STATUS REPORT
FINANCE/M.I.S. DIVISION Regional Office - Zurich
Effective October 1, 1989, the responsibility for processing the financial and most of the administrative records for European clubs was transferred to
Indianapolis. The M.I.S. staff wrote the computer programs required to handle the invoicing, accounts receivable and membership record keeping for Europe.
The completion of this assignment means that all records are now centralized on the Nixdorf computer system in Indianapolis.
Considerable testing was performed in advance of the conversion in order to reduce the number of problems needing resolution, but, as is the case with almost all major computer conversion efforts, there are still a few bugs to be worked out in the new systems.
In addition to the new or revised computer programs and documentation, there are several other systems components necessary to fully implement the complete
system. This included written procedures for the staff in Zurich and new forms that are compatible with the revised system and with the forms used by Kiwanis International.
Two members of the Kiwanis International staff in Indianapolis visited the
Zurich office in late October - early November for two purposes. First, the new Zurich office staff required training and orientation on the new forms and pro- cedures to be implemented. Secondly, the accounting records for the fiscal year 1988-89 had to be finalized for the auditors. It is interesting to note that our auditors, Ernst & Young, did not require that a local audit be con<lucte<l in Zurich. They were willing to accept the records prepared by our Indianapolis staff.
During the visit to Zurich, the following work was performed:
1. Completed the summarization of the 1988-89 cash receipts due to Kiwanis International from the Federation.
2. Test counted and verified year-end supplies inventory quantities and costs.
3. Summarized year-end cash disbursements, accounts payable, expenses and income for posting to the Kiwanis International general ledger.
4. Reconciled year-end bank balances and petty cash.
S. Completed the summarization of the 1988-89 expenses to be reimbursed to the Federation by Kiwanis International.
6. Prepared written procedures for reporting cash receipts, cash disbur- sements, membership changes and supply orders to International Head- quarters.
7. Established supplies items retail prices consistent with actual Kiwanis International guidelines and practices.
8. Reviewed year-end financial statements for Kiwanis International and the European Federation and recorded audit adjustments. These adjust- ments will be reviewed and finalized with the Federation Board and
their auditors on November 28-December 1, 1989.
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Numerous changes in both the Kiwanis International and Federation staff have occurred since the October Board Meeting. The Kiwanis International staff now consists of the manager of the Zurich office, Rene Chapuis, one full-time assistant and two part-ti~e clerical personnel. One additional part-time
employee is required to complete the staff and a search is now underway. Prior to the separation of the offices, the previous staff consisted of three full- time and three part-time personnel, sometimes four.
The General Secretary of the Federation decided to take early retirement as of October 31, 1989. Termination provisions are now being negotiated thru an attorney in Zurich. With the assistance of the Kiwanis International manager, one part-time employee has been hired by the Federation and a search is underway for a qualified full-time staff member. Until such a person is hired and
trained, this vacancy will place an extra burden on the Kiwanis International staffo Kiwanis International has agreed to assist the Federation until their personnel situation is resolved.
The next few weeks and months will be critical in identifying problems resulting from such a major change. Staff will have to react as quickly as possible to assure continuation of quality services to the clubs and districts in Europe.
Kiwanis International and the European Federation have been advised that the five-year lease which expires on March 31, 1991, will not be renewed. This is a matter of concern to both organizations and the Federation Board will be
discussing a possible new location at their meeting in February. Kiwanis Inter- national staff will begin investigating alternatives and report results to the board in the near future.
Staff will be preparing a detailed report on the payment of dues by European clubs. It appears at this time that payments in certain districts may not be in compliance with procedures. It is possible that some European Governors have instructed their clubs to send payments to the district rather than to the Kiwa- nis International Regional Office in Zurich.
Manila, Philippines Office
Efforts continue toward eliminating the long-standing difficulties with mem- bership and financial reporting from the clubs in the two districts in the Phi- lippines. Several new processes and procedures have been established recently which will result in improved reporting by these clubs.
A small new Kiwanis International office is being shared with the district
office of the Philippine Luzon District. Leo Espinoza, past district secretary, has been hired as the Kiwanis International fiscal agent on a part-time basis to handle the financial and administrative duties of this new office.
The method of preparing semi-annual billing for clubs in the Philippines has been revised to make it easier for clubs to understand and pay for dues and pro- cessing fees. Clubs are now being billed in Philippine pesos. Clubs also
received rosters of members and return envelopes permitting them to send their payments directly to the new office in Manila. The new fiscal agent will submit semi-monthly reports to Kiwanis International in Indianapolis. f
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A facsimile machine has been ordered and installed. This will help improve com- munications with the Kiwanis International fiscal agent and the leaders of the Philippines districts. Staff has redesigned forms and is modifying procedures
in order to assist the clubs with their problems.
The Director of Field Service Operations for this region, Korath Norin, recently visited this office and held discussions with those involved. The general
feeling is that the changes being implemented will result in improved service to the clubs in these districts.
Staff will be preparing further written procedures for the new fiscal agent which will include a revised method of handling the bank accounts, procedures for regular submission of rosters, official monthly reports and other Kiwanis International required reports.
The removal of the financial and administrative responsibility from the field service representative, Bill Santos, will allow him more time to spend on building quality clubs as well as improving communications with district and club leaders.
Semi-Annual Billing
The accuracy of the paperwork submitted by clubs continues to improve with each semi-annual billing cycle. This is the result of the continuing education being provided by district leaders. This effort by the district leadership is very beneficial to Kiwanis International and their help and assistance is recognized and appreciated.
The number of clubs reporting a higher number of members at September 30th than eventually paid for continues to remain at about the same level, 3-4 percent.
These clubs are billed for these differences which often results in correspon- dence from these clubs. One common problem is that they don't "understand"
why they are required to pay for the number of members reported on the September 30th Official Monthly Report. In spite of this problem, it is cle~r that the revised method of billing is considerably improved from the previous method.
At the time of writing this report, the significant portion of the October 1, 1989, semi-annual dues billing has been received. Total collections through November 15, 1989, and comparable periods for previous billing periods are as follows:
Billing Data
Total Amount Billed Number Members Certified Number Active Clubs November or May 15th Total Collected Number Clubs Paid Percent $ Paid
Oct. 1, 1989
$4,061,134 291,408 7,579
$3,459,216 5,997 85.2%
April 1, 1989
$3,625,437 290,462 7,367
$3,050,035 5,735 84 .1%
Oct. 1, 1988
$3,670,834 287,744 7,391
$2,958,847 5,740 80.6%
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The above figures do not include the clubs in Europe at this time. Since the first billing for Europe was just completed in Indianapolis, reports in the future will also include the European figures.
These figures represent a small increase in the number of clubs paid at this time.
Desk Top Publishing
Since installing the Ventura desk top publishing software a little over a year ago, over 50 forms and reports have been produced using this new technique. The present equipment does an acceptable job of producing professional looking
results. The new model 386 computers will be significantly faster and the new laser printer results will look even better.
Much of the work being done in-house using desk top publishing software was pre- viously done on typewriters. The difference in quality between these two alter- native is enormous. Some of the work now being done was previously done by professional typesetting firms. The cost savings resulting from using this method is considerable and every effort should be made to expand on this poten- tialo
As staff becomes more experienced with the various software packages and
methods, the quality and quantity of the work being produced internally should increase accordingly.
MANAGEMENT INFORMATION SERVICES Convention Registration System
Significant enhancements have been or will be to be made to this computer appli- cation. The regular programs have been modified to reflect the new registration fees, assign superstar tickets by section and date and do in-house printing of name badges using a personal computer and laser printer. This latter feature can save Kiwanis International about $6,000 per year compared to the previous method.
The system has been especially modified to permit registration for the 75th Anniversary Celebration in Detroit. In completing the changes, the programmers were also implementing changes required to develop a ~onvention registration for district conventions. Some further work is required to complete this process.
When this system is completed and the micro-mainframe linkage is operational, a district test site will be selected to pilot test this package. Several
districts have previously expressed an interest in this new package.
The final modification to this application involves development of a module for automating the credentials process. A preliminary design has been worked out, the basic forms have been designed and programming effort is now underway. It is anticipated that this system will, like the regular and special registration modules, interface with the membership system. Once completed, these programs will utilize the membership database and automatically check to assure not only the accuracy of the information provided, but also assure that the member and club are correct and in good standing.
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Completion of this system will provide three major advantages to Kiwanis Inter- national. First of all, the overall financial and administrative control of registration and the credentials process will be significantly enhanced. Every dollar and every process can be monitored and accounted for. Secondly, the cost compared to any other method will be lower. This is especially true of the pre- vious manual method and personal computer packages. Finally, the speed with which these tasks can be performed will also be significantly improved. The speed of computer processing and high-speed printing on the mainframe are just two examples of this improved efficiency.
Micro-to-Mainframe Link
The necessary hardware and software devices have been installed and are opera- tional. The first District has agreed to be the initial test site and that effort should begin following their mid-winter conference in February.
As a result of a request from the European Federation Board of Trustees, the micro-to-mainframe method was utilized to download club and officer information from the Nixdorf computer to a personal computer. A diskette was then edited and shipped to a printer in the Netherlands. By the time of the January Board Meeting, the printer will have produced 23,000 of the small European Direc-
tories, one for each member in Europe.
This method of downloading data from the mainframe to personal computers will also be used extensively internally. One such file was prepared for the Mem- bership Department to prepare personalized letters to KIARS, Lt. Governors, etc.
Significant additional uses will be made of this technique.
New Office Automation Equipment
Following approval by the Board of Trustees, staff ordered and received several personal computers including two high speed units to be used primarily for desk top publishing. These two units also have expanded capacity laser printers for improved quality printing.
Also received and installed are eight Nixdorf terminals, two Nixdorf printers and data moderns for future district office linking.
FINANCE Budget Process
Following approval of the 1989-90 budget at the October Board Meeting, each department head prepared the twelve-month spread for each line item in the budget. This is necessary to compare the actual financial results on a monthly basis. The department heads also revised the final 1989-90 Operational Plan to conform to the approved budget.
The process of preparing the 1990-91 budget and operational plan is now under- way. Staff will present the first version to the appropriate board committees in January.
In order to assist the Finance Committee in its review of the proposed budget, staff will be preparing a budget summary report. The format to be used for this report was approved at the June, 1989 Board Meeting and follows the format
suggested by the past-president counselor to the Finance Committee.
Annual Audit
The auditing firm of Ernst & Young has completed the audit for the 1988-89 fiscal year for Kiwanis International, Key Club International, Circle K Inter- national and the Kiwanis International Foundation. The final audit reports and the management letter will be ready for review by the board in January.
This completes the three-year agreement made with Ernst & Young. At the January meeting, new proposals will be presented, both from the current auditors and two-three other firms.
Again this year staff prepared and made available to the auditors an expanded number of account analyses. In addition, the significant decrease in the number and dollars of accounts receivable balances of clubs has made the work of the auditing firm easiero This should help keep the future cost of the audit as reasonable as possible.
Reduction in Bad Debts
As a result of the implementation of Procedure 319 and efforts by staff to clear up club credit balances, the amount of expense charged to bad debts will be lower for the fiscal year ending September 30, 1989.. The amount of Kiwanis International bad debts for dues is $43,738. However, this is offset by dues recovery income of $49,766 which reflects amounts previously charged to the allowance for bad debts. Future amounts charged to bad debts are likely to be lower than the amount recorded this year.
SUPPLIES Sales, Cost of Sales, and ExEenses
Pre-Audit
Actual Actual % Increase 1988-89 % Over/
1987-88 1988-89 (Decrease) Budget (Under) Total Sales 2,175,426 2,198,284 1.1% 2,197,700 0.0%
Total Cost of Goods Sold 1,312,742 1,353,046 3.1% 1,357,080 0 .3%
Gross Surplus 862,684 845,238 (2.0%) 840,620 0.5%
Total Expenses 555,965 465,160 (16 .3%) 491,227 ( 5 .3 % )
Net Surplus 306,719 380,078 23 .9% 349,393 8.8%
The 1987-88 sales figure includes approximately $46,000 in Canadian sales pro- cessed at the International Office, but shipped by McLeans, the Canadian distri- butor. Under the new licensed distributorship agreement, McLean's sales are not
reported in the 1988-89 total shown. Therefore, 1988-89 sales were reported as budgeted but 3.2% higher than the prior year.
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The 1988-89 net surplus is considerably higher than last year. This is due pri- marily to the increase in customer shipping charge revenue. Also contributing
to the improvement were reduced promotional expenses and a modest savings in department salaries due to open positions and lower overtime. These same fac- tors contributed to the improvement over the 1988-89 budget.
Canadian Supply Royalties
The contract agreement for supply sales in Canada with the McLean Company in Toronto continues to be successful since its renewal in May 1988. The Kiwanis clubs in Canada are quite pleased with this arrangement. Sales by McLean have increased from approximately $29,000 in May through September 1987-88 to $70,980 in fiscal year 1988-89. Since the agreement calls for a 10% royalty payment to Kiwanis International, McLeans has paid $7,098 for the 1988-89 fiscal year.
Due to the time required to record and send sales and royalty information to Indianapolis, the cut-off is somewhat earlier for McLean than for Kiwanis Inter- national. Subsequent to the year-end cutoff, supplies has received two addi- tional monthly checks totalling $1,719 which means Canadian sales for 1989-90 are off to a good start at $17,190.
Part of the agreement with McLeans is that we can periodically review the sales and financial records in their office. Since considerable enhancements are planned in the computer programs for the Supply Department this year, it is likely that procedures used by and with McLean will be considered as well.
Staff may visit their office for the purpose of general review and consideration of improving the data communications between McLean and Kiwanis International.
The design used for this arrangement could be emulated if other distributorships are utilized in the future.
District Convention Sales
Kiwanis supply items are made available to all interested U.S. districts and selected U.S. Key Club districts for display and sale at district conventions.
As an inducement to have a supply booth at these conventions, Kiwanis Inter- national offers a 15% sales commission to the district.
This year 17 Kiwanis districts offered this service to the clubs and members.
This compares to 16 for the previous year. The total sales, however, increased by $6,000 from $29,000 to $35,000.
The number of Key Club districts using this service increased from 8 in 1987-88 to 12 in 1988-89. Again, the total sales increased from $5,500 in 1987-88 to
$10,900 in 1988-89. This is almost a 100% increase.
Staff believes this service is important to the districts and clubs and plans to continue to find ways to improve this program. Promotional material will
encourage districts to offer this service and efforts will be made by staff to improve the mix of items required or requested by districts to more closely meet
their individual needs.
New Catalogs
The 1989-90 version of the Kiwanis International Club Needs and Personal Items catalogs as well as the 1989-90 Key Club/Circle K catalogs were mailed early in October and the new prices went into effect shortly thereafter. From the impro- vement seen in the volume of orders being received, it appears these cat~logs are being very well received.
Toll-Free Fax Service
Considerable effort has gone into p·romoting the new toll-free fax number,
including publication in the new catalogs. The total number of orders received is 427 through November. In November, the number received was 137. This com- pares to 125 in October and 142 in Septembere Club and district acceptance of this new service is quite goode