Category Archives: AUS

The AUS job- Part 8

Now we get to what for me was the most interesting (and strategic) part of my mandate. While taxes were being filed, and frosh reports were being made, I had to come up with a game plan to make sure the AUS did not ever find itself in the same position again, with regards to both taxes and annual audits. Like I’ve said before, the biggest hurdle to getting the audits and taxes done were the externalized departments.

AUS Wars Episode I: The Phantom (financial) Menace

Externalized departments had autonomy without any real responsibility. If they issued a cheque without any receipts to back it up, it would be the AUS’s problem to deal with. Also, problems with record-keeping were usually discovered near the end of the year, at which point it was too late to penalize.

There were two immediate solutions available- either reduce the autonomy they had or to increase their level of responsibility. The first required internalizing their bank account, which meant closing down their bank accounts and moving their funds to the AUS account. The second required the departments getting accredited and becoming completely autonomous of the AUS. In this case, they would need to complete their own audits and file their own taxes.

AUS Wars Episode II: Attack of The (McGill Admin) Clones

In our discussions with the Deputy Provost, the McGill admin did not appear too keen on the second option, as the more ‘radical’ departments were the ones seeking accreditation. Getting legally accredited would allow them to hold strike votes in case of a student protest movement, as they had wanted to do in the previous year against the raise in tuition proposed by the Quebec government. There were only a couple of departments interested in this, and I was all for helping them seek accreditation, if that’s what they wanted.

AUS Wars Episode III: Revenge of The (PSSA) Sith

I had to use whatever tools and leverage I had to get the restructuring implemented as quickly and with as little controversy as possible. I set up separate meeting with the Presidents and VP Finances of each of the affected departments, to break the idea of internalization vs externalization to them. As expected, the smaller and less radical of the departments were willing to internalize with very little contention. This got four of the eight external departments out of the way. Out of the bigger departments, both the ESA and DESA were willing to go along with internalization and the PSA wanted to get accredited. This then left only the PSSA, the biggest department in the Faculty of Arts, wanting to keep things as they were.

The PSSA president said it was duplicitous of me to meet with the departments one-on-one, instead of all together. This, of course, was exactly the point. Meeting one-on-one gave me more leverage. She then asked for a list of the affected departments and set out to arrange a meeting for the departments to discuss the restructuring imitative independently of the AUS. Out of the eight departments affected, only four showed up to the meeting: PSSA, ESA, PSA and DESA. The others had already made their decisions and were committed to them- all except for the ASA, which would wake up a few months down the line and realize it didn’t want to internalize after all.

AUS Wars Episode IV: Return of the (ESA) Jedi

I wasn’t invited to this meeting, so the departments drew up a list of questions to send me by email. Out of the four that attended, the ESA was still okay with internalization, the PSA still wanted accreditation, but DESA now seemed to be on the fence. I was in close contact with the ESA during all this, as I had been in the ESA the year before and knew the President fairly well. They kept me in touch with what was going on throughout.

AUS Wars Episode V: The (AUS) Empire Strikes Back

To be sure, the PSSA had legitimate concerns; it was just that something had to give for the AUS to be financially responsible again. The PSSA started reaching out to the media and other organizations on campus, to see if any other ideas could be brought to the table. I kept up communication with DESA, ESA, and PSA throughout the intervening time-period, to keep them up to date and to get a firm answer from them regarding their position as I wanted the restructuring to be completed as soon as possible. Firm answers form them would’ve also meant less support for the PSSA’s position to keep things as they were.

AUS Wars Episode VI: A New Hope

At this point, I had come up with and discussed a possible third solution with our accountants, who after much convincing, said it was workable. I set up a final meeting, and got the assembled departments together, and let them know that there was an alternative available. Everyone immediately accepted it as the best option, something which allowed the AUS to track departmental finances while allowing the departments to continue operating their bank accounts.

The PSA still wanted to seek accreditation, but everyone else was satisfied with what I had proposed. The departments would now have to input all their revenues and expenses on our accounting software before being allowed to conduct any transactions. They would still be responsible for the paperwork, but the idea was this would help keep their paperwork organized and help identify where mistakes had been made. This was also exactly how the AUS retail store, SNAX, functioned.

Throughout this process, I had to manage keeping the departments happy and keeping the media from blowing this up into a big political debate while accomplishing what I wanted for the AUS.

In the next post, I will go over what I had wanted done with the third option- what my ideal outcome would have been.

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The AUS job- Part 7

Before I go into the AUS restructuring that took place in my year, let me talk a little bit about some of the other things I was doing at the same time.

Frosh or nothing

Over the summer, one of the biggest challenges faced by the incoming executive each year is organizing Frosh. Although it is chiefly the VP Events responsibility, any other exec who are staying behind in the summer are supposed to help out too. The VP Events, along with the Frosh co-ordinators, work on everything from the logistics to sponsorship and communication over the summer to make sure that incoming freshmen have a safe and memorable start to their college years. Frosh also sets the mark for how the new AUS executive will be seen for the rest of the year- get it wrong and you spend the year under its shadow, get it right and it lends credibility to the competence of your executive team.

A good frosh is a safe frosh

It is very important to emphasise the word ‘safe’ here. Safety was our primary concern when organizing Frosh. Frosh usually involves a lot of alcohol consumption for people who may never have had alcohol before, and so managing people who do not yet know their limits and are in a new city is of the utmost importance. We were also trying to shift the culture of Frosh from being alcohol-centric to more about getting to know Montreal and meeting new people in a comfortable environment, but such change takes time.

Frosh and finance usually don’t go well together

As VP Finance, I was responsible for providing financial planning and support and for approving the Frosh budget. I also helped out with getting sponsorships, but the majority of that work was handled by the Frosh sponsorship coordinators. Financially, AUS frosh had seen many controversies over the previous few years, with the theft of $12,000 in 2011-12 and a $35,000 loss in 2009-10, so I had to make sure that frosh finances were completely airtight in my year.

Stress test

The one week period before the start of frosh was incredibly stressful. For the last three days of registration, I had difficulty sleeping as we were looking at $40,000 dollar loss if registrations had not picked up significantly. I also had to deal with constantly thinking about the thousands of dollars flowing from the registration table to the AUS office being lost to theft, as had happened in the year before. When registration ended and I deposited all our frosh funds at the bank, then only could I relax a little.

I still had to go through frosh itself, making sure that everything was running smoothly and helping out where possible. Beach day was terrible, as it almost always is, with no organization for the bus lineup and thousands of students waiting to go back home. Beach day is organized by SSMU so the onus was on them, however we inevitably ended up helping organize the departure along with some MUS coordinators and the SSMU president.

Early taste of success

AUS frosh our year was considered an overall success. The few problems we did have were mostly things completely out of our control, and the response and level-headedness shown by the frosh coordinators was all we could have asked for. The hats we provided with the Frosh kits were a brilliant idea, and have since become almost a cultural phenomenon in the college-student demographic in Montreal. Overall, frosh our year was a resounding success, people loved the hats, the boat cruise was re-introduced, and we had alternative all-age events for every single night.

Financially speaking, frosh turned out to be incredibly successful too, much to my surprise. I had been expecting a small profit of $3000 to $5000, but after all the revenue had come in and all payments had been made, we ended up with a net profit of $17,000. This was a nice break from years past, where frosh had always marked the start of a financially turbulent year for the AUS. So not only were we able to provide a great experience to incoming Arts freshmen, we also managed to make a nice profit out of it for the AUS.

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The AUS job- Part 6

Tax Filings

With our student fees released, I could finally pay back the multitudes of people we owed money to. This took much more time than I had anticipated. I was then able to turn my attention towards getting those of our funds frozen by Revenu Quebec released.

This required getting up-to-date on all our tax filings, as the AUS had been tax-delinquent since 2008. Although most of the important filings had been done already, there were a few which were holding us back, mostly involving the small retail operation the AUS runs called SNAX.

These tax filings were taken care of by our accountants, and I was relegated to a support role which required digging up old documents and trying to re-construct missing financial history. This article goes into a bit of the history which led to our funds being frozen by the Quebec government. I was interviewed for this right around the time we had made our final submission to Revenu Quebec and were expecting our funds to be released in 30-60 days.

This article is a follow-up to the previous one. The exact amount held back by Revenu Quebec was indeterminate and depended on how much they assessed the AUS owed in charges for delinquency and the like. I was expecting we would get back $100,000 but we ended up receiving $114,000. This amount was immediately transferred to our savings account, which had been hurting over the last few years (as discussed in the articles).

Getting our student fees released and finally being up-to-date on our tax filings were immensely important. Failure in either of these would probably have meant the AUS filing for bankruptcy. It may seem negligent for an organization to get to the point where it has to cover years of ground in financial reporting over a few months, but understanding what caused the AUS to come so close to bankruptcy was critical in making sure this didn’t happen again.

To prevent the AUS going down the same path in the future, it was clear the AUS needed to be restructured, at least as the very first step. I will cover this restructuring in the next post.

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The AUS job- Part 5

The summer of ‘12
After all the negotiation work had been done, it was time to be an accountant! I was tasked with rebuilding AUS financial history for the last 4 years using the boxes of documents and receipts left over. It is safe to say that I spent most of my summer in the AUS office, with over 12-14 hours per day easily going into organizing the documents left over from the previous years. After I had organized the receipts, cheque requisition forms, deposit slips and all other transaction records in chronological order, I had to go through them again, one-by-one, to enter them into Quickbooks, our accounting software.

After that had been done, I had to go through the bank statements for four years, month-by-month, and reconcile our Quickbooks accounting records item-by-item with the bank statements. One of my motivating factors while working through this was the incredible insight I got into AUS operations by going so thoroughly through the financial records. You cannot get to know an organization better after you have been through each dollar of cash coming in and going out for the last four years three times over.

One of my other motivating factors was to have everything perfectly organized in the way I wanted. There is something beautiful in organizing things, giving structure to what was before an ungodly mess. Organizing these documents and databases was like running a marathon, or solving a very large puzzle. Completing it is its own reward, in addition to any other positive ramifications that may be obtained.

Externalized Departments
The records I had available were for all the non-externalized departments, i.e. departments which did not have their own bank accounts. Records for externalized departments were incredibly irksome to obtain. None of the departmental executives were in Montreal over the summer and the banks wouldn’t release their information to me as I did not have signing authority on their accounts. Many of their records were locked up in their offices for the summer, their bank statements were impossible to obtain, and I could not get the NTRs processed without these documents.

Getting these documents delayed the process. I had to send frantic emails to account managers at the bank, departmental executives (both old and new) and our accountants to coordinate the whole thing, so that we didn’t miss any of our debt repayment deadlines.

In the end, I managed to gain access to these locked up documents by talking to the building manager where the departmental offices were located, and by talking to the account managers at the bank to obtain the bank statements for these accounts. As they can only allow access to these documents/ offices to the specific departmental executives, what they did wasn’t technically legal, but it helped save the AUS.

Delivery!
Once I had all the information compiled, organized and reconciled on both our accounting software and on paper, I delivered it to our accountants. We subsequently had the NTRs made and delivered to McGill on time and got our student fees released.

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The AUS job- Part 4

Where did the money go?
Back in 2003, the AUS was given $130,000 in exchange for providing McGill with some space in the Arts Building basement which McGill subsequently leased to a Subway franchisee. The $130,000 was deposited by the AUS into a GIC, which gave an interest of approximately 3% annually. This $130,000 was reduced to $110,000 by 2009, further reduced to $90,000 by 2010, and when my term started, was non-existent.

This GIC had constituted the only long term savings/investments the AUS had. In 2011-2012, when the AUS had run out of funds to pay for its operations (because of no student fees transfers from McGill), the executive of that year decided to liquidate the GIC to pay for operations. However, as soon as they liquidated and deposited the $90,000 into the checking account, it was immediately frozen by Revenu Quebec due to the several years of non-payment of taxes.

Seeking aid from McGill
The AUS executive of 2011-2012 then had no other option left except to seek assistance from McGill, which they were granted after strenuous negotiations.  

Similarly, the AUS in 2009-2010 had promised McGill a Notice To Readers (NTR) for the previous year and a full audit for the 2009-10 year, if McGill released their student fees. They got the fees released but failed to provide what they promised. The AUS for 2010-11 promised McGill NTRs for 08-09, 09-10  and a full audit for 2010-11. Again, they got the student fees but failed to provide any of that. And as mentioned before, the executive in 2011-2012 promised NTRs for all the previous years and a full audit for their year. This promise was also not upheld during that year, though the process for obtaining the NTRs was initiated.

So, by the time I started my term in 2012-2013, McGill gave no value to the promises made by AUS executives. This was the context under which I (along with the AUS President) had to negotiate with the McGill administration.

Promises made and kept
We promised McGill to clear all outstanding NTRs and to provide a full audit for the 2012-2013 year. After several rounds of meeting, we managed to convince the administration that we knew what we were doing, and would deliver on our promises. We provided them with our debt repayment schedule, to inform them of when we would be needing cash inflows. They mapped specific milestones to each release of student fees as a pre-condition.

These milestones were in the form of letters from our accountants detailing the progress made in compiling and producing the financial statements. Accountants are notoriously difficult to get any official letters laying out the timelines for completing work from, which is what McGill wanted. So I had to balance the demands placed by McGill with what I knew I could extract from our accountants and negotiate with both of them to strike that balance.

I’ll go over what exactly I had to do to get the NTRs done in the next post

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The AUS job- Part 3

The two obligations
The AUS has always had a troubled financial history. These stem from the AUS not being able to fulfill two of its most important legal obligations, as an incorporated student association. The first obligation is filing taxes every quarter to Revenu Quebec. The second obligation is providing audited financial statements to McGill annually.

Consequences
If the AUS does not fulfill its first obligation, it leads to Revenu Quebec arbitrarily assessing the tax owed by the AUS and then freezing that amount in the AUS’s checking account. If the AUS does not fulfill its second obligation, the AUS does not receive its student fees, collected by McGill to be disbursed to the AUS.

2008: A pivotal year
When I started my term, the AUS had been in violation of both of these obligations since 2008. Why 2008 in particular you ask? Well, 2008 was the year in which a few of the larger departments were externalized, meaning they were allowed to open up their own bank accounts.  Before that, all of the AUS’s financial records were centralized, with the AUS VP Finance having overall responsibility for ensuring each transaction got appropriately. As the VP Finance was also responsible for the audit, he/she knew where to get any missing information from that would be needed for the audit.

Despite that, the AUS had still had had a lot of trouble fulfilling its financial obligations prior to 2008. After 2008, with records being maintained by multiple people across multiple locations with varying levels of consistency, it became nearly impossible to fulfill the AUS’s financial obligations.

The core issue
So, to recap, the core issue that the AUS was facing was externalized departmental accounts. Externalized accounts meant that departmental VP Finances/ Treasurers were responsible for making sure their records were up to legal accounting standards, so that the AUS could get its annual audit done. Legally the departments fell under the AUS, so if the departments weren’t doing their job, the consequences would be borne by the AUS. This gave the departments increased autonomy with increased responsibility, but no accountability if that responsibility wasn’t maintained.

In the next post, I will go over how this problem snowballed from 2008 on wards and almost brought the AUS to bankruptcy in the summer of 2012.

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The AUS job-Part 2

Debt Negotiations
The first thing to do was re-negotiate debt terms individually with each supplier. The AUS owed money for things such as office supplies, venue rentals and student reimbursements for AUS related expenditure, among many other things.

The amount totaled around $25,000 with the majority of it being owed to 3-4 suppliers. I had meetings separately with these suppliers and promised them that they would be paid back fully as soon as we received our student fees from McGill.

Debt Restructuring
I provided them a timeline, with several scenarios on when we could expect to pay them back. The important thing here was to maintain a good future relationship with the suppliers while obtaining the concessions I felt were necessary to avoid bankruptcy. In hindsight, I was able to do a much better job than I though I would, as at the moment, I was powering through everything in ’emergency mode’.

Or maybe people were more understanding and sympathetic than I thought they would be. After continuous rounds of emails and meetings over two stress-filled weeks, I was able to delay our accounts  payable sufficiently to be able to get us a shot at actually paying back our suppliers.

It was more a case of structuring and eroding away our debt in exactly the right way and making commitments to match with our projected cash inflows, then doing everything possible to ensure that the projected cash inflows turned into actual cash inflows.

Where the debt came from…
The second, and more complicated, part of the equation was getting the inflows of cash started again. The debt restructuring took place during the summer of 2012, when the only cash inflow we could expect was from the student fees held back by McGill for the previous year. The debt had built up because the AUS had continued to function as normal in the prior year, despite not having received the full student fees from McGill for that year.

The AUS had continued to function as normal because the previous AUS executive, in my opinion, were wary of projecting the image that AUS finances were in trouble. My perception of the preceding AUS exec’s reasoning is that they thought they were going through a very politically turbulent year because of the Quebec student strikes, and did not want to add anything else to the mix.

The Theft and its strategic implications
AUS finances that year were already dealing with a bad reputation, due to the theft of  $12,000 from the office earlier in the year, and they did not want to publicly reveal any other negative information on AUS finances. Ideally, however, the AUS would have significantly scaled back its operations to deal with the shortage of incoming student fees.

Before I get into what needed to be done to get our frozen student fees from McGill released , I will need to recap a bit of AUS history. It’s important to understand why exactly McGill froze these funds in the first place.

And so on to the next post!

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