Checking the books
By Edward P. Salek, CAE, Outgoing Executive Director, and Rebecca Lintow, CAE, Executive Director | TLT Headquarters Report December 2023
STLE gets an “A” on its 2023 financial report.
STLE’s financial report card, more formally described as the Independent Auditor’s Report, was part of the agenda last month when the STLE Board of Directors held its fall meeting in Cleveland, Ohio (U.S.).
Review of the audit report is an important part of the board’s fiduciary responsibility for finances. An annual audit also is required by the STLE Constitution and Bylaws, reflecting the role it plays in the prudent management of association affairs.
The audit is conducted by Selden Fox, a Chicago-based firm founded more than 50 years ago and with an extensive client base of non-profit associations and charities. The auditors coordinate with a Board Audit Committee, chaired this year by STLE Director William B. Anderson (Afton Chemical Corp). Three other board members serve with him on the committee, which is tasked with “oversight of the annual audit of the organization’s books and records and the system of internal controls that the organization has established.”
Here are several highlights from the report, which covers the fiscal year of July 1, 2022, to June 30, 2023.
STLE received what is known as an “unmodified opinion,” which is the best that can be obtained when auditors review management’s financial reports. Similarly, the report states that there were no disagreements with management or any issues with cooperation of staff. Taken together, these two conclusions are comparable to getting an “A” grade on the organization’s financial report card.
The audit did not generate a significant amount of material adjusting journal entries from ongoing activities. This means, in effect, that the auditors did not require any significant corrections to the financial information presented by STLE management.
“This should give confidence to the Audit Committee and board that the STLE staff is producing accurate financial information both at year end and on an interim basis,” according to the report.
STLE’s ratio of overhead expense remained consistent at 11%. This overhead ratio reflects how much of an organization’s budget is used for overhead costs versus programming and is regarded as a key metric for assessing an organization’s efficiency. A general rule of thumb is that organizations that spend less than 25% of their budget on overhead are highly efficient.
The STLE Board of Directors has created a Scholarship and Investments for the Future Fund (SIFF) and designated $35,000 (U.S.) to that fund. Net assets now show this $35,000 designation. Exact uses and strategies to grow the fund are now in the planning stage.
Overall, STLE is in good financial condition for the upcoming year. Operating revenue for the 2023 fiscal year was $3.15 million (U.S.), with net assets of $3.9 million (U.S.), and the society has sufficient liquidity to meet expenses, according to the report.
STLE Executive Director Rebecca Lintow, commenting on the 2023 audit results, says, “This reflects STLE’s solid financial foundation and puts us in position to become an even more valuable resource for our members and a more forceful advocate for the tribology community in 2024 and beyond.”
You can reach Certified Association Executive Ed Salek at esalek@stle.org.
You can reach Certified Association Executive Rebecca Lintow at rlintow@stle.org.