Finance –
Technical Division and Institutes
Roy Hogan rehogan@sandia.gov
Elio Manes ManesE@asme.org
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
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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)
Events
Management,
3%
Institutes, 5%
Knowledge &
Communitity,
1%
Other, 1%
Membership,
12%
Strategic
Centers
Institutes
Events
Management
Knowledge &
Community
Standards &
Certifications
Marketing &
Membership
Publishing,
15%
Standards &
Certifications,
63%
Publications
HQ Services
Revenues ($86.2 M)
Expenses ($84.6M)
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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
• 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
Policy
Number
2.1
Name
Responsibility
Committee on Finance
& Investment
2.2
Custodian and Operating Funds,
Technical Divisions, Research
Committees, and Sections
Investment Policy of the Society
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 Committee on Finance
and Equipment
& Investment
2.7
Solicitation of Funds
Committee on Finance
& Investment
2.8
2.9
Appropriations for Sections,
Subsections, Groups, Student
Sections, and Technical Chapters
Fiscal Framework
Knowledge and
Community Board of
Directors
Committee on Finance
& Investment
2.11
ASME Foundation Grants Program
Board of Governors
4.5
Travel Expense Contribution
4.6
Travel Expense Reimbursement
Committee on Finance
& Investment
Committee on Finance
& Investment
Committee on Finance
& Investment
• http://www.asme.
org/Governance/
Society_Policies.
cfm
• All the way from
P-1.1 to P-17.1
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Society Budget Includes
Funds for Operating the Institutes
Sector organization and operating units:
–
–
–
–
–
–
–
Knowledge & Community (K&C)
Institutes
Three Institutes
Standards & Certification• International Gas Turbine
Centers
Institute (IGTI)
Strategic Management • International Petroleum
Publishing & Services Technology Institute (IPTI)
• Nanotechnology Institute
Corporate Support
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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
Five Vice-Presidencies
Standards & Certifications
• Technical Communities
Centers
• Global Communities
Strategic Management
• Programs and Activities
Publishing & Services
• Affinity Communities
Corporate Support
• Financial Operations
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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
FY11 Volunteer Travel & Meals
Travel
Meals
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
* K&C Admin includes the K&C Operating Board, Technical Communities, Global
Communities, Affinity Communities, Programs & Activities, and Financial Operations Board
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K&C Budget Feeds into the
Overall Society Budget
• K&C Financial Operations Board
integrates requests from the five vicepresidencies (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 Policies
http://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
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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 Policies
http://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 policyreimbursable expenses
– Members may incur out-of-pocket costs that
the Division cannot reimburse!
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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 12.1
http://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
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Planning and conducting an
ASME Conference or Event
• 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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Your Conference or Event May
be Audited (Policy 12.1)
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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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
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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.
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Initial Page of the Financial Tool
1. Select the account
you want to view
2. Click on “Generate
Report”
Note: You will only see your accounts
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Overview of Revenue and Expenses
Blue entries are “hot” and will take you to
a more detailed description of the item
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“Hot Entries” lead to the Details
Multiple pages
Multiple tabs for
different entries
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Details Transaction Page
Can be Printed, Exported, or Saved
From the Detailed Transaction Page
you can:
• Print your report
• Export your financial statement into
other file formats (excel, word, adobe)
• Save your document
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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
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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, etc
http://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
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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
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