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

johanna curiel curiel johanna.curiel at owasp.org
Thu Jun 23 13:36:05 UTC 2016


Andrew,

Your explanation clarifies the situation and I think you are in the right
direction to make the necessary adjustments for the foundation finances.

I believe the reform you have proposed is absolutely necessary for the
financial stability of the foundation.

Thanks for clarification.

Regards

Johanna

On Wed, Jun 22, 2016 at 9:00 PM, Andrew van der Stock <vanderaj at owasp.org>
wrote:

> 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
>>
>
>


-- 
Johanna Curiel
OWASP Volunteer
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