Fiscal Management

By Ray Zimmerman, Executive Director

Welcome back. This is the second of a series of articles designed to inform you, the BMW MOA members, about the daily operations of your club.

This month I'll discuss some of the detail about how the BMW MOA budgets and manages its financial resources. Each year, in August, the Accountant and the Executive Director initiate the process of preparing the upcoming year's budget. They examine the prior year's budget performance to evaluate how well we did in the previous period. History has proven that the annual budgets are mostly accurate with few major deviations from the plan. In fact most of the variances are good. Net income is usually somewhat higher than expected.

What do we do with the additional revenue? I am glad you asked! During 2003 and 2004 we completed pieces of a major project that have provided the members the ability to join and renew on-line; pre-register for the International Rally; and make on-line purchases from the BMW MOA Country Store. All of these transactions are done in a secure mode. Of course, the benefits also affect the staff in a positive manner by providing better information and analytical tools.

A proposed budget is prepared on a monthly basis for the coming year. This draft is sent to the Finance and Operations Committee around the 20th of September. That Committee, chaired by the BMW MOA Treasurer, reviews the budget and provides feedback to the office as appropriate. The budget is then updated and sent to all members of the Board of Directors for their review and comments. During the October Board meeting the budget is presented and discussed. Suggested changes are made and the new year's budget is ready for use on January 1st. Now the work is over and we wait until August to start the next budget. Not!

BMW MOA uses Quickbooks (an Intuit product) for our accounting software. Once the budget is approved it is entered into Quickbooks. Then as actual costs and revenues are realized they are posted to the system utilizing an account structure designed to provide the best visibility possible for reporting. These reports compare actual income and expenses to budgeted amounts on both a monthly and year-to-date basis. Financial statements, which include balance sheets and income statements, are generated as necessary, but not less than once a month, to allow Association Management to review operating results and ensure fiscal control. Once the monthly reports are completed they are sent to a local CPA firm to review in accordance with generally accepted accounting principles. During each Board meeting a set of charts showing the results of operations is presented to the Board by the Executive Director. Those charts include comparisons of actual to budgeted amounts for income, cost of goods sold, administrative expenses and net income. Also at each Board meeting, the Treasurer presents a report on the overall financial condition of the organization. That report is summarized in the Board minutes which are published in the ON.

Internal controls? Exactly how does the money flow? Cash flow into the BMW MOA comes from a variety of sources. Membership dues, Country Store purchases, advertising fees, etc are received at the office. Many of these funds come in by credit card and checks. Occasionally we receive cash but that is very rare. Hey, it is the 21st Century after all. That revenue is deposited daily, by someone other than the Accountant and appropriate entries are made in Quickbooks. Expenses are paid by check. The check writing process is designed to eliminate the possibility of someone doing something they shouldn't. The bills are received and reviewed by the Executive Assistant who validates the expense. The bills are then given to the Accountant who enters the payment amounts in the proper accounts and prepares the checks for signature. There are three individuals in the headquarters who are authorized to sign checks - the Executive Director, the Executive Assistant and the Office Manager. Each check requires two signatures. The checkbook is reconciled by the executive assistant.

At the end of each year the independent CPA firm audits the organization's books and records and performs a physical inventory of the items handled by the Country Store. When the CPA's are satisfied that everything is in order, they issue an opinion to the effect that the BMW MOA's financial statements present fairly the financial position and results of operations for the year. As you can imagine this entire accounting process is rather complex but we do it that way to be able to provide visibility and protect the assets of the BMW Motorcycle Owners of America. Join me next month as we look a yet another facet of BMW MOA Operations.