[Owasp-leaders] [Owasp-board] Financial report 2015 -questions regarding reports

Andrew van der Stock vanderaj at owasp.org
Thu Jun 23 01:00:44 UTC 2016


Johanna,

Answering your concrete questions

   - I was under almost the same impression until I was corrected by Tom.
   Chapter balances are not liabilities, but cash on hand, and
   - Chapter earmarked funds therefore accounted for by being consolidated
   in the US and EU bank balances in the asset section of the P&L sheets.
   Operational reserves can be worked out by adding each of the Chapter P&L
   balances together (Global + EU), and then subtracting that from the total
   of our Global (US) and EU bank balances. This is unwieldy to reverse
   engineer in the financial packages, but I have a solution to that - see
   below.
   - Yes, but just a bit behind the actuals, due to the reasons I mentioned
   before that it takes time to finalize a monthly P&L package. This means we
   are seeing what happened 1-2 months ago, and sometimes three months for big
   months such as Year End. That's why we set a budget to help us validate
   that our spending is within tolerances, and our income targets are being
   met.

When OWASP moves banks (shortly), I am pushing for sub-accounts for each of
our strategic goals to make this very clear to all involved, so we will
have separate accounts for Foundation operations, chapters, projects,
outreach, conferences, etc.  This will make it very clear as to when we dip
into the chapters account to fund operational activities, as funds will
have to move from strategic goal to operational funds and vice versa.

Answering your general commentary

At some point, unless we fix this, chapters will have all of OWASP's cash
on hand, so we have a session in the budget drafting session at AppSec EU
to discuss structural reform that hopefully will come to a consensus view
that will address these issues in the long term, whilst still rewarding
chapters for their activities, such as local membership drives, holding
local and regional events, etc.

But we absolutely must fix the structural reason why as at the end of May,
chapters have $697k earmarked to them, which means we dip into earmarked
funds continuously to stage our events and run the Foundation. One day,
it'll drive us broke (i.e. foundation operational reserves < $0) unless we
fix the reasons why this funding continues to grow at the expense of all
other strategic goals. It nearly happened early this year, and in fact, may
have already occurred.

I have just received the May financial package that I'm reviewing in a call
with Tom tomorrow night. It'll be linked to the July 1st Board meeting once
I've had a chance to review it.

thanks,
Andrew

On Thu, Jun 23, 2016 at 4:00 AM, johanna curiel curiel <
johanna.curiel at owasp.org> wrote:

> Andrew,
>
> Thanks for pointing me out to the reports.
>
> My question based on these reports  is the following
>
> Right now there is a total allocated for :
> $746,292.52 allocated for Chapters
> $  78,803.18 for projects
>
> It means the money is exclusively reserved for costs related to these
> accounts (expenses for projects and chapters)
>
> https://docs.google.com/spreadsheets/d/11acTOmtmBGq6-5CIGsjlEByU8POSGqda0r23VNnhEGQ/pub?hl=en_US&hl=en_US&output=html#
>
> Following accounting principles , these allocation should appear under *current
> liabilities* in the balance sheet,but they are not allocated anywhere,
> correct me if I'm wrong.
>
> If you sum up allocation for chapters and projects, these is an equivalent
> of aUSD825,095.65
> and you look at the current assets in 2015 Dec Balance sheet, is a total
> of USD 822,474.88
>
> Off course , without a current P&L , we don't know other source of incomes
> where the foundation can count to pay other liabilities
> (excluding Projects + Chapters) such as salary for staff or conferences
> costs or credit cards etc..
>
> My concrete questions are:
>
>
>    - Why do these current liabilities such as the allocation of chapters+
>    projects money does not appear on these reports under this section?
>    - If they appear, where exactly are these being allocated?
>    - Do we work with more actual P&L + Balance sheet that reflects the
>    actual financial situation?
>
>
> Basically I think we need an actual Balance Sheet but most important P&L
> in order to be able to have a clear picture of the actual financial
> situation that includes these allocations.
>
> I know that we do not spend the money as fast as has been allocated but
> the actual picture (BS + PL December 2015) does not offer in my opinion a
> clear view of the financial situation today and
> has the risk to create a picture that there is more money available for
> paying other liabilities than we can actually afford without using the
> budget that has been allocate for chapters or projects.
>
> Regards
>
> Johanna
>
>
>
>
> On Wed, Jun 22, 2016 at 9:37 AM, Andrew van der Stock <vanderaj at owasp.org>
> wrote:
>
>> Johanna,
>>
>> In each Board meeting's reading material or either in the ED report or
>> the treasurer report, there is a very detailed draft Financial Package for
>> 1-2 months in the past directly exported from QuickBooks each month in
>> accrual and cash basis. The draft December 2015 financial package was
>> released in February 2015, which contains all the very nearly final numbers
>> for 2015. Accrual basis is excellent for letting you know if you made a
>> profit or a loss that month, so every time you see ($xxx), we spent more
>> than we made. It's only really a problem if that keeps on going on like
>> that for big values of $xxx.  That becomes clear through the year in the
>> cash forecast sheet, which you can see the actual amount of money OWASP has
>> to its name in the US and in the EU.
>>
>> e.g.
>> https://www.owasp.org/index.php/February_17,_2016
>>
>> Draft December 2015 financial package:
>>
>> https://docs.google.com/spreadsheets/d/1OdiijD2toRgkhIKupbrFMqAEZSBH_NrTxHxkKe7XDzM/edit?usp=sharing
>>
>> As you correctly note, there's not a lot of graphs in here, and I've
>> struggled with that, as it's difficult to see where we have come from and
>> where we are going to, which as a board is the context we need for good
>> long term decisions. I will have read only access to QuickBooks soon, and
>> if that generates graphs, you can be sure, I'll add them to the treasurer's
>> report, as I'm pretty visually orientated, and I think it will help the
>> Board make better informed decisions.
>>
>> In your e-mail, you note frustration in delays, but that's just how it
>> works. The books aren't closed until three months later, and then some work
>> has to be done to make sure everything is reconciled, e.g. perform basic
>> checks to make sure things stack up, to allow receivables that were paid by
>> check or funds transfer with a waiting period, outstanding CC transactions,
>> etc, to come in, and loose ends tied up, like transferring funds to
>> chapters as approved in our December 2015 meeting, staff leave processed,
>> etc. For example, I'd expect a merchandise stock take to take place and to
>> match up stock on hand to stock in Quickbooks, assess AR for potential bad
>> debt write downs we might need to take, that sort of thing. It's not like
>> Tom and his team run a magic report on January 1 and call it done.
>>
>> Since then, Tom Pappas and his team have been working on getting our Form
>> 990 ready, which is effectively OWASP's tax return. We are expecting the
>> finalised final 2015 990 tax forms to be sent to me this week, ready for
>> our review and approval to submit to the IRS after the F2F. Those fully
>> reconciled figures end up in our 2015 Annual Report, which is due around
>> August or September. This will be added in the usual spots.
>>
>> In a call the other day, Tom Pappas, our CFO, set me on the straight and
>> narrow, and we are GAAP compliant and have been for a fair while now. In
>> our 2013 audit, KPMG brought up a number of items that we had to bring into
>> line to make sure that we were GAAP compliant. These changes were put into
>> taken place, and if you compare a Board financial package from 2012 to now,
>> you'll see that indeed these things are now aligned to GAAP. We are due for
>> another audit of 2016's financials starting next year. I don't consider
>> GAAP compliance to be an issue in that audit.
>>
>> I hope this answers your questions, and I'm sure Tom will jump in if I've
>> answered them incorrectly or incompletely.
>>
>> thanks,
>> Andrew
>>
>> On Wed, Jun 22, 2016 at 10:48 PM, johanna curiel curiel <
>> johanna.curiel at owasp.org> wrote:
>>
>>> Board,
>>>
>>> I have noticed that we are half of 2016 and there is no available
>>> financial reports for 2015
>>>
>>> Example, at the moment a lot of money has been allocated to chapters and
>>> projects as part of their budget /expenses. How is that money been
>>> allocated within the balance sheet and under which account?
>>>
>>> Basically that money is not part anymore of an account that can be used
>>> to pay expenses , for example, to employees since already has been
>>> allocated for expense for chapters and projects.
>>>
>>> On the last balance sheet I do not see a similar breakdown of accounts.
>>>
>>> Are there charts of accounts available that can reflect the actual
>>> financial situation of the foundation including a more detail breakdown on
>>> the Balance Sheet and P&L?
>>>
>>> This report in here:
>>> https://www.owasp.org/images/7/7e/2014_OWASP_Annual_Report_Final.pdf
>>>
>>> Does not reflect the position based on a Balance sheet, with these
>>> details.
>>>
>>> What is the actual situation of these reports following accounting
>>> principles reporting standards like GAAP?
>>>
>>> --
>>> Johanna Curiel
>>> OWASP Volunteer
>>>
>>> _______________________________________________
>>> Owasp-board mailing list
>>> Owasp-board at lists.owasp.org
>>> https://lists.owasp.org/mailman/listinfo/owasp-board
>>>
>>>
>>
>
>
> --
> Johanna Curiel
> OWASP Volunteer
>
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