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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