A SIGNATURE PROGRAM OF
INDIANA PHILANTHROPY ALLIANCE
FINANCE & INVESTMENT DEEP DIVE DAY
Patrick Burkey – Estep, Burkey, Simmons, LLC
Michael Fleetwood – Blue & Co., LLC
10 MOST IMPORTANT NUMBERS FOR YOUR BOARD
• Public support percentage
• Total contribution $ & as a % of average investment pool
• Total grants expense $ & as a % of average investment
pool
• Net operating expense $ & as a % of average investment
pool
• Personnel cost $ & as a % of average investment pool
• Operating spendable funds balance
• Fund admin fee $ vs. net operating expenses
• 990 management & general $ as a % of total expenses
• 990 fundraising $ as a % of total expenses
• Total new funds compared to new fund contributions
TIPS FOR A GOOD AUDIT
Early communication of changes
• New policies or changes to existing policies
• Receipt of unusual gifts
Providing information in advance of field work
Coordinating on obtaining difficult information
• Charitable trust investments
• Alternative investments
• Fair value disaggregation information
AUDIT COMMITTEE RESPONSIBILITIES
Oversight and monitoring of:
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Financial statements and financial information
Compliance with legal and regulatory requirements
Independent auditors
Treasury and finance matters
Enterprise risk management, privacy and data
security
• Accounting and financial reporting process
MANAGEMENT LETTER
Required audit communications
• Our responsibility as it relates to internal control
• Qualitative aspects of accounting practices
 New accounting policies
 Use of estimates
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Difficulties encountered
Audit adjustments or potential adjustments
Disagreements with management
Management representations
Consultations with other accountants
Other audit findings or issues
Other information in the financial statements
Internal control matters
• Significant deficiencies
• Material weaknesses
• Control deficiencies and other recommendations
INTERNAL CONTROLS
General controls
• Documentation of policies and procedures
Segregation of duties
• Ensuring important functions are independent of each
other
• Limitation based on size
• Impact of volunteers
 Increased risk
 Monitoring / control procedures
• Compensating controls
Board involvement
• Education on operational and financial matters
• Timely review of appropriate financial reports
• Impact on segregation of duties
INTERNAL CONTROLS
Specific controls to consider
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Pre-approval of checks
Post-approval of checks
Dual signatures
Bank statement review
Use of budgets
Special event issues
Financial reporting controls
Other controls
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Ethics policy
Conflict of interest policy
Whistleblower policy
Regular board meetings with written minutes
Documented job descriptions
Fidelity bonding insurance
990 INFORMATION
Unrelated Business Income Tax (UBIT)
• A trade or a business, which is
• Regularly carried on, and which is
• Not substantially related to the CF’s exempt purpose
Public Support Test
• 1/3 test in the current or prior year
• 10% facts & circumstances
Board Review
• Appearance of good governance
• Areas that deserve extra scrutiny
KEY IT CONTROLS
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Acceptable use policy
Confidentiality and non-disclosure agreements
Disciplinary process
Software license monitoring
Back-up and storage
Anti-virus / malware software
Firewall protection
Wireless network security
Hardware encryption
Physical access controls
Restricted software access
Business continuity and disaster recovery plan
ELECTRONIC PAYMENTS AND RECEIPTS
Safeguards
• Strong internal and information technology controls on all programs and
data files associated with identity information of vendors and employees
to ensure privacy and prevent unauthorized use
• Network security to protect data files from internal and external threats
• Appropriate segregation of duties
• Dual controls for the authorization of non-repetitive transactions
• Dual controls for the establishment of repetitive transactions
• Establishment of dollar limits for authorized personnel
• Establishment and use of passwords for authorized personnel to initiate
transactions
• Implementation and periodic review of internal controls that address
access control, confidentiality of data, integrity of data, and other
information security issues as appropriate
• Electronic transactions must have an audit trail
PAPERLESS OFFICE PROCEDURES
Establishing & maintaining an electronic file room
• Purchased or self-developed method
• Format for storing data
• Backing up data
Determine what to store
• How to get it to electronic format
• Document retention dates
• Data security & access control
QUESTIONS