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120408 March Report

120408 March Report

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Published by: c_c_mitchell on Apr 09, 2012
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04/09/2012

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REPUBLICAN PARTY OF MINNESOTA525 PARK STREET SUITE 250 ST. PAUL, MN 55103(651) 222-0022
CONFIDENTIAL
March 16, 2012
MEMORANDUM FOR FILES: TREASURER’S REPORT 
-MARCH EXECUTIVE COMMITTEE MEETING, RPM FINANCIAL STATEMENTS AS OF FEBRUARY 29, 2012 FOR THE MONTH ANDYEAR-TO-DATE THEN ENDEDFR: BRON J. SCHERER, CPA, SECRETARY-TREASURER, REPUBLICAN PARTY OF MINNESOTATO: REPUBLICAN PARTY OF MINNESOTA EXECUTIVE COMMITTEE 
OVERVIEW:
The purpose of this memorandum is to discuss the finance position, results of operations andchanges in financial position for the Republican Party of Minnesota (RPM or the Party) as of February 29, 2012 and for the two months and year-to-date then ended. See accompanyingfinancial statements and detailed schedules for additional information. The accompanyingstatements of revenues and expenses and related supplemental schedules include year-to-dateas well as monthly reporting periods for your review.
FINANCIAL POSITION:
As of February 29, 2012, RPM cash balances were approximately $27,000 as compared to a
“book” overdraft of approximately $24,000 as of December 31, 2011. This is obviously a
substantial improvement over the two month period. However, as most of 
the Party’s financialactivity flows through the “Federal” account, it is important to note that there is still a “book”
overdraft of approximately $7,000 in such account as of February 29, 2012 (but again, asubstantial improvement from December 31, 2011 when such balance reflected a
“Federal”“book” overdraft of approximately
$44,000).One other factor to consider is that in either March or April of 2012, there are a fair number of older, dated outstanding checks that either must be written off or will be cancelled, thenreissued as a final attempt to get the payee to cash such checks. Ultimately, if not cashed and
 
such expenditures reversed, our book cash balances will improve to that extent. We areworking with Counsel as to disposition of un-cashed contribution refund checks (generallyremitted to the U.S. Treasury) and as to other un-cashed checks.We also have a substantial cash transfer required (approximately $70,000) due to prior periodfederal and state cost allocation adjustments that will move cash from the federal to the stateaccount. This transfer (or transfers), which is expected to occur in June or early July of thisyear, will be partially offset with re-allocated personnel costs, previously accounted for asexclusively
“federal” expenditures, but now partially allocated to “state” activities based upon
guidance received from the Minnesota State Campaign Finance and Public Disclosure Boardstaff.
We continue to make our required debt service payments, retiring the F.E.C. “penalty” note
($15,000 monthly) and the Alliance Bank note payable at approximately $3,500 monthly(principal reduction). Trade accounts payable grew slightly from January 31
st
to February 29
th
 from approximately $957,000 to approximately $982,000, respectively (approximately 80%
allocated to “federal” activity
). There is nothing unusual to report here other than what hasalready been discussed except that we continue to be in a precarious working capital position.Consequently, please note that we are not paying our office lease rent payment currently (buthave been in discussions with our landlord) and have not yet negotiated long-term paymentschedules and/or negotiated settlements relating to most of the vendors on the accountspayable aging (see accompanying financial statements and schedules for summary accountspayable aging reports as of February 29 and January 31, 2012).We continue to refine our monthly accounting period closing process which has been
somewhat of a challenge given the many “cooks in the kitchen”. Our monthly reporting
procedures are substantially more complicated due to the federal and state transactionreporting requirements that are not always in accordance with generally accepted accounting
principles. Further, staff and our outside compliance firm, “
F.E.C.
Cardinals” are not yet used tothe new procedures I’ve set up to require a firm closing date after which no entries can be
made to prior periods. This is obviously necessary so that reports issued to the Executive
Committee are indeed “final”.
In that regard, please note a small difference in the January2012 results of operations and certain balance sheet amounts as of January 31, 2011 due to alate (while immaterial) posting issue
. As the months go on, we’ll have this process working
effectively.
OPERATIONS:
For the month ended February 29, 2012, RPM incurred a loss of approximately $8,000 but forthe year-to-date period then ended has earned approximately $34,000. A key fact to take awayfrom the accompanying Statements of Revenues and Expenses is that while net revenues(contributions and other income, net of related fund raising expenses) are substantially belowbudget for the fiscal month of February and on a year-to-date basis ($155,000 and $125,000negative variances, respectively), total expenses are also below budget ($74,000 and $66,000
 
for the month and year-to-date ended February 29, 2012, respectively), partially offsetting thenegative net revenue variance. Such financial results caused a negative variance in netearnings for the year as actual earnings were less than the budget on a year-to-date basis byapproximately $58,000 ($81,000 for the month of February 2012).
Having said this, I believe it’s a fair s
tatement to remind us that the 2012 five month budgetwas perhaps not prepared in a detailed manner, certainly on a month to month basis and thus
we shouldn’t be focused solely on actual to budget results at least only over two months. Fund
raising is the key and we need to generate adequate (substantial) net earnings every month inorder to not only retire our debt, but to retire our significant trade accounts payable balance asreferred to above.
Finally, the importance of “Major Donor” programs histori
cally and on-goingcannot be over-emphasized, as again reflected in both January and February 2012 results of operations.Finally, as I referenced at the February 2012 Executive Committee meeting, I had not had achance to review the 2012, five month budget in detail prior to publishing the January 2012financial statements. A significant data entry error was discovered subsequently that hadoverstated the reported budget amounts reflected in the January 2012 financial statements.Such error has been corrected and is now reflected properly for both the months of Januaryand February 2012 in the accompanying financial statement report. We need to be working onour 2012 stub period (June 2012-December 2012) and preferably a 2013 budget soon.Also, as noted at the February Executive Committee meeting, there are two months office rentexpense reflected in the January 2012 financial statements (for January and February 2012).Again, we are working to clean up our monthly closing process to assure all period expenses arereflected in the proper month. I did not re-state the January financial statements due toconsistency reporting issues with previously filed F.E.C reports but had we done so, bothJanuary and February would have had an excess of revenues over expenses (net income).Full-time-equivalents (FTE
s) and contributor number information are not yet available. We willadd in future reports.OTHER ACTIVITIES:We continue to be very busy in the Finance Department with not only our day to day activitiesincluding the essential fund raising processes that are critical to the short and long-term successof the RPM, but continue to make progress in terms of implementing new accounting andreporting processes, procedures and internal controls as will be more formally documented viathe RPM Financial Controls Committee documents to follow prior to the RPM State Conventionin May.We have filed all 2011 monthly F.E.C amendments as well as the amended Minnesota StateCampaign Finance and Public Disclosure Board (CFB) year-end reports for 2011 and 2010. Weare working closely through counsel and directly with the F.E.C. and C.F.B on a number of 

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