Alaska Wing

This publication was developed to inform the units below wing level of the procedures in implementing the Wing Banker Solution. It was developed by the financial management staff at Alaskan Wing, Civil Air Patrol.

Any comments or suggestions should be directed to your Wing Finance Officer or = Wing Bookkeeper.

WHY ARE WE DOING= THIS

Civil Air Patrol, Inc. has received only qualified annual audit reports from their outside audit firm. The reason for the qualification is= that the financial statements do not include the accounts and financial transact= ions of units below wing level, meaning that funds at units below wing level are= not audited. These unaudited fund= s are considered material in relation to the entire corporate total of audited fu= nds. An unqualified audit will result in additional opportunities for funding for the entire corporation. In addition, an unqualified audit = will result in greater accountability and consistency and will increase the confidence and trust of Civil Air Patrol members, government entities and t= he public. The Board of Governors unanimously approved the Audit Committee recommendation that Civil Air Patr= ol obtain an unqualified audit within three years. This goal has also been approved by= the National Executive Committee. In order for an unqualified opinion to be obtained, either all the units below wing level need to be audited (at a cost of over 5 million dollars) or something else needed to be created.

In 2005, Virginia Wing developed a = plan to solve the problem. They de= cided to ask their units to close out all their bank accounts and send the money = to wing HQ. Wing HQ would open a separate checking and savings account into which the unit monies would be deposited. The advantages of = the wing acting as the “banker” for the unit’s monies include= obtaining an unqualified audit opinion, all accounting being on the accrual basis (un= its below wing level are on the cash basis), all funds being audited, and better reporting. This solution elim= inates the need for financial recordkeeping at the unit level, which in turn eliminates the need to consolidate all units below wing level at year-end. = It also relieves the burden on unit finance officers for reporting, writing checks, and reconciling the bank account each month.

While there is no recordkeeping req= uirement at the unit level under the new system, the unit finance committee continue= s to play an important part in the financial process. Wing will not pay bills on behalf = of the unit until they receive the required approvals. The requirement for approvals of t= wo finance committee members for expenses over $200.00 continues. Approvals may be obtained via mail= , fax, or e-mail. There will be bett= er accountability because payments are correctly authorized. Wing will not “float” = funds for a unit if it does not have enough money in the bank. The unit will be required to depos= it enough money to cover an outstanding bill before it will be paid. The unit must continue to account = for all income deposited in the bank. If the wing uses a bank with branches around the state and the unit makes deposits locally, the unit must ensure that wing knows which unit made the deposit and to what income accounts the money should be posted.

The Wing Banker Solution offers a viable resolution to the qualified audit opinion. It will also end the problems encountered by the wings doing the consolidated unit report at year-end sin= ce this reporting requirement will be eliminated. The inconsistency and inaccuracy o= f the unit reports will cease to be a problem at all levels of CAP. The problem of different accounting methods will also disappear. = Units will now be on the accrual basis of accounting just like the wings, regions= and NHQ. The Wing Banker Solution= has been endorsed and mandated by the Board of Governors and will be phased in = over a three-year period. Beginnin= g March 2007 Alaska Wing will be actively participating.

The Alaska Wing is one of the first large wings implementing this system. While the workload may increase, the Wing Accountant, an integral pa= rt of the process works at wing HQ every day and can process transactions on a timely basis. We look forward= to a successful conversion.

WHAT SHOULD WE DO FIRST?

=

A Plan and Timet= able have been developed as follows:

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; AK Wing wi= ll be using Wells Fargo bank for all transactions and has opened a separate check= ing and savings account that will be used only for the units below wing transactions.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; All units = will need to submit AKWGF 173-FC. = This form will list the members of their units finance committee along with their signatures for check request approvals purposes by 1 March 2007.=

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; All units = will be issued deposit slips, Check Request and Deposit Remittal forms.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; AK Wing Accountant has already created the necessary sub-accounts and classes in QuickBooks®.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; All units = must send a check(s) closing all bank accounts as of 28 February 2007 to AK Wing Headquarters by 9 March 2007. (Make sure you leave enough money in the acco= unt to clear all uncashed transactions.)

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; The Units = FY07 CAPF 173-1 for the period through 28 February 2007 needs to be received at = AK Wing Headquarters by 16 March 2007.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; The final = bank statement closing all accounts must be sent to AK Wing Headquarters by Marc= h 25, 2007.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; This docum= ent contains the procedures for processing income and expenses, as well as peri= odic reporting to the units. This document is not complete it is a working document. It will be revised and developed a= s we all work together through this first year.=

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; If units h= ave certificates of deposit these accounts should not be closed. Most certificates of deposit or some investment accounts have penalties for early withdraw. These need to be identified and reviewed with the Wing Finance Director individually prior t= o March 1, 2007. The address of the a= ccount needs to be changed to The Alaska Wing Headquarters, P.O. Box 6014, Elmendorf AFB, AK 99= 506, by February 20, 2007, for proper accounting. In addition, the signers will have= to be updated to include the signers from the AKWG finance committee. When the accounts mature the units finance committee along with the AKWG finance committee will collectively m= ake the decision on future investment of these accounts.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Each unit = needs to maintain their finance committee. This committee will develop the unit’s budget, authorize payme= nts and make deposits.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Every unit= will receive a monthly accounting report of all their funds by the AK Wing Bookk= eeper. This report must be reviewed for accuracy every month by the units finance committee.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Units are = not authorized to have a petty cash fund.

Please send any questions by e-mail to the AK Wing Bookkeeper, Linda Henry at akcapoffic= e@ak.net. The more questions you ask about t= he plan, the smoother the transition. = This program is mandatory, not volunt= ary. Separate bank accounts and periodic reporting will be used.

The New Unit Bank Account<= /o:p>

AK Wing has opened a checking account at Wells Fargo Bank as it is the only financial institution available to all of our squadrons. We will also open a savings accoun= t for units if necessary. Units with savings accounts are asked to contact the AK Wing Bookkeeper. If there is already an account out= there with a good interest rate, we may be able to adopt that account for all units. Deposits can always be mailed to AKWG HQ as well.

Any unit’s certificates of deposit (CD) or some investment accounts (othe= r than savings accounts) may be maintained to avoid penalties. The money must be recorded in Quic= kBooks® at the wing level, though. Th= e unit must change the address to AKWG HQ so the bank statements or brokerage statements come to AKWG HQ so that interest and any other transactions are properly recorded. The unit m= ay also allow a CD to mature and move it to the new bank. If the CD is allowed to stay in th= e unit’s local bank and is not moved to the new wing bank, the mailing address and signatures must be changed to AKWG HQ.&nbs= p; Any withdrawals from the CD or brokerage accounts must have proper approvals and must be done through AK Wing HQ.

=

What is the Unit= 217;s Role?

Each unit must maintain a finance officer and finance committee as required in C= APR 173-1. The unit finance offic= er, the unit commander, or a designated finance committee member must initiate = and approve any expenses under $200.00. This approval may be accomplished o= n the Check Request Form AKWGF 173-C. If the expense is over $200.00, then a majority of the finance committee must = indicate approval with signatures.

The unit finance committee must continue to function and record minutes. All approvals should be noted in t= he minutes. Any electronic appro= vals should also be attached. The = unit finance committee should continue to develop a budget to help manage the unit’= ;s finances. They must also monitor their incom= e and expenses to help verify that wing has recorded everything correctly. This will be done by reviewing the= monthly reports that will be sent to each unit by wing HQ.

The unit needs to ensure that all their bank accounts are closed and the money = is forwarded to wing within the allotted time period. The final CAPF 173-1 and a copy of= the bank statement dated February 28, 2007 showing a zero balance also needs to= be sent to wing by the March 20, 2007 deadline. Once this report is accomplished, = the unit will never have to complete this report again.

The unit needs to ensure that all bills are forwarded to wing in a timely manne= r. If the mailing address for approved reoccurring bills is changed to wing HQ, then the unit needs to authorize w= ing to pay those bills on a recurring basis through a recurring expense authorization. An example of = a unit recurring expense policy AKWGF 173-R is attached in the Examples section. The address on these bills must in= clude the unit charter number.

The unit needs to either make their deposits at the designated bank or collect = the checks and send them to wing HQ. The proper accompanying forms need to be filled out correctly and in= a timely manner so that wing HQ knows which unit is involved, what accounts to debit or credit, and the source and purpose of the funds.=

The unit will continue to be responsible for following fundraising procedures a= s required in CAPR 173-4. These procedur= es require the wing commander to approve all fundraising requests. In addition, the unit must provide= an accurate accounting of funds raised to wing HQ.

The unit finance committee continues to play a very important role and is cruci= al in the management of the unit’s financial transactions. The only difference is that wing i= s now their bank, their accountant, and their reporter. The units should also be reassured because wing HQ is audited every year, by an outside accounting firm and the wing financial analyst.

HOW DOES WING HA= NDLE THE ACCOUNTING?

Receiving Income=

When wing HQ receives the initial funds from the units it will be posted as sepa= rate deposit for each unit. Each u= nit will have a separate sub account.

After the initial funds are received at AKWG the units may make the deposit direc= tly to the bank:

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; When anyon= e is writing a check to your unit it should be made payable to: AKWG CAP Unit AK= ____ (your unit charter number).

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; The unit m= ust send a copy of deposit slip and a Deposit Advice form (AKWGF 173-D) to wing= HQ so that the proper entries can be made.&nb= sp; The AKWGF 173-D can be found on the AK Wing Web Site in PDF form. The excel version of the form will be emailed to each squadron’s finance officer, this version of the form is convenient as there are pre-set drop d= own boxes for required account/asset information.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; The unit w= ill specify names and account numbers from the standard chart of accounts or just descr= ibe the transaction in plain language with enough detail so that the proper acc= ount numbers can be identified.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; If the unit sends the checks to wing to be deposited the unit still needs to send a Dep= osit Advice form AKWGF 173-D. Wing= must do a separate deposit for each unit so that each unit’s cash sub-acco= unt receives credit for the deposit. All entries on the deposit must be classed.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Make sure = you have written the units charter number on every document. This will help insure that all transactions are posted correctly.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Copies of = all deposits slips and checks should be kept for reconciliation of your units account.

Paying Bills

The AK Wing will ensure that all necessary approvals have been obtained before paying any bills. =

Submitting unit bills to AK Wing HQ:

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; All bills = must be submitted on an AK Wing Check Request Form AKWGF 173-C or a Recurring Expen= se Form AKWGF 173-R with proper approval before any bill can be paid. A copy of the original receipt/invoice/bill must accompany all forms. Electronic submission is authorized (e-mail scans or faxed).

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Recurring Expense are invoices that units are paying on a routine basic i.e. phone, electric, rent. The address of these invoices needs to be changed to AK Wing HQ, = P.O. Box 6014, Elmendorf AFB, AK 99506. The unit charter numbe= r must be added to the billing name, and the AKWGF 173-R needs to be completed each year.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; The unit f= inance committee must authorize all expenses over $200.00 in writing. Under $200.00 can be authorized by= the unit commander or one of the approved members of the unit’s finance c= ommittee.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Original receipts and AKWGF 173-C or 173-R must filed with the units finance paperwo= rk.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Make sure = you have written the units charter number on every document. This will help insure that all transactions are posted correctly.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Copies of = all check request including bills and/or invoices should be kept for reconcilia= tion of your units account.

<= span style=3D'font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-fa= mily: Symbol;color:blue'>·      =             &nb= sp; Time sensi= tive expenses can be e-mailed or faxed to AK Wing HQ. akcapoffice@ak.net or Fax 907-753-4560.

Reconciling the = Unit Checking Account

The AKWG accountant will reconcile the accounts every month.

The AKWG accountant may find discrepancies with account, i.e. a deposit of whic= h we have no record. This might oc= cur when the units make deposits locally, and for some reason AKWG does not rec= eive record of the deposit. If this occurs an e-mail will be sent out on the commander list server listing the = date and amount of the deposit and asking to whom it belongs. The claiming unit of the deposit w= ill need to mail the deposit slip and Deposit Advice form AKWGF 173-D so they m= ay receive proper credit.    <= /span>

After the reconciliation is complete each unit will be e-mailed a statement that = the units finance committee must review and approve. The units should keep copies of al= l transactions; (deposits and bills/invoices) should be kept for reconciliation of your uni= ts account.

If the unit finance committee finds any discrepancies with the unit account st= atement    e-mail the AKWG accountant akcapoffice@ak.net as soon as possible with all details discrepancy so correction can be made.&nbs= p;

Unit Savings Acc= ount

If a unit has funds that are not budgeted to be used for more than 6 months, t= he unit can request that the funds be transferred into the unit saving account where the unit will receive interest every month in the units account.=

AKWG will be absorbing all the mailing cost, checks, deposit slips, and accounti= ng fees.

Any unit that wants to invest in a CD or other investment need to contact AKWG = Bookkeeper to review options and open an account.

Questions

Any questions can be e-mailed to:

Linda Henry, AKWG Bookkeeper akcapoffice@ak.net

Or Maj Dave Thompsen, AKWG Direct= or of Finance thompsend@akrr.com <= /o:p>

Or call AKWG Headquarters at 907-551-3145, AKWG HQ Fax: 907-75= 3-4560

Alaska Wing Headquarters

= P.O. Box= 6014

Elmendorf AFB, AK 99506=

Glossary of Acco= unting Terms

Auditor Opinion - The auditor’s opinion is the most important part of the audit report that is provided on company accounts.

The auditor will give= an opinion that is unqualified, qualified,= adverse or that there= is a fundamental uncertainty. A fundamental uncertainty means that the auditor is unable to express an opinion.

A disclaimer of opini= on is issued when the auditor is unable to express an opinion. An auditor may draw investor’s attention to a fundamental uncertainty, but this does not necessarily mean that the audit is qualified.

Unqualified Audit - If there are no problems found during an audit,= the auditor will state “in our opinion the financial statements give a tr= ue and fair view…” Such an audit opinion is giv= en when there has been no limitation on scope and the auditor agrees with the treatment and disclosure of information the financial statements.

The accounts of liste= d companies are almost always given an unqualified opinion on the audit report, as potential problems will be identified and dealt with ahead of the release of the financial statements.

Qualified Audit - Qualified Audit A qualified op= inion is given in the auditors’ report if there is a limitation on scop= e or if the auditor disagrees with the treatment or disclosure of information = in the financial statements. Except = for the qualification of a particular issue, the rest of the financial statemen= ts will give a true and fair view.

The accounts of listed companies are rarely qualified and it would seriously undermine confidence = in the management if they were.

Accrual Accounting - An accounting met= hod that measures the performance and position of a company by recognizing econ= omic events regardless of when cash transactions happen.

Notes: The opposite of this is cash accou= nting, which recognizes transactions only when there is an exchange of cash. But under accrual accounting, for example, if you buy a stereo on credit, the company you buy from would still recognize the event as a transaction.

Cash Accounting - An accounting met= hod where receipts are recorded during the period they are received, and the expenses in the period in which they are actually paid. <= /p>

Notes: Basically, when the cash is receiv= ed for a sale, it is recorded in the accounting books as a sale. This is in contrast with accrual accounting, where revenue and expenses are recorded when they are incurred.=

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What is the Unit= 217;s Role?

What is the Unit= 217;s Role?