5/2/2017 Chapter Treasurer Jason R. Minard, CIA, District Advisor Ann Cohen, IIA Sr. VP Chief Financial Officer Donna Wiley, Manager, Chapter Relations Agenda • Legal Issues • Chapter Internal Fraud • Safe Guarding the Profession • Safe Guarding Chapter Assets • Internal Controls and Oversight • Financial Management • Group Activity 1
5/2/2017 Quick Poll • Presidents • President-Elect / Vice Presidents • Treasurer • Board Member • Other Chapter Position Quick Poll • What type of organization are IIA chapters considered? – 501c(3) – 501c(6) – Unsure • Chapters are exempt from: – Sales Tax – Income Tax – Both – Unsure 2
5/2/2017 Chapter Legal Issues • Tax-Exempt 501(c)(6) Association – Exempt from paying Federal Income Tax – Does not apply to SALES TAX • Chapter Funds Management Policies and Procedures (Handout) Chapter Legal Issues • Chapters have a 4 ½ month period after year end to filing the necessary IRS forms • Chapters with a May 31 st ending have a filing deadline of October 15 th • Types of Forms – FORM 990-N (US ONLY) – FORM 990 OR 990EZ (US ONLY) – FORM 990T • Required for tax on unrelated business income 3
5/2/2017 Chapter Internal Fraud • Four incidents in three years • Three convictions w/restitution • Ranging from several thousand to more than $80K • Factors - Economic pressure and opportunity • Trust is not a control Safeguarding the Profession • These instances place the profession under scrutiny • Importance of leading by example • Manage chapters like you would your own organization • Identify your own process and control gaps • Ask yourself if “trust’ is part of your control process 4
5/2/2017 Safe Guarding Chapter Assets • Chapter Leaders should: – Demonstrate responsible cash management – Exercise good judgment in holding and preserving chapter funds • IIA strongly recommends each chapter should: – Have an audit committee (members should not be an officer or governor) • Annual requirement for independently reviewed financial statements • Have an adequate verification process for disbursement requests to prevent external fraud INTERNAL CONTROLS AND OVERSIGHT • Review Treasurer’s Position Description • Implement some of the recommended Best Practices * • Ensure proper Segregation of Duties* • Adopt guidance provided by the Treasurer’s Manual • Watch for Red Flags*and elevate any concerns • Ensure an Independent Review is completed each year • 2017-2018 North American Chapter Manual * Handouts 5
5/2/2017 BEST PRACTICES FOR INTERNAL CONTROLS A few examples: • Produce financial reports on a regular basis • Reconciliations are a key detective control • Require verbal contact/confirmation for disbursement requests of certain transactions • Review signature cards and other means of providing account access on an annual basis Note: The full list of Best Practices for Internal Controls can be found in the Chapter Manual. SEGREGATION OF DUTIES • Chapter duties should be segregated so that no one individual has the ability to do all or multiple activities as summarized below: – Custody or access to chapter assets – Authorization or approval of transactions affecting chapter assets – Recording and reporting of transactions • Not a ‘one size fits all” • Based on size, structure, volume of transactions 6
5/2/2017 TREASURER’S MANUAL Banking Procedures Cash Receipts / Disbursements Reporting & Record Keeping Treasury Policy Chapter Treasury Job Description Ethical Guidance & Expectations Financial Reports …& more! RED FLAGS FOR CHAPTER DEFALCATIONS • The IIA Code of Ethics • Ethical Guidance and Expectations – Ethics@TheIIA.org • Red Flags for potential defalcations document – NA Chapter Manual Note: The full list of red flags for potential defalcations can be found in the Chapter Manual. 7
5/2/2017 Financial Management • Annual Budget Procedures – Budgeting at a loss? • Standard Chart of Accounts • Annual Report of Income & Expenses – Due August 31 st – Independent Reviewer – New Template – Mandatory requirement – Suggested template for review of financial records – Prerequisite for receiving the Chapter Allotment • Chapter Allotment – $9.00 per member or a minimum of $1,350.00 Annual Report of Revenue and Expenses Mandatory Template Annual Report of Revenue and Expenses To: ChapterRelations@theiia.org cc: District Representative and District Advisor Due: August 31 Chapter Name / Submission Date: Completed By (Officer’s Name): Reviewer's Name (Print) / Date: Reviewer's Signature: Check if change Accounting Method from prior year Cash Accrual INSTITUTE OF INTERNAL AUDITORS ‐ ( Insert Chapter Name ) STATEMENT OF POSITION For the years ended May 31, 20__ and May 31, 20__ 20__ 20__ Due August 31, 2017. Chapters needing an extension should contact IIA HQ prior to this date. Chapters not submitting an accurate, independently 16 reviewed report by October 15, 2017, will forfeit their chapter allotment. 8
5/2/2017 Financial Management • Chapter Insurance – Comprehensive general liability insurance ($1,000,000) which covers all chapters – Not-For-Profit Organization Liability Insurance - also known as Directors and Officers Liability Insurance – Premiums are split between Headquarters and the chapter. • $100 deducted annually from chapter allotment – $50/$50 for each type of insurance Chapter Treasury Session Group Activity 9
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