It All Adds Up... 

It’s almost time...for the 

Audit! 

In our last issue, we 

proffered advice on how to 

choose an auditor. But for 

now, let’s focus on what you 

can do to actually get the audit ball rolling. 

This ball doesn’t roll uphill as some may 

think. 

Preparation for the audit 

begins a whole year in 

advance and indeed is an ongoing project. Many 

associations especially the 

smaller ones, voice the 

concern to us that the audit is 

far too expensive and involved 

an exercise for smaller operations. While 

we certainly sympathize with the expense, 

the audit is part of the cost of doing 

business and, as with any other overhead 

expense, should be factored into the annual 

budget. We all do budgets, don’t we? 

Whether the cost of the audit is factored 

into your pricing structure or it’s accrued 

over the year, it need never be a crippling 

burden. 

Forward planning always makes your 

life easier. If you keep association 

financial records current, then by the time 

the audit rolls round, you’re ahead before 

you’ve started. This paperwork should 

include: 

$ Monthly financial reports 

$ Monthly bank reconciliations and 

statements 

$ Organizational and staffing charts 

$ Payroll register 

$ Mark-up and pricing policies 

$ Credit policy 

$ Personnel policies and procedures 

$ Accounting policies and procedures 

$ Tax records 

$ Inventory sub-ledgers 

$ Investment portfolio 

$ Check register 

$ Accounts receivable and 

payable ledgers 

$ Fixed assets register 

$ General ledger 

$ Trial balance 

The Treasurer or accountant 

should have all these up to date. If you’re 

unsure about any of these, contact our 

Accounting Team at CR. 

You should ensure that all general 

journal entries have been made and 

reconcile all accounts before the auditors 

begin their fieldwork. Regarding the 

accounts reconciliation, you should 

perform at least the following steps: 

$ Review your accounts receivable with 

the thought of charging off all bad 

debts and any longstanding differences 

between your account receivable 

subsidiary and the general ledger 

control account. Also, review your 

If you keep 

association financial 

records current, by 

the time the audit rolls 

round, you’re ahead 

before you’ve started. 
allowance for bad debts and make any 

adjustments needed. 

$ Make sure your bank accounts are 

properly reconciled and consider 

writing off any checks that have been 

outstanding for a long time (at least a 

year). 

$ Reconcile your accounts payable 

subsidiary to the general ledger 

account. Any discrepancies should be 

adjusted.

$ Last but not least, bring your 

depreciation schedules up to date. 

Accomplishing the above can actually be a 

timesaver by bringing order to your 

records prior to the audit. 

Please remember, financial statements, 

audited or not, should be prepared 

according to CR’s standardized format. 

These are too lengthy to go into here, but 

check out our collective cable on audit 

guidelines. It can be found in the resource 

library on the CR website. Remember, 

audits should be conducted according to 

U.S. Generally Accepted Accounting 

Principals (GAAP) and Generally 

Accepted Auditing Standards (GAAS). 

Reminder! 

2001 Reporting Requirements 

Due 1st May 

 Association Prepared Financial 

Statements

 Audit Report with Audited Financial 

Statement and Management Letter

 2001 Questionnaire responses 

Due 1st June 

 Compliance Certification 

Due 15th August 

 Semi-annual Financial Statements 

Due 1st November 

 Assessment Payment 

New Kids on the Block!

CR welcomes three new staff members to 

the Accounting and Operations Teams

Dave Williams joined the Accounting 

Team in October 2000. A graduate of the 

University of Maryland with a degree in 

Finance, Dave brings several years of 

experience as an auditor with the 

Department of Defense to CR. Dave is a 

D.C. native and is married with three boys, 

including twins. He says his hobby is 

reading about accounting issues, but he’s 

more often seen with the sports pages. 

Greg Moore is also a D.C. native and 

joined the CR Accounting Team in April 

2000. Currently a senior at Bowie State, 

Greg is going after a Bachelor’s in 

Accounting. He is married with a newborn 

boy, Justin, and finds the GAAP only 

marginally more interesting than the Dallas 

Cowboys. 

The newest addition to the Operations 

Team is Brian Keener, formerly General 

Manager of the Community Support 

Association in Frankfurt, Germany, and 

Board Secretary to the American Embassy 

Cooperative and Welfare Association in 

Cairo. Brian brings over three years of 

employee association experience to bear at 

CR. A graduate of the University of 

Liverpool, U.K., Brian is a Foreign Service 

spouse with two young boys, Miles and 

Alex. 

Packed your bags? 
In the last issue of The CRonicle, we 

announced our plans for the 2001 

Employee Association Training 

Conference and Trade Show. The 

conference will be held in Arlington, 

Virginia at the Ritz-Carlton Hotel from 

August 27-31, 2001. A pre-conference 

icebreaker will be held on the Sunday 

evening from 7:00pm to 9:00pm. 

Attendance at the icebreaker is optional 

but it’s a great opportunity for participants 

to meet CR staff members and network 

with other attendees, as well as any 

vendors present. The conference will 

officially kick-off on Monday, August 27 

and will feature guest speakers, peer group 

and one-on-one discussions, interactive 

workshops, and a supplier trade show. 

 There is no registration fee for the 

conference. What’s more, we are pleased 

to announce that the Central Fund Board 

has approved the funding of hotel rooms 

from the Central Fund for conference 

participants. This funding will cover 

lodging expenses at the conference site for 

the evenings of Sunday, August 27 through 

Thursday, August 30. Checkout will be 

Friday, August 31 to coincide with 

conference wrap-up. To be eligible for 

this funding, participants are required to 

attend all mandatory conference sessions 

for the week. 

 Central Fund loans are available to 

cover the cost for airfare and other 

expenses to assist associations in sending a 

representative. Loans will be provided 

interest-free upon approval of the loan 

application. Please contact us if you are 

interested in obtaining a loan. 

 Seats will be limited! We encourage 

Boards of Directors to consider sending an 

association representative to the 

conference. Post officials and Board 

members are invited to attend. However, 

please be aware that the agenda will be 

geared to general managers. Although 

association accountants and financial 

managers are also welcome, advanced 

training in accounting will not be provided. 

 If you are interested in sending a 

representative to the conference or have 

any questions, please contact Conference 

Coordinator Annie Dickson by phone 

(202)663-1330, fax (202)663-1329, State 

Department email (dicksonar@state.gov), 

cable, or via the internet 

(crlogon@erols.com). Annie is also 

interested in hearing from you on the 

training topics that may be of most value to 

participants. Please send her any ideas in 

the coming month for consideration. We 

look forward to seeing you in August! 

Board of Directors’ Handbook 

The New! Improved! Board of Directors’ 

Handbook is now available on the CR 

intranet site. The handbook was recently 

updated to reflect contemporary issues and 

concerns Boards and association managers 

face in the field, including the effects of 

globalization and expanding markets. New 

and present Board members, association 

managers, post management, and all 

members are invited to have a look. 

We’re On The Web! 

 Visit our intranet site available from the 

Department’s internet explorer. Just click 

on Administration, scroll down to Office 

of Operations, and click on Office of 

Commissary and Recreation Affairs. 

There is a wealth of information to get you 

started off on the right foot. Let us know 

how we can help. You may contact the 

staff directly from our intranet site or via 

the internet (crlogon@erols.com). Access 

to the site is via the Department’s internet 

explorer. Click on “Administration M/A”, 

scroll down to “Office of Operations”, and 

click on “Office of Commissary and 

Recreation Affairs”. 
 If you have any suggestions for 

improving our site (and some of our best 

initiatives come from suggestions from the 

field) or would like assistance in finding 

guidance on a particular subject from the 

site, please contact Operations Team 

Leader Annie Dickson by phone, fax, 

email, internet (crlogon@erols.com), or 

via our intranet site. Please remember to 

include your post name (city, country) 

when contacting us. 

Cryptic Travel Quiz 

Where are these places...? 

(Answers on page 6; no fair peeking!) 

1) Capital city in denial. 

2) Said to be the Venice of the North. You 

want fries with that? 

3)Once a beautiful isle to the Portuguese; 

we’ve institutionalized it. 

4) He takes to Spanish water. 

5) Poach engine? Not I! Something rotten 

there. 

6) What folly? “I’ll ask her”, you say. 

7) Through the looking glass and out back, 

she jumps. 

8) Misguided barnacle has nothing to keep 

it on the Med. 

9) We hear the laurel, backing its 

foundation, rises again. 

10) Curry? Once; but it’s still hot! 

Non-Profit ?!? But we’re making 

money...? 

Whoa Hoss! This is a common 

misconception among Boards, managers 

and members. In fact, employee 

associations are not non-profit. They are 

not-for-profit which is a different fish 

altogether. Non-profit entities, such as 

charities and foundations, usually derive 

their income from outside the organization, 

such as in the form of bequests and 

donations. After paying overhead costs, 

this money is then turned around and used 

for other non-profit causes. 

Employee associations, though they 

may accept donations, usually derive their 

income from their members, in the form of 

a fair price charged for the goods and 

services specified in the association 

charter. Therefore, there is an obligation 

to the members that associations not only 

be self-sustaining, but also to have the 

potential for expansion and improvements. 

And that requires profit. 

How much? Hang on, we’re not there 

yet. The association has to be selfsustaining and that means paying its own 

way. All costs incurred in operating the 

organization (salaries, inventory, utilities, 

shipping, annual audit, CR’s assessment, 

insurance, and other overhead) should be 

factored into the prices for the goods and 

services. This is old-fashioned capitalism. 

Or rather housewife economics. What 

goes out (expenditure) should be no more 

than what comes in (income). Anything 

above that is profit. 

 Okay! So How much? Well, that 

depends. There is no fixed figure. What 

should rule that figure are the association’s 

needs and the best interest of the 

membership. Profit is usually applied in 

four ways: expansion of current services, 

introduction of new services, capital 

improvements and contingencies. Need 

new playground equipment? Want to add 

electronics to the gift shop? Want to open 

child-care facilities? That’s what your 

profit is for. A caveat: except under 

certain circumstances, profit should never 

be used to sustain money-losing activities. 

If a part of your operations is draining 

resources from others, you need to reexamine its validity. 

Okay, you didn’t ask this but what if 

you make too much? Well, it means either 

you’re really, really, good at this, or 

perhaps you’re charging a little bit too 

much for your services. OUCH! If your 

association proves to be extremely 
profitable, then it’s a good idea to come up 

with ideas on how to use the excess funds. 

A written plan is a good idea as we might 

ask to see it at some point. In any case, it 

can’t hurt; a realistic management plan can 

only be of benefit, no matter what the size 

of the association. 

For questions regarding association 

profits and management plans, please 

contact the CR Accounting Team by 

phone, fax, cable or e-mail. 

European Beef. Must I Be 

Mad to Eat It? 

The Department of Defense (DOD) will 

soon publish a directive to further clarify 

DOD policy and ensure maximum 

awareness of and compliance with federal 

regulations (9 CFR 94.18) prohibiting the 

importation of beef and beef products from 

European countries where Bovine 

Spongiform Encephalopathy (BSE, or Mad 

Cow Disease) has been found. The 

directive reiterates DOD’s policy that 

extends this ban of European ruminant and 

ruminant meat products to troop dining 

facilities, commissaries, delicatessens, 

shoppettes, and concessions. The 

regulations and DOD’s policy are the 

result of continued concern over BSE and 

its probable association with its human 

analog, new variant Creutzfield-Jacob 

Disease encephalopathy (nvCJD), both of 

which are invariably fatal. 

Those are some mighty big, official 

sounding words and you may wonder just 

what does all this have to do with me and 

my association? Tons. Just consider the 

number of DOD employees who are 

members of your association or utilize 

your facilities. Given the DOD instituted 

its policy in March of 2000, members may 

have already asked you about the 

association’s meat procurement practices. 

As a food service operator, be it 

restaurant or commissary, your first 

priority must be to ensure the health and 

well being of your customers. As the 

association’s manager, the Board of 

Directors must rely on your expertise to 

make decisions affecting the association 

and its members. What are you going to 

do now? Call CR? Let us save you the 

phone charges. 

CR was alerted to the DOD message by 

Dr. Cedric Dumont, the State 

Department’s Director of Medical Services 

(MED). Dr. Dumont reasons, “The 

communication will, in all probability, 

generate questions about the sale and use 

of these food products in overseas State 

Department facilities such as (employee 

association) cafeterias and commissaries. 

For the sake of consistency, MED advises 

compliance with this DOD restriction as 

well as the previously established USG 

ban on the importation of such foodstuffs 

to the United States.” 

According to the Centers for Disease 

Control (CDC), cases of BSE in cattle have 

been reported almost exclusively (more 

than 99% as of 1998) from the United 

Kingdom. However, endemic or isolated 

cases of BSE have also been reported in 

other European countries including 

Belgium, France, Germany, Liechtenstein, 

Luxembourg, the Netherlands, Portugal, 

Spain, the Republic of Ireland, and 

Switzerland. For your reference, as well as 

that of your members, CDC provides the 

following guidelines for eating beef in, or 

from, affected European countries. 

“The current risk of acquiring nvCJD 

from eating beef (muscle meat) and beef 

product produced from cattle in Europe 

appears to be extremely small (perhaps 

fewer than 1 case per 10 billion servings), 

if it exists at all. However, to reduce this 

possible risk, travelers to Europe may wish 

to consider either 1) avoiding such beef 
and beef products altogether or 2) 

selecting beef or beef products, such as 

solid pieces of muscle meat (versus beef 

products such as burgers and sausages), 

that might have a reduced opportunity for 

contamination with tissues that may harbor 

the BSE agent. Milk and milk products are 

not believed to pose any risk for 

transmitting the BSE agent.” 

For further guidance and the latest 

information regarding BSE and nvCJD, 

take the time to log on to CDC’s website 

(www.cdc.gov/travel/madcow.htm). 

Closer to home, MED has compiled 

additional information on BSE, CJD and 

vCJD, as well as a summary of recent 

events in Europe. The article, “Should 

You Eat European Beef?”, can be found on 

CR’s State Department intranet website in 

its entirety. 

Bottom line, your chance of getting 

vCJD from eating European beef is 

extremely remote. It is up to you to decide 

how important beef is to your diet. If you 

want to minimize your risk of getting 

vCJD as much as possible, you should 

avoid beef. If beef is integral to your diet, 

then you may continue incorporating it but 

should avoid organ meats, any products 

containing nervous tissues, and essentially 

stick to cuts of muscles. 

Who are you?

The CRonicle would like to hear from our 

colleagues in the field. Write to us and tell 

us about your association, your post, 

services, and employees. Share your 

success and your concerns. Although each 

association is unique, many of you share 

the same problems and issues, and more 

importantly, there’s someone out there 

who can benefit from your experience or 

perhaps has the answer to that problem 

that’s been plaguing you! 

We would like to start a series of 

articles featuring associations overseas 

from their own perspective. But that 

means we need to hear from you. Please 

take the time to give us a run-down on 

your association, your goods and services, 

your triumphs and your pitfalls too. 

Whether you run a vast retail empire, or 

only Homeward Bound Mail, everyone’s 

got a story to tell. We’d like to tell yours. 

You can send contributions to The 

CRonicle Editor, Brian Keener, by 

Department e-mail, fax (+1-202-663-

1329), or the internet at 

crlogon@erols.com. 

Cryptic Travel Quiz Answers 

1)Cairo 6)Alaska 

2)Hamburg 7)Alice Springs 

3)Taiwan 8)Barcelona 

4)Managua 9)Beirut 

5)Copenhagen 10)Chennai 

Coming up in 

the next issue of 

the CRonicle, CR 

will be launching a 

Q&A column to 

address the more common questions we 

get from Boards, managers, and post 

management. There may even be the odd 

zinger, so watch this space! We will also 

update you on the status and development 

of our internet site. In addition, we will 

continue our feature column “It All Adds 

Up” with an accounting topic. See you 

next time!