Yearend Closeout Procedures

1. Yearend Closeout Procedures • Wing Administrators are key in assisting WFAs with yearend closeout • Yearend closeout is an extremely time consuming process and Wing Administrators can help reduce the amount of time WFAs must devote to this process • The following slides show problem areas where additional time is often spent sorting out details

2. Certificate of Deposit Information • Documentation is required for all Wing and Unit CDs • Documentation must show that CD is open as of 9/30 • Documentation must show balance at or near 9/30 and maturity date. Renewal notices are not acceptable since they do not prove that the CD was actually renewed • Documentation includes bank statements, bank CD reports and bank CD account query screenshots

3. Form 171 Unit Commander’s Certification • Unit commanders must complete Form 171 in eServices between 1 October and 30 November • The Form 171 Completion Report is required and is included in the audit files submitted to our auditors • Wing Administrators should monitor the report and follow up with units that have not complied • In eServices go to Member Reports and select Form 171 Completion Report to review compliance

4. Contributed Facilities – Real Property Report • WFAs use the Real Property Report to record contributed facilities as non-cash contributions • Wings and units are required to complete the report by 12/30 • Wing administrators should monitor unit compliance by reviewing reports in ORMS • In ORMS select Reports – Real Property – F174 Real Property Year End Report – Select Unit and check View Unit Only • Notify WFA if duplicate entries are noted. NHQ must delete

5. 1099 Reporting • CAP is required to issue Form 1099 to certain vendors • Wing Administrators are provided a spreadsheet to complete • Reporting is calendar year, not fiscal year • Spreadsheet should include unincorporated vendors providing services that received $600 or more for awards, services and rent. Include attorneys regardless of amount • Typical vendors are caterers, landscapers, cadets receiving flight scholarships, janitorial service and rental landlords

6. 1099 Reporting Continued • The best way to tell if a vendor should receive a 1099 is to get a completed W-9 from the vendor • QuickBooks provides a convenient method to track 1099 vendors and will make yearend reporting quick and easy • In the Vendor Center go to tax settings and select Vendor is eligible for 1099. A yearend report can be produced • Common reporting errors include listing C corporations, listing vendors we purchased merchandise from and not listing cadet flight scholarships

7. Intercompany Reconciliation • Intercompany accounts are 65 revenue accounts and 95 expense accounts. The two account groups must balance in order to be eliminated at yearend • All wings should have an Intercompany memorized report to determine if intercompany transactions are in balance • For more information review Intercompany Transaction Posting PowerPoint in Wing Administrators Toolbox

8. Lease Information • Wing lease information must be included in yearend audit files. Wings have a Leases folder in SmartVault • Copies of all leases should be in the SmartVault folder • Needed lease information includes type of lease (land, facility, equipment etc.) along with the lease term and payment amount

9. Memorandum of Understanding (MOU) • Wings receiving state funding should have an MOU agreement from their individual state • MOUs are normally considered contracts and must be signed by the Civil Air Patrol Chief Operating Officer • Wings should have an MOU folder in SmartVault where all MOUs need to be stored • MOU effective dates should be reviewed occasionally to ensure they are still valid. • Copies of MOUs are included in yearend audit files

10. Capital Assets • Capital assets are significant items with a purchase cost exceeding $5,000 and having a useful life greater than one year • We capitalize these assets and depreciate them over their useful life as opposed to expensing them in the current fiscal year • Capitalization also includes increasing the value of an existing asset such as an addition to a CAP building • Notify your WFA anytime you question whether or not a purchase should be capitalized

11. Yearend Deposits/Undeposited Funds • We do not want uncleared deposits on our September bank reconciliations or undeposited funds on the September balance sheet. Undeposited funds cannot be audited • Avoid recording deposits including receive payments at the end of September when they won’t appear on the bank statement until October. Record them in October

12. Miscellaneous Income & Expense • Review transactions posted to miscellaneous income (5415000) & miscellaneous expense (9302000) • Most transactions can be posted to a regular income or expense account • WFAs repost numerous miscellaneous transactions at yearend. Most are attached to an activity or event

13. Restricted Contributions • Only a donor may restrict a contribution. If not restricted by the donor it is unrestricted. CAP may designate but cannot restrict a contribution • If a restricted contribution will be used completely in the current fiscal year it should be recorded as an unrestricted contribution • Restricted contributions must be tracked from receipt through completed usage for the restricted purpose • Restricted contributions that will span 2 or more fiscal years should be assigned a unique class to track the remaining balance. All income and expense associated with the contribution should use this class • Restricted balances are posted to net assets on the yearend balance sheet

14. Payments Made In First Quarter • At yearend WFAs review payments made during October, November and December to ensure the expense being paid is posted to the correct fiscal year. We call this our subsequent payments audit test • WFAs normally make several corrections but wing administrators can assist by ensuring bills are dated in the correct fiscal year • Bill dates should be the date CAP became obligated to pay the expense, normally the date of purchase or the date the service was received. The bill date posts the expense date • Bill payment date should be the actual date the bill is paid. Bill payment date has no impact on posting the expense date

15. Summary WFAs are familiar with and have adapted to being very busy at yearend closeout time. The items discussed in this presentation are areas where wing administrators can assist with the accuracy and efficiency of yearend closeout. The purpose of this presentation is not to make life easier for WFAs. We know wing administrators strive to do things correctly and hopefully this information will help. If topics addressed seem confusing, do not hesitate to contact your WFA for clarification.