) A detailed risk analysis. Risk categories will include stable, moderate, and high risk. The high-risk category will not exceed ten percent (10%) of overall budgeted revenues. The Committee overseeing Financial Planning has final authority for how much high-risk revenue remains in the proposed budget.
(d) A prioritization of project and program spending as recommended by the Strategic Planning process.
(e) A “contingency” or “reverse contingency” plan when warranted by economic conditions.
(f) Balance sheet and income statements.
(g) Reporting for each strategic objective and goal.
4. Individual departments create budgets based on:
(a) Benchmarks provided by the Finance Department including average airfare and lodging costs, mileage reimbursements, and meal allowance.
(b) Consultation with other Departments that will play a role in specific projects.
(c) As appropriate for specific projects, consultation with the Sales Department regarding potential advertising or sponsorship revenue.
(d) Reports provided by the Finance Department that set forth how revenue for the project has performed over the past several fiscal years.
5. Individual department budgets are entered into a financial budgeting tool.
6. The ED and the Director of Finance review the consolidated budget.
7. Directors and senior staff meet iteratively to identify overlaps in budgeting and to prepare the final budget to the parent committee.
8. On a monthly basis, with the exception of the month of the Annual Conference, the Director of Finance will submit budget reports to the parent committee. For the final month of the fiscal year, this report will include year-end projections.
9. An analysis is prepared for the parent committee, including:
(a) Project Narrative: A description of each project, which highlights changes in budget from the previous year
(b) Six-Month Operating Expenses: An analysis that calculates how a base of $1,500,000 can be preserved to operate the Association assuming no other additional or minimal revenue was received during an economic hardship.
(c) Cost of Providing Services & Dues Analysis: An analysis to determine the cost of providing services to an individual member. Association dues will fund 70% - 80% of services per member. If dues fall below 75% of services per member, the parent committee will consider whether a dues increase will be recommended to the Board of Directors.
(d) Revenue Risk Analysis: An analysis that assesses the risk to revenue. The analysis includes historical revenue data that allows risk to be ranked as high, moderate or low. The proposed budget may not have more than 10% revenue classified as high risk.
(e) Equity Analysis: The most current year-end projections are provided to the parent committee. The Committee will review this analysis when allocating non-operating budget funds to the Adaptive Budget and Technology Fund.
Funding for task forces created by Committees:
Board Committees may create task forces to carry out the work of the Association. Committees are responsible for developing project charters and budgets and submitting them for approval to the parent committee and Treasurer. The parent committee and Treasurer will determine if resources exist to fund the project. Committees are responsible for managing task forces within budgetary constraints.
Restrictions:
1. The Executive Director and/or the Director of Finance will include in its monthly report to the parent committee any budget change/variation in excess of ten percent (10%). The Treasurer will report these changes/variations to the Board of Directors.
2. The Executive Director and/or the Director of Finance will report to the parent committee any unbudgeted, extraordinary expense (i.e., a new initiative, one-time project, or capital expense) that exceeds $10,000. This report will include formal Project Initiation documents, including project scope, cost and impact to ARMA.
Questions about previous Policies & Procedures? Contact Connie Hardy, Corporate Secretary.