The Finance Committee (FC) continued to address the major financial issues facing the Association. In addition to focusing on the annual budget, the FC dealt with a number of other significant issues during 2007; such as, searched for a new independent audit firm; oversaw long-term investment portfolio performance; recommended a designation of net assets to fund the web relaunch project; and recommended approval of an exception to the convention designation of net assets policy.
Independent Audit Firm Search/Fraud Report
Since it has now been five years with our current audit firm, the FC in conjunction with staff and the Audit Subcommittee conducted a search that included our current audit firm and several of the big four audit firms as well as several second tier audit firms to fully explore the market. As a result of that search process, last fall the FC recommended and the Board appointed Argy, Wiltse & Robinson to conduct the 2007 APA audit (performed in 2008). Also in 2007, on the recommendation of the FC the Board appointed Calibre CPA Group to conduct the audit and related tax services for the Association’s pension plans.
Long-Term Investment Performance
It is the responsibility of the FC, with the help of its investment community members, to oversee the performance and management of APA’s long-term investments. Although $1,900,000 was available for investment under the Council’s action of June 2007, the FC supported the CFO’s recommendation to defer the investment of these funds until management has better information on our working capital needs for interior renovations and the web relaunch project. The APA long-term portfolio generated an overall annual return as of 12/31/07 for the entire portfolio of 4.86%, valued at $73M at 12/31/07.
Designation of Net Assets to Fund Web Relaunch Project
The FC unanimously recommended and the Board of Directors approved a designation of net assets in the amount of $7,600,000 to fund the Web Relaunch Project.
After a thorough review of the web relaunch spending to date, and the potential financing alternatives, the FC concluded that the most advantageous approach appeared to be to increase our current line of credit from $5M to $10M. In summary, the FC recommended to the Board and the Board approved an increase to our current line of credit from $5M to $10M. The Board also granted authority to the CEO and CFO jointly to execute annual line of credit renewals for up to five years through and including 2012.
Exception to Convention Policy
The Board of Directors approved an exception to the convention designation of net assets policy to allow up to $200,000 to support the convention-related activities at the 2008 Boston convention.
Composition of FC Members
The FC is comprised of seven voting members elected by the APA Council of Representatives and up to seven non-voting community members appointed by the Board (four investment subcommittee members and three audit subcommittee members). In 2007, the FC had eleven white/Caucasian members and two ethnic minority members, one African American and the other Latina; seven members are female and seven members are male. The FC did not have specific diversity training during 2007.
The FC’s focus for 2008 will center on the refinancing of some or all of our long-term debt given the interest rate market trends, and will focus on the development of the 2009 Preliminary Budget to go to Council in August 2008 for approval.