ASABE FINANCE COMMITTEE HANDBOOK OF POLICIES

1. Financial Policy

1.1 Financial Aims of ASABE

The American Society of Agricultural Engineers is a 501(c)(3) nonprofit organization that is operated exclusively for scientific, educational and charitable purposes with a specific focus on the advancement of engineering in agricultural, food, and biological systems. Increasing assets, while not the function of ASABE, is a legitimate goal that supports the need to develop working capital that is needed to underwrite Society capabilities and services. It is the policy of the Board of Trustees of ASABE that the realization of these worthwhile purposes warrants a financially vital organization, so that expended capital can be replenished, the Society's capability can be enhanced, the eroding effects of inflation can be offset, new technologies can be adopted, services can be expanded, and ASABE can be protected against financial harm due to recessions or other uncontrollable situations.

1.2 ASABE Tax Exemption Status

The American Society of Agricultural Engineers is exempt from federal taxes under the 501(c)(3) designation used for qualified charitable, educational, and scientific organizations. Maintaining this tax exemption is a primary responsibility of all Officers and Trustees of ASABE.

1.3 Fiscal Responsibility and Guidelines

1.3.1 The related financial duties of the Board of Trustees are to:

· Maintain a financially sound Society
· Approve an annual budget based upon Finance Committee recommendations
· Set broad fiscal policies for the Society
· Authorize any special authority for fund disbursement

1.3.2 The related financial duties of the Finance Committee are to:

· Obtain budget input from staff, Councils and other entities
· Prepare annual Operating and Capital budgets for Board of Trustees review and approval
· Provide general fiscal oversight for the Society, including its Restricted Reserve
· Communicate budget performance reports to the Board of Trustees
· Communicate ASABE financial condition annually to Membership

1.3.3 The Finance Committee shall meet at least three times per year. In the Fall, Spring and at the Annual Meeting of ASABE.

1.3.4 The related financial duties of the Councils and other entities are to:

· Establish priorities for budget development
· Submit budget requests to the Finance Committee
· Monitor their programs and activities to ensure that they are within budget parameters

1.3.5. The related financial duties of the staff under the leadership of the Executive Vice
President are to:

· Develop an initial budget to support Society programs and services as determined by the Councils and other entities in keeping with policies and direction provided by the Finance Committee and the Board of Trustees
· Manage Society programs and activities within the adopted budget
· Report financial performance of program areas and activities

2. ASABE Restricted Reserve Fund

2.1. Definition and Scope

2.1.1 The Restricted Reserve net balance shall be targeted to remain at or above 50% of the Society's Expense Budget for the previous fiscal year.

2.1.2 All Operating Budget balances or deficits at the close of a fiscal year shall be transferred to the Restricted Reserve.

2.2 Loans from Restricted Reserve

2.2.1 Operating Budget cash flow loans in excess of $300,000 total require approval of the Treasurer.

2.2.2 Funds required to meet cash flow needs for the Society's operating budget or for approved capital budget shall be borrowed from the Restricted Reserve unless the Finance Committee approves another source. The Operating Budget shall pay the Restricted Reserve an interest rate of 9% APR on all borrowings.

2.3 Investments

The investment of funds policy of ASABE is cited in Article B13, Par. 1 of the ASABE
Bylaws and Rules as follows: All funds shall be paid in to the Executive Officer, who
shall enter them in the books of the Society, and deposit them to the account of the
Society in federally insured banks, insured savings and loan associations, or other
commercial and government money market investments.

2.3.1 The ASABE Board of Trustees authorizes the Executive Vice President, with the informed advice and consent of the Finance Committee, to manage the investments of ASABE within bounds of approved investment policy.

2.3.2 The Finance Committee shall monitor the investment program and counsel appropriate courses of action.

2.3.3 The Executive Vice President and Finance Committee shall exercise the judgment, care, discretion and intelligence in the management of ASABE investments with due regard to the balance of potential income versus the potential risk to ASABE's financial well-being.

3. Capital Assets

3.1 Equipment Assets

3.1.1 All equipment and software valued at $500 or more and having an expected life greater than one year shall be considered part of the capital assets of ASABE.

3.2 Depreciation of Capital Equipment

3.2.1 Capital Equipment shall be depreciated across its expected useful life-span according to generally accepted accounting practices thereby matching the cost of an asset to the period in which it is used.

4. Dues Income

4.1 Status of Dues Income

All ASABE dues shall be received as unrestricted general funds.

4.2 Dues Rate Policies

4.2.1 The annual dues, admission fees and reinstatement fees policy of ASABE is cited in Article B5 of the ASABE Bylaws and Rules.

4.3 Dues Billing Cycle

4.3.1 Members shall normally be billed annually for ASABE dues. As set forth in ASABE Bylaws, the Membership Development Council shall order the withholding of publications from members whose dues remain unpaid beyond a date established by the Council.

4.3.2 After the close of the fiscal year on December 31 all members who have been delinquent in payment of dues for the year, unless previously excused by the Membership Development Council, shall be stricken from the membership rolls, and shall cease to have any further rights as members. Their names and addresses shall be reported to the Section Membership Chairman representing the Sections concerned.

5. Non-Dues Income

5.1 Publication Sales, Subscriptions, Advertising and Miscellaneous Income

5.1.1. Staff managers, under the direction of the Executive Vice President, shall
establish the selling price for all ASABE publications and for all advertising and
mailing labels, including any appropriate discount schedule for quantity sales.

5.2 Meetings and Conferences Registration Fees

5.2.1. Staff managers, under the direction of the Executive Vice President, set fee
structures for all such activities to meet budget guidelines established by the
Board of Trustees. Present guidelines are that each meeting and conference
budget will include a 15% risk management expense line item and a line item for
appropriate profit.

5.3 Investment Income

5.3.1. ASABE, under the management of the Executive Vice President and guidance of
the Finance Committee, derives unrestricted income from investing excess cash.

5.4 Grants and Contracts

5.4.1. ASABE may apply for and receive government, corporate, foundation, and private
grants and contracts to carry out activities in relation to its tax exempt purposes.

5.4.2. All grant or contract agreements between ASABE and external funding sources
shall include provisions for the recovery of direct and indirect expenses, unless
an exemption is authorized by the Board of Trustees.

6. Planning and Budgeting

6.1 Vision - A broadly participatory budgeting process that accepts responsibility for the fiscal integrity of the total Society.

6.2 Goals

6.2.1. Empower the Councils and other entities to make programmatic decisions
having budgetary implications.

6.2.2. Assure sound fiscal future of ASABE.

6.3 Budget Process

The Society fiscal year is the calendar year. A new budget is prepared each
year and approved by the Board of Trustees prior to the start of the fiscal year.
Consolidation of the overall budget and presentation for Board approval is the
responsibility of the Treasurer and Finance Committee. Headquarters' staff provides
baseline budget development for submittal to the Councils and other involved entities.

Schedule

A "flow-chart" of the budget process is attached to assist in clarification.

1. The Board of Trustees, at its last meeting of the fiscal year, will review the strategic goals of the Society and reconfirm the goals or make any necessary changes. These will be transmitted to the Finance Committee, the Councils and other entities.

2. At its spring meeting, the Finance Committee will set "target" levels, and budgeting policies for the next fiscal year budget. The "target" levels will be based upon input from the Councils/entities and staff.

3. Staff will work with the Council/entity's chair in the development of an initial draft based upon the target levels set by the Finance Committee. By a target date of May 1, staff will send the initial draft out to the Councils and all other entities involved.

4. Within 30 days after the Annual Meeting, the Councils, and any other entities, will submit their budget requests with supporting comments to the Finance Committee for incorporation into an overall budget for review and discussion.

5. The Finance Committee will meet to review and discuss budget requests and the overall budget. Should adjustments be necessary, the Finance Committee may request further interaction with Council Chairs and the Chairs of other involved entities. Every effort will be made to ensure that budget priority is given to programs and activities that support or help achieve the Society's strategic goals as approved by the Board of Trustees.

6. The Finance Committee will submit a budget to the Board of Trustees for approval two weeks prior to the Board's last meeting of the fiscal year.

7. Prior to the beginning of the fiscal year, the Board of Trustees will review, deliberate and approve the budget.

6.4 Finance Committee Membership

A key Finance Committee responsibility is to provide a fiscal overview for the total Society that assures fiduciary soundness and minimizes friction between Councils and other entities competing for finite financial resources.

6.4.1. The Treasurer is appointed annually by the Board of Trustees.

6.4.2 During Finance Committee deliberations it is in the best interest of the Society
that all opinions and concerns be fully represented. Members of the Finance Committee are elected by the Finance Committee. The Finance Committee will consist of six members in addition to the Treasurer. Following the example of the Board of Trustees, four of the six Finance Committee members will be appointed by the Committee at each annual meeting as "Liaisons" with each of the Councils. The two remaining members may be appointed "Liaisons" to any other entities as may be involved in the budget process. The Liaisons will attend the respective Council or other entity meetings and represent the views, opinions and interests of the Council or other entity to the Finance Committee and of the Finance Committee to the Councils or other entities. To assure the stability of the Society, however, it is understood that the members of the Finance Committee will not place the views, opinions, or interests of any Council or other entity before their responsibility to the fiduciary soundness of the Society.

6.5 Authorization for Budget Variance

It may be necessary, from time to time, to make changes after the annual budget has been approved for use. Subject to oversight by the Executive Vice President, staff and Councils/entities are empowered to make budget redistributions within their Program Area. The Executive Vice President will seek approval by the Finance Committee before authorizing changes involving:

1. Variances with long-range Society budget implications; or
2. Variances in expenses that do not have a potentially offsetting increase in income.

Councils are encouraged to discover efficiencies, cost savings or increased income opportunities that may fund new ideas, programs and activities during the current or out-year fiscal years.

6.6 Initiative Fund

In years when the net balance (cash plus any General Fund Operating Loans) in the restricted reserve exceeds a target balance of 50% of the previous year's Operating Budget Expenses, the Finance Committee will recommend to the Board of Trustees the amount to be made available for the Society Initiative Fund throughout the next budget cycle. This recommendation will take into account:

· The long-range fiscal climate for the Society,
· Likely capital needs for the next three years,
· Desirability to avoid major annual fluctuations in the magnitude of such funding.

This recommendation will be made at the April meeting of the Finance Committee and may be reviewed and revised at its November meeting should investment, budget or capital needs trends warrant.

Solicitation and approval criteria for initiatives to be supported by this Fund are the
responsibility of the Board of Trustees. However, proposals having potential long-range recurring budget implications must include a multi-year budget projection. This projected budget information will be forwarded to the Finance Committee when a project is funded.

6.7 Capital Budget

The budget is proposed annually by the Executive Vice President to the Finance Committee at their Fall meeting. The capital budget includes depreciable items such as office equipment, computer hardware/software, and major facility improvements. When the budget is approved by the Finance Committee, it is presented to the Board of Trustees for adoption.

7. Accounting and Reporting

7.1 Responsibilities

Accounting and budget oversight are accomplished at ASABE headquarters by the Comptroller under the direction of the Executive Vice President and Treasurer.
The books of account and financial information of ASABE are maintained by the
Comptroller under the direction of the Executive Vice President.

7.2 Method of Accounting

7.2.1 ASABE uses the accrual fund accounting approach, through which ASABE funds are established for a variety of purposes and with a variety of designations.

7.3 Reports

7.3.1 The records and report formats must conform to the stated needs and requirements of the government agencies and services having an authorized interest, the auditors retained by ASABE, the Finance Committee, the Board of Trustees, and the general principles and practices of sound management.

7.3.2 Financial reporting shall include the following:

7.3.2.1 Comparative Balance Sheet - reflecting assets, liabilities and fund
balances.

7.3.2.2 Comparative Operating Statement - reflecting income, direct expense, indirect expense and net activity for each functional area.

7.4 The financial statement, supplemented by the Executive Vice President's analysis
and comments regarding performance to date and trends, shall be submitted to the
Finance Committee when it meets three times annually.

7.5 A financial status report and year-end report shall be presented to the Board of Trustees. A year-end report shall be included in the Annual Report printed in an ASABE publication and provided for use and reference at the annual business meeting.

7.6 Other reports dealing with financial matters shall be prepared from time to time as the need arises or as requested by the Finance Committee or Board of Trustees.

8. Safeguards and Controls

8.1 Commitment of ASABE Funds

8.1.1 The deposit, investment, and disbursement of all funds shall be subject to the direction of the Board of Trustees with recommendation from the Finance Committee.

8.1.2 Upon dissolution of the Society its remaining property or proceeds and the balance of any money or property received by the Society from any source, including its operations, after payment of all debts and obligations of the Society, shall be transferred to another organization or organizations of like purpose qualified under the provisions of Section 501(c)(3) of the Internal Revenue Code of 1986, and regulations pertaining thereto as such sections are amended from time to time.

8.1.3 All funds shall be paid in to the Executive Officer, who shall enter them in the books of the Society, and deposit them to the account of the Society in federally insured banks, insured savings and loan associations, or other commercial and government money market investments.

8.1.4 All bills against members and others shall be made and collected by the Executive Officer.

8.1.5 Funds may be solicited from sources outside of the Society for special
purposes. All contributions to the Society for any specific purpose shall be
disbursed under the direction of the Board of Trustees with recommendation
of the Finance Committee.

8.1.6 The accounts of the Society shall be audited and approved annually by a
certified public accountant.

8.1.7 Any expenditure for the purpose of a division or institute chargeable to the Society must be authorized by the Board of Trustees of the Society before it is incurred. Any liability otherwise incurred shall not be binding on the Society, and must be met by the division or institute itself.

8.1.8 In view of the ultimate responsibility of ASABE for the financial obligations of its units, all such arrangements should be brought to the attention of the Executive Vice president before being consummated by any unit ASABE.

8.2 Authorized Signatures

8.2.1 Checks may be drawn on the ASABE operating cash account bearing one authorized signature. The following shall be authorized to sign checks:

1. Executive Vice President
2. Comptroller

8.3 Annual Audit

8.3.1 It is ASABE policy to retain a professional firm of certified public accountants to examine the annual financial statement and perform an annual audit of ASABE's financial records. Included in the scope of this activity are the examination of financial procedures and safeguards and the submission of appropriate recommendations in the form of a management letter. The auditor may also be requested to provide counsel on special matters that may arise from time to time.

8.3.2 The Comptroller, under the direction of the Executive Vice President, shall
arrange for an annual external audit of ASABE financial records. The audit
should begin as soon as possible after the closing of the previous fiscal year
and conclude with a written report to the Finance Committee on the financial
condition of ASABE prior to its Spring meeting.

9. Risk Management

9.1 Indemnification

The Indemnification policy of ASABE is cited in Article B15, Par. 1 of the ASABE Bylaws and Rules as follows: "No Trustee, Officer, Employee, Committee Member of other agent appointed by the Trustees of the Society shall incur any personal liability for any acts, omissions or errors in such capacity except for his or her own negligent or willful misconduct. No person shall be liable for the acts, neglect default, omissions, and errors or misconduct of any fellow trustee, officer, employee, committee member or other agent of the Society in which he or she has not participated, concurred or acquiesced. No person dealing with the Society shall be obliged to see to the application of any money or other property contributed, loaned or otherwise paid or delivered to the Society."

9.2 Insurance

9.2.1 ASABE shall maintain insurance up to limits established by the Finance
Committee upon the recommendation of the Executive Vice President.

9.2.2 The Executive Vice President shall be responsible for arranging and maintaining
insurance in accordance with the direction from the Finance Committee. Types of insurance include property, officers and directors, medical, life, health, and workman's compensation.

10. Conflict of Interest

10.1 General Policy

Conflict of interest is defined as any situation in which an individual's decision, actions,
or votes could materially affect that individual's financial, business, or professional
interests. It is the responsibility of all ASABE officers, trustees, members, and staff to
consider each item of business where they have a vote, action, responsibility, or decision
of authority to determine if a conflict of interest, or the appearance of such conflict of
interest, may exist. Any such recognized potential conflict shall be made known
immediately to the person in charge of the activity (or the next higher authority if the
individual with the potential conflict is in charge), who, after consultation with the
Executive Vice President, will advise the member of the proper course of action and
cause a notation of the action to be entered in the activity's record.

APPROVED DATE - 4/28/00
Revised 11/15/00
Exec ASABE FC Handbook of Policies