Eastsound Water’s Financial Processes

To clear up any misunderstanding of how Eastsound Water’s finical process works and has been working, we developed the details below and presented it at the June 19, 2024 Board meeting to educate the Board and the membership present at the meeting; there was about 60 people present. We believe and we have confirmed with several outside partners and professionals that we have a high-caliber system in place.

Monthly Closing: We have the following reports for every month from January 2023 to present. The Treasurer has access to these reports, and is now signing off on the accuracy of these records monthly along with the Bookkeeping staff and the GM.

These records contain every transaction in the system for that month, and all entries made throughout the system and by whom. These reports are generated by the CPA once all reconciliations have occurred with our banking venders. “Closing” a month means that the CPA, the Bookkeeper and GM all agree on the numbers for the month. These reports include:

• Bank Statements with scanned images of all checks signed
• Credit Card Statements
• Bank Reconciliation Report by CPA
• Balance Sheet
• P&L with Budget to Actual
• Check Register – Month End Report
• Journals – Every User Action for the Month
• A Detailed Leger – Every Transaction In/Out for the Month

These records are stored in our Board of Directors folder that the Treasurer has full read/write access to. Here is a screen shot of what the file system looks like going back to January of 2023, all months since then have been reconciled and stamped by our Caselle CPA contractor Kimberly Olsen:

These documents are also on file in the office along with all of our receipts and invoices paid under lock and key. These are the records that any member can review if they make a records request:

Payroll Pay Period Closing: We also perform a similar process for Payroll as our monthly closing. The following are produced every two weeks for payroll ever since we moved to Caselle. Reports are displayed as seen below and are produced when closing each pay period.

Payroll closing files look like this; there are 21 payroll records used to audit and close payroll for each period (24 reports each month):

System Access for the Treasurer: The Treasurer currently has view access to the entire Caselle financial software system via Caselle Connect Online. This has been in place since February 2023 when Tenar Hall requested access. In this portal, the Treasurer can see exactly what is happening in the software “live” as things happen from anywhere there is internet service.

The Caselle Connect Online portal was developed by Caselle for the purpose of providing oversight access to anyone who is deemed to need it by a Board. In the case below, this is the view access to Caselle Connect Online for the current Treasurer Leith Templin:

The Treasurer also has complete Admin access to our WaFed account and can see every penny we spend and receive, download statements going back several years, and see all check images for all checks signed and by whom. They have Admin access to this account in case there is an event with the GM or Bookkeeper where the Treasurer may need to step in. This access is 24/7/365.

The Treasurer/Secretary also has access to our “Board of Directors” files in our filing system on our company server where not only all our bookkeeping and financial reports are kept, but other relevant documents are present for the Treasurer to do their job effectively as well.

As you can see, there are the source files for our current and previous budgets, our important contracts, our corporate documents, Board Meeting Minuets and more.

Best Practice for Financial Health

Here is what a healthy finance function looks like for a corporation (see image below). As you can see, there are roles for the contracted venders and employees who do the daily work of collecting, filing and checking all the numbers.

There always needs to be “segregation of duties” as a part of a heathy organization so that one person is not doing too much without another team member checking their work. Eastsound Water has had proper segregation of duties for as long as anyone can remember, and just over the last few years, the Association has taken even further steps to improve the health of the financial organization (we moved from two (2) entities in the middle to three (3) – Bookkeeper, CPA and GM).

Internally, the GM oversees the work of the Bookkeeper and CPA. The GM asks them questions, runs reports and/or make requests for edits but does not make changes to the system. The GMs job, in this case, is one of oversight and overall responsibility for the accuracy of all numbers generated by the people who manage them (each person within this triangle both gets to hold the others accountable and are accountable to them).

Outside of the Company, the Treasurer as well as the Tax Accountant are responsible for oversight of the entire organization.

The chart above was sent to a few key people we work with as well as the folks within our community to validate. All have agreed that this chart is accurate and believe that this is how a healthy organization is run.

Access to Venders/Employees: The Treasurer can communicate with key players within the finance ecosystem. The Treasurer can call our Tax Accountant CPA, as well as our hired Caselle CPA to ask questions and to seek clarity on the work that has been done by the staff in the systems. These CPAs – as part of their accreditation – are required to maintain objectivity and integrity, be free of conflicts of interest, and will not knowingly misrepresent facts. These are the suitable contacts to use when the GM is not available or to check the work of the internal staff independently as a health check. All are welcomed and valid actions for the Treasurer to take.

It is important to note that agents outside of the company, including the Treasurer, are not given direct access to the system due to the risk of piercing the corporate veil, making both the company and the Treasurer in this case, personally liable for the actions they take within the system, with good intention or not. When this corporate vail is pierced, it creates an risky environment that could open the Association up for collusion – an egregious demonstration of this was what happened to Enron, for example.

As you can see, things are really solid within the organization. If you see room for improvement or have any additional ideas on how we can get any better, just send us a note from our Contact Us page. We’ll be happy to hear from you.