Transcript Slide 1

•Financial Solvency Core Standards
•E-Commerce
Every Association must adopt policies to ensure
the fiscal integrity of their financial operations.
Attach a copy of the Association’s financial policies in
the compliance tool.
Examples of Financial Policies:
Fraud Awareness & Prevention
Budgeting
Dues Collection
Financial Information Disclosure
Officer, Member and Staff Travel
Investing
Reserve Levels
Payment Policies
Compensation
Revenue Recognition
Asset Capitalization
Financial Reporting
Conflicts of Interest
Whistleblower
Document Retention
Compliance Reporting
How do I know which policies my
Association must adopt to meet the
standard?
The basic premise for all Associations is that you must have financial
policies, procedures and documents which outline your internal control
structure.
NAR did not want to dictate which policies are “required” but wanted you
to create policies that are responsive to your Association’s operations.
The extent of these documents will largely be dictated not driven by the
audit/review/compilation decisions you make.
Take Away:
NAR has provided templates for the suggested financial policies. These
are included in your handouts.
Every Association must have an annual audit,
review or compilation conducted by a CPA.
All Associations (state or local) with annual revenue of $50,000 or
more must submit a report from a CPA which includes either:
Audit Opinion
Or
Accountant’s Review
For those association’s with revenues of less than $50,000
annually, a Compilation Report prepared by a CPA will be
acceptable.
•The $50,000 threshold applies to all associations
•It is based on your Gross Revenue
•MLS Revenue is included only if the MLS is operated as a
committee of the Association (i.e. Not a Separate Corportion)
•RPAC Contributions are not included
•State Dues are not included.
•National Dues and Assessments are not included.
For those associations with annual revenue of over
$50,000, it will be left to the discretion of each
association as to whether you conduct an audit or a
review.
What is the difference between the three?
Provides no assurance that there are not material modifications that
should be made to the financial statements. Objective is to assist
management in the presentation of financial information in the form of
financial statements.
Provides limited assurance that there are no material modifications to
be made to financials.
Provides a high (but not absolute) level of assurance about whether the
financials are free from material misstatement, thereby allowing the
auditor to express an opinion on the financials.
Fees will be dependent upon:
•Local Market
•Size and complexity of your organization
•The relative strength of your internal control structure
•The quality of accounting records
•Timeliness of the information that you prepare and provide to auditors
•Whether or not you prepare your financials
In Little Rock market (generally speaking):
•Small Audit - $7,500
•Small Review - $5,000
•Small Compilation - $2,500
Arkansas REALTORS® Association – Audit of 2013 Financial Statements
Gross revenue was 1.8 million dollars
Audit Cost - $9,720
1. Date of Last Financial Audit/Review/Compiliation
2. Name of Individual or Firm conducting the Review
3. Year End to which the report relates
4. If an audit, what type of opinion was received:
Unqualified
Adverse
Qualified
Disclaimer
The Audit/Review/Compiliation report itself
does not have to be attached to the
Compliance Tool.
Question:
For the first compliance cycle (ending
6/30/15) in what tax year should be audit,
review or compilation be for?
Answer:
•The report should be for the most recent fiscal year available.
•In most cases that will be the Association’s 2014 fiscal year.
•In some cases, Associations wait until after tax season when the
costs of preparing such reports may be less.
•Example 2014 audit will be performed in June or July of 2015
•In those cases, the tax year of Core Standards reporting
purposes would be fiscal year 2013. The same will be true
for future year reporting as well.
Question:
Our Association hasn’t conducted audits, reviews or compilations in the
past. To complicate matters, our 2014 approved budget doesn’t
include funds to have the required reports prepared by a CPA for the
current fiscal year. Is there a way we can comply with the Core
Standards going forward without going into debt?
Answer:
•At the 2014 NAR Convention, the Finance Committee authorized staff
to accept a signed CPA engagement letter committing the association to
having the required reports performed in 2015 for the association’s
2014 fiscal year.
•That means for the second (and future) reporting cycles, the
association will need to be able to confirm that their
audit/review/compilation was conducted.
Question:
Will NAR provide financial assistance to associations that have not
utilized such reporting in the past?
Answer:
No. Fiscal integrity and financial reporting are the corporate
responsibilities of every association regardless of size.
•NAR E-Commerce Network System has been in existence since November 1999
•Created by NAR to provide all Associations with a system that allowed their
members to pay their dues electronically online.
Why use NAR’s E-Commerce System?
•Reduces time spent processing dues.
•Associations can use the network at no charge.
•No special hardware or software is required
Why use NAR’s E-Commerce System?
•Money moves electronically. No need to write checks to ARA & NAR.
•Easy access for your members.
•You can transfer funds to other associations for free.
•Run reports that will allow you to reconcile your bank statements
•No need for paper invoices.
•When a member’s payment is processed through the Invoicing module, the EC
system uploads each night to the NRDS Financial Record.
Why use NAR’s E-Commerce System?
•Over half of our associations use the network nationwide.
•Annual combined volumes of over $617 million keep credit card rates low.
Why use NAR’s E-Commerce System?
Local Boards in Arkansas who use some portion of E-Commerce in the 2015 dues
cycle:
Benton-Bryant
Cleburne County
Crawford County
Crittenden County
Eureka Springs-Carroll County
Faulkner County
Fort Smith
Hot Springs
Little Rock
North Pulaski
Northwest Arkansas
Pine Bluff
Searcy
Southeast Arkansas
Texarkana
Why use NAR’s E-Commerce System?
Local Boards in Arkansas who use some portion of E-Commerce:
Benton-Bryant
Cleburne County
Crawford County
Crittenden County
Eureka Springs-Carroll County
Faulkner County
Fort Smith
Hot Springs
Little Rock
North Pulaski
Northwest Arkansas
Pine Bluff
Searcy
Southeast Arkansas
Texarkana
What is involved in signing up for E-Commerce?
•Requirements:
The Association must be a Live POE on the NRDS system
Your bank account accepts ACH credit and debit transactions
•Complete REALTOR® E-Commerce Network Contact Information form and send to
Chris DeRosa at NAR.
See handout.