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Post by schlager7 on Feb 19, 2008 22:20:25 GMT -6
For those who did not get this directly via the USFA Board of Directors Meeting at JOs and/or did not see this on Fencing.Net, the following it something of a quick edit job from the latter: ==========================================
from T (Tracy Hurley) on Fnet:
One piece of news hot off the press: Michael Massik (the Exec Director) has resigned but will stay on until after the Olympics. That will make many things much easier for the new President, no matter who it is.
One other piece of quite disturbing news! We learned that the USFA could be in the red for upwards of $1million. Conservative estimates are over $250,000; but evidently the auditor’s estimate is that it is probably closer to $1million.
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from oiuyt (Brad Baker) on Fnet:
The budget and related issues were discussed more than any other topic (actually close to as much as EVERY other topic) at the meeting. In addition to discussion in the morning, there was over an hour of dicussion on the topic, including a number of very specific questions (mostly from Greg) and related sub-discussions during the latter portion of the meeting after the recess.* The majority of the financial discussion took place at the evening portion of the meeting, which I don't believe T attended. While Greg and Jerry were two of the more active members in the discussion, I would not characterize things as they being the only two involved.
As mentioned previously in the thread, Greg's motions were passed. The interval of time between the morning and evening portions of the meeting allowed for the confirmation of the identities of some people interested in serving on each. The Board made our required appointment to each (Greg to Finance, Evan Ranes to Audit). The Athlete's Rep to the Finance Committee (Scott Rodgers) had already been identified, and Derek Cotton, as treasurer, was automatically the chair. There is one Presidential appointee to each, which appointments are required within 1 month, and an athlete rep appointment to the audit committee, required to be made expeditiously.
Based on reports, the topic was discussed very extensively the previous day at the EC meeting as well.
Without going into specifics, the USFA lost considerably more money last (fiscal) year than was anticipated. There were cost over-runs in a number of areas, some quite significant. I think there is no one involved in any capacity that is "ok with it" or indifferent.
[referring to a query from another poster that read, "I know the USFA had/has a endowment started from left over money from the 1984 Olympics. Not sure of the current status / limitations though."]
That money, as well as other designated gifts over the 20+ years since, was placed with the US Fencing Foundation, a separately-controlled non-profit. The USFF has chosen to invest their assets with the US Olympic Foundation. Annually the USFF choses an amount of money to give to the USFA, coming exclusively out of the USFF earnings (so as to maintain the principal). This year I believe that amount is on the order of $70,000.
The USFA names a couple of the directors of the USFF and does some administrative work for the USFF, but certainly doesn't control it or own it's assets. They are tightly connected but separate organizations.
I'll type up notes from the meeting and post them (in the thread about the meeting), probably tonight. As in the past, I anticipate that mostly being brief notes of the resolution of the various motions, perhaps with a few comments.
One note for here, because it pertains to the budget discussions and doesn't really have a particular agenda place, but affects most of this thread's readers; As has been mentioned in the past, and again on Sunday, the USFA has an existing policy of increasing membership fees with the new Olympic quadrennial. As descibed on Sunday, absent a modification to the policy in July, membership fees in 2008-2009 will be increased by $10/year in each category. I'm unclear how lifetime membership fees will be altered without specific action.
-B
* For those that were not in attendance, the meeting, which was scheduled to run 7:30-9:30am ended up recessing at ~9:40am and reconvening at 5:00pm, running until just before 7:00pm. The latter session contained an executive (closed) portion dealing with a sensitive non-budget-related topic, but the majority of that time was dealing with the specific budgetary and financial discussions.
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Post by fox on Feb 20, 2008 7:46:44 GMT -6
Well, I guess they DO need the money, now.
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Post by schlager7 on Feb 20, 2008 8:13:45 GMT -6
Here is one motion made by Greg Dilworth which was already on the agenda to voted on at the meeting. Not surprisingly, it has now passed. ========================================
Motion (Mr. Dilworth):
At each board meeting the USFA National Office is required to prepare and distribute with the budget report a statement of the sources and uses of cash, by month, for the period from the previous board meeting (actual figures) to the period of the next board meeting (pro-forma). Further, at the meeting where the budget is approved the USFA National Office is required to submit an anticipated statement of the sources and uses of cash, by month, for the same period as that covered by the budget.
In addition, at each board meeting the USFA National Office must present a list of accounts payable that are aged more than 30 days from the date of presentation of the relevant invoice or report.
Finally, at each board meeting the USFA National Office must present to the board for its approval a list of all variances from the approved budget, both revenues and expenses, which exceeded in the past or are anticipated to exceed the lesser of $10,000 or 10% of the budgeted item. Any expense that does not fall under the current budget must also be presented for approval to the board.
This motion will take effect beginning at the Board meeting subsequent to the adoption of this motion.
Rationale: In the past, it was not unusual for the board to pass a budget knowing that there was going to be a deficit at the end of the year. The last several years have seen the financial position of the USFA improve significantly, with budgets generally anticipating a break even position. This is an extremely positive development.
However, there have been a number of occasions over the last several years when payments from the national office to members of the USFA for reimbursement of expenses or payment of honoraria have been delayed by a significant amount of time as a result of “cash flow” problems. Also, as was highlighted at the 2007 Summer Nationals board meeting, the current processes for financial oversight of the corporation are either non-existent or are not being consistently followed.
Requiring the national office to undertake the preparation of the enclosed statements along with the current budget reports will make it possible for the board to have adequate financial oversight of the USFA. In addition, requiring the preparation of the above reports will make it less likely that problems will occur in the first place.
Should it become clear that there will be an issue at some specific time in the future, either as a result of an unanticipated variance or a cash flow shortage; the board could take measures to solve that issue. Finally, if there are simply problems of timing that require the USFA to delay payment of expenses or honoraria, the National Office could inform people that this is going to occur, allowing people to plan
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nemo
Blademaster
mobilis in mobili
Posts: 729
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Post by nemo on Feb 20, 2008 9:25:44 GMT -6
Not to live up to my rep as a fault-finder...
but I am presuming lack of oversight of USFA financial affairs has, somewhere in the past, crossed the line from problem to legacy and tradition.
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Post by schlager7 on Feb 21, 2008 18:54:45 GMT -6
In order to further dissiminate a particularly informed viewpoint, I am copying Greg Dilworth's post on Fencing Net from yesterday: ============================================
US Fencing is NOT going bankrupt
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Since I was one of the most vocal board members about our latest financial report and since I asked a number of questions I guess I should respond...
First, as a headline, the USFA has some significant issues, but it's not so dire that we're going to be unable to continue with operations or send teams to the Jr. World Championships or Olympics. The financial reports that currently come from the National Office present only a piece of the entire picture. That picture is pretty dire, showing a bottom line loss of more than $1 Million in 2006/2007. However, this is still a preliminary report and may get somewhat better after the auditors finish their work. More of the picture emerged during the board meetings for those who were able to attend both sessions.
Those of us on the Board of Directors only get what is, essentially, an income statement. As useful as an income statement is in a company reporting net profits and losses to shareholders who expect a return on their financial assets, it's not as useful for us in a not-for-profit. Rather, we need to know about cash flow. In other words, do we, as an organization, have cash on hand to cover our bills? What debts do we have outstanding?
The news here is better. We have sufficient cash on hand to cover most of our bills were we to shut down operations today. Since we’re not shutting down today, it’s more similar to the situation that The Momster described in a post in a different thread. The USFA is not unlike a family living paycheck to paycheck. We have debts outstanding. We’re waiting on certain revenues to arrive to pay the bills. We have some cash in case there are emergencies that arise in between those paychecks. It’s just on a much larger scale.
It’s also not acceptable and needs to be fixed. If everything comes in as projected for the rest of the year (which is a bad assumption to start) we’ll have a cash deficit at the end of the fiscal year to go along with a planned income statement deficit of around 100K. How did we get into this situation? Quite simply, there are not sufficient process controls over all of the spending of the USFA. There are a number of different groups outside the control of the national office that are able to spend money and then submit expenses. These expenses got out of control and the mechanisms and reporting were not in place to stop it. We spent the majority of the second half of the board meeting (the one that started at 5PM) going through the budget report line item by line item to understand what happened.
So, what do we do about it? In the short term, in my opinion, this is NOT the year to be cutting significantly. The Olympics only come around every four years and we need to spend prudently but as necessary to assist our athletes with training and competing so that we have the best chance to succeed. Rather, we need to make sure that we gain control of those out of control processes that led us to overspend various pieces of the budget by an aggregate 700K in fiscal 2006/2007. We also need to prepare a budget for 2008/2009 that shows significant surplus and will allow us to begin digging out from the hole.
My goal with the motions passed by the board was to provide a structure for giving more information to the board so that it could make better decisions (Motion 1), add people and oversight to the budget creation and variance processes (Motion 2), and add people and oversight to our actual spending and to reporting out to the BOD on what is actually happening (Motion 3).
I would like to point out that these motions were sent to the current USFA Secretary in time to be included in the October board agenda (i.e. in late September). This was significantly before I was nominated to be Treasurer. That occurred in December. Regardless of whether or not I actually become Treasurer I was then and am now concerned about our financial health and am doing what I can as a member of this organization to help. It had nothing to do with writing into the agenda a job description and job security for my next (uncontested elected) position.
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Post by D on Feb 22, 2008 10:43:41 GMT -6
We should ask to be subsidized but the NFL and NBA... yea right. I hate how much money other sports have. Even softball... Why does softball even exsist if baseball does? anyway im rambling.
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Post by schlager7 on Mar 7, 2008 19:11:44 GMT -6
with thanks to DavidSierra & Fenci ng NetThe Financial State of US FencingMany members of US Fencing are aware of the financial documents released before our Board meeting in Charlotte. Those documents rightly raised concern that the association might be in financial trouble. Your Board of Directors and Executive Committee had similar questions and concerns. To address and rectify these issues we have moved to establish two committees, an audit committee and a budget committee, to oversee the financial affairs of US Fencing and report any issues to the membership. This note is a combined effort of those two committees. Our first official function was a conference call with auditors of US Fencing, the CPA firm of Waugh & Goodwin, LLP. On the call representing US Fencing were members of the audit and budget committees along with Nancy Anderson, President of US Fencing and Jill Goodwin, US Fencing’s lead auditor from Waugh & Goodwin. We spoke for over an hour, and the results of the call were as follows: 1. US Fencing is NOT currently at risk of insolvency. 2. The budget deficit is NOT the result of any malfeasance. 3. The current outlook for this fiscal year is much healthier than last year. 4. There are new controls in place to guard against surprises like this in the future. We will now address all of the above in a little more detail. After speaking with Jill, we learned that she was initially very concerned that the auditors might have to issue a “going concern” letter, meaning a written notice that there is doubt the entity in question can continue as a going concern for the next fiscal year. She has now determined that this will not be necessary given the current state of our financials, as of the end of January 2008. We have paid down 95% of the debt incurred on the July 31, 2007 statement and all of our receivables are of the 30-60 day nature. Jill believes that most of the issues facing our organization were one-time issues which have been addressed. This leads us to our second point. There was no malfeasance at US Fencing. We know and understand that many members have concerns that there may have been some illegal conduct, which has led to our enlarged deficit. The members of the committees had similar concerns. Jill gave us assurances that this was not the case. Our difficulties are a case of a “death from a thousand cuts” rather than any single calamitous event. Yes, Summer Nationals overruns hurt, as did the overall loss from our other domestic events. After that, the deficit was a result of a high number of smaller items all coming in over budget and adding up to one large figure. The reason for the late notice was simply that a staff member of the national office, who has since left the organization, was not up to the task of accounting for all of our various programs. By the time it was discovered that this person could not, and was not, handling the intricacies very well, many programs and events had run far into the red. Take our weapon squads, for example – they submit receipts for activities; those receipts should have been quickly entered and counted against their budget, telling them how much money they had remaining for the season. This was not done, so the weapon squads ran over budget; by the time it was discovered, the money had been spent. If you multiply this problem by all of our various programs, you can see how quickly this can get out of control. This problem has been resolved, and we have new, qualified staffing in place. Next, the current state of US Fencing is much healthier than last year. Our bills are paid, and our tournament costs are in control. Through the end of January, the organization has revenues that are significantly higher than expenses. As mentioned previously, this positive cash flow, along with other financing activities, has allowed us to pay down the vast majority of accrued liabilities stemming from the end of last year. In addition, the US Olympic Committee has changed the timing of funding NGBs; they now will give the grants when the organization most needs it rather than on a fixed schedule, therefore, allowing us to better match the grants to our organization’s expenses. This will also help our balance of payments this year and in the coming years. Obviously, any member can rightfully ask if Summer Nationals and our International Programs got us in trouble last year, why would they not do the same this year and put us in this same situation next year? While that is a possibility, there are many more internal controls now in place and a more qualified staff to identify problems and address them as they arise, instead of waiting until there is nothing that can be done except to write the checks. In addition, we have increased oversight by adding the audit and budget committees to our financial processes. Each month, the National Office will send reports to these committees, ensuring oversight of our financial health and giving us the opportunity to take action should costs or revenues again get out of line with projections. The members of the budget and audit committees wanted to get word to the general membership as quickly as possible that US Fencing is in better financial health than last year and to put to rest any ideas of illegal activities. We also wanted to assure you that steps are now being taken to ensure and safeguard the short and long-term fiscal viability of US Fencing. If you have additional questions please contact us at usfafinance@yahoo.com. We will respond to your query as quickly as possible. Sincerely, Budget & Finance Committee: Audit Committee: Derek Cotton Ed Wright Greg Dilworth Evan Ranes Scott Rodgers John Strass Carla Mae Richards
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