READING FINANCIAL STATEMENTS
The Reading Financial Statements seminar has been written for co-ops and non-profits to provide Finance Committee and Board members with a basic understanding of financial statements. It is written in plain language, and contains numerous examples.
Material Covered
The seminar explains the format and content of the Balance Sheet and Income Statement. The various sections of each report are identified and defined, and the meaning of all major accounts is explained.
Reference is also made to other reports that should be available in each co-op and non-profit, such as the members'/tenants' receivable list, and the deposit list.
Attendees are invited to bring copies of their own financial statements, and to ask questions specifically related to them.
Seminar Format
The seminar is presented as a series of slides using an overhead projector, and assisted by flip charts. Each attendee is given a handout that summarizes the seminar, complete with explanations, definitions and examples.
The seminar takes approximately 2 1/2 hours, and can be given in the evening or on weekends.
What Should the Attendees Expect from the Seminar
Attendees should be able to identify the major sections of each financial statement, to understand the definitions of all of the accounts that appear on the financial statements, and to understand how the various financial statements inter-relate.
Reading Financial Statements does not explain how to manage a co-op using financial statements. It explains the format and content of the financial statements. Refer to the seminar "Using Financial Statements to Manage a Co-op" for more information on this topic.
USING FINANCIAL STATEMENTS
TO MANAGE A CO-OP
The Using Financial Statements to Manage a Co-op seminar has been written to assist co-op Finance Committee, Arrears Committee and Board members to make management decisions based on information taken from the financial statements. It is written in plain language, and contains numerous examples. While it has been written for co-ops, it can be adapted for non-profits.
The seminar assumes that the attendees have a basic understanding of the content of financial statements. That is, they should be able to pick up an Income Statement or Balance Sheet, identify all of the major sections, and define all of the accounts.
Material Covered
The seminar looks at the different formats in which data is available in a co-op, and at the various levels of detail in which it may be found. For example, the Balance Sheet will contain one number for Member receivables, and there is a separate report, called a Subsidiary report, that contains each member's individual receivable balance. Furthermore, within each member/tenant account are all of the transactions that make up the balance.
The core of the seminar is identifying what types of data are suitable for reviewing each type of Income Statement account and for making decisions.
Several "processes" are used in a co-op to help manage it. The arrears process is an example. The seminar identifies the type of decisions that are being made in the process, and shows how the financial statements can be used to provide that information to help make the decisions.
The seminar includes discussions of the budget, arrears, and investment processes.
Seminar Format
The seminar is presented as a series of slides using an overhead projector, and assisted by flip charts. Each attendee is given a handout that summarizes the seminar, complete with explanations, definitions and examples. There are case studies to help attendees become familiar with the concepts.
The seminar takes approximately 2 1/2 hours, and can be given in the evening or on weekends.
What Should the Attendees Expect from the Seminar
Attendees should understand how the co-op's financial decision making process works, and what information is available to support it.
INTERNAL CONTROLS
The Internal Control seminar illustrates the various types of financial controls that should be used by a Non-profit Corporation, and discusses who has the responsibility for ensuring they are implemented.
Material Covered
The seminar discusses the difference between "processing" controls and "asset" controls, the former being the responsibility of the staff, and the latter being the responsibility of the Board and/or Finance Committee.
Each of the main systems in the non-profit is covered. These include Cash Receipts (rents/housing charges, and other income) and Cash Disbursements (payables, petty cash, and payroll). The bank reconciliation is covered separately, as is protection of assets such as investments and tools.
Seminar Format
The seminar is presented as a series of slides using an overhead projector, and assisted by flip charts. Each attendee is given a handout that summarizes the seminar, complete with explanations, definitions and examples. There are case studies to help attendees become familiar with the concepts.
The seminar takes approximately 2 1/2 hours, and can be given in the evening or on weekends.
What Should the Attendees Expect from the Seminar
Attendees will gain insight into the reasons for having internal controls, and for their importance in the ongoing business of the non-profit. They should be able to recognize some areas within their own project where they can make improvements to the internal controls.
BUDGET PREPARATION AND PRESENTATION
The Budget Preparation and Presentation seminar is intended to illustrate the different methods of forecasting revenues and expenses that can be used in housing co-ops. For example, it identifies which accounts can be budgeted by applying a percentage increase on the previous year's amount, and which accounts should have each individual expenditure forecast.
Material Covered
Co-ops have been constructed under a number of government support programs - 34.18, 56.1, ILM, FP, Homes Now, and JobsOntario Homes. Each one puts different budgeting requirements on the co-ops, and each one has different rules for (budgeting the) subsidy assistance provided by the government. Each government program is described in detail.
From a logical point of view, there are a number of steps that should be undertaken as part of preparing a budget - things such as collecting historical data, and getting the budget approved. These steps are reviewed.
Actual budget preparation involves forecasting the revenue or expenditure for every account on the Income Statement. The method of forecasting differs from one group of accounts to the next. For example, all of the utility accounts might be forecast one way, and the administrative expenses another. The different techniques are covered in detail.
Seminar Format
The seminar is presented as a series of slides using an overhead projector, and assisted by flip charts. There is a case study that can be reviewed if time permits. It covers forecasting and filling in forms for an FP co-op.
Each attendee is given a handout that summarizes the seminar, complete with explanations, definitions and examples. The seminar takes approximately 2 1/2 hours, and can be given in the evening or on weekends.
What Should the Attendees Expect from the Seminar
Seminar attendees will gain a better appreciation for each of the government programs and how they affect co-ops' planning and budgeting. Attendees will improve their forecasting ability, and be able to read/understand the budget submission forms for the FP and HomesNow programs.
CASH FLOW
The Cash Flow seminar is intended to illustrate the difference between an Income Statement that is based on accrual accounting, and a Cash Flow report that is based on cash accounting. There is a difference in reporting of Cash Flow versus Income Statement data, and different types of management decisions that are made from the reports.
Material Covered
Considerable time is spent in the seminar discussing the differences between Cash and Accrual accounting because it is this area that gives rise to the differences between an Income Statement and a Cash Flow statement. A connection is established between accrual accounting and audited financial statements, and from there, another connection is made to the fact that budgets are forecasts based on accrual accounting rather than cash accounting.
Generally, it is more useful to look at a forecast of Cash Flow rather than look at historical Cash Flow. However, most businesses (including non-profits) prepare an Income forecast (Budget) and not a Cash Flow forecast. The seminar looks at the different ways of preparing a Cash Flow forecast based on the Budget information already available.
Seminar Format
The seminar is presented as a series of slides using an overhead projector, and assisted by flip charts. There are several quizzes included in the presentation.
Each attendee is given a copy of the overhead slides on which to make notes. The seminar takes approximately 2 1/2 hours, and can be given in the evening or on weekends.
What Should the Attendees Expect from the Seminar
Seminar attendees will gain an understanding of the difference between cash and accrual accounting, and an appreciation of how to prepare a Cash Flow forecast. They should be able to determine when a Cash Flow forecast is useful, and to differentiate between accounts on an Income Statement that are stated on a Cash basis versus those that are stated on an accrual basis.