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**Pennsylvania Wing**

**CIVIL AIR PATROL**

**WING BANKER SOLUTION FOR UNITS BELOW WING LEVEL**

**November 2006**

**PAWGM 173-1, PAWG Supplement to CAPR173-1**

This publication was developed to inform the units below wing level of
the procedures in implementing the Wing Banker Solution. It was
developed by the financial management staff at Pennsylvanian Wing, Civil
Air Patrol.

Any comments or suggestions should be directed to your Wing Finance
Officer or Wing Accountant.

**WHY ARE WE DOING THIS**

Civil Air Patrol, Inc. has received only qualified annual audit reports
from their outside audit firm. The reason for the qualification is that
the financial statements do not include the accounts and financial
transactions of units below wing level, meaning that funds at units
below wing level are not audited. These unaudited funds are considered
material in relation to the entire corporate total of audited funds. An
unqualified audit will result in additional opportunities for funding
for the entire corporation. In addition, an unqualified audit will
result in greater accountability and consistency and will increase the
confidence and trust of Civil Air Patrol members, government entities
and the public. The Board of Governors unanimously approved the Audit
Committee recommendation that Civil Air Patrol obtain an unqualified
audit within three years. This goal has also been approved by the
National Executive Committee. In order for an unqualified opinion to be
obtained, either all the units below wing level need to be audited (at a
cost of over 5 million dollars) or something else needed to be created.

In 2005, Virginia Wing developed a plan to solve the problem. They
decided to ask their units to close out all their bank accounts and send
the money to wing HQ. Wing HQ would open a separate checking and savings
account into which the unit monies would be deposited. The advantages of
the wing acting as the "banker" for the unit's monies include obtaining
an unqualified audit opinion, all accounting being on the accrual basis
(units below wing level are on the cash basis), all funds being audited,
and better reporting. This solution eliminates the need for financial
recordkeeping at the unit level, which in turn eliminates the need to
consolidate all units below wing level at year-end. It also relieves the
burden on unit finance officers for reporting, writing checks, and
reconciling the bank account each month.

While there is no recordkeeping requirement at the unit level under the
new system, the unit finance committee continues to play an important
part in the financial process. Wing will not pay bills on behalf of the
unit until they receive the required approvals. The requirement for
approvals of two finance committee members for expenses over \$200.00
continues. Approvals may be obtained via mail, fax, or e-mail. There
will be better accountability because payments are correctly authorized.
Wing will not "float" funds for a unit if it does not have enough money
in the bank. The unit will be required to deposit enough money to cover
an outstanding bill before it will be paid. The unit must continue to
account for all income deposited in the bank. If the wing uses a bank
with branches around the state and the unit makes deposits locally, the
unit must ensure that wing knows which unit made the deposit and to what
income accounts the money should be posted.

The Wing Banker Solution offers a viable resolution to the qualified
audit opinion. It will also end the problems encountered by the wings
doing the consolidated unit report at year-end since this reporting
requirement will be eliminated. The inconsistency and inaccuracy of the
unit reports will cease to be a problem at all levels of CAP. The
problem of different accounting methods will also disappear. Units will
now be on the accrual basis of accounting just like the wings, regions
and NHQ. The Wing Banker Solution has been endorsed and mandated by the
Board of Governors and will be phased in over a three-year period.
Beginning October 2006 Pennsylvania Wing will be actively participating.

The Pennsylvania Wing is one of the first large wings implementing this
system. While the workload may increase, the Wing Accountant, an
integral part of the process works at wing HQ every day and can process
transactions on a timely basis. We look forward to a successful
conversion.

**WHAT SHOULD WE DO FIRST?**

**A Plan and Timetable have been developed by the PA Wing Finance
Committee**

-   All units will be notified by a conference call on September 12,
    2006 at 1930 hours.

-   PA Wing will be using PNC bank for all transactions.

-   PA Wing has a separate checking and savings account that will be
    used only for the units below wing transactions.

-   All units will need to submit PAWGF 173-FC this form will list the
    members of their units finance committee along with their signatures
    for check request approvals purposes by September 25, 2006.

-   All units will be issued deposit slips with in the next 2 weeks
    along with Check Request and Deposit Remittal forms.

-   PA Wing Accountant has already created the necessary sub-accounts
    and classes be created in QuickBooks®.

-   All units must send a check(s) closing all bank accounts to PA Wing
    Headquarters by September 25, 2006. (Make sure you leave enough
    money in the account to clear all uncashed transactions.)

-   Any funds not received by PA Wing Headquarters by September 30, 2006
    will require special reporting to National Headquarters by the units
    in the next fiscal year.

-   The Units 2005-2006 CAPF 173-1 needs to be received at PA Wing
    Headquarters by October 23, 2006.

-   The final bank statement closing all accounts must be sent to PA
    Wing Headquarters by November 15, 2006.

-   This document contains the procedures for processing income and
    expenses, as well as periodic reporting to the units. This document
    is not complete it is a working document. It will be revised and
    developed as we all work together through this first year.

-   If units have certificates of deposit these accounts **should not be
    closed.** Most certificates of deposit or some investment accounts
    have penalties for early withdraw. These need to be identified and
    reviewed with the Wing Finance Director individually prior to
    September 30, 2006. The address of the account needs to be changed
    to The Pennsylvania Wing Headquarters, Building 3-108 Fort
    Indiantown Gap, Annville PA 17003, by September 29, 2006, for proper
    accounting. In addition, the signers will have to be updated to
    include the signers from the PAWG finance committee. When the
    accounts mature the units finance committee along with the PAWG
    finance committee will collectively make the decision on future
    investment of these accounts.

-   Each unit needs to maintain their finance committee. This committee
    will develop the unit's budget, authorize payments and make
    deposits.

-   Every unit will receive a monthly accounting report of all their
    funds by the PA Wing Accountant. This report must be reviewed for
    accuracy every month by the units finance committee.

-   Units are not authorized to have a petty cash fund.

Please send any questions by e-mail to the PA Wing Finance Director,
DeEtte Riley at <driley@awandsons.com>. The more questions you ask about
the plan, the smoother the transition. This program is mandatory, not
voluntary. Separate bank accounts and periodic reporting will be used.

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**The New Unit Bank Account**

PA Wing has opened a checking account at PNC Bank. We will also open a
savings account for all units if necessary. Units with savings accounts
are asked to contact the Director of Finance. If there is already an
account out there with a good interest rate, we may be able to adopt
that account for all units. The PAWG Staff and Finance Committee did an
extensive search on all regional banks in PA, locating all their
branches then matching them up with all the unit locations. The research
concluded that PNC Bank had the most branches located within 10 miles of
98% of all the present units in PA. If any unit has a problem with being
able to deposit money into this bank please notify the PA Wing Finance
Director immediately to evaluate alternatives. Deposits can always be
mailed to PAWG HQ as well.

Any unit's certificates of deposit (CD) or some investment accounts
(other than savings accounts) may be maintained to avoid penalties. The
money must be recorded in QuickBooks® at the wing level, though. The
unit must change the address to PAWG HQ so the bank statements or
brokerage statements come to PAWG HQ so that interest and any other
transactions are properly recorded. The unit may also allow a CD to
mature and move it to the new bank. If the CD is allowed to stay in the
unit's local bank and is not moved to the new wing bank, the mailing
address and signatures must be changed to PAWG HQ. Any withdrawals from
the CD or brokerage accounts must have proper approvals and must be done
through PA Wing HQ.

## 

## What is the Unit's Role?

## 

Each unit must maintain a finance officer and finance committee as
required in CAPR 173-1. The unit finance officer, the unit commander, or
a designated finance committee member must initiate and approve any
expenses under \$200.00. This approval may be accomplished on the Check
Request Form PAWGF 173-C. If the expense is over \$200.00, then a
majority of the finance committee must indicate approval with
signatures.

The unit finance committee must continue to function and record minutes.
All approvals should be noted in the minutes. Any electronic approvals
should also be attached. The unit finance committee should continue to
develop a budget to help manage the unit's finances. They must also
monitor their income and expenses to help verify that wing has recorded
everything correctly. This will be done by reviewing the monthly reports
that will be sent to each unit by wing HQ.

The unit needs to ensure that all their bank accounts are closed and the
money is forwarded to wing within the allotted time period. The final
CAPF 173-1 and a copy of the bank statement showing a zero balance also
needs to be sent to wing by the November 15, 2006 deadline. Once this
report is accomplished, the unit will never have to complete this report
again.

The unit needs to ensure that all bills are forwarded to wing in a
timely manner. If the mailing address for approved reoccurring bills is
changed to wing HQ, then the unit needs to authorize wing to pay those
bills on a recurring basis through a recurring expense authorization. An
example of a unit recurring expense policy PAWGF 173-R is attached in
the Examples section. The address on these bills must include the unit
charter number.

The unit needs to either make their deposits at the designated bank or
collect the checks and send them to wing HQ. The proper accompanying
forms need to be filled out correctly and in a timely manner so that
wing HQ knows which unit is involved, what accounts to debit or credit,
and the source and purpose of the funds.

The unit will continue to be responsible for following fundraising
procedures as required in CAPR 173-4. These procedures require the wing
commander to approve all fundraising requests. In addition, the unit
must provide an accurate accounting of funds raised to wing HQ.

The unit finance committee continues to play a very important role and
is crucial in the management of the unit's financial transactions. The
only difference is that wing is now their bank, their accountant, and
their reporter. The units should also be reassured because wing HQ is
audited every year, by an outside accounting firm and the wing financial
analyst.

**HOW DOES WING HANDLE THE ACCOUNTING?**

**Receiving Income**

When wing HQ receives the initial funds from the units it will be posted
as separate deposit for each unit. Each unit will have a separate sub
account.

After the initial funds are received at PAWG the units may make the
deposit directly to the bank:

-   When anyone is writing a check to your unit it should be made
    payable to: PAWG CAP Unit PA\_\_\_\_ (your unit charter number).

-   The unit must send the a copy of deposit slip and a Deposit Advice
    form (PAWGF 173-D) to wing HQ so that the proper entries can be
    made. The PAWGF 173-D can be found on the PA Wing Web Site and can
    be locally produced or electronically form filed and printed on your
    computer.

-   The unit will specify names and account numbers from the standard
    chart of accounts or just describe the transaction in plain language
    with enough detail so that the proper account numbers can be
    identified.

-   If two or more units are participating in a fund raiser a separate
    deposit transaction must be accomplished for each unit. You cannot
    group different unit deposit. If you only receive one check for the
    event the entire check will need to be deposited into one of the
    units accounts and check will need to be written from this unit to
    the other participating unit(s).

-   If the unit sends the checks to wing to be deposited the unit still
    needs to send a Deposit Advice form PAWGF 173-D. Wing must do a
    separate deposit for each unit so that each unit's cash sub-account
    receives credit for the deposit. All entries on the deposit must be
    classed.

-   Make sure you written the units charter number on every document.
    This will help insure that all transactions are posted correctly.

-   Copies of all deposits slips and checks should be kept for
    reconciliation of your units account.

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**Paying Bills**

The PA Wing will ensure that all necessary approvals have been obtained
before paying any bills.

Submitting unit bills to PA Wing HQ:

-   All bills must be submitted on a PA Wing Check Request Form PAWGF
    173-C or a Recurring Expense Form PAWGF 173-R with proper approval
    before any bill can be paid. A copy of the original
    receipt/invoice/bill must accompany all forms. Electronic submission
    is authorized (e-mail scans or faxed).

-   Recurring Expense are invoices that units are paying on a routine
    basic i.e. phone, electric, rent. The address of these invoices
    needs to be changed to PA Wing HQ, the unit charter number must be
    added to the billing name, and the PAWGF 173-R needs to be completed
    each year.

-   The unit finance committee must authorize all expenses over \$200.00
    in writing. Under \$200.00 can be authorized by the unit commander
    or one of the approved members of the unit's finance committee.

-   Original receipts and PAWGF 173-C or 173-R must filed with the units
    finance paperwork.

-   Make sure you written the units charter number on every document.
    This will help insure that all transactions are posted correctly.

-   Copies of all check request including bills and/or invoices should
    be kept for reconciliation of your units account.

-   Time sensitive expenses can be e-mailed or faxed to PA Wing HQ.
    <capfm@bigbrain.net> Fax 717-871-2164.

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**Reconciling the Unit Checking Account**

The PAWG accountant will reconcile the accounts every month.

The PAWG accountant may find discrepancies with account, i.e. a deposit
of which we have no record. This might occur when the units make
deposits locally, and for some reason PAWG does not receive record of
the deposit. If this occurs an e-mail will be sent out on the commander
list server listing the date and amount of the deposit and asking to
whom it belongs. The claiming unit of the deposit will need to mail the
deposit slip and Deposit Advice form PAWGF 173-D so they may receive
proper credit.

After the reconciliation is complete each unit will be e-mailed a
statement that the units finance committee must review and approve. The
units should keep copies of all transactions; (deposits and
bills/invoices) should be kept for reconciliation of your units account.

If the unit finance committee finds any discrepancies with the unit
account statement e-mail the PAWG accountant <capfm@bigbrain.net> as
soon as possible with all details discrepancy so correction can be made.

**Unit Savings Account**

**Interest**

Unit savings account, if a unit has funds that are not budgeted to be
used for more than 6 months. The unit can request that the funds be
transferred into the unit saving account where the unit will receive
interest every month in the units account.

PAWG will be absorbing all the mailing cost, checks, deposit slips, and
accounting fees.

Any unit that wants to invest in a CD or other investment need to
contact PAWG Finance Committee to review options and open an account.
Local suggestions are encouraged.

**Questions**

Any questions can be e-mailed to:

Maj DeEtte Riley, PAWG Director of Finance <driley@awandsons.com>

Mr. Phil Richardson, PAWG Accountant <capfm@bigbrain.net>

Lt Col Robert Meinert, PAWG Executive Director <rlmeinert@forcomm.net>

Or call PAWG Headquarters at 717-861-2335, DeEtte Riley home number
after 8 PM 814-632-8341.

PAWG HQ Fax: 717-861-2164

Pennsylvania Wing Headquarters

Building 3-108

Fort Indiantown Gap

Annville PA 17003

**Glossary of Accounting Terms**

**Auditor Opinion -** The auditors opinion is the most important part of
the [[audit]{.underline}](http://moneyterms.co.uk/audit/) report that is
provided on company accounts.

The auditor will give an opinion that is
[[unqualified]{.underline}](http://moneyterms.co.uk/unqualified-audit-opinion/),
[[qualified]{.underline}](http://moneyterms.co.uk/qualified-audit-opinion/),
[[adverse]{.underline}](http://moneyterms.co.uk/adverse-opinion/) or
that there is a fundamental uncertainty. A fundamental uncertainty means
that the auditor is unable to express an opinion.

A disclaimer of opinion is issued when the auditor is unable to express
an opinion. An auditor may draw investors attention to a fundamental
uncertainty, but this does not necessarily mean that the audit is
qualified.

**Unqualified Audit -** If there are no problems found during an audit,
the auditor will state "in our opinion the financial statements give a
true and fair view..." Such an [[audit
opinion]{.underline}](http://moneyterms.co.uk/auditors-opinion/) is
given when there has been no limitation on scope and the auditor agrees
with the treatment and
[[disclosure]{.underline}](http://moneyterms.co.uk/disclosure/) of
information the financial statements.

The accounts of listed companies are almost always given an unqualified
opinion on the audit report, as potential problems will be identified
and dealt with ahead of the release of the financial statements.

**Qualified Audit -** Qualified Audit A qualified [[opinion is given in
the auditors'
report]{.underline}](http://moneyterms.co.uk/auditors-opinion/) if there
is a limitation on scope or if the auditor disagrees with the treatment
or [[disclosure]{.underline}](http://moneyterms.co.uk/disclosure/) of
information in the financial statements. Except for the qualification of
a particular issue, the rest of the financial statements will give a
true and fair view.

The accounts of listed companies are rarely qualified and it would
seriously undermine confidence in the management if they were.

**Accrual Accounting -** An accounting method that measures the
performance and position of a company by recognizing economic events
regardless of when cash transactions happen.

Notes: The opposite of this is cash accounting, which recognizes
transactions only when there is an exchange of cash. But under accrual
accounting, for example, if you buy a stereo on credit, the company you
buy from would still recognize the event as a transaction.

**Cash Accounting -** An accounting method where receipts are recorded
during the period they are received, and the expenses in the period in
which they are actually paid.

Notes: Basically, when the cash is received for a sale, it is recorded
in the accounting books as a sale. This is in contrast with accrual
accounting, where revenue and expenses are recorded when they are
incurred.