Chat with us, powered by LiveChat As treasurer, determine what additional information you would like Analyze the information and prepare a report for the steering committee explaining the losses. 3. Provide suggesti - EssayAbode

As treasurer, determine what additional information you would like Analyze the information and prepare a report for the steering committee explaining the losses. 3. Provide suggesti

1. As treasurer, determine what additional information you would like.

2. Analyze the information and prepare a report for the steering committee explaining the losses.

3. Provide suggestions to the steering committee on how to avoid future meeting losses.

    

SM9115 Advanced Finance and Budgeting resit project

Required

1. Analyze the information and prepare a report for the steering committee explaining the losses.

  

1. Provide suggestions to the steering committee on how to avoid future meeting losses.

Sometimes Accountants Fail to Budget

( Abstract The case is based on the actual events for a nonprofit organization. Students are required to analyze the information given in the case to determine what information is relevant for analyzing variances, determine the reason for variances, and provide suggestions to avoid further losses. In addition, the case simulates a real-world situation where all relevant information is not available or not in a format that allows for detailed analysis. )

Case

Budgeting is important in all organizations, but it is especially in nonprofit organizations where revenue sources are often inconsistent from year to year. Nonprofit leadership has a fiscal responsibility to monitor the variances between actual revenues and cost and make operating decisions to ensure the organization’s viability and success.

Introduction

In August 2003, the Steering Committee of the American Accounting Association Midwest Region (AAA-MW) discovered that its 2003 annual meeting had a net loss of $24,232, leaving a net account balance at less than

$50,000. This was on top of a loss of $13,264 the previous year. Concerned about a possible trend, the board created a treasurer position and asked the treasurer to investigate these losses.

The Organization

The steering committee is an entirely volunteer board whose task is to organize and run an annual conference targeting members of the American Accounting Association who reside in the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, North Dakota, South Dakota, Nebraska, and Wisconsin. The Amer- ican Accounting Association (AAA) is a not-for-profit organization whose members are primarily accounting academics. The organization “promotes worldwide excellence in accounting education, research and prac- tice. Founded in 1916 as the American Association of University Instructors in Accounting, its present name was adopted in 1936. The Association brings together the academic community to further accounting edu-

SM9115 Advanced Finance and Budgeting resit project

( Sometimes Accountants Fail to Budget ) ( Page 2 of 6 )

cation and to advance the discipline and profession of accounting.” ( American Accounting Association Our Shared Vision: http:llaaahq.org/aboutlAAAShareVisionDocumentJan08fnl_4_.pdf , 2008, p 6)

The steering committee meets twice a year; every spring at the annual AAA-MW Region meeting and in Au- gust at the national meeting of the American Accounting Association. The typical process for organizing the AAA-MW annual meeting was as follows:

1. Eighteen months prior to the meeting (usually at the August AAA national meeting), the steering committee determines in which city within the Midwest region to hold the meeting and submits a meeting site search request to the AAA national office.

2. The program chair for the meeting is a volunteer of the steering committee and is a different (and new) person each year.

3. The event coordinator (a third party hired by the AAA national office) contacts hotels in the chosen city and provides the AAA-MW steering committee with a list of hotels, room rates, and parking rates.

4. At the spring AAA-MW regional meeting, one year prior to the next meeting, the steering committee chooses a hotel based on its location in the city and room rates offered.

5. The event coordinator negotiates the final contract, it is signed by the AAA executive director, and a copy is kept in the AAA headquarter files.

6. The new AAA-MW regional meeting program chair is then responsible for organizing the meeting.

There was little in the way of a formal process, so each program chair would determine how he/she wanted to run the meeting. There was a tradition of charging a registration fee that covered food, audiovisual needs, and meeting rooms. The program chair, working with a few other volunteers, would organize the call for pa- pers, review of papers, program speakers, receptions, and communication with members within the region. Typically, the meeting had multiple continuing professional education (CPE) sessions, offered breakfast on Friday and Saturday, lunch on Friday, snack breaks on Friday and Saturday morning and Friday afternoon, and evening receptions on both Thursday and Friday. All of this planning was a significant amount of effort and generally consumed the program chair’s attention. All cash inflows and outflows were handled by the AAA staff members.

They collected registration fees, paid the hotel bills, etc., charging or crediting the region’s accounts. The AAA-MW steering committee president would receive periodic account activity reports. Prior to 2002, the AAA-MW meetings had generally resulted in an increase in cash flow and the steering committee had little need to worry about finances.

Background

At the August 2002 meeting of the AAA-MW steering committee, the committee learned that the spring 2002 regional meeting showed a loss of $14,389.13. The comparison of 2001 and 2002 is shown in Exhibit 1.

The 2002 AAA-MW regional meeting had been held in Milwaukee in March and the attendance at that meet- ing was 170. This was a 30.6 percent drop from the previous year’s meeting held in St. Louis, and one of the few times in the region’s recent history that the meeting attendance was below 200 attendees. The committee believed the main reason for the low attendance was reluctance to fly (travel) so soon after the after the 9/11 terrorist attack. In addition, the committee believed the location (Milwaukee, Wisconsin) in early spring was difficult to travel to and may not have been appealing. Therefore, the committee was satisfied that the net cash outflow for the 2002 meeting was an anomaly and there was no need for more investigation. As such, the committee proceeded to discuss the plans for the 2003 AAA-MW annual meeting, which was to be held the following spring at the Millennium Hotel in St. Louis. The Midwest region had the policy of holding the annual meeting in St. Louis every other year and, because of the central location and more favorable spring weather, the St. Louis meetings had always been well attended. For that reason, the committee was not con- cerned that the 2003 meeting might result in a loss.

The March 2003, AAA-MW meeting was held and followed the typical two-and-a-half-day format, with partici- pants attending a number of CPE sessions and other activities included in their registration fee. The schedule of events for the 2003 AAA-MW annual meeting is shown in Exhibit 2.

Immediately after the meeting, during the Saturday steering committee luncheon meeting, the new AAA-MW president (the 2003 program chair) presided over the meeting. As normal, the event coordinator attended and reported the final attendance numbers. The attendance was 185, which was higher than the previous year’s attendance of 170, but still lower than the 200 or more expected. The steering committee, not yet having any financial figures from the meeting, did not consider that the low attendance might result in a loss. Therefore, the remainder of the meeting was spent discussing the plans for the 2004 meeting in Kansas City and the plan for the 2005 meeting, which would be back in St. Louis.

The steering committee met again in August 2003 at the AAA national meeting and received from AAA head- quarters’ staff the financial information about the March 2003 meeting. (See Exhibit 3.) The committee was shocked to find that the spring meeting had resulted in a loss that was almost twice the loss incurred in 2002. If this pattern continued, the Midwest region would be bankrupt within a couple of years. Concerned, the com-

mittee decided to appoint a treasurer. The official duties of the treasurer would be to receive monthly financial reports of the AAA-MW from the AAA and report on the AAA-MW region’s financial situation at steering com- mittee meetings and the annual meeting. First, however, the treasurer would need to investigate the 2003 loss.

Required

1. Analyze the information and prepare a report for the steering committee explaining the losses.

10-8.5

8.49-8

7.9-7

6.9-6

5.9-1

Clearly and explicitly explains Causes of changes the cash flow situation with reference to Incomes, costs. Planning and changes in operations and its impact of costs or revenues.

Clearly explains Causes of changes the cash flow situation with reference to Incomes, costs and Planning.

Clearly explains Causes of changes the cash flow situation with reference to Incomes and costs.

Explains Causes of changes the cash flow situation with reference to Incomes and costs.

Failure to adequately explain Causes of changes the cash flow situation with reference to Incomes and costs.

2. Provide suggestions to the steering committee on how to avoid future meeting losses.

10-8.5

8.49-8

7.9-7

6.9-6

5.9-1

Identify options available Including increasing revenues reducing the significant and lesser costs. Improved management through negotiation and product development.

Identify options available Including increasing revenues reducing the significant and lesser costs. Improved management action.

Identify options available Including increasing revenues reducing the costs. Improved management.

Identify options available Including increasing revenues reducing the costs.

Failure to Identify options available Including increasing revenues reducing the costs, or identify ways to Improve management.

About IMA®

IMA, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, con- tinuing education, networking, and advocacy of the highest ethical business practices. IMA has a global net- work of more than 80,000 members in 140 countries and 300 professional and student chapters. Headquar- tered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/Africa.

image1.jpeg

,

Budgeting is important in all organizations, but it is especially in

nonprofit organizations where revenue sources are often inconsistent

from year to year. Nonprofit leadership has a fiscal responsibility to

monitor the variances between actual revenues and cost and make

operating decisions to ensure the organization’s viability and success.

INTRODUCTION

In August 2003, the Steering Committee of the American

Accounting Association Midwest Region (AAA-MW)

discovered that its 2003 annual meeting had a net loss of

$24,232, leaving a net account balance at less than $50,000.

This was on top of a loss of $13,264 the previous year.

Concerned about a possible trend, the board created a

treasurer position and asked the treasurer to investigate

these losses.

THE ORGANIZATION

The steering committee is an entirely volunteer board

whose task is to organize and run an annual conference

targeting members of the American Accounting

Association who reside in the states of Illinois, Indiana,

Iowa, Kansas, Michigan, Minnesota, Missouri, North

Dakota, South Dakota, Nebraska, and Wisconsin. The

American Accounting Association (AAA) is a not-for-profit

organization whose members are primarily accounting

academics. The organization “promotes worldwide

excellence in accounting education, research and practice.

Founded in 1916 as the American Association of University

Instructors in Accounting, its present name was adopted

in 1936. The Association brings together the academic

community to further accounting education and to advance

the discipline and profession of accounting.” (American

Accounting Association Our Shared Vision, http://aaahq.org/about/

AAAShareVisionDocumentJan08fnl_4_.pdf, 2008, p 6)

The steering committee meets twice a year; every spring

at the annual AAA-MW Region meeting and in August at the

national meeting of the American Accounting Association.

The typical process for organizing the AAA-MW annual

meeting was as follows:

1. Eighteen months prior to the meeting (usually at the

August AAA national meeting), the steering committee

determines in which city within the Midwest region

to hold the meeting and submits a meeting site search

request to the AAA national office.

2. The program chair for the meeting is a volunteer of the

steering committee and is a different (and new) person

each year.

3. The event coordinator (a third party hired by the AAA

national office) contacts hotels in the chosen city and

provides the AAA-MW steering committee with a list of

hotels, room rates, and parking rates.

4. At the spring AAA-MW regional meeting, one year prior to

the next meeting, the steering committee chooses a hotel

based on its location in the city and room rates offered.

5. The event coordinator negotiates the final contract, it is

signed by the AAA executive director, and a copy is kept

in the AAA headquarter files.

IMA EDUCATIONAL CASE JOURNAL VOL. 4 , NO. 3 , ART. 3 , SEPTEMBER 20111

ISSN 1940-204X

Sometimes Accountants Fail to Budget

Gail Hoover King

Purdue University Calumet

Jane Saly

University of St. Thomas

6. The new AAA-MW regional meeting program chair is

then responsible for organizing the meeting.

There was little in the way of a formal process, so each

program chair would determine how he/she wanted to run

the meeting. There was a tradition of charging a registration

fee that covered food, audiovisual needs, and meeting rooms.

The program chair, working with a few other volunteers,

would organize the call for papers, review of papers, program

speakers, receptions, and communication with members

within the region. Typically, the meeting had multiple

continuing professional education (CPE) sessions, offered

breakfast on Friday and Saturday, lunch on Friday, snack

breaks on Friday and Saturday morning and Friday afternoon,

and evening receptions on both Thursday and Friday. All of

this planning was a significant amount of effort and generally

consumed the program chair’s attention. All cash inflows

and outflows were handled by the AAA staff members.

They collected registration fees, paid the hotel bills, etc.,

charging or crediting the region’s accounts. The AAA-MW

steering committee president would receive periodic account

activity reports. Prior to 2002, the AAA-MW meetings had

generally resulted in an increase in cash flow and the steering

committee had little need to worry about finances.

BACKGROUND

At the August 2002 meeting of the AAA-MW steering

committee, the committee learned that the spring 2002

regional meeting showed a loss of $14,389.13. The

comparison of 2001 and 2002 is shown in Exhibit 1.

The 2002 AAA-MW regional meeting had been held in

Milwaukee in March and the attendance at that meeting

was 170. This was a 30.6 percent drop from the previous

year’s meeting held in St. Louis, and one of the few times

in the region’s recent history that the meeting attendance

was below 200 attendees. The committee believed the main

reason for the low attendance was reluctance to fly (travel)

so soon after the after the 9/11 terrorist attack. In addition,

the committee believed the location (Milwaukee, Wisconsin)

in early spring was difficult to travel to and may not have

been appealing. Therefore, the committee was satisfied that

the net cash outflow for the 2002 meeting was an anomaly

and there was no need for more investigation. As such, the

committee proceeded to discuss the plans for the 2003 AAA-

MW annual meeting, which was to be held the following

spring at the Millennium Hotel in St. Louis. The Midwest

region had the policy of holding the annual meeting in St.

Louis every other year and, because of the central location

and more favorable spring weather, the St. Louis meetings

had always been well attended. For that reason, the

committee was not concerned that the 2003 meeting might

result in a loss.

Exhibit 1 Comparison of 2001 and 2002

Financial Report AAA Midwest Region For years ending September 30, 2001, and September 30, 2002

09/01-08/02 09/00-08/01

Attendance 170 245

INFLOWS

Mid-year Meeting

Registration $ 14,835.00 $ 20,125.00

Contributions 0.00 1,990.00

Exhibitor Fees 4,200.00 4,500.00

CPE 2,400.00 3,270.00

Total Meeting $ 21,435.00 $ 29,885.00

Interest 1,313.29 4,312.20

Total Inflows $ 22,748.29 $ 34,197.20

OUTFLOWS

Mid-year Meeting

Printing $ 2,890.55 $ 2,425.52

Mailing 752.35 470.17

Exhibitor Expense 354.82 460.00

Food/Bev 28,527.36 18,490.63

Audio Visual 0.00 2,965.85

Speakers 469.76 1,477.92

Mtg Coord 2,231.05 0.00

Postage 55.97 0.00

Travel 0.00 184.79

AAA Staff 154.00 105.00

CPE travel 350.00 1,990.00

Total Meeting $ 35,785.86 $ 28,569.88

G&A 1,351.61 1,590.02

Total Outflows $ 37,137.47 $ 30,159.90

Net change in assets $(14,389.18) $ 4,037.30

Beginning Cash 88,783.55 84,746.25

Ending Cash $ 74,394.37 $ 88,783.55

IMA EDUCATIONAL CASE JOURNAL VOL. 4 , NO. 3 , ART. 3 , SEPTEMBER 20112

The March 2003, AAA-MW meeting was held and

followed the typical two-and-a-half-day format, with

participants attending a number of CPE sessions and other

activities included in their registration fee. The schedule of

events for the 2003 AAA-MW annual meeting is shown in

Exhibit 2.

Immediately after the meeting, during the Saturday

steering committee luncheon meeting, the new AAA-

MW president (the 2003 program chair) presided over the

meeting. As normal, the event coordinator attended and

reported the final attendance numbers. The attendance was

185, which was higher than the previous year’s attendance

of 170, but still lower than the 200 or more expected. The

steering committee, not yet having any financial figures from

the meeting, did not consider that the low attendance might

result in a loss. Therefore, the remainder of the meeting was

spent discussing the plans for the 2004 meeting in Kansas

City and the plan for the 2005 meeting, which would be back

in St. Louis.

The steering committee met again in August 2003 at the

AAA national meeting and received from AAA headquarters’

staff the financial information about the March 2003 meeting.

(See Exhibit 3.) The committee was shocked to find that

the spring meeting had resulted in a loss that was almost

twice the loss incurred in 2002. If this pattern continued, the

Midwest region would be bankrupt within a couple of years.

Concerned, the committee decided to appoint a treasurer.

The official duties of the treasurer would be to receive

monthly financial reports of the AAA-MW from the AAA and

report on the AAA-MW region’s financial situation at steering

committee meetings and the annual meeting. First, however,

the treasurer would need to investigate the 2003 loss.

REQUIRED

1. As treasurer, determine what additional information you

would like.

2. Analyze the information and prepare a report for the

steering committee explaining the losses.

3. Provide suggestions to the steering committee on how to

avoid future meeting losses.

IMA EDUCATIONAL CASE JOURNAL VOL. 4 , NO. 3 , ART. 3 , SEPTEMBER 20113

ABOUT IMA With a worldwide network of more than 60,000 professionals,

IMA is the world’s leading organization dedicated to

empowering accounting and finance professionals to drive

business performance. IMA provides a dynamic forum for

professionals to advance their careers through Certified

Management Accountant (CMA®) certification, research,

professional education, networking and advocacy of the

highest ethical and professional standards. For more

information about IMA, please visit www.imanet.org.

IMA EDUCATIONAL CASE JOURNAL VOL. 4 , NO. 3 , ART. 3 , SEPTEMBER 20114

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