February 15, 2011

Asset allocation changes, aligning asset allocation decisions with overall finance goals and decreasing volatility top the list of 10 investment priorities during 2011 for nonprofit executives and investment committee members.

According to a recent poll conducted by SEI’s Nonprofit Management Research Panel, 82 percent of respondents said making asset allocation changes focused on downside risk protection was a priority in 2011. SEI is a provider of outsourced asset management, investment processing and investment operations solutions and based on Oaks, Pa.

At the Federal Reserve Bank in lower Manhattan, machines have been installed in the cafeteria. They dispense one napkin and one piece of plastic ware at a time. No longer is the supplier simply dumping napkins and forks, spoons, and knives into big buckets for the employees to take whatever they want.
 
“Money had to be saved,” said Michele Lamourt of the Fed’s Analytical Support Unit. “We used to be able to grab a bunch if we wanted to, no longer.” In fact, the cafeteria has stopped subsidizing the food. Contracts have been renegotiated so that employees now have to pay normal prices. “It’s double the cost of what we used to pay,” she added.

In the for-profit world over at Ross Stores’ corporate headquarters, Sarah Nagel, senior buyer, reported that in the office supplies area, contracts have been renegotiated with vendors to supply off price/brand products. “As a result, we are only allowed to buy products for which we have a special contract. So, there are few styles of pens, pencils, notebooks, and the like.”

ARRA. It sounds like something actor Robert Newton would say when playing pirate Long John Silver, but it stands for the American Recovery and Reinvestment Act.

Speaking during the recent AICPA Not-For-Profit Financial Executive Forum, Kimberly McCormick of Grant Thornton LLP related several early findings about ARRA funds and the auditing attached to them.

McCormick said the objectives of a single audit were to determine the financial statements are presented in accordance with Generally Accepted Accounting Practices (GAAP), determine the Schedule of Expenditures of Federal Awards (SEFA), determine if the entity has complied with direct and material compliance requirements and understand and test the operating effectiveness of internal controls over compliance over each major federal program.

There were problems attached to the single audit, however. They include:

* Internal controls were not adequate to ensure ARRA funds were properly reported.

* Internal controls were not adequate to minimize excess unspent balances of ARRA funds at the grantee and sub-recipient levels.

* Internal controls were not adequate to ensure ARRA expenditures were allowable.

* Procurement internal controls were inadequate.

* Internal controls were not adequate to ensure eligible goods and services were provided to eligible individuals and entities.

* Auditees were not providing sub-recipients with timely information about federal award requirements, increasing the risk of noncompliance with grant terms.

* Internal controls were not adequate to ensure accurate and timely reporting.