Finance –

Technical Division and Institutes

Roy Hogan rehogan@sandia.gov

Elio Manes ManesE@asme.org

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Why talk about finances?

• Money lets us do good things!

• A financially sound organization benefits everyone!

• Stewards of your Division’s resources

• Responsibility & accountability

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Objectives of Division/Institute Finance Session

• Overview of ASME Finances– The “Big Picture” of ASME– The ASME budgeting process– How your Unit fits in

• Guidance for Unit Leaders – Your financial responsibilities– Your financial resources

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The “Big Picture” of ASME Finances

• Our focus – Putting our money to work to accomplish our

Mission and Vision

• Our opportunity– Wisely use our Division/Institute’s money to

serve our members and the Society as a whole

ASME is a “Not-for-Profit” under IRS 501-(c)(3) Regulations

• Exempt from payment of federal income and sales taxes (in certain States)

• Operated exclusively for purposes of “… scientific, public safety, ….”

• Dictates mandatory operational, accounting, and reporting responsibilities and limitations which are applicable to all of us

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Overview of ASME Finances

• ASME operates on a 3-year budget cycle– Driven by 3-year publication & sales of the

ASME Boiler Code– Budget is balanced over a 3-year period

• ASME Fiscal Year July 1 to June 30

• Nominal annual operating budget is ~$80M

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Revenue and Expenses(2010 Actuals)

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Revenues ($86.2 M) Expenses ($84.6M)

Events Management

Standards & Certifications

Publications

HQ Services

Marketing & Membership

Knowledge & Community

Institutes

CentersStrategic

Financial Governance• Board of Governors (BOG)

– sets policies, strategic direction, and priorities

• Committee on Finance & Investment (COFI)

– reports to the Board of Governors

– responsible for maintaining Society’s financial policies

– leads our financial operations and approves an annual operating budget

– produces our Annual Report

• Knowledge and Community (K&C) Financial Operations Operating Board

– prepares and monitors budget for the K&C Sector

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ASME Annual Report

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• IRS requires ASME to produce an Annual Report– 501-(c)(3) not for profit

– Publication 557

– http://www.irs.gov/

• Link to Annual Report– http://files.asme.org/asmeor

g/About/26305.pdf

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ASME Policies – Finance Related

• http://www.asme.org/Governance/Society_Policies.cfm

• All the way from P-1.1 to P-17.1

Policy Number

Name Responsibility

2.1 Custodian and Operating Funds, Technical Divisions, Research Committees, and Sections

Committee on Finance & Investment

2.2 Investment Policy of the Society Committee on Finance & Investment

2.3 Budget and Financial Administration Committee on Finance & Investment

2.4 Insurance Requirements for Contractors to ASME

Committee on Finance & Investment

2.5 Development Fund Committee on Finance & Investment

2.6 Capital Additions, Furniture, Fixtures and Equipment

Committee on Finance & Investment

2.7 Solicitation of Funds Committee on Finance & Investment

2.8 Appropriations for Sections, Subsections, Groups, Student Sections, and Technical Chapters

Knowledge and Community Board of Directors

2.9 Fiscal Framework  Committee on Finance & Investment

2.11 ASME Foundation Grants Program  Board of Governors

4.5 Travel Expense Contribution Committee on Finance & Investment

4.6 Travel Expense Reimbursement Committee on Finance & Investment

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Society Budget Includes Funds for Operating the Institutes

Sector organization and operating units:– Knowledge & Community (K&C)– Institutes– Standards & Certification– Centers– Strategic Management– Publishing & Services– Corporate Support

Three Institutes

• International Gas Turbine Institute (IGTI)

• International Petroleum Technology Institute (IPTI)

• Nanotechnology Institute

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Society Budget Includes Funds for K&C Volunteer and Staff Support

Sector organization and operating units:– Knowledge & Community (K&C)– Institutes– Standards & Certifications– Centers– Strategic Management– Publishing & Services– Corporate Support

Five Vice-Presidencies

• Technical Communities

• Global Communities

• Programs and Activities

• Affinity Communities

• Financial Operations

Financial Operations Board Develops a K&C Budget

• Operation of K&C Sector– K&C Board, plus Technical, Global, Affinity, and

Programs & Activities Boards and programs

– Volunteer/staff travel and expenses

– Audio/Visual, meals, telecons, etc.

• Division custodial fund activities do NOT roll up into the Society general fund budgeting process

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Majority of K&C Budget Supports Governance and Operations

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FY11 Volunteer Travel & Meals  Travel Meals

*K&C ADMIN 161240 11952

ENERGY GROUP 1248 312

PRESSURE TECHNOLOGY GROUP 1248 225

ENVIRONMENT & TRANSP GROUP 1248 225

BASIC ENGINEERING GROUP 1248 450

SYSTEMS & DESIGN GROUP 1248 450

ENGINEERING & TECH MGT GROUP 1248 450

MANUFACTURING GROUP 1248 312

DISTRICT OPS (includes district budgets) 112060 18713

STUDENT SECTION OPS 154960 2923

TOTAL TRAVEL 436996 36012

* K&C Admin includes the K&C Operating Board, Technical Communities, Global Communities, Affinity Communities, Programs & Activities, and Financial Operations Board

K&C Budget Feeds into the Overall Society Budget

• K&C Financial Operations Board integrates requests from the five vice-presidencies (TC, GC, AC, P&A, FO) in the January/February timeframe

• Budget requests prioritized by Strategic Management Committee (SMC) & COFI

• Final budget approved by the BOG at the Annual Meeting (June)

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Division Leader’s Responsibilities

• Division/Institute Income & Expenses

• Conferences, Exhibits, and Events

• Custodial and Operating Accounts

• Annual Budgets and Reporting

• Resources for Division/Institute Leaders

Understand and follow Society Policieshttp://www.asme.org/Governance/Society_Policies.cfm

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Volunteer Leaders Represent ASME and our Membership

It’s important to remember that our actions will reflect on the reputation of the Society.

• Act with integrity and honesty• Practice financial stewardship and accountability• Understand and follow ASME policies• Avoid real or perceived inappropriate, unethical,

conflicts-of-interest…. behavior and activities

Public respect and trust of ASME has been earned over many years; but it can be easily destroyed!

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Income and Expenses

• Income (Sources of Funds)– Where do Technical Divisions or Institutes get

their operating funds?

• Expenses (Uses for Funds)– How do Technical Divisions or Institutes use

their money?

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Divisions and Institutes Earn Income Through Programs

– Surplus and/or share from Conferences, expositions, short courses, publications, etc. (Pursuant to Policy P-12.1)

– Journal Revenue Sharing

– Voluntary member dues contributions

– Share of Continuing Education Institute (CEI) programs sponsored/facilitated by a Division

– Solicitation of Funds from Non-ASME Sources such as corporate sponsorships (Pursuant to Policy P-2.7)

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Division & Institute Expenses

• Conferences, short courses, etc• Recognition, honors and awards• Speaker programs• Scholarship programs• Student activities, competitions, etc.• Newsletters and other communications• Volunteer travel and support• ASME staff support

When are Expenses Covered?

ASME units may pay expenses when:– There are sufficient funds in the budget and custodial

account to cover the expenses– The expenses have been authorized, are within policy,

and are supported with receipts– The expenses are incurred for the benefit of ASME– Expenses are allowed under current ASME Policy– The expenses are consistent with ASME’s 501-(c)(3)

tax status

It’s your responsibility to know the Society Policieshttp://www.asme.org/Governance/Society_Policies.cfm

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Volunteer Travel Expenses

• Travel expense support for officers and members to participate in ASME programs (reimbursable pursuant to Policies P-4.5 and P-4.6)– Travel must coincide with activity and be

reasonable– Custodial funds MAY NOT be used to cover

differences in actual expenses and policy-reimbursable expenses

– Members may incur out-of-pocket costs that the Division cannot reimburse!

Considerations for Covering Expenses for Invited Speakers

• Reimbursement of travel expenses– Reimbursement limited to acceptable expenses– May cover all travel costs

• Honorariums– May be awarded in lieu of covering expenses– Must be reported as income to recipient

• Both require a written speaker agreement stipulating terms of engagement

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Recent Changes in Society Policies and Processes Impact YOU

• Financial Accounting and Information Reporting (FAIR)

• Society Policy 12.1http://www.asme.org/Governance/Society_Policies.cfm

• Some new requirements are driven by IRS

• These apply to all conferences and events organized by the Divisions and Institutes

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Requirements for Conferences and Expositions Depend on Finances

• ASME Financial responsibility drives requirements – Sponsorship: Total financial responsibility– Co-sponsorship: Joint financial responsibility– Participation: No financial responsibility

• Conferences & expositions may– be managed by ASME HQ, ASME units, or non-ASME

organizations– have total, shared, or no ASME financial responsibility

• All events require a CA-1 Approval Form

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Collaborations Require Additional Planning and Agreements

• Co-sponsored events – require a written agreement of the duties,

responsibilities, and disposition of surpluses and losses

• Participation events – require a written agreement of the duties,

responsibilities, and stating no ASME financial obligations

• Prevents misunderstandings and conflicts

• ASME sponsored and co-sponsored events– Require a business plan and budget

– Require approval of Conference Planning Committee

– Must be budgeted to be self supporting with 15% surplus

– Must include Staff support (FAIR Accounting)

– May include a surcharge to produce operating funds

– All income is to be deposited into Custodial Accounts

– Must provide a final report to CPC

– May require post-event auditing

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Planning and conducting an ASME Conference or Event

Required• When ASME has greater than a 50% financial responsibility and where

actual or budgeted income or expense is $500,000 or more

• Performed by a professional independent auditor– jointly identified by Event Chair and ASME Assistant Treasurer

– ASME Assistant Treasurer has final responsibility for the selection

• Cost incorporated into Event budget (estimated $10K)

Random• When the actual or budgeted income or expense is less than $500,000

• Selected by the ASME Assistant Treasurer

• Cost paid by ASME

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Your Conference or Event May be Audited (Policy 12.1)

Additional Considerations for Conferences and Events

• All expositions – Shall be conducted in a manner consistent with

ASME’s Policy 12.1 and 501-(c)(3) tax status

• All contracts – MUST be signed by the Executive Director or the

Assistant Treasurer

• All income– MUST be deposited in the Division’s or Institute’s

Custodial Fund

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Higher-Dollar Activities Require Additional Approvals

• When any Division or Institute activity involves total annual expenditures of $100,000 or more (Policy P-2.1)– An itemized budget MUST be prepared and

submitted to the Committee on Finance and Investment for review and recommendation to Board of Governors

– MUST be approved by the Board of Governors for execution in the subsequent year

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International Events Require Additional Attention to Finances

• North America

• Europe

• Developing Nations

• ASME has consultants available

• Work closely with ASME Staff – Ken Hunt and Mike Weis

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Custodial and Operating Funds

• ASME has established policies that facilitate the efficient and timely financial operation of Divisions and Institutes

• “Custodial” and “Operating” accounts are available to Divisions and Institutes

• The ASME Assistant Treasurer creates monthly Custodial Fund financial reports that are available to Division/Institute Chairs and Treasurers on the ASME website

Establishing Division/Institute Custodial or Operating Funds

• To establish a new Custodial or Operating Fund, a Division or Institute (Policy P-2.1) – MUST show that they have a need to make

direct expenditures– MUST have an approved budget– MUST obtain the approval of the Technical

Communities Operating Board, and of the Committee on Finance and Investment (COFI)

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Description of Operating Funds

Operating Funds: • Money (usually for small, frequent expenses) kept

separately in banks or other recognized financial institutions

• MUST have receipts available for audits• MUST be reported annually to the Committee on

Finance and Investments (COFI)– Names and addresses of the financial institutions – Names of those authorized to make withdrawals

• MUST adhere to all ASME Policies and necessary requirements for IRS 501-(c)(3)

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Annual Planning and Reporting

• Divisions should prepare an operating budget• Divisions are required to prepare and submit an

Annual Report and Plan to their respective Technical Group Operating Board

• Annual Report and Plan– summarizes your Division’s activities

– presents goal & plans for the upcoming year

Important communication with your leadership!

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Using Your Custodial Fund

• All monies received by a Division or Institute are to be deposited into the Custodial Fund

• Payments from a Custodial Fund– Payments are made from the Custodial Fund on the

written request of two members of the Society authorized by the Executive Committee of the Division or Institute (usually the Treasurer and Chair)

– Verbal authorizations for payment may be given to staff by two authorized members for expenditures up to $2000, provided that copies of the approved invoices are sent to the authorizing members for their records

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Description of Custodial Funds

• Custodial Funds:– Money generated by an ASME activity– Maintained in the ASME General Fund by the

ASME Society’s Treasurer– Invested as part of the General Fund– Investment gains and income (or losses)

allocated to the Division or Institute’s Custodial Fund

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Custodial Fund Reports

• Custodial Fund financial reports are available to Chairs and Treasurers

• View your Division’s custodial fund report at http://my.asme.org/financials/GLReports.cfm

• Check it often! It is your responsibility to be certain that your unit’s accounts are accurate!

• Promptly report suspected errors to your assigned Division staff manager or support staff who will look into the problem

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Once you receive access to the custodial fund you can go to the financial reports website and sign in.

Please use the email address on your ASME record

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Enter your personal password that you created for the ASME members-only site.

Your password is not your membership number

or an ASME generated number.

Initial Page of the Financial Tool

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1. Select the account you want to view

2. Click on “Generate Report”

Note: You will only see your accounts

Overview of Revenue and Expenses

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Blue entries are “hot” and will take you to a more detailed description of the item

“Hot Entries” lead to the Details

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Multiple tabs for different entries

Multiple pages

Details Transaction Page Can be Printed, Exported, or Saved

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From the Detailed Transaction Page you can:

• Print your report

• Export your financial statement into other file formats (excel, word, adobe)

• Save your document

Additional Financial Help

• For questions related to financial specifics please contact your ASME Staff Manager

• For any additional questions about the financial tool or your access– please contact: Deidra Hackley ( hackleyd@asme.org )

– or send your message through the Volunteer E-Request Tool (VERT) at http://vorequest.asme.org

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ASME Financial Resources

• Earnings (or losses) from Division or Institute Custodial Funds – Mingled with ASME General fund

• Society resources for innovative initiatives– ASME Development Fund (Policy P-2.5)– ASME Foundation Grants (Policy P-2.11)– ASME Sustaining and Breakthrough

Innovation Fund

Additional Resources for Financial Questions and Assistance

• Your Vice-President for Financial Operations– Karen Ohland ohlandk@asme.org

• TCOB Resources– Conference Planning Committee

– Committee on Finance and Administration

– Committee on Division Operations and Training

• Your Technical Group Operating Board

• Volunteer Orientation & Leadership Training (VOLT)

• ASME website for forms, best practices, etchttp://committees.asme.org/K&C/CPC/Forms_Templates.cfm

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Summary• Protect 501-(c)(3) status• Understand and follow ASME policies• Prepare an annual operating budget• Follow Policy 12.1 for events• Prepare Division Annual Report and Plan• Keep records of what you spend and receive• Monitor Custodial Fund using web tool often• Promptly report errors in your account• Operate with integrity, fairness, and honesty

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Contact Information

Roy Hogan rehogan@sandia.gov

Elio Manes ManesE@asme.org

This presentation will be posted on the 2011 LTC Web Site

http://www.asmeconferences.org/ltc11/presentations.cfm

Finance - Division and Institute

Any Questions or Comments?

Please provide your comments and

feedback on the Session Survey Form

THANK YOU!

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Division/Institute Finances Exercise

In this exercise, you will be reviewing your Division Financial report and preparing an annual operating plan

• What are the major expenses and revenues?• What major activities are planned?• What do you consider a strength or even a best practice?• What are areas of improvement?

Discuss these and select one highlight and one action planned based on what you have learned.

• Each division should select a spokesperson