Budget: MEI will
annually present a proposed Program of Activity and Budget which includes
the associations goals for the year, the ongoing member services and specific
projects needed to accomplish them, and the budget of revenues and expenses
that will be needed.
Rarely are there funds enough to support every program
or service an association wants. The annual budget proposed by MEI will
be based on its management perspective and responsibility
to ensure the most effective use of limited fiscal resources. It will be
constructed in line with the strategic plan of the association. It will
support those services and programs with the highest priority in that plan,
and will include only those which truly support the strategic mission of
The Board has a responsibility to approve this or any
other budget. MEI can provide guidance the reasons it constructed
its proposed budget as it did, help in understanding the trade-offs of changes,
and the advantages and disadvantages to achieving the associations goals.
Once a budget is approved, MEI reverts to its management
role. It executes the program of the approved budget, makes sure its expenditures
on behalf of the association are in line with the approved budget, and exercises
its internal system of fiscal procedures and controls. These checks
and balances ensure compliance and give early warnings of significant
variances. This system of internal controls that has been approved by the
auditors (including two of the former Big 8) of our existing
Accounting: MEI employs
a functionalized accounting system for all its association clients.
This system allows the tracking of income, but more importantly, that of
expenses by program activity (e.g., membership, meeting, newsletter) and
functional activity (e.g., postage, printing, and travel). When summarized
by program, this accounting method ensures that the association has a clear
understanding of each programs cost and its contribution (positive and
negative) to the bottom line. This enables the association to examine the
return on investment and cost/benefit ratio of each of its programs.
The actual posting of the accounting data is normally
done by MEI. At the associations option, an accounting firm can be engaged
to perform the accounting work, with MEI supplying the accountant with basic
data. In either case, the functionalized system will be used.
Variations and extensions of the functionalized accounting
systems account codes are used for two other purposes. They are used for
filing of association records. They are also integrated into MEIs time
management system, allowing the tracking of actual time spent by our staff
by program. (Initially, MEIs management fee is allocated, as a functional
expense, against each program based on a percentage of either estimated
time or actual budget. Subsequently, it is allocated more precisely on the
basis of these time records.)
Grants: MEI will
write and present applications for grants or other funds on the associations
behalf. None will be initiated without the approval of the associations
officers. None will be applied for which dont foster and support the associations
programs and services. And none will applied for which impose severe restrictions
or requirements on the association.
Bank Accounts: MEI
establishes two checking accounts for each association client, a depository
account accessible only by the client Treasurer for withdrawal of funds,
and an operating account accessible by the MEI Executive Associate
assigned to the client.
The depository account is maintained as a segregated
account. The Treasurer will have the only checkbook for the account and,
usually along with one other association officer, is the only person authorized
by the bank to withdraw funds. All association receipts (cash, checks, and
charge card receipts) are directly deposited into this account through a
bank lock box (or deposited to the lock box within
24 hours if received by the office staff).
The operating account is the account from which the MEI
Executive Associate pays the associations operating expenses, including
MEIs invoice. Monthly, a report to the Treasurer is prepared detailing
the distribution of funds to be made from the operating account. Once the
Treasurer has reviewed and approved this report, he/she will issue a check
from the depository account to the operating account sufficient to cover
This two-account system ensures good money management
and control, and ensures that MEI never has direct access to the bulk of
the associations funds. Even for the limited access it does have, all of
MEIs staff are individually bonded in favor of the association against
Accounts Receivable &
Payable: MEI assigns these responsibilities to two different
individuals, in accordance with generally accepted accounting principles.
Non-membership receivables are invoiced with chronological identification
numbers, and a strict system of second and third notices results in minimal
bad debt write-off.
All payable invoices are date stamped when received,
and when cash flow is sufficient, are paid within 45 days of receipt. Each
invoice must be approved for payment by having all calculations checked
and each item coded according to the associations chart of accounts. If
cash flow is insufficient to cover the payables, payment schedules are negotiated
with vendors to maintain the associations good credit rating.
will take appropriate steps, as authorized by the associations bylaws and
its officers, to invest the associations idle funds to maximize the yield
of those investments, and to preserve the capital invested.
Monthly: At the end
of each monthly accounting period, MEI will provide financial reports to
the associations Treasurer and principal officers. These include bank statements,
detailed lists of deposits made to the depository account and checks written
on the operating account, income and expense schedules for the month and
year-to-date compared to the annual budget, and a balance sheet showing
the assets, liabilities and net worth of the association.
Audit: MEI will arrange
for an outside auditor, to be approved by the association, to conduct an
annual audit of the associations financial transactions and records, and
to prepare fiscal year-end statements of financial condition. If the association
has elected to engage an accountant for the monthly accounting routine,
the auditor engaged should be a different accounting firm to assure independent
In either case, the audit will be conducted at the associations
expense. MEI will provide and make available all records needed by the auditor.
Tax Returns: Based
on the annual audit, all required tax returns for any and all jurisdictions
will be prepared and filed on the associations behalf.