Dollar$ and sen$e and PSA - Photographic Society of America finances; includes financial statement

DOLLAR$ and SEN$E and PSA

Introduction

We are slowly working our way out of a very deep hole. For the third consecutive year, the Society took in more dollars than it paid out. That continuing effort is the work of many people, working together to find more efficient ways of operating. It is important for all of us to understand the results of these efforts when they are translated into dollars. At the risk of oversimplifying matters, let me highlight some of the things that can be learned from a study of the auditor's report.

The Financial Statements

Each of these statements contains a column for the General Fund, one for the combined Restricted Funds (Donated Awards, Education and Scholarship, Fund for the Society's Future, Hartig, Headquarters Equipment, Journal Support and Permanent Collections), and one for the two Memorial Funds. These data are totalled into comparison columns for the current and immediately prior fiscal year. I will focus on the General (Operating) Fund, where all financial activities begin.

Statement of Revenue, Expenses and Changes in Fund Balance: This report shows the results of the Society's day-to-day operating activities for the 1989-90 fiscal year alone. Those activities generated income of $554,690, and cost $363,360 in expenses, leaving excess income of $191,330. To this was added $14,185 in funds transferred to the Society from six chapters that completed the changeover process by the June 30 deadline, as well as income transfers from the Memorial Funds and a transfer of $4,784 from the Headquarters Equipment Fund for the purchase of two new word processors and a new computer with Lotus 1-2-3 software. The combined total of excess income and transferred amounts, $228,226, increased the starting balance of $698,503 to a June 30, 1990, Fund Balance of $926,729.

Balance Sheet: This statement reflects the continuing financial operating picture of the Society, and is based on the accounting equation--Assets equal Liabilities plus Fund Balance (or Equity or Net Worth for the individual). The equation can also be thought of in another way--Assets minus Liabilities equals Fund Balance--or in everyday language--What you own minus what you owe is what you're worth. At June 30, 1990, the Society had total assets of $1,315,103, obligations amounting to $388,374 ($175,077 plus $210,697 and $2,600), and a Fund Balance of $926,729. The Fund Balance has been increased by the amount of excess income and transfers to the Society shown on the Statement of Revenue, Expenses and Changes in Fund Balance. At the same time, the dollars represented by the Fund Balance are reflected in several of the investment accounts. For details you will want to refer to the auditor's Footnote 2, the second part, and the other footnotes, too.

The Balance Sheet is the source of ratios important to creditors and potential major contributors. As one example, take the Current Ratio, the relationship of current assets to current liabilities. At June 30, 1987, that ratio stood at .20, meanign that the Society had only 20 cents on hand for each dollar it owed currently. Two years later, the current ratio was 1.79, and today it stands at a very favorable 1.93. Today's favorable picture didn't just happen. It took work to achieve; it will take more work to maintain.

Statement of Cash Flows: This statement replaces the former Statement of Changes in Financial Position, as required by the Financial Accounting Standards Board. It helps you to see what decisions management made that had financial consequences, and to know what those consequences were. At the start of the year we had $239,324 in cash and cash equivalents. We increased that amount by day-to-day decisions through the year that resulted in an additional $199,435 cash available from operating activities, $40,251 transferred to the General Fund from the Restricted and Memorial Funds, for total available cash and cash equivalents of $479,010. This sum was increased by the $2,336 of mortgage principal received, decreased by $4,783 spent for capital equipment, $480 representing 16 additional prints in the Permanent Collection, and $351,748 spent to purchase short- and intermediate-term investments. At the end of the fiscal year cash and cash equivalent amounted to $124,335, the amount shown in the first line of the Balance Sheet.

Summary

It would be a mistake to conclude, after a third year of favorable financial operations, that we can now sit back and spend as we used to spend. An organization that habitually spends more than it takes in writes its own demise. But although this Society doesn't have any unallocated dollars, it now does have a small reserve for future operations which, with prudent advance planning and a wise set of priorities, can help the Society to move closer to the fulfillment of some of its goals. Those two words--advance planning--represent a major key to the future growth of the Society. They are words you can expect to hear often in the days ahead.

COPYRIGHT 1991 Photographic Society of America, Inc.
COPYRIGHT 2004 Gale Group