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 & PreventionCompensation BudgetingRevenue Recognition Dues CollectionAsset Capitalization Financial Information DisclosureFinancial Reporting Officer, Member and Staff TravelConflicts of Interest InvestingWhistleblower Reserve LevelsDocument Retention Payment PoliciesCompliance 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.
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
4. If an audit, what type of opinion was received: UnqualifiedAdverse QualifiedDisclaimer
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-BryantLittle Rock Cleburne CountyNorth Pulaski Crawford CountyNorthwest Arkansas Crittenden CountyPine Bluff Eureka Springs-Carroll CountySearcy Faulkner CountySoutheast Arkansas Fort SmithTexarkana Hot Springs
Why use NAR’s E-Commerce System? Local Boards in Arkansas who use some portion of E-Commerce: Benton-BryantLittle Rock Cleburne CountyNorth Pulaski Crawford CountyNorthwest Arkansas Crittenden CountyPine Bluff Eureka Springs-Carroll CountySearcy Faulkner CountySoutheast Arkansas Fort SmithTexarkana Hot Springs
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.