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Moving company invoice template for NPOs

and just going to admit everybody in hello everyone thank you so much for joining us today we're just waiting for all of our attendees in the waiting room to join the zoom call and we'll begin shortly amazing so so far we have about 19 people um and as folks come in as well I'll let them in Susan but I think we're about ready to get started um so good morning everyone and thank you so much for joining us um for the second session in this financial literacy series um with our presenter today Susan lado um today's session is on financial processes for npos um I see a couple of familiar faces from our last session so thank you for joining us again and to those who are new um we welcome you and we hope that you have a very valuable time here um a few pieces of housekeeping as we are setting up here um like the last session I will be sharing the recording with you um and any of the resources that Susan shares during the session today will also be sent to you uh via email um and uh of course before we get started as well I'd like to perform a land acknowledgement um we would like to acknowledge that the bcn ph's offices are located on the unseated traditional Coast Salish territories of the Squamish slat Toth and musan peoples our work takes place throughout the ancestral lands and unseated territories of about 198 distinct First Nations in BC and we would like to acknowledge that each and every one of you are coming to this session virtually from The ancestral homelands of indigenous peoples across the province um I welcome you to say hello and share where you're coming uh from today um and I would also like to encourage everybody to use that chat feature to um ask us questions if you need any kind of support please feel free to send those in and I'll be there to support um and without further Ado I'll hand it over to Susan to get us started for the day thank you natika thank you very much welcome everyone um hopefully on your screen you are um currently seeing um the beginning of the PowerPoint presentation if you're not and you're having sort of any technical difficulties with that please um pop into uh the chat so that um natika might be able to give you um a help with that and uh and we'll go from there so this morning we're all here today um to cover off uh Financial processes 101 as as we call it basically some best practice um processes for financial Administration uh for nonprofit organizations um I will not be doing this today and for whatever reason my screen wants to keep showing you guys so there there we go all right so what are we going to cover today we're going to cover the responsibilities of board and staff we're going to cover roles and support and then we're going to look more in more detail at what should be covered off every month every quarter every year I apologize for the ringing phone my phone never rings my landline unless I'm in a seminar and then it rings for whatever reason everybody who knows me knows that I'm doing this this morning so it's probably somebody looking to you know report me to the RCMP for CRA or something along those lines but we'll go from there uh so we're going to be looking as I said in a bit more detail about what you should be doing every month every quarter and every year in your organization and then once we go through that we will spend a little bit of time on budgeting uh fraud prevention and we'll make some time for questions and answers speaking of questions and answers as natika mentioned if you do have a question as I'm speaking and going along um you can uh you could use the raise your hand or you could type the question into the chat natika is here for the entire seminar and so she will be monitoring um the chat for me in addition as I sort of wrap up a particular section I will pause and ask if anyone has any questions so at that point uh feel free to unmute yourself and and ask your question or if you've typed it in the chat natika will alert me to that and we'll pull it up and um and answer that question so just a little bit about me um You probably uh read the the lovely um biography that natika prepared online so I'm not going to spend too much time on this but um just as a a general background so I am a CPA CGA uh so chartered professional accountant um and my background is quite varied I spent about 14 years with Grant Thorton um here in Victoria um as a senior manager in their small business and owner managed group and within that group I spent um about half of the year working with um Charities and doing charitable Audits and review engagements from there I moved to the Victoria foundation and I spent 11 years there as the staff Director of Finance and during the time I was at the Victoria Foundation which is an endowment holding granting organization that maybe many of you are familiar with if you're not you're likely familiar with the Vancouver foundation which is a sort of a bigger sibling to to the Victoria Foundation um but while I was there um our assets under management Grew From just over 20 million to um over 400 million so it was a time of huge growth and change at the foundation and during that time um I spent a lot of time uh working with other local organizations that had funds with the foundation and that sort of led me to moving into the Consulting world and um I've always loved working with smaller organizations or organizations going through change and so uh that's sort of taken me into this world and then in addition in 2019 in order to sort of augment um my work life balance um so have less of it Bas basically I started instructing at Cen college so I'm sort of training the next generation of accountants so before we move on natia is going to put a poll up on the screen for you it might come through your chats or it might come on the screen and if you could let me know because it's very helpful to me to understand who's in the room with us today what your role is um at the organization you're here representing today so whether you're a board member whether you're staff whether you're a volunteer whether you have um an accounting designation or not um other not listed would probably be whether you're a program manager or in some type of other role within your organization if you're a board member that's not a Treasurer there's a ro a place for you there as well and we'll give you about a minute to uh to get through that you've almost got everyone Susan just almost got everyone great well we can end the poll not everyone will necessar say so go well we have a a quite a range actually here today uh we're not over represented in any one area so that's uh good to see we've got treasurers board members some executive directors and staff lots of bookkeeping uh other Financial role and lots of other not listed so I'm going to make an assumption that our other not listed our um staff are volunteers who work in a non-finance IAL area of the organization program managers and that so um this is great um I think that you will all um benefit from today and uh and it's nice really nice for me to see that organizations out there are having a wide variety of their um staff and constituents coming in for this type of seminar so I think we can stop sharing that natika thank you very much okay so let's start with our board members and Board responsibility because we kind of start from the top and we we sort of work our way down if you will um through the process so um as board members you know that you have a personal responsibility so that meaning an individual responsibility for ensuring that you understand the financial information of the organization that you are volunteering with you have a responsibility to probe and question um so asking questions and making sure that you understand to the best of your ability so I think that's a really key thing for me to say to you as board members to the best of your ability the level of understanding that a board member who is a professional accountant is expected to have around finances is different than the level of responsibility a board member who has no Financial experience is expected to understand it doesn't mean that the board member with no Financial experience has no responsibility or expectations around finances it just means that you know if you were ever in a gosh forbid lawsuit situation you know more responsibility would have been deemed to have been placed on this person with a financial background then without so you need to be satisfied that you understand the financial information that's being presented to you understand the direction that your organization is moving and understand that there is effective oversight of the financial affairs of the organization so that's really the sort of you know um overriding fiduciary responsibility of the board around finances and for individual board members so really if we've you know sort of distilled that down to some key things there you're responsible to make sure that you are getting financial information for your review at the board level so you that's part of your responsibility that you see Financial information that you ask about it and that you understand it to the best of your ability what's also important to understand as a board member is that you don't have to do it all yourself and I imagine that most of you aren't all doing it by yourself that there's not many 100% volunteer um boards in the room but if there are um it's okay to delegate this can often be the most challenging thing when an organization is growing is understanding that you have a responsibility but you are allowed to delegate tasks that feed into that responsibility right you can't delegate your responsibility but you can delegate the work and that's when boards move from operational through to governance having quarterly and annual review procedures will safeguard the board and the staff and ensure that any tasks that the the board has delegated are fulfilled and we'll talk about that a bit later I'll give you some some handouts and things that you'll be able to use to do that but my message here today to board members is please do not be afraid to delegate it makes a lot of sense for board members to delegate Financial tasks to staff and contractors why well board members change and hopefully do change should change right if you've been sitting on a board for more than 10 years that could be a problem for both you and the board right so we want to make sure that we have policies in place to make sure that we're always having um not constant change on the board but that there are limits to how long someone can sit on a board uh staff have the time right if you're a volunteer board member and this is something you're doing for a few hours a month and starting to take on a lot of operational tasks is probably something you're doing off the side of your desk the side of your life Maybe won't have the time to do that properly and in addition staff are normally the front line with the community receiving the services that the organization provides and therefore will have not often have they will have staff know more about the organization than the board I'm putting it out there they do they're there every day working on the tasks the services the things that the organization is doing day-to-day and when we think about Finance processes that's a day-to-day thing so the people that are there daytoday are going to have the best understanding of how that organization is functioning day to day so once you've decided that as a board you can delegate tasks to staff or contractor what are some of the main ones that you should really consider delegating from a financial point of view well tax reeding um accounts payable receivable payroll Banking and Bank reconciliations you know computerized accounting because no one's doing it by hand anymore so there all that computerized accounting work um preparing budget and acts roll reports for board approval so that might be a little higher level but that can still be delegated you can delegate the analyzing of financial reports the discussion and making recommendations to the Border finance committee that can be done at the um you know Finance um manager executive director level they can be analyzing those results and sort of bringing forward what they believe from the base of their knowledge what the key aspects are and obviously preparing minutes and other types of reports in draft for board approval I'd like to talk a little bit about um support and this is support not only for you as board members but for you as staff so if you're a staff member sitting here today who has financial responsibilities this one's for you um the board of directors and the executive director really need to have a good understanding of the skills and ability of their Finance staff when we are sitting in the not for-profit sector we are usually sitting in a sector does that does not have you know bags of money on the floor uh to pay you know a CPA uh to work full-time in their organization some do some don't if you fall under the don't category it's really un important that you understand what the person you have doing finances is actually knowledgeable about and capable of doing in their present State and that it's important to understand that there is a distinction between somebody with an accounting designation and somebody without there's distinctions between people with accounting designations um somebody that's worked in the not for-profit sector for 20 years has a very different background than somebody who been in the government for 20 years both may have a an accounting designation but they will have very different experiences right I always like to use the example of a doctor right you're not going to go to the eye doctor uh if you break a bone in your foot but both of them will be doctors and it's no different with accountants it's no different with lawyers or really any other professional right so really understand what experience the people that you have working for you and if you're going out to hire what they're bringing to the table and you may still need to think about Contracting out some work or having some extra support coming in for your staff in these areas right so you may not need to hire a CPA full-time but maybe you need to have somebody coming in once a month to help your staff with some of their tasks it could be for a short period of time to help them build a better budget it could be for a short period of time to help them develop Financial policies um it could be for a long period of time to just continually support the um day-to-day bookkeeping to executive director board role right so um I just sort of put that out there as something to think about when you're thinking about financial processes so if you're a staff member doing that and you feel like there's things I don't know how can I find out right maybe how you find out is your organization uh looks to a local CPA contract controller your CPA firm that you're already using and asks what kind of other supports might you have what might you recommend for us and again what you're doing today right by coming in and um getting some training that's out there any questions so far because I'm going to move into my next topic now all right so the first thing I want want to cover before I actually get into the processes are the accounting principles and I think this is important from just an overarching point of view to help people understand because you've heard this acronym before you've probably heard it at the board table if you have financial statements done by an accounting firm um if you're a bookkeeper you may have heard about it but you may not actually understand what it means because you know CPAs when they come and sit at your table they like to throw around their jargon not because they want feel important but it's just that we're so used to saying things like Gap and GAP stands for generally accepted accounting principles and it really is a guiding set of principles that all accountants use all over the world and Within These principles they might have different names attached to them but the overarching idea is that all accountants follow the principles when doing their work and apply them to the work that they do for you and you can apply them too to your nonprofit organization and to your bookkeeping practices some will be easier to sort of apply than others but it's a an helpful bridge in understanding what's going on between what you're doing on a day-to-day basis and what your accounting firm is looking for so these are the 10 principles of generally accepted accounting principles of Gap um I've given you a source here but I think that there's a few here that um we would sort of speak to right so regularity consistency and we're going to talk about that regular processing so consistency of doing the same thing the same time every month recording things the same way um continuity um and then we've got materiality so you'll hear your accounting firm talk about materiality all the time well that wasn't a mat material adjustment or that wasn't a material thing and so I'll Define materiality for you material materiality is if there is an error that is large enough that somebody reading your financial reports would come to the wrong conclusion about your organization that's what materiality is so if you have a million dooll budget and you made a $50 mistake in telephone expenses that will not be material because someone reading your financial statements is not going to make a different decision about your organization based on a $50 difference between what telephone expense should have been and what it is okay what would be material would likely be a $50,000 grant that you received during the year that was for the next year and you've got it in your income for this year instead of deferring it to the next year right so I mean I know with a nonprofit organization you're all familiar with deferred revenue um it's probably the tricky thing that you have to do every year when you are being reviewed or audited is figure out what part of that Grant was for this year what part of it flows into the next year Etc um and so that's where materiality is going to come into play so any questions before we move in now that we've spoken at a high level around roles responsibility and principles and I don't spend a lot a lot of time on the accounting principles because you can Google them um but I just wanted to I like to bring them up okay natika is going to let me know if there's any questions all right so now we're going to move into the weeds and we're going to start talking about what you should be doing so as the name of this seminar is called Financial processes 101 there's things that you are likely already doing but I'm going to bet you on this slide right now there are things you're not doing because 99% of the organizations I work with are not doing these things and should be doing them so we'll start with the one that most people do um the bank reconciliation so almost every organization will reconcile their Bank on a monthly basis making sure that um everything's complete following up on anything that's unusual not as many organizations are writing checks anymore but you know following up on anything that is a reconciling item that's been hanging around for a while um looking at the bank statement Etc um I should say after today's seminar in atika is going to be sending out to all of the participants a file that has some templates and documents so um one of the two of the handouts you'll get are an bank reconciliation template in Excel and a bank reconciliation process document so most of you won't need this because if you're using computerized accounting it's prob helping you with your bank reconciliation however if uh if you are doing your bank reconciliation by hand um then this will be something maybe helpful for you to understand the process and have a template to use so why do we reconcile the bank every month the bank reconciliation is the number one task every organization should do every month every business should do every month it prevents errors it prevents fraud and it helps ensure that your financial records are complete the person doing the bank reconciliation should not be the person doing the banking and somebody should be reviewing the bank reconciliation every month and not only the bank reconciliation but the actual bank statement so as I go through all of my slides I'll make comments around what should be done but there will be a document that you'll have as a review document so um the key thing when we're talking about processes and we talk about errors and fraud um understanding that errors are what usually happens and fraud is rare okay so fraud is very rare even though that's what gets in the news it's doesn't happen all the time um but errors happen all the time um if you don't make errors then I'm you must be AI because I make them all the time and it's the process of finding your errors and correcting your errors that is the key that we want to take away from Financial processes so if you're sitting in an organization where one person is doing everything financial and no one is reviewing their work you have errors happening and you may have fraud right when one person controls everything that is the opportunity for fraud and I'll talk about that later so the bank reconciliation is the number one thing we want to do now I'm going to move into the two things that I bet you you're not doing so maybe we could uh if you if you're doing this you could you know give a thumbs up but if you're not doing this you're you're probably not so when you issue tax receipts are you making sure that on a monthly basis the tax receipts you've issued agree to your bookkeeping records meaning that if I were to look at your income statement and you would have a line on there called donations that whatever was posted to donations for the month agrees to the tax receipts you've issued for the month that should be done monthly um gifts in kind so those are gifts um that people give you that are non-cash so they could be stocks they could be uh it could be food it could be um artwork it could be gift cards they need to be recorded um we'll talk about that as well and are all tax receipt numbers accounted for every month so these are things that should be done that should be done monthly why monthly well most of the time the organizations that I've worked with wait and they do it once a year and let me tell you it's a mess trying to figure out what you did 12 months ago is difficult even if it was you that did it right I can't remember what I did yesterday let alone what I did 12 months ago so every month as part of your monthly reconciliation process you reconcile your donations and then the last thing are expense reconciliations and the two things here are um payroll and Grant expenses so do the payroll records agree to the bookkeeping records on a monthly basis have you had anyone look for new employees leaving employees making sure that new employees have been paid usually they'll let you know if they haven't but if employees have left making sure that they're not still being paid that they've been removed from the payroll uh process anything that you need to do for vacation acrs or other liabilities and then Grant expenses so are you making any entries you need to make from deferred revenue are you doing that monthly or are you waiting to do that at the end of the year now I will say with payroll and Grant that is something you could potentially move as a quarterly reconciliation um but what I have found is that when something is quarterly and it doesn't get done then it becomes annual and we don't want it to become annual right so I put this in as monthly just to kind of get you thinking about this should be something that's being done on a regular basis in your organization and not waiting until the end of the fiscal year because when you wait till the end of the fiscal year you're doing that reconciliation after your fiscal year has closed which means you don't have the opportunity to fix these things from even a from a banking Point of View if there is any banking things that need to be fixed within your fiscal year right so we want to be looking at some of these things while we're within the fiscal year so let's go back for a minute and talk about gifts in kind uh I imagine that that most of your organizations at some point have received a gift in kind and and gift in kind means non-cash gift so gift in kind is the um the Canada Revenue Agency description of of a gift that is a non-cash gift you may receipt for a gift of tangible goods at the fair market value of those goods so what is a tangible good I can touch it I can pick it up I can move it around what is an intangible good here I am my services if I donated them are intangible you can't take me my service and put it in a Cupboard right so you could please don't right so tangible goods at the fair market value so things like stocks and bonds food donations office furniture and Equipment gift cards if someone gives you a $25 gift card to put in your silent auction that you can you can receipt for that because it has a value that you can uh prove the fair market value must be supportable and if in doubt you will need to get an unbiased thirdparty valuation so most organizations don't want to pay for a bunch of third evaluations but if someone said to you I would like to donate you an original Emily car artwork you would go out and get that appraised right you would or you would require the donor to have it appraised Etc so you would say well yes we can give you a tax receipt for that um but it needs to be appraised you may not receipt for gifts of services so there is only one way to deal with a gift of service and that is you pay for the service and then the person providing the service gives you the money back and that achieves the audit Trail so what are common Gifts of services accounting services free labor and donated space so someone is donating space to you that is a service not a good and you would actually need to pay and they would need to donate it back why has CRA said there's a difference between tangible goods and services because it's very easy to commit tax receipt fraud for services and so that is why um it's not because they're trying to make things difficult for you it's because too many people have done too many bad things in the past and we pay the price for that right um so that is why uh the tax receipt itself must State information specific to the gift and I'll I've got a slide on that coming up and when you give a tax receipt for a gift in kind you need to make an entry in your bookkeeping records and this is the most common discrepancy between tax receipts issued and the accounting records that I see when I'm working with organizations because no cash has changed hands and so often times if you have a separation between the people writing the tax receipts so maybe that's um you know a development department or a reception or something like that and then you've got a bookkeeper accounting department off to the side they might not ever know about those until the year end or until they're trying to do a charity information return or something along those lines and so so we that's why we want to do these monthly reconciliations and just for those of you in the room that are bookkeepers your entry is in the back right and at the bottom here you know you're going to make an entry that um uh debits the expense account that's the account you would have had to Ed had you purchased the donated item so if someone if I were to say donate accounting services to you you would debit your accounting expense and you would credit donation in kind after I gave you the money back yes natika we have a quick question here from Amy um they ask what about a property tax exemption a property tax exemption um so that's something specific coming from your municipality if the municipality is asking for a tax receipt then you would record it I imagine they're not would you like to speak to that our participant uh she writes that they are not they are not so if you're not tax receding it um you don't have to record it um so that's the the Line in the Sand for what you have to do um I would say however and and it would really depend on your organization uh you might want to have a note in your financial statement that speaks to that so if you're having your financial statements reviewed or audited the notes in your financial statements are um many of them are required notes under accepted generally accepted accounting principles but you can also have additional notes and so you might like to have a note in your financial statements that lets the reader know that you receive a property tax exemption of X doll every year from the municipality because should the municipality decide that you don't get that exemption anymore that could have an impact on your organization so it's an important piece of information that people in your organization need to know the Board needs to know that right and maybe other people reading your financial statements need to know that so I always say more information is better um but in terms of actually recording it in your accounts I would say you probably would not record that in your actual books and Records thanks for the question so if we were doing a gift of surfes I've given you an example here I won't uh go into detail on that but I have put in at the bottom um the web link for gifts of services on the canada.ca website so if you are currently receding for gifts of services um please go there have a read through if your role involves tax receding you should make yourself familiar with the Charity's website for tax receeding it's an important thing for you to be familiar with and comfortable with you don't have to be an accountant to understand it it's fairly straight forward um but I always encourage organizations to be um having a look so what are the items that you would have to put on a tax receipt for gifts in kind um the fair market value of the property a description of the property received an appraised buy if someone was done so if you had an appraisal done you would note that on the tax receipt um if someone gives you a um let's use an example of a gifting kind that that might be common what if someone donates to you a bed right and they you know a bed frame not a mattress so you know bed frames and they actually went out and bought those bed frames to donate to you then the amount of the tax receipt that you would give them is going to be based on the amount they paid so you don't have to go out and get a new fair market value of the bed frames if they went out last week to the brick and spend $1,000 on bed frames and then donated that to you you would take the receipt from the brick and you would use that as your support for the bed frames let's use that same example someone has 10 bed frames that they donate to you that they've had for 30 years how would you give them a tax receipt for that amount that becomes a lot more complicated because the fair market value of those bed frames is what I call garage sale value unless they are you know um Danish mid-century modern teak specialty bed frames that have some value on the open market most used furniture does not really have much value right if you go on to Facebook Marketplace and look for used furniture um you know most of it's not too expensive and particularly if it's quite old so if someone comes and says well I've got these bed frames and they're worth $3,000 you know you really need to have your red flag hat on there because you how are you going to support that so you would have to go out and try to put a reasonable garage sale value on that right so you might have to like look on Facebook Marketplace can we see what a bed frame goes for that's really old you know if it's 50 bucks then you you know you would take a screenshot of that and you would support it all CRA is looking for is that you've done your due diligence and that you've receded for it properly that's what they're looking for someone comes you and says I got these 10 bed frames they're really special I want $1,000 each so that's you know a $10,000 tax receipt for bed frames well you know hm right so there's that the other thing when someone wants to give you something that you don't need so I in the bed frame example I'm saying you needed those bed frames you wanted to put them into into your organization in some way what if someone wants to donate something that you don't want right you don't want that piece of artwork you're not going to hang it up you just want the money the easiest thing to do in those situations is to say to the donor you sell it and donate us the money rather than accepting the artwork and trying to go out for appraisals and trying to do all that you sell it whatever you get for it we would be happy to take the cash right you put that back on to the donor to some extent so that you're not trying to go through all of that work to get to evaluation okay and if it's an estate same thing you know you you might receive an estate where you might receive goods from an estate then the best thing you could do is hire an auction house to get rid of though you know to sell those things and whatever the amount is you get is the amount that the estate gets as a tax receipt so there's you know lots of sort of Common Sense ways of going about that um and it's always the organization's um responsibility to make sure that they're tax reeding correctly the donor has no responsibility around the tax receipt none whatsoever other than to make sure they get one if they think they need one um but every other piece of information on that tax receipt is your responsibility so you just really want to make sure you have all of that information um what else would you be doing monthly well obviously uh receivables and payables reconciliations you're probably doing that um another thing that I like to suggest that you're doing monthly is um have a a folder now this can be an electronic folder on your computer or a paper folder in your filing cabinet wherever you're at in in that uh stream of Consciousness but you want to make your year end as easy as possible and so if you buy a new computer you know that when the auditor comes out they're going to want to see the invoice so take a copy of the invoice and put it in a folder called annual audit or year end audit and pop it in there right right away have folders within the folders you know banking information asset information all the different thing grant information you get a new Grant you know the auditor is going to want to look at the grant agreement take a copy put it in there so as you're going through your year you're building up that year-end file and it will save you days as you're getting ready for your audit because you're not going to have to be going and trying to find all of these documents somewhere on your server or in someone's filing cabinet Etc all right so different things that um that they like to look at right they ask you every year for all of the invoices you used for Legal Services every auditor will ask you for all your legal invoices so if you have if you use a lot of Legal Services during the year make sure they're all going in right uh and the other thing of course you're going to do month is the preparation of your internal Financial reports so these might be run from um your accounting software QuickBooks your Sage Etc um but you're going to prepare those things monthly depending on the size and complexity of your organization Financial reports might be done only quarterly so I suggest monthly financial reporting um in terms of running the reports and storing the reports but as you'll see later on in terms of board ofor dor review I recommend quarterly before sending reports to your executive director a Treasurer your financial staff or contractor should review for accuracy completeness and reasonableness so one of the things that you want to make sure you're not doing is press print from you know QuickBooks run a balance sheet and not look at the numbers if you're responsible for the numbers that are on that statement you should be looking at every single one of them and making sure that they make sense to you as the person who was preparing those numbers or responsible for those numbers some quick things you can do just quickly tie the bank reconciliation into the accounting software you know does your donation amount on your income statement match that receipts reconciliation You've Done Right does your payroll amount match your payroll reconciliation compared to the previous month have you been consistently reporting expenses so you know in one month did uh the rent go to rent expense and another month it went to occupancy costs like you know you want to make sure you're consistent with where you're placing things uh do your ledger accounts tie into your budget reports so if you're doing a budget to actual report that actual net income at the bottom of your budget should tie to the net income on your financial report in your bookkeeping software and are there any new items that need to be disclosed so when you're sending that up to your Ed or your treasurer you know um I always recommend that organizations have a combination of reports that have numbers on them and reports to have words on them so that you've got this sort of summary document that says this is what's new this month and you just carry that forward every month we want to compare to known events did we get a new contract and did we record it do we have any new employees and has their pay been recorded Etc so um just making sure that what you expect to be in those financial reports is what you see in those financial reports before they move up into the next levels you want to be asking questions and if you are the Ed or Treasurer it's always nice rather than just um having a report emailed to you is to if you can meet to review them and that's why I suggest quarterly um at the board level um a quarterly meeting with the treasurer or the finance committee to go through comparing your budget to actual report and investigating any significant or important differences and making notes about those um reviewing your budget to actual report in comparison to your income statement and preparing draft notes to include with the reporting to the board again it's very helpful to provide narrative notes to accompany your numbers understanding that not everyone at the board table is um a financial professional or has a financial background so you know I've known so many board members over the years and they've said you know said to me when I look at the numbers that my eyes just blur I I I just don't like looking at the numbers but they're happy to read a report and the best thing you can do when you're providing that report particularly if you're the Ed is that sort of summary report and it can just be Point form will help your board look at the things on the financial report they should look at that you want them to notice that you want them to be talking about at the board level because human nature is such that if I um am a board member and my background is um let's just say I worked for tus for 30 years okay and maybe I sold telephone plans or something like that you know what line item I'm going to look at every month I'm going to look at telephone expense and that's because that's what I know and I'm going to bring it up every month I'm going to say have we seen whether we're paying too much for telephone costs well you could have that million dollar budget and your telephone cost could be $1,000 a year not material but you could have a board member who wants to talk about that on a regular basis because we always want to talk about what we know and what we feel comfortable with so by having some draft notes by having some sort of points that we want uh to bring forward to the board that will help the financial conversation be focused on the things that matter the things that are material the new funding maybe the fact that some funding didn't come through and we're going to have to make some hard decisions about you know budget line items right that are material so it's really important to have that narrative accompaniment to your budget taxal reports and then we're going to talk a little bit as well about cash flow um but we often when we're looking at um our financial reports we're looking at um non-ash flow reports right we're looking at sort of the the items coming on the income statement and we're not necessarily seeing when cash comes in and out of our organizations so I will talk in a little bit about cash flow budgeting um but we want to make sure that at the board level in this quarterly meeting we're looking at not only what is the net income of the organization or the profit or loss Surplus or deficit but we're actually looking also at cash flow the other thing that we want to make sure that we're doing on a monthly and quarterly basis is ensuring that our statutory deductions are filed and paid on time and it's read and it has an exclamation point because as a nonprofit or charity you know you're not paying taxes but you have employees and you may um uh you may be collecting GST on some things that you do so if you're collecting GST you're going to have some regular GST filings as well and these are the areas these statutory filings where um most nonprofits that run into issues with CRA this is where it happens okay so if you are um not Outsourcing your payroll processing uh this is something that you definitely want to be making sure is being done and even if you are Outsourcing it but if you're Outsourcing it to a third party um that is part of their responsibility you're going to make sure it's done um but if it's internal and you've got one person handling all the payroll and all of the payments and all of that this is an area that can get forgotten about or um not done if there's cash flow issues ETC so um this is a task that I always say needs to be proven right and so proving something doesn't mean that you get shown a report from accounting software we can make the accounting software say whatever we want it to say it's not a source document it doesn't prove anything it proves that somebody put something into a software program so when I say proven you want to look at the report that comes from CRA that says here's what you paid in statutory deductions this month you can look at that online some organizations will still have that mailed some will have it emailed um but that's when I say prove I'm always thinking about what is the source document okay because anything that someone prepares in a bookkeeping program or in Excel is proof of nothing other than the numbers that they put there and that's why we have these checks so payroll is normally monthly GST is normally quarterly but sometimes annually right so we want to make sure these are um uh done properly any questions about the monthly quarterly tasks that we've been through before I move on to the annual tasks okay great so annually there's several items that we want to think about on an annual basis um and they often sort of straddle between what I would call Financial processing and financial reporting the key thing here is that if you start to sort of embrace this monthly uh quarterly reconciliation process then your annual process will be so much smoother so it's always a hard thing to make that adjustment between we do this annually to we do this quarterly or we do this monthly um but I do uh strongly encourage it the on an annual basis this is really where that board Treasurer finance committee audit committee will be more involved in the work because depending on the size of the information whether you're being audited or reviewed you know there's going to be more engagement with the accounting firm at that time um staff and the responsible board members should be planning timelines on an annual basis so I always recommend work backwards from your AGM date to ensure that your timelines are going to work I see this all the time where an organization has sets an AGM date and the AGM date seems to be completely oblivious to what actually has to happen between the financial staff and the Auditors it normally takes at least eight weeks to um wrap up a year end and have it audited and have that audit report back sometimes closer to 12 weeks so if you're booking an annual report an annual general meeting for six weeks after your year end um you you've probably got staff working a lot of overtime to try and get ready for it um and maybe things aren't getting done as well as they should be um maybe maybe not maybe it's all just fine but the key is just to work backwards from your AGM dates to make sure that your timelines work bring your auditor bring your year-end accountant in on that conversation early if we want to have our AGM on August the 25th what day is it that you need us to have the audit working papers to you um our year-end working papers all of our bank reconciliations all of our Revenue reconciliations Etc when do you need that buy to make that AGM work knowing that you've got to send out your reports two weeks before the AGM date you've got to have time for a board meeting before that to approve them etc etc so when you start working backwards from that AGM it's really helpful to make sure that you're going to have that done in addition budget for the next fiscal year is normally going to be happening in the last quarter of your current fiscal year and I'll talk about that in a bit so that's another area that you want to do that work backwards from in your annual process so a few things that you can put in your annual calendar for payroll uh t4s are due in your employees Hands by February 28th of the following year and the summary um and T4 slips are to be due with filed by CRA on that same date there is a penalty for late filing so you want to make sure that you're not late um and if you have workers compensation so work safe BC there's usually at least an annual reporting for that one thing that most organizations are not doing and should be doing all of your employees should be completing an updated Federal and provincial td1 form for their payroll files in early January of every year why we always have them fill these out when they start right we have them and then that's what we base their tax deductions on on their payroll what we fail to recognize is that people's lives change so maybe when they started with us they were a student and they had marked off that they had tuition and so we took Le tax off and now they've graduated from their program and we're still taking less tax off well what's going to happen to that is employee is that when they file their tax return they're going to owe tax and they might be surprised by that and while it's not your responsibility to make sure that their td1 is taking the right amount off they should really be coming to you and saying hey I I need to have more tax taken off 99% of employees don't think about that and so what we always do at the beginning of every January is we send an email out to our employees and we say this is the time for your provincial and federal td1 forms to be updated here is a link to the forms online online please have a look if there's been any changes to your personal situation you may wish to update and uh refile these forms with payroll department if we do not receive a response from you taxes will continue to be taken off at the same level you're currently at if you're not sure what level you're currently at please come see us it's as easy as that right it you it's not a huge task but it's an important one so please do that for your employees every year um tax receipts so donation tax receipts donors uh who contribute monthly should be provided one annual tax receipt so don't send out a $20 tax receipt every month to a monthly donor once a year by February of the following year send them that tax receipt um I suppose if they ask for it you could but it's a pain and I would you know I would hesitate to agree to do that um I've seen organizations who do that and and it's it's actually quite a lot for the donor because then they end up with 12 tax receipts that they're trying to deal with um and the other thing is if you don't actually um get very many charitable donations right if you're mainly government funded and you might be a registered charity but you get like you know less than 20 a year you don't have to receipt them when they come in the door you can receipt them once a year and you could do that reconciliation annually so earlier I said do it monthly I'm really speaking about organizations who get you know a decent amount so if you get 10 donation receipts a month I would still recommend doing that monthly but if you get one maybe you don't need to right so um think about that um when you tax receed and what makes sense for your organization and then just put the processes in place that make sense for that so if it makes sense to reconcile the tax receipts to The Ledger quarterly because you get so many and maybe you do your tax reeding course ly right so just think about your processes from an efficiency point of view it's the same thing when we think about accounts payable do you pay as soon as someone gives you an invoice so every day you're writing a check or setting up a payment no usually an accounts payable department will have a process in place where they say we pay on the 10th and the 20th of every month or we pay on the 15th and the 30th of every month everything that's come in for those weeks tax receding can be the same thing you just want to make sure that you're being efficient so that these processes can work for you um from a fiscal year point of view annually if you are a charity you're going to be doing your t310 charity return and um I won't go through that at uh detailed level but again that's something you're going to want to work backwards from knowing that it's due 6 months after the year end um but if you are having an audit and the Auditors want to see that it might have to be done sooner than that right so whatever is happening for your organization and as well we're going to talk about you know I've talked about that year- end supporting documents um think about what your CPA firm asked for last year that you had to run and get them right did you you know go back and have a look at those emails what did they ask for that we didn't send them with the package we make sure you send that this year because they're going to ask for it again um there's a lot of things to consider annually and while not all of them will be 100% Financial they all have financial implications and I think the biggest one is the signatories right who are the signatories uh signing authorities for your organization normally those are updated on an annual basis um when the financial statements are approved or when a new board member comes on or the treasurer you know comes off the board Etc and that requires a board motion most organizations update that with the bank because it impacts the ability to sign checks but they forget to update it in other places that are also important your Law Firm should know who your signing authorities are who are the current signing authorities as someone from the board calls them and says I'm a signatory they're going to go I don't have record of you I don't even know you exist who are you right um the accounting firm needs to have that information but the most important one after the bank is CRA so I don't know if anybody in this room has ever had a situation where you've needed to deal with CRA and none of the existing board members nor the Ed are on the current CRA list of directors because it was done when the organization was formed and I've had situations where the list of directors that CRA has is over 20 years old because it was done when the organization was initially formed and registered with CRA and never updated since so every time you update your signing authorities you need to send the motion approved with a letter to CRA if you have a my business account you can upload it um otherwise you need to snail mail it off to them so that they have your current list of directors and then of course uh if you're having an audit done um one thing that the Auditors always want to see are your board minutes for the year now instead of you know the auditor going through every single month and trying to find all of the Motions that were approved in the month why not have a master list of all of the approved motions for the year that you can put on top of that so here's our monthly board minutes the auditor is not interested in reading about the debate right the auditor is not if you decided to put $50,000 from Surplus into an internally restricted fund for the repair of your roof the auditor is not needing to read the three or four paragraphs that how how you debated and got to the amount of $50,000 what they want is the motion for $50,000 approved so that they can tick that off and make sure that that is reported on the financial statements correctly they want to know who the signing authorities are they don't need to see the debate right so you're going to give them all of those um minutes but if you give them a master list with all of the approved motions I guarantee you that's what they're going to focus on and then if there's a motion in there that they want more information in they'll know what month to look at and they can go and look at the details there so that is a really efficient way of um making sure your Auditors are spending time efficiently right the more we give them that helps them with their job hopefully the less that they have to charge you okay so here's our Master list and what needs to be completed each year so another thing that we want to have in that annual list of board motions is really helpful because what that does is that um allows us to have a list of motions that need to be brought forward to the board each year so we don't forget them right oh did we update did we approve the financial statements did we approve the t310 did we approve the budget Etc so then you know that you have you have done that so as part of the handouts that you're going to receive post seminar um you will be getting a financial checklist and that will indicate many of the tasks that we've covered above with the financial te checklist the person using that is the person who does not prepare any of the items on the checklist or any of the items mentioned in the seminar so we can think think of this as an internal financial review right it's some something that is happening internally and this financial checklist was created a number of years ago when I was working with an organization's executive director and they asked me how can I make sure that everything that needs to be being done financially is being done because I have you know one bookkeeper and they do everything and they give me things when I ask it or uh but I don't really know you know if I'm really looking at the right things or if I'm really making sure and that makes sense because um for all my executive directors in the room I'm going to just go out on a limb and bet that you're not accountants most of the time executive directors are people with the experience in the area that that organization is working right so if we've got a Health Care Organization often times the executive director of someone who is someone who's worked in the healthcare field right and they may not have much Financial expertise they have a huge amount of expertise in the field that they are from but looking for those supports what should I be doing to make sure that the role I have as an ed which contains a financial role that I'm fulfilling that in the most efficient way possible to the best of my abilities and so that's what the financial checklist was created for but anybody can use it so the key is that if you're preparing all the information you're not also going through and going tick tick tick I sign off on all my work right so you can't approve your own work basically um but you can certainly look at the checklist and go am I doing this is this being done and then your Ed or if there's multiple people in the financial department then maybe um you know if someone's doing the bank reconciliation someone else in the financial department is reviewing it and signing off on it Etc the treasurer can use this checklist if you're a smaller organization and the person doing the bookkeeping Works directly with the treasurer so it really just depends on your organization and the reason we do the checklist is because remember it's not your money right we're all in this this not for-profit World we're being funded somehow right so this is not you know Susan's money that she's reconciling it's donors it's government it's funders that have put the funds into the organization to help you fulfill your mission so we want to make sure that that fiduciary duty is being um taken care of and that we remember that there is a word that accountants hate and that is the word trust so the word trust and financials we don't use those together they don't belong in the same sentence I have clients so they always say oh I trust you Susan and I'm like you shouldn't so we're going to make sure that you don't have to right so um you know I'll give you an example I have a number of uh small clients for whom I actually do everything and I make sure that if when I pay myself they have to approve the invoice before I pay myself because they don't pay me I pay myself well if I never have them improve my invoice how do they know what they're you know paying me um I make sure they're looking at the bank statements that they're looking at cancel checks that they're looking at all of these things to make sure that they're looking at the source documents as opposed to just some report that I prepare for them so we want to make sure that and any body who um is working for you who says I don't want you looking at my work that's your biggest red flag for fraud right there right anyone who is deserving of that will be please help me thank you for the help yes I'd love to have someone review my work yes I'd love to have that and of course this has to be done if you're not currently doing this and you leave this seminar and all of a sudden you come down hard on your bookkeeper and say I'm reviewing everything you do and you know be aware that there are emotions that go into that right if no one has ever reviewed your work before um and all of a sudden people are asking to see things that you do that can come with a little bit of like well why are you asking why don't you don't you think I'm doing a good job don't you know that kind of thing that's a that's normal um so we just want to make sure that if we're starting some processes here particular if you come out of this seminar kind of all gung-ho and we're gonna do this and we're going to do that that we understand that this is really a a process piece and not a I don't trust you anymore piece right so we're improving our internal processes any questions or comments before we move into sort of the budgeting and um fraud prevention area I see that we're at 10 almost 10:40 so we're just over an hour in we have till 11:30 this morning and I do want to make sure that we have you know some time for um questions so any questions about the sort of financial aspect of things in fact I'm just going to see if I can't I'm sharing my screen I'm just going to see if I cannot no share with you the financial checklist I think I might be able to bring it up of course it's hidden behind that so this there it is haha oh that's fraud prevention wait here we go so here's our financial checklist where you can kind of see here that there's just little bullet points that you can tick off and things that you should be looking for so if you're an executive director you know it can just be a helpful thing like what should I be looking for it's one thing to say please review it if I say to you review it well great what am I looking for right how do how you know that's not something you've been necessarily trained to do right it's it's an audit procedure it's something that accountants have been trained to know what to look for when they're looking at a bank reconciliation but what should I be looking for if I'm a a volunteer Treasurer who doesn't have a financial background or I'm an ed or I'm a program manager and someone's asked me to do this so and these are some of the things that are on the financial checklist which of course you will get a copy of so natika is not coming up with questions so I'm going to keep going so let's talk a bit about budgeting um you know really when we think about financial processes in any kind of not for-profit organization I mean budgeting is budgeting is almost everything isn't it really I mean we we live and die by our our budgets our ability to um look into the future and into that crystal ball and and have a sense of what's going to happen with our organization and this quote that I've been using for years I just love it because I think it speaks to the non-accountants in the room you know the budget i