Audit of the Second Half Financial Records for
Toastmasters International District 55
August 27, 2012
District 55 Treasurer: Heather C. Diehl
Audit Committee: David Fritzlen - Chairman
Tom De Luca
Harry Truman, PDG
The audit was conducted with several meetings between the Treasurer and members of the Audit committees to review the transactions and records for the six months ending June 30, 2012. An audit committee meeting was held on August 11, 2012 at 7:00 a.m. at the Egg & I to discuss the final results, findings and recommendations of the audit. District Treasurer Heather C. Diehl and the members of the Audit committee (David Fritzlen – Chairman, Tom De Luca, and PDG Harry Truman) were in attendance.
In addition, a conference call was held on August 20th between Past District Governor Linda Williams, District Governor Sharon Brown, Lieutenant Governor of Education and Training William Greenham, Past District Treasurer Heather C. Diehl, and Audit Committee Chairman David Fritzlen to discuss the results of the audit, the audit recommendations and the appropriate corrective and management actions.
The scope of the audit was to determine the integrity of the accounting process. That included a review of all transactions. It was determined that all transactions were documented, had the appropriate authorizations and were within the District and Toastmasters International guidelines. The transactions were reconciled with Bank statements and Toastmaster Intacct financial reports.
Deviations from budget are considered management issues and were not part of the scope of this audit.
A. Transactions
The following procedures were completed:
- Verified that transactions were recorded, documented and appropriately authorized.
- Reconciled the transactions to the bank statements and Toastmaster International Intacct financial reports.
- Reconciled transactions to the District reports. This required determining which transactions are excluded due to reporting in future months in accordance with accrual accounting procedures.
In our opinion, except for the items listed below, all of the transactions were recorded properly and were documented appropriately in accordance with the Toastmasters International and District.
Exceptions:
1. Reimbursement for Conference Hotel costs
Reimbursements for twelve District Executive Council (DEC) members totaling $674.00 were inappropriately allowed for the 2012 District Spring Conference Friday night hotel costs.
The District procedures state “In the event that any District Officer is required to travel to an official venue requiring an overnight stay, the committee member is entitled to a hotel reimbursement of $60 per night, not to exceed $120 total per member.” Since official District Business did not require DEC members to be at the conference much earlier than 3:00 pm on Saturday, the Audit Committee does not consider these expenses appropriate for reimbursement.
In the case of the Saturday night hotel reimbursements, the Audit Committee feels that the lateness of the DEC meeting could entitle the members to staying overnight. There is a gray area in the procedures as to what constitutes “requiring an overnight stay” and as such, the Audit Committee did not choose to challenge the Saturday night hotel reimbursements.
The District may want to consider holding the Conference DEC meetings earlier in the afternoon. This could help reduce potential requirements for DEC member reimbursements. In addition, this might make travel for club officers (who do not have the opportunity for hotel reimbursements) easier by reducing or eliminating travel early in the morning or late in the evening.
Management Response:
This exception has been referred to the District Procedures Committee chair for review with the recommendation that we update the procedures to clarify the specific travel requirements needed before hotel reimbursement is approved.
B. Management Recommendations
- The Audit Committee recommends that a separate bank account be created for District Bookstore transactions. That would make it easier to determine the net impact of the Bookstore operations. With the importance placed on the District Bookstore operations in making Toastmaster materials convenient and being the backbone of a very successful internal incentive program, the Audit Committee feels that a separation of Bookstore operations would provide more accountability for those operations.
- In the 2nd half of the 2011-2012 fiscal year, District 55 paid almost $2,000 for hard copies of the Better Speaker Series, Better Club Series, and the Leadership Excellence Series to use as incentives for clubs. However, all of these products are available in digital form for free. The Audit Committee recommends that the District eliminate or significantly reduce the purchase of materials that can be obtained digitally for free.
Management Response:
1. The District Governor and District Treasurer discussed this recommendation. We have decided not to open a separate bank account for the bookstore for the following reasons.
◦ The financial reporting of bookstore expenses and revenue would be the same as it is today. All bookstore activity is accounted for in the bookstore line item in the budget. The financial reports will always require us to look at bookstore revenue vs. bookstore expenses, therefore adding an additional account would not add more insight into the impact or increase accountability of the District bookstore operations.
◦ All bookstore purchases are made with District Reserve funds which are withdrawn from the main District 55 checking account. The activity in a bookstore bank account would be limited to bookstore sales deposits and transfers to the main checking account when District purchases are made.
2. The incentives for the 2011 – 2012 Toastmasters year were set prior to the availability of free downloads. Current year incentives do not include any sets that are available for free download.
This report is submitted to the District Executive Committee this 27th day of August, 2012.
David Fritzlen
Audit Committee Chair