6. The new AAA-MW regional meeting program chair is then responsible for organizing the meeting. There was little in the way of a formal process, so each program chair would determine how he/she wanted to run the meeting. There was a tradition of charging a registration fee that covered food, audiovisual needs, and meeting rooms. The program chair, working with a few other volunteers, would organize the call for papers, review of papers, program speakers, receptions, and communication with members within the region. Typically, the meeting had multiple continuing professional education (CPE) sessions, offered breakfast on Friday and Saturday, lunch on Friday, snack breaks on Friday and Saturday morning and Friday afternoon, and evening receptions on both Thursday and Friday. All of this planning was a significant amount of effort and generally consumed the program chair's attention. All cash inflows and outflows were handled by the AAA staff members. They collected registration fees, paid the hotel bills, etc., charging or crediting the region's accounts. The AAA-MW steering committee president would receive periodic account activity reports. Prior to 2002, the AAA-MW meetings had generally resulted in an increase in cash flow and the steering committee had little need to worry about finances. BACKGROUND At the August 2002 meeting of the AAA-MW steering committee, the committee learned that the spring 2002 regional meeting showed a loss of $14,389.13. The comparison of 2001 and 2002 is shown in Exhibit 1. The 2002 AAA-MW regional meeting had been held in Milwaukee in March and the attendance at that meeting was 170. This was a 30.6 percent drop from the previous year's meeting held in St. Louis, and one of the few times in the region's recent history that the meeting attendance was below 200 attendees. The committee believed the main reason for the low attendance was reluctance to fly (travel) so soon after the after the 9/11 terrorist attack. In addition, the committee believed the location (Milwaukee, Wisconsin) in early spring was difficult to travel to and may not have been appealing. Therefore, the committee was satisfied that the net cash outflow for the 2002 meeting was an anomaly and there was no need for more investigation. As such, the committee proceeded to discuss the plans for the 2003 AAA- MW annual meeting, which was to be held the following spring at the Millennium Hotel in St. Louis. The Midwest region had the policy of holding the annual meeting in St. Louis every other year and, because of the central location and more favorable spring weather, the St. Louis meetings had always been well attended. For that reason, the committee was not concerned that the 2003 meeting might result in a loss. Exhibit 1 Comparison of 2001 and 2002 Financial Report AAA Midwest Region For years ending September 30, 2001, and September 30, 2002 Attendance INFLOWS Mid-year Meeting Registration Contributions 09/01-08/02 170 09/00-08/01 245 $ 14,835.00 Exhibitor Fees 0.00 4,200.00 $20,125.00 1,990.00 4,500.00 CPE 2,400.00 Total Meeting $ 21,435.00 $29,885.00 Interest 1,313.29 Total Inflows $ 22,748.29 4,312.20 $34,197.20 Printing Mailing Exhibitor Expense Food/Bev Audio Visual Speakers 3,270.00 OUTFLOWS Mid-year Meeting $ 2,890.55 $ 2,425.52 752.35 354.82 28,527.36 0.00 469.76 470.17 460.00 18,490.63 2,965.85 1,477.92 2,231.05 55.97 0.00 0.00 0.00 184.79 154.00 105.00 350.00 $ 35,785.86 1,990.00 $28,569.88 1,351.61 $ 37,137.47 1,590.02 $30,159.90 Mtg Coord Postage Travel AAA Staff CPE travel Total Meeting G&A Total Outflows Net change in assets Beginning Cash Ending Cash $(14,389.18) 88,783.55 $ 4,037.30 $ 74,394.37 84,746.25 $88,783.55 The March 2003, AAA-MW meeting was held and followed the typical two-and-a-half-day format, with participants attending a number of CPE sessions and other activities included in their registration fee. The schedule of events for the 2003 AAA-MW annual meeting is shown in Exhibit 2. Immediately after the meeting, during the Saturday steering committee luncheon meeting, the new AAA- MW president (the 2003 program chair) presided over the meeting. As normal, the event coordinator attended and reported the final attendance numbers. The attendance was 185, which was higher than the previous year's attendance of 170, but still lower than the 200 or more expected. The steering committee, not yet having any financial figures from the meeting, did not consider that the low attendance might result in a loss. Therefore, the remainder of the meeting was spent discussing the plans for the 2004 meeting in Kansas City and the plan for the 2005 meeting, which would be back in St. Louis. The steering committee met again in August 2003 at the AAA national meeting and received from AAA headquarters staff the financial information about the March 2003 meeting. (See Exhibit 3.) The committee was shocked to find that the spring meeting had resulted in a loss that was almost twice the loss incurred in 2002. If this pattern continued, the Midwest region would be bankrupt within a couple of years. Concerned, the committee decided to appoint a treasurer. The official duties of the treasurer would be to receive monthly financial reports of the AAA-MW from the AAA and report on the AAA-MW region's financial situation at steering committee meetings and the annual meeting. First, however, the treasurer would need to investigate the 2003 loss. REQUIRED 1. As treasurer, determine what additional information you would like. 2. Analyze the information and prepare a report for the steering committee explaining the losses. 3. Provide suggestions to the steering committee on how to avoid future meeting losses. ABOUT IMA With a worldwide network of more than 60,000 professionals, IMA is the world's leading organization dedicated to empowering accounting and finance professionals to drive business performance. IMA provides a dynamic forum for professionals to advance their careers through Certified Management Accountant (CMA) certification, research, professional education, networking and advocacy of the highest ethical and professional standards. For more information about IMA, please visit www.imanet.org. 2 IMA EDUCATIONAL CASE JOURNAL VOL. 4, NO. 3, ART. 3, SEPTEMBER 2011 3 IMA EDUCATIONAL CASE JOURNAL VOL. 4, NO. 3, ART. 3, SEPTEMBER 2011 IMA EDUCATIONAL Case Case Journal Study ima Sometimes Accountants Fail to Budget The Association of Accountants and Financial Professionals in Business ISSN 1940-204X Gail Hoover King Purdue University Calumet Jane Saly University of St. Thomas Budgeting is important in all organizations, but it is especially in nonprofit organizations where revenue sources are often inconsistent from year to year. Nonprofit leadership has a fiscal responsibility to monitor the variances between actual revenues and cost and make operating decisions to ensure the organization's viability and success. INTRODUCTION In August 2003, the Steering Committee of the American Accounting Association Midwest Region (AAA-MW) discovered that its 2003 annual meeting had a net loss of $24,232, leaving a net account balance at less than $50,000. This was on top of a loss of $13,264 the previous year. Concerned about a possible trend, the board created a treasurer position and asked the treasurer to investigate these losses. THE ORGANIZATION The steering committee is an entirely volunteer board whose task is to organize and run an annual conference targeting members of the American Accounting Association who reside in the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, North Dakota, South Dakota, Nebraska, and Wisconsin. The American Accounting Association (AAA) is a not-for-profit organization whose members are primarily accounting academics. The organization "promotes worldwide excellence in accounting education, research and practice. Founded in 1916 as the American Association of University Instructors in Accounting, its present name was adopted in 1936. The Association brings together the academic community to further accounting education and to advance the discipline and profession of accounting. (American Accounting Association Our Shared Vision, http://aaahq.org/about/ AAA Share Vision DocumentJan08fnl_4_.pdf, 2008, p 6) The steering committee meets twice a year; every spring at the annual AAA-MW Region meeting and in August at the national meeting of the American Accounting Association. The typical process for organizing the AAA-MW annual meeting was as follows: 1. Eighteen months prior to the meeting (usually at the August AAA national meeting), the steering committee determines in which city within the Midwest region to hold the meeting and submits a meeting site search request to the AAA national office. 2. The program chair for the meeting is a volunteer of the steering committee and is a different (and new) person each year. 3. The event coordinator (a third party hired by the AAA national office) contacts hotels in the chosen city and provides the AAA-MW steering committee with a list of hotels, room rates, and parking rates. 4. At the spring AAA-MW regional meeting, one year prior to the next meeting, the steering committee chooses a hotel based on its location in the city and room rates offered. 5. The event coordinator negotiates the final contract, it is signed by the AAA executive director, and a copy is kept in the AAA headquarter files. IMA EDUCATIONAL CASE JOURNAL 1 VOL. 4, NO. 3, ART. 3, SEPTEMBER 2011 Exhibit 2 Midwest Region of the American Accounting Association 2003 Meeting Program Day Thursday Time Afternoon Evening Friday Saturday 7:00 pm 8:30-10 am 10-10:30 pm 10:30 noon Noon-1:30 pm 1:45-3:15 pm 3:15-3:45 pm 3:45-5:15 pm 6-7:30 pm 7:30-9:00 pm 7:30-9:00 am 9-10:30 10.30-11.00 am 11-12.30 pm 12.30-2:00 pm Steering Committee Meeting Participant Events Tour of Cardinals Baseball Stadium Welcome reception with appetizers and open bar. Reception was sponsored in part by the textbook publishers Buffet breakfast: continental rolls, cereal, toast, yogurt, fruit, coffee, milk, tea 5 concurrent CPE sessions Morning reception with food and drink (coffee, bottled water, and juice) 7 concurrent CPE sessions Luncheon with speaker 7 concurrent CPE sessions Afternoon refreshment break with coffee/soda and snack 7 concurrent CPE sessions Reception with hot and cold hors d'oeuvres including two carving stations (roast beef and turkey) as well as vegetables, egg rolls, chips and dips... and an open bar Ice cream social sponsored by the Teaching and Curriculum Section of the AAA* AAA-MW business meeting FASB update and 2 other concurrent CPE sessions Morning break with coffee and snacks 5 concurrent CPE sessions No events; conference has ended *AAA stands for American Accounting Association Steering Committee Activities Steering committee breakfast meeting to receive information on meeting attendance and issues that needed to be addressed and finalize location or other details not yet decided for next year's event. Awards for papers and lifetime members President and program chair preside over the meeting; Nominate and vote on new steering committee members Steering committee luncheon and meeting; the j program chair becomes the president and presides over the meeting IMA EDUCATIONAL CASE JOURNAL VOL. 4, NO. 3, ART. 3, SEPTEMBER 2011 AAA-MW Financial Information Provided to Steering Committee for 2002-2003 Exhibit 3 Prior Beginning Cash Balance Sep-02 74394.37 Oct-02 75500.56 Nov-02 75568.03 Dec-02 74529.07 Jan-03 74562.27 Feb-03 76392.44 Mar-03 79251.84 Apr-03 92040.53 May-03 91981.19 Jun-03 53269.27 Jul-03 Aug-03 TOTAL Year Totals INFLOW MID-YEAR MEETING Advertising Registration Fees Contributions Exhibitor Fees 1032.00 12477.00 2919.00 1800.00 1800.00 600.00 0.00 16428.00 0.00 4200.00 14835.00 0.00 4200.00 CPE Registration Fees 0.00 0.00 2400.00 Total Mid-year Meeting 0.00 0.00 0.00 0.00 1800.00 2832.00 13077.00 2919.00 0.00 0.00 20628.00 21435.00 IMA EDUCATIONAL CASE JOURNAL 5 OTHER INCOME Contributions Interest Income Total Inflow OUTFLOW MID-YEAR MEETING Printing Copying Mailing Registration Expense Exhibitor Expense Hotel-Rooms/Food/Bev Hotel-Audio Visuals Mtg. Entertainment Speakers Mtg. Coord.-Exp. Postage Supplies Telephone Travel AAA Staff Support Misc. CPE Hotel-Rooms/Food/Bev Hotel-Audio Visuals VOL. 4, NO. 3, ART. 3, SEPTEMBER 2011 Misc. Speakers Travel Total Meeting GENERAL/ADMIN. Postage Misc. 67.47 67.83 33.80 30.77 30.59 26.53 33.73 28.76 13.36 332.84 1313.29 0.00 67.47 67.83 33.80 1830.77 2862.59 13103.53 2952.73 28.76 13.36 20960.84 22748.29 (1106.19) 1106.19 2716.25 105.00 2716.25 2890.55 0.00 0.00 752.35 0.00 0.00 354.82 34010.36 (40.00) 33970.36 28527.36 3983.40 3983.40 84.00 84.00 662.32 507.35 1169.68 469.76 1244.59 1244.59 0.00 2231.05 55.97 105.00 0.00 0.00 0.00 350.00 0.00 154.00 0.00 0.00 (1106.19) 0.00 1106.19 0.00 0.00 0.00 0.00 2821.25 38740.08 1711.94 0.00 0.00 43273.28 35785.86 0.60 0.60 0.60 3.19 58.04 78.32 0.60 0.60 142.55 0.00 86.11 0.00 369.30 1000.00 265.50 511.85 1351.61 Awards Total General 0.00 0.00 0.60 0.60 0.60 3.19 256.80 314.84 112.50 190.82 0.60 0.60 COMMITTEES/OFFICERS Hotel-Rooms/Food/Bev Travel Misc. Total Committee/Officers Total Outflow (1106.19) Ending Cash Balance 75500.56 0.00 75568.03 1106.79 74529.07 0.60 74562.27 0.60 76392.44 3.19 79251.84 314.84 92040.53 3012.07 91981.19 38740.68 53269.27 1712.54 43785.13 37137.47 51570.09 Council Fee Q. Does the budget require any sort of board/committee A. approval? The board approved the site based on hotel room costs and location. After that, the program chair had complete authority over spending. Q. Would it be possible to get a list of all the variable and fixed costs? We would like to know them in order to determine the breakeven point. A. That information was not available. You have to figure out which costs are fixed and which are variable. Q. We are concerned with the fact that the interest earned in 2002 significantly decreased compared to 2001. We would like to know in what the excess cash is invested. A. Excess cash is invested by the national office. The interest revenue is based on the cash balance and the Midwest Region share as determined by the head office. Q. Is there any process in place that helps to determine how many people show up at the conference? A. People attend the conference to network with their colleagues from other institutions, to present their research, and to hear others' work about research and teaching. Estimates are based on prior years' attendance. Q. How is the registration fee determined? A. The registration fee is set by the steering committee. It was $100 with a $20 discount for early registration. This fee was the same for several years. Q. Are food/bev costs fixed or are they variable? How is it determined how much will be spent for food/bev every year? A. Each hotel contract has different costs for food and beverages. Typically, the contract calls for a minimum in food costs. The total cost is dependent on the contract and how much of each item is ordered. Q. Is there a reason the meeting is over three days rather than two? A. The Midwest Region has a tradition of offering a plant tour on the Thursday, with the main meeting taking place on Friday and Saturday morning. Q. What is the content of the seminars and what sort of speakers are there? A. There are two types of seminars-invited and reviewed. The invited seminars are often updates about current practice and those speakers are experts in those areas. The reviewed seminars typically have three or four different papers. The authors submit their papers to the program chair. There is a review process to decide which papers are accepted. Q. Has the committee tried to find out peoples' reasons for not attending the past two years? A. Not successfully. The national organization conducted a survey of all members. The region had not completed one. Q. How has the program agenda changed from 2000, 2001, and 2002? A. Not much. The papers change each year, and the invited speakers change, but the program format is the same. Q. Where was the meeting located in 2000? A. Not sure. Q. Is there any advertisement for this conference? There was no mail or postage expense this year, so have they sent advertisements to people in the past and chose not to this year? A. The mail and postage expense is an allocation from the national office. This year they started using email to alert members to upcoming events. Q. Who pays the registration fees (the individual or the school they work for)? A. Typically, the university or school will pick up the costs. A few individuals pay the cost themselves. Q. How much does the sponsor pay for, and have they considered having more sponsors to help cover costs? A. Sponsors are basically donors. They pay what they can. You can ask them to cover a snack or reception. Sometimes they cover part of one. Sometimes, they cover printing costs. It is whatever we can get. Q. Could you provide us with a detailed listing of the food/beverage/hotel expenses for all three years? A. That information wasn't available. All we could find was the hotel bill for 2003 (see attached). Q. Is there a reason for no contributions in 2003? A. Contributions occur if the program chair or someone else solicits them. No one asked for contributions in 2003. Q. What is the CPE cash inflow for, and is there a reason there was no collection of this in 2003? A. CPE cash inflow is for the extra program on Thursday before the main meeting started on Friday morning. In 2003, the program was a tour of the Cardinals baseball team stadium. It was a block from the hotel and the participants just walked over to the site. Since there were no added costs associated with this tour, no fee was charged. Exhibit TN-1 Midwest Region Time Line of Events Spring 2000, AAA-MIDWEST Meeting Aug. 2000, AAA Annual Meeting SC decides location of 2002 meeting & requests AAA do a site search. SC decides the spring 2002 meeting will be in Milwaukee, WI Spring 2001 AAA-MIDWEST Meeting Aug 2001AAA Annual Meeting SC decides location of 2003 meeting & requests AAA do a site search. SC decides spring 2003 meeting will be in St. Louis SC = Steering Committee PC = Program Chair 9/11/2001 Terrorist Attack on Twin Towers, New York City, NY Spring 2002 AAA-MIDWEST Meeting- Milwaukee Wisconsin Aug. 2002 AAA Annual Meeting SC receives 2002 meeting standard format. Attendance is down (175 vs. 245 the prior year) financial report showing 2007 Sunds meeting loss Spring 2003 AAA-MIDWEST Meeting, St. Louis, MO August 2003, AAA Annual Meeting, Honolulu, Hawaii The spring 2003 meeting in St. Louis is announced. 2003 meeting takes place; attendance is 180 SC receives a financial report showing spring 2003 meeting loss. SC designates a treasurer SC selects location of 2004 meeting & requests AAA do a site search SC decides spring 2004 meeting will be in Kansas City 04/10/03 Date 04/11/03 04/12/03 04/17/03 04/16/03 Invoice STATEMENT Banquet-3106 Banquet-3105 Banquet-3104 Banquet-3098 Banquet-3094 Banquet-3089 Banquet-3099 Banquet-3094 Banquet-3091 Phone Line Charges Business Center Banquet-3084 Banquet-3083 Description 3,596.25 277.66 Debits 1,027.87 Credit Balance 1,027.87 162.00 925.28 925.28 162.00 277.66 3,596.25 3,964.18 3,964.18 373.18 4,001.44 366.89 366.89 373.18 4,001.44 1,340.30 1,340.30 3,297.97 3,297.97 524.02 471.38 3,983.40 3,983.40 524.02 471.38 395.36 24.76 11,997.00 1,500.00 300.00 Security Room Rental Attrition UPS Shipping Audio Visual Sheraton Room Incidentals Balance owed All payments are due within 30 days of this invoice 300.00 1,500.00 11,997.00 395.36 24.76 $ 38,528.94 American Accounting Assoc. The spring 2004 meeting in Kansas City is announced. ST. LOUIS MO MILLENNIUM HOTEL DOWNTOWN ST. LOUIS FOUR POINTS BY SHERATON MW REG SC decides the 2005 meeting will be back in St. Louis, and site search; Millennium Hotel Statement August 2003- March 2004 TIME WHEN CASE ANALYSIS TAKES PLACE Meeting Coordinator's Explanation of Hotel Charges After questions from the treasurer about specific numbers shown in the fax shown in TN-2, the meeting coordinator subsequently provided the following information: Fax Correspondence from Hotel Explaining Contract Terms and Statement Charges 85/22/2003 17:18 4873669856 AAA PAGE 82 MILLENNIUM HOTEL Removed due to privacy issues FOUR POINTS BY SHERATON DOWNTOWN ST. LOUTS Removed due to privacy issues American Accounting Assoc Director of Meetings Removed due to B privacy issues Staterpept Date Removed due to privacy Account Page Number Balance Due issues $38,828.94 STATEMENT Date 04/10/03 Lavolce Descriptiva Debits Credit Balance Banquet-3053 Banquet-3084 1,027.87 925.28 04/11/03 Business Center 162.00 Phone Line Charges 277.66 Banquet-3091 3,596.25 Banquet-3094 3,964.18 Banquet-3099 373.18 Banquet-3089 366.89 Banquet-3094 4,001.44 Banquet-3098 1,340.30 04/12/03 Banquet-3104 3,297.97 Banquet-3105 47138 Banquet-3106 524.02 Audio Visual 3,983.40 Sheraton Room Incidentals 395.36 UPS Shipping 24.76 04/16/03 Attrition 11,997,00 04/17/03 Room Rental 1,500,00 1,500.00 Security 300.00 300.00 YHIBITS $ 38,528.94 Balance owed All payments are due within 30 days of this invoice Account numbers to charge amounts to have been temoved due to privacy issues 34,010.36 3933.40 162.00 373.18 05/24/2004 16:04 05/22/2003 17:10 To: To Fax: From: 604 FAX TRANSMITTAL Date: 5/22/2003 PAGE 82/84 PAGE 81 1,027.37 TMR REPT Lo 925.28 " " BA 162.00 PETE WILSON & 27766 REG. DESK 3,396.25 FRBERESTS 3,964.18 FRIRCPT FO 373.18 TTC RCPT 366.89 STEEP.Com B 4,001.44 FRI LUNCH 1,340.30 FRI.RCPT BA 3,297.97 SATBRIFS 471.38 397. nm B $24,02 SERCOML 3,983.40 FRISAT AV 395.36 Staff Rest 24.76 11,997.00 Direct Line: (407) 366-9855 + # of pages including coversheet: Message: FAX: 407-366-9856 Ref: 2003 Midwest Region Meeting - St. Louis, MO we have completed our review of the master account for this meeting. Adjustments caught on site have been made. Charge backs are as follows: T&C Reception = $373.18 Printing of Pete Wilson's letter-$102.00 Regarding attrition, you will note that the hotel originally showed 207 picked up out a contracted block of 405 (80% of which is 324). The hotel took coplos of our sign- in sheets and found 24 additional room nights. You will note from the attached that there were 6 attendees that indicated they were staying in the hotel but the hotel could not locate their reservation. You may want to contact these attendees and verify their stay. ok shared The hotel is showing a shortfall of 93 room nights for an attrition of $11,997 as well as a $1,600 room rental as provided in the contract on a sliding scale basis. Formal Letter from Hotel Explaining Contract and Charges April 15, 2003 Director of Meetings Amencan Accounting Association MILLENNIUM HOTEL St. Louis Dear The contract for American Accounting Association set down a total room block of 405 room nights, as well as an attrition clause to utilize at least 80% of that room block, or a total of 324 room nights. The final room block pick up for your group is 93 room nights short of reaching the 80% goal. The attrition damages assessed are $11.997.00.- Additionally, based upon the final pick up, 57% of the room block, meeting space charges will be $1,500.00. I regret that we must communicate regarding these circumstances, however, the management and staff of The Millennium Hotel looks forward to working with American Accounting Association. in the future. If we can be of any further assistance, please contact Director of Sales and Marking !. Again, thank you for choosing The Millennium Hotel St. Louisl Senior Convention Services Manager Director of Sales and Marketing Hotel's Room Block Count AMERICAN ACCOUNTING ASSOCIATION Date NT ST 9-Apr 0 2 10-Apr 72 22 11-Apr 68. 12-Apr 13 22 8 Total 153 54 Outside Block TOTAL GROUP PICK UP: 80% PICK UP OF 405RN BLOCK: SHORTFALL: DAMAGES DUE TO ATTRITION: $ 11,997 Total 207 24 231 324 -93 Hotel Contract for 2002 Meeting in Milwaukee especial guest room rates agreed to above will apply 2 day(s) before and 2 day(s) after the official dates of the Group's meeting. These rates are subject to avellability of guest rooms in excess of the Is Cheduled meeting dates shown on the room black. OMMISSION These rates are confirmed on a net non-commissionable basis. COMPLIMENTARY BOOMS he Hotel agrees to provide the Group with one (1) complimentary Business Plan unit per every fifty pald rooms occupied on a cumulative basis by the Group's attendees over the official dates of the Group's meeting at the convention rate. The official dates of the meeting are those dates listed on the first page of the contract. This shall be computed by adding together the total paid room usage per night during the meeting period and dividing by fifty (50). These credits for units may be applied as follows: Room Type Guest Room Units Applied 1 Bedroom 1 Unit Executive Suite 1 Bedroom 3 Unita 2 Bedroom 4 Unita Grand Sulta 1 Bedroom 6 Units 2 Bedroom 7 Units Penthouse 1 Bedroom 8 Units 2 Bedroom 10 Unite AAA-MW Region Financial Report Analysis for Years 2001-2003 2002- 2001- 2003 2002 2003 2002 2001 2002-2003 change 2001-2002 % % change change change INFLOWS Mid-year Meeting Registration Contributions Exhibitor Fees 16,425.00 4,200.00 CPE Total Meeting Interest Total Inflows 22,628.00 332.84 22,960.84 14,835.00 20,125.00 1,990.00 4,200.00 4,500.00 2,400.00 3,270.00 23,437.00 31,886.00 1,313.29 4,312.20 24,750.29 36,198.20 1,590.00 (2,400.00) (5,290.00) 11% -26% (1,990.00) 0% -100% (300.00) 0% -7% (870.00) -100% -27% (809.00) (8,449.00) -3% (980.45) (2.998.91) -75% (1,789.45) (11,447.91) -7% -26% -70% -32% OUTFLOWS Mid-year Complimentary room unite may not be used as credit. Complimentary room nights not used have no value. CUT-OFF DATE The "cut-off date" la March 13, 2002. Should the hotel elect to accept reservation requests received after the cut-off date or above the group block the hotel will accept the reservations at the group rate. RESERVATIONS Reservations are to be made by the individual directly through our Reservation Department. Please inform your attendees to request the group rate for American Accounting Association. BAGGAGE HANDLING There will be no baggage handling charge of housekeeping service gratuity applied to Client's bill. MEETING ROOM AGREEMENT Meeting Printing Mailing Exhibitor 2,715.25 354.84 Expense Food/Bev Audio Visual Jep. Speakers Mtg Coord 33,970.95 3,983.40 1,160.65 2,890.55 2,425.52 752.35 470.17 460.00 28,527.36 18,490.63 2,965.85 469.76 1,477.92 (175.30) (752.35) (354.84) 5,443.59 3,983.40 465.03 -6% 282.18 -100% (105.16) 10,036.73 19% 19% 60% -100% -23% 54% (2,965.85) 100% -100% 690.89 (1,008.16) 147% -68% 1,244.09 Postage 2,231.05 55.97 (986.96) 2,231.05 -44% -100% (55.97) 55.97 -100% -100% AAA Staff 154.00 Entertainment Supplies Total Outflows 511.85 84.00 105.00 43.775.19 184.79 105.00 350.00 1,990.00 1,351.61 1,590.02 (184.79) 0% -100% (154.00) 49.00 -100% 47% (350.00) (1,640.00) -100% -82% (839.76) (238.41) -62% -15% = 37.137.49 30.159.90 84.00 105.00 6.637.70 100% 0% = 100% 0% 6.977.59 18% 23% who my All function and meeting space is assigned by the Hotel according to the number of personee to attend the Group's function. The Hotel reserves the right to reassign, with Association consent, the space listed on the Program of Events to accommodate both the Group and all other groups or parties using the Hotel's facilities during the Group's meeting. The Group agrees to promptly notify the Hotel of any changes in its function or meeting space requirements. All fees for meeting and function space are subject to appropriate federal, state and local taxes. The Hotel is currently holding function space based on the attached 3 page Program of Events dated January 23, 2001. The Group will promptly notify the Hotel if any blocked space will not be needed. GROUP COMMITMENT The Hotel will provide all of the outlined function and meeting space at a discounted rate according to the following scale: Pick up of Room Block 80% and Above 79%-70% 69%-60% 59% or below " Reoth Nights Payment 300-375 $5,000 299-262 $8,500 281-225 $10,000. 224-0 $11,550 Function/Meeting room rental fees are assessed separately and are not in lieu of any liquidated damages for room revenue or food and beverage revenue set forth herein. American Accounting Association Page 3 of 11 Travel CPE travel G&A Net Change in Cash Beginning Cash Ending Cash (20,814.35) (14,389.18) 4,037.30 (6,425.17) (18,426.48) 74,394.37 88.783.55 84,746.25 (14,389.18) 4.037.30 53.580.02 74,394.37 88,783.55 (20,814.35) (14,389.18) -28% 45% -456% -16% 5% -16% Attendees 185 170 242 15 (72) 9% -30% AAA-MW Region Projected Financial Report for Year 2004 2004* 2003 2002 2001 * projections based on 200 participants AAA-MW Regional Financial Information for 2001-2003 MIDWEST CASH FLOW HISTORY 2001 Location INFLOWS Mid Year Meeting Registration Contributions Exhibitor Fees 19,000.00 1,500.00 4,200.00 16,425.00 4,200.00 CPE Total Meeting 24,700.00 Interest Total Inflows 332.84 25,032.84 22,628.00 332.84 22,960.84 14,835.00 20,125.00 1,990.00 4,200.00 4,500.00 2,400.00 3,270.00 23,437.00 31,886.00 1,313.29 4,312.20 24,750.29 36,198.20 registration fee of $95 x 200 participants constant with previous years constant with previous year consistent with prior year Hotel Attendance Average Registration Fee (based on full and St. Louis Hilton 245 2002 Milwaukee 2003 Hyatt 170 St. Louis Millennium 185 $82.14 $87.26 $88.80 early registration discount) Beginning Balance INFLOWS $ 84,746.25 Registration Fees 20125 $87,658.55 14835.00 $74,394.42 Exhibitor Fees 4,500.00 4,200.00 16,428.00 4,200.00 OUTFLOWS OTHER INCOME TOTAL INFLOWS OUTFLOWS Tour Contributions Total Interest Income 3270.00 2400.00 1,990.00 $29,885.00 4,312.20 $34,197.20 $21,435.00 1,313.29 $22,748.29 $20,628.00 366.73 $20,994.73 Mid Year Meeting Printing Mailing 2,715.25 470.17 2,715.25 2,890.55 2,425.52 752.35 470.17 same as previous year Exhibitor Expense Food/Bev 18,490.63 Audio Visual Speakers 1,200.00 Mtg Coord 33,970.95 3,983.40 1,160.65 1,244.09 Postage 354.84 460.00 28,527.36 18,490.63 2,965.85 469.76 1,477.92 2,231.05 55.97 no attrition charge invitations sent by mail and electronically consistent with prior year free audio visual support from hotel well-known speakers terminate the contract with the mtg coord Travel AAA Staff CPE travel G&A 500.00 Entertainment Supplies Total Outflows 23,376.05 511.85 84.00 105.00 43,775.19 184.79 154.00 105.00 350.00 1,990.00 1,351.61 1,590.02 consistent with prior years consistent with prior year consistent with prior year consistent with prior year consistent with prior year reduce expense reduce expense 37,137.49 30,159.90 Printing Mailing Exhibitor Expense 2,425.52 470.17 460.00 2,890.55 752.35 354.82 2,716.25 ** Hotel-Rooms/Food/Bev 18,490.63 Hotel-Audio Visuals 2,965.85 26,450.97 2,076.39 402.50 33,970.36 3,983.40 Mtng. Entertainment 84.00 Speakers 1,477.92 Mtg. Coord.-Exp. 1,125.00 469.76 1,106.00 1,169.68 1,244.59 Postage 55.97 Supplies 142.50 Telephone Travel 184.79 AAA Staff Support 105.00 350.00 154.00 CPE Hotel- Rooms/Food/Bev Misc. Travel GENERAL/ADMIN. Postage Net Change in Cash Beginning Cash Ending Cash 1,656.79 (20,814.35) (14,389.18) 4,037.30 53,580.02 74,394.37 88,783.55 84,746.25 55,236.81 53,580.02 74,394.37 88,783.55 Attendees 200 185 170 242 Registration Fee 95 89 87 83 TOTAL OUTFLOWS Net Cash Flow Ending Balance Members in Region **Major hotel charges 1,990.00 $29,694.88 216.02 $ 34,660.81 86.11 $43,713.28 143.80 Credit Card Fees Misc. Council Fee Awards Total General 1,000.00 374.00 1,590.02 1,000.00 265.50 1,351.61 $36,012.42 $ 31,284.90 $2,912.30 $87,658.55 1,305 $ (13,264.13) $ 74,394.42 1.311 1,000.00 369.30 1,513.10 $ 45,226.38 S (24,231.65) $ 50,162.77 1,267 11 1.As treasurer, determine what additional information you feel you would like/need. (30 points) 2. Analyze the information and prepare a report for the steering committee explaining the losses. (40 points) After analyzing the additional information what the professor give to us, we notice that there are three main reasons and some factors to cause losses in 2002 and 2003. The first reason is that the main cash inflow "registration fees" reducing since 2001. Take the change from 2001 to 2002 ($5,290) as an example, the amount means this organization reduces about 500 ($5,290/$100 per person) members in 2002 compared to 2001. This is also the reason why the attendances are less than 200 in 2002 and 2003. The second reason is we notice that there is no contribution for 2002 and 2003. Based on Q&A, we know that the program chair did not solicit anyone to contribute to support the program. The missing support for 2002 and 2003 is also the reason to reduce cash inflow what caused the loss. The third reason is that the accountants of this organization set down a total room block of 405 rooms overmuch what is 174 rooms more than the actual rooms picked up by the group. Therefore, the hotel billed the organization high damage cost due to attrition $11,997 what almost 50% of total net loss. There are also other factors to cause the losses like the cash inflow of total meeting reduced $8,449 from 2001 to 2002 and the cash flow of interest reduced due to the decreasing cash balance.