Audit and Tax Compliance and Insurance
Your association’s financial governance may be good, but how can you make it great?
The pursuit of great financial governance was the topic of an education session I attended at the 2023 American Society of Association Executives (ASAE) Annual Meeting and Exposition. The presenters, Thomas McCally and Heather Dean of Cordia Partners, touched on six areas that all association management professionals and their volunteers should be aware of.
In the third part of this article series, I will address audit and tax compliance and insurance.
A best practice in the association world is to have a regular audit or financial review. The board treasurer should work with the finance committee to create a policy on this topic. Some organizations have a full audit every three years with a financial review in between, but every organization is different, and the board of directors should work in collaboration with their association manager to determine the best option.
Another good practice is to issue a request for proposals (RFP) for your external accounting firm every three to five years. Ensuring that the pricing for their services meets your expectations and budget, as well as having a different set of eyes on your financials, are a couple of the key reasons for looking at different firms.
Your organization may have a different external accounting firm for audit purposes and your Form 990 filings. You’ll want to ensure that there is a process in place to identify a firm, sign an engagement letter, and work collaboratively to complete the Form 990 and any other related filings on time. If there may be a delay in meeting the filing deadline, your service provider should file an extension with the IRS.
Insurance is a very important element for all our clients to consider. Your board of directors should work with your association manager to discuss the various types of insurance and what is necessary to meet the needs of the organization. Here are a few key types:
Business Owners Policy/Commercial Package Policy: Bundles several coverages together for one convenient policy to protect from claims related to property damage, bodily injury/medical expenses, and business interruption.
Management Liability Insurance (D&O Liability Insurance, EPL Insurance, Fiduciary Liability Insurance): Package of insurance coverages designed to protect a business and its directors, officers, board members, managers, administrators, volunteers, and the entity itself from exposures that arise from governance, finance, employees, benefits, and management activities.
Event Cancellation Insurance: Coverage extends beyond full cancellation to include interruption, postponement, rescheduling, and “enforced” reduced attendance of an event.
There are certainly other types of insurance that may be necessary, such as cyber and artificial intelligence. Work collaboratively with your Barcami Lane representatives and your insurance agents to determine the necessary and best options for your organization. BL
Read Part 1 on organizational documents and board/volunteer training.
Read Part 2 on board norms and internal financial reporting.
Comentários