FINANCIALLY
SPEAKING…
A follow-up to the Aurora
Chamber's Annual General Meeting (AGM)
This article is
long, but for those members who attended the AGM and had questions related to
the financial statements, it is worth the read.
At the Aurora
Chamber’s AGM held October 9, the financial statements as at June 30, 2014 (the
Chamber’s 2013-2014 fiscal year-end), showed a deficit. Not many people heard
the auditor say that the Chamber, despite the deficit, was financially sound. Few Ontario Chambers have a building that is mortgage free and a substantial
amount of money set aside in reserve for emergencies or unplanned/unbudgeted
expenses ($256,000 reported as at June 30, 2014). The Aurora Chamber is
financially sound, but there is a lot of work that will have to take place over
the next few years to ensure the legacy survives.
Budgeting
Budgeting for
most businesses, including non-profit organizations, involves a review of the priorities
as set out in the strategic plan. Then, a review of issues that could affect
the bottom line takes place, including membership renewal, sponsorship, event
revenue, funds raised through non-membership revenue, and of course, all
expenses related to achieving goals of the organization, plus salaries and the related
expenses of operating a business. Best practice is to review the financial
statements for at least three previous years before developing the current
year’s budget. Finally, there is risk management, a review of the “what ifs” or
what would the outcome be if . . .
The Chamber’s
budget and financial status is reviewed monthly by me, a Finance Committee and
the Board of Directors. Variances are expected in most budgeted areas, as it is
rare that the assumptions made during the budgeting process become reality. This
is due to unexpected economic trends that affect revenue streams for funders
and sponsors, which directly influences the organization’s bottom line. And,
there is always the potential for unforeseen circumstances that could affect
events, such as “weather” and other challenges.
Even with an education
directly related to the non-profit world, it was only after asking professors
and auditors very basic questions that I began to truly understand and analyze financial
statements. Possessing an ability to effectively navigate organizational
finances is a good thing, as throughout my career I have been responsible for
budgets ranging from the high millions to one million dollars and less.
Since arriving
at the Chamber, a lot of changes have been made in how the financial aspects of
the organization are handled and reported. I will clearly state that there were
absolutely no questions about
how funds were spent or the honesty and credibility of those in charge.
Review of Year-End 2011
The receivables
(uncollected funds or funds owed by customers) were high, based on the Chamber’s
annual budget. At some point, if outstanding invoices are unlikely to be paid (especially
when they go back years) and if steps have been taken to obtain payment without
success, they have to be written off. The Board accepted the first ‘hit’ in the
2010-2011 (year ending June 30, 2011).
That same year,
revenue for the business directory collected in 2011 was deferred to the
following year as the distribution date was changed. The Chamber reported an
$18,545 deficit. It was a paper deficit to resolve outstanding issues. Financial
policies and procedures were put into place for receivables.
Review of Year-End 2012
By the end of
the 2012 fiscal year, revenue had grown by almost $90,000; there was a positive
balance at year end.
Review of Year-End 2013
Yet another
challenge . . . I have always struggled with the word ‘amortization’ that
appears on most, if not all, financial statements. It is hard to understand,
but is understandable! Amortization or the depreciation of assets is a non-cash
deduction of owning business assets such as the building, parking lot,
computers, desks and office furniture, etc. It is a non-cash expense that
reduces the value of assets over time.
This also was
the year Microsoft made major changes to its operating system and new computers
had to be purchased. There was a $9,215 deficit due to a strategic planning
session that was not budgeted. Amortization and the write off of computer
equipment equalled $27,659, both non-cash items. The deficit was $36,874.
Review of Year-End 2014
This is the
year end reported at the AGM held on October 9, 2014. There was a cash loss of
$12,028 and amortization of assets at $24,416 for an overall loss of $36,444.
The cash loss ($12,028) was due to lower than expected revenue from an event
and unbudgeted staff training. However, even though revenue was down by $43,071
compared to 2013, overall expenses were also down by $40,258. The Chamber
actually did very well with cost containment.
Staff Salaries
There was a
question at the AGM related to staff salaries and why this expense was so high.
My response is that salaries and staff benefits are a cost of doing business.
After reviewing the results of a salary survey from other chambers, in many
cases salaries of this Chamber are lower than others in Ontario. The staff at
the Chamber is dedicated and talented. There is a cost for that!
FUTURE
CHALLENGES
There are two
major financial challenges for the Chamber during this fiscal year, July 1,
2014 - June 30, 2015.
- Moving the Home Show from the Aurora Community Centre to the Stronach Aurora Recreational Centre (SARC). We have agreed to the move to keep the Aurora Tigers Hockey Team here. We have estimated that there will be at least $20,000 in additional expenses related to:
- Lack of parking at the SARC: Exhibitors will be moved to off-site parking. A van or bus will be operating continuously during the hours of the show to an off-site parking lot.
- Traffic control: Police officers will be needed to direct traffic to and from Wellington Street.
- Increased advertising for the new location.
- Increased electrical, setup and layout expenses.
- Increased
staff time, which is not calculated in the $20,000.
It's a brand new show! - Changes to the Current Value Assessment of the Town’s property where the Chamber office is located, as determined by the Municipal Property Assessment Corporation (MPAC). Property taxes have increased for the taxation years 2012, 2013 and 2014, resulting in an unexpected expense of over $13,000. Steps are being taken to appeal MPAC’s decision.
NEW
REPORT FROM THE ONTARIO CHAMBER OF COMMERCE:
A
Straightforward Guide to Ontario’s Debt and Deficit
This latest
report from the Ontario Chamber of Commerce (OCC) begs the question: Should
Ontarians be concerned about the province’s fiscal situation?
Read How Bad Is It? What Do We Do About It? to
learn more about Ontario’s fiscal situation and the steps the government can
take to return itself to a path of fiscal sustainability.
LET
US NEVER FORGET
This past
weekend, on Remembrance Sunday, I laid a wreath on behalf of the Aurora Chamber
of Commerce at the cenotaph. I beg everyone to remember those who served and
those who lost their lives to give us the freedom that we have today.
Sometimes war
doesn’t seem real until you see the motorcade escorting slain soldiers on the
Highway of Heroes or view the tragedy as two soldiers are killed in Ontario –
Corporal Nathan Cirillo and Warrant Officer Patrice Vincent. Both acts appear
to have been deliberate by men who were recently drawn to Islamic extremism. On
this Remembrance Sunday security in Britain was increased to protect against a
terrorist plot that may have involved an attack on the Queen.
Will life ever
be the same again?
Judy Marshall,
CEO
Aurora Chamber
of Commerce
905-727-7262
