Financial Policy | CBA British Columbia

1. Definitions

1.1 “Approval” means an approval documented in writing and includes, but is not limited to meeting minutes, email, and electronic signature or initials on an electronic form or record in use by CBABC;

1.2 “Financial Narrative” means a written explanation of CBABC’s financial position on a given date.

1.3 “Fiscal” means the period of September 1 to August 31.

1.4 “Consolidated Forecasting” means a statement showing at a department summary level, the year to date actual revenue and expenditures and anticipates the balance of year revenue and expenditures.

1.5 “Statement of Financial Position” means the balance sheet that reports the assets, liabilities and fund balances on a given date.

1.6 “Statement of Revenue and Expenses” means the income statement that shows income and expenditures on a given date.

1.7 “Volunteers” means members of the Board of Directors, Provincial Council, Section Executives, and professional development organizing committees.

2. Financial Responsibility

2.1 The Chief Executive Officer (“CEO”) has duties outlined in the Bylaws, and in particular sections 9 and 12, and is responsible for CBABC’s financial administration and operations.

2.2 The Director, Finance & Administration (“DFA”) reports to the CEO and manages the daily financial operations.

2.3 The Finance & Audit Committee (“F&A Committee”) is appointed by the Board of Directors and holds the responsibilities as set out in the Terms of Reference attached as Appendix “D” and as outlined in this Financial Policy.

2.4 The Chair of F&A (“Chair”) has duties outlined in the Bylaws, and in particular sections 8 and 12, as well as specific responsibilities outlined in the Terms of Reference and this Financial Policy.

2.5 The Board of Directors has the duties outlined in the Bylaws, and in particular section 6, 8 and 12, as well as specific responsibilities outlined in this Financial Policy.

3. Reserve and Operating Funds

3.1 CBABC shall maintain three funds: the Restricted Reserve Fund, the Unrestricted Reserve Fund and the Operating Fund. The Restricted Reserve Fund and the Unrestricted Reserve Fund may be held in a common account.

3.2 All funds shall be invested in accordance with the Investment Policy and Guidelines attached as Appendix “A” to this Financial Policy. Investment gains from any of these funds are to be reported as investment income on the Statement of Revenue and Expense or Statement of Financial Position as applicable.

3.3 Operating Fund

3.3.1 The purpose of the Operating Fund is to provide funds for the operations and capital budgets for the current fiscal year. It consists of cash and short-term investments in accordance with the Investment Policy and Guidelines attached as Appendix “A” to this Financial Policies.

3.4 Restricted Reserve Fund

3.4.1 The purpose of the Restricted Reserve Fund is to provide sufficient resources to continue operations of CBABC in the event of a crisis that severely restricts income to CBABC, or to wind up CBABC.
3.4.2 The Restricted Reserve Fund shall equal four months of the operating budget (less grants and self-funded events) for the current fiscal year.
3.4.3 Funds may be used from the Restricted Reserve Fund only when and as authorized by the Board.

3.5 Unrestricted Reserve Fund

3.5.1 The purpose of the Unrestricted Reserve Fund is to provide investment income generated from longer-term investments
3.5.2 The Unrestricted Reserve may be used:
1. for a planned or unplanned operating deficit;
2. to maintain the Restrict Reserve Fund; or
3. for a one-time special project.
3.5.3 The Unrestricted Reserve Fund should not, as ongoing practice, be permitted to exceed two months of the operations budget, less grants and self-funded events (“Fund Threshold”) because the source of the funds are primarily membership dues that should be used for the benefit of members in pursuing the objects of CBABC. There may occasionally be extenuating circumstances and/or certain market conditions of uncertainty that may warrant funds in excess of the Fund Threshold to be maintained temporarily in the Unrestricted Reserve Fund.
3.5.4 In the event that the Unrestricted Reserve Fund exceeds the Fund Threshold at the time of budget preparation,
1. the CEO shall advise the Board and make recommendations for its use; and
2. the Board shall
  1. reduce the Unrestricted Reserve by
    1. topping up the Restricted Reserve Fund if necessary;
    2. directing the CEO to prepare a deficit budget; or
    3. using the funds for a one-time special project; or
  2. acknowledge the excess but permit it to continue given extenuating circumstances.

4. Budget

4.1 Each year, the CEO shall prepare a two-year operating budget and a one-year capital budget and in so doing consider:

CBA and CBABC Strategic documents and progress;
membership status and proposed targets;
present and future internal and external factors which may influence the budget;
anticipated operational and capital project needs.

4.2 The budget preparation and approval schedule is:

April-May:
- CEO and DFA oversee staff budgeting preparation of a two-year operating and one year capital budget
June:
- Chair, CEO and DFA meet to review draft budget and make adjustments if necessary
- F&A Committee reviews draft operational and capital budgets and makes recommendation to the Board with respect to the budgets for the next Fiscal
July
- Chair presents draft operational and capital budgets for Board approval of the budgets for the next Fiscal.

4.3 Upon Board approval of the operational and capital budgets, the CEO is authorized to make budgeted expenditures.

4.4 In the event the CEO wishes to make an expenditure for the upcoming Fiscal before that Fiscal’s budget is approved, and the proposed expenditure is more than $10,000 than the current Fiscal’s expenditure, the CEO shall seek the approval of the Board before doing so. This requirement does not apply to employee compensation and benefits.

5. Financial Reporting

5.1 The DFA will provide the following reports:

Not later than the 25th day of each month, provide the CEO with the Statement of Financial Position and Statement of Revenue and Expenses for the previous month and a draft Financial Narrative;
Not later than the last day of each month, provide the Chair with the Statement of Financial Position and Statement of Revenue and Expenses for the previous month (eg. By June 30 provide the Statements for May 31), along with a Financial Narrative;
For each meeting of the F&A Committee and Board, provide the most recent Statement of Financial Position, Statement of Revenue and Expenses, Financial Narrative and Consolidated Forecasting.

6. Audit

6.1 The DFA shall have the records and accounts of CBABC ready for audit in a manner timely to the requirements of the auditors.

6.2 The audit shall be completed and the draft audited financial statements shall be required no later than 45 days prior to the AGM.

6.3 The auditors shall be required to provide a letter to the CEO on the topic of accounting procedures and systems of internal control. The CEO, in consultation with the DFA, shall prepare a response to the letter and both shall be provided to the F&A Committee and the Board not less than 45 days prior to the AGM.

6.4 The F&A Committee shall meet with the auditors to review the audit results and the draft audited financial statements. During that meeting, the CEO and DFA will leave the meeting so that the auditors can raise any concerns about the DFA and/or CEO’s conduct or co-operation during the audit.

6.5 The F&A Committee shall provide their recommendations about the audit, audited financial statements, and any changes required as a result of the audit to the Board by December 5.

6.6 The Board shall review and approve the audited financial statements by December 31.

6.7 Members shall be provided with audited financial statements via CBABC’s website.

6.8 The F&A Committee shall recommend to the Board of Directors the auditors for the current Fiscal in consideration of the following:

performance of the existing auditors;
reputation, expertise and experience of the existing auditors;
introduction of new individuals on the auditors’ team who are performing the audit;
length of service of the existing auditors to CBABC;
audit fees.

6.9 Every 7 years, or at the request of the CEO or Chair, the DFA will prepare a Request for Proposal from potential auditors and provide a recommendation to the F&A Committee about a possible change of auditors considering these factors:

reputation;
experience and expertise with audits of a not-for-profit association of CBABC’s size;
technological capacity;
understanding of not-for-profit associations;
ease of communication and prompt responses; and
audit fees.

7. Expenses of Volunteers

7.1 Most expenses for CBABC operations are arranged and paid by CBABC. Occasionally Volunteers receive advance approval to incur expenses for CBABC activities (eg. arranging food and drinks for a Section meeting) or to travel to or attend an event on behalf of CBABC (eg. Provincial Council, CBA National meeting, out of town local bar association meeting, a call or judicial welcoming ceremony).

7.2 Volunteers with advance approval will be reimbursed for reasonable expenses on presentation of receipts and in accordance with the Member Travel and Expense Guidelines, attached as Appendix “B”.

7.3 Members who are not Volunteers who are approved in advance by CBABC staff to incur expenses in fulfillment of a CBABC objective may also submit expenses in accordance with the practices in Appendix “B”.

7.4 Any expense submitted which does not meet requirements for reimbursement will be reviewed by the CEO for confirmation and final decision.

8. Key Operating Procedures

8.1 The DFA shall prepare and maintain documentation of standard operating procedures which includes details of the accounting systems, general ledger codes, an outline of the processes to be followed by staff with respect to managing revenue and expenditures, and the responsibilities of the accounting staff.

8.2 All funds received by CBABC in the ordinary course of its operations shall be accounted for and applied in accordance with the objectives of CBABC, this Financial Policy and operating procedures in effect.

8.3 All applications for grants or funding on behalf of CBABC for any CBABC activity or project must be submitted in writing to the CEO for approval and in a case where two or more applications are made to the same funding agency, the CEO shall set the priorities of the applications.

8.4 Contracts for expenditures in excess of $5,000 related to

member services and programs must be signed by the CEO or the Senior Director of Membership, Engagement and Strategy; and
any and all other expenditures must be signed by the CEO or DFA.

8.5 Payments of expenses, except the CEO’s expenses, will be made in accordance with these steps:

the staff member responsible for the program, activity or goods and services acquisition will confirm the accuracy of the invoice, request for reimbursement, and delivery of goods or services against budget and/or any applicable contract;
the CEO will review and approve the proposed payment; and
the Chair will review and approve the proposed payment.

8.6 Payment of the CEO’s expenses will be made following review and approval by the President and the Chair.

8.7 Notwithstanding the approval process set out in s. 8.5 and 8.6,

if the CEO is unable to fulfill their approval power, the DFA is authorized to review and approve in their place;
if the Chair is unable to fulfil their approval power, any one of the President, First Vice-president and Second Vice-president are also authorized to review and approve in their place.

8.8 Invoices and requests for reimbursement for budgeted operating expenses will ordinarily be paid by electronic funds transfer within 30 days of receipt of an invoice or request, and within 60 days if payment is by cheque.

8.9 Where purchases of items or services authorized by the capital budget will be in excess of $10,000, the CEO may require three written quotations by potential contractors and, subject to quality and service and a preference to deal with BC-based suppliers, the lowest of the three tenders should normally be used.

8.10 The CEO must report to the Board any expenditures which will result in a department’s actual expenditures being over budget by less than $15,000. Any variance reflecting an increase of $15,000 or more a department’s actual expenditures must be reported and approved by the Board.

9. Signing Authorities

9.1 The authorized signing authorities for cheques or investment transfers are the CEO and Chair or another Officer. In the absence or unavailability of the CEO, two Officers may sign cheques or transfers.

Appendix "A"

The Canadian Bar Association – BC Branch

Investment Policy and Guidelines

(Revised June 2020)

1. Introduction:

CBABC has developed the following investment policy and guidelines for its Operating Fund and Restricted Reserve Fund. CBABC is committed to ensuring that the fundamentals of sound investment are met in terms of safety, liquidity, appreciation and return. Investments may be made that further the purposes of the CBA if the overall return on assets is maintained at a level that does not jeopardize the operations of the CBA.

2. Investment Goals and Objectives:

Investment decisions will be made so as to achieve long-term financial stability for the CBA and to sustain and strengthen its mandate as a professional association.

Investments will be made through a diversified and balanced portfolio. The investments shall be consistent with a conservative risk profile for the operating fund and relatively conservative profile for the restricted reserve fund to accomplish the following objectives:

preserve the capital required to fund CBABC’s operations;
preserve the purchasing power of CBABC’s reserve funds by achieving growth adequate to offset inflation; and
achieve modest capital growth wherever possible subject to the realities of the market and the economy.

3. Portfolio Administration:

Decisions as to fund placement will be made by CBABC’s Executive Director, Finance & Administration Manager and Chair of Finance & Audit Committee [the “Administrators”]. CBABC may retain a financial advisor [the “Financial Advisor”] whose responsibilities are to monitor the investments, report annually to CBABC, make recommendations for the reinvestment of maturing investments and generally provide advice and assistance consistent with the Financial Advisor’s expertise and the investment policy and guidelines of CBABC.

The Executive Director will report annually to the Board on the performance of CBABC’s investments.

4. Eligible Investments and Asset Allocations:

Asset Mix:

The CBA’s funds shall be invested with the objective of maximizing earning potential while also preserving capital and providing for ease of access to funds. The asset mix shall be set so as to achieve the investment objectives of the CBA within the restrictions of the regulatory environment.

A Benchmark Portfolio consisting primarily of bonds and equities will form the basis of the strategy. Based on recommendations of the Financial Advisor, the Administrators will be entitled to make use of the other acceptable securities as set out below, as a substitute for this Benchmark Portfolio in order to enhance returns.

The Administrators may alter the portfolio mix within the bounds set out above to take account of shorter-term fluctuations in the market and economic cycle. A common allocation strategy shall apply to both the Restricted Reserve Fund and the Operating Fund as set out in the table below. The targeted minimum and maximum allocation, as a percentage of the market value of the CBA’s funds, is as follows:

CBABC Asset Allocation
	Operating Fund			Restricted Fund
	Target	Minimum	Maximum	Target	Minimum	Maximum
Cash	0	0	0	0	0	0
Fixed Income & Bond Index	100	100	100	40	30	50
Canadian and Global Equity	0	0	0	60	40	60

Investment Guidelines and Restrictions:

The Administrators are expected to exercise due prudence in the management of the CBA’s Funds and to diversify investments sufficiently to minimize the risk of substantial losses. In that management:
1. The duration range of the Universe fixed income portfolio is plus or minus 2 years of the FTSE TMX Canada Overall Bond Index’s duration.
2. “BBB (low) and Above” rated holdings can make up to 100% of the Universe fixed income portfolio’s market value. “BB (high) and Below” rated holdings can make up to 40% of the Universe fixed income portfolio’s market value.
3. “CCC (high) and Below” rated holdings can make up to 5% of the Universe fixed income portfolio’s market value.
4. Individual issuer concentration guidelines are Canadian Provincial and U.S. Treasury (40% maximum), Corporate Bonds rated “BBB (low) and Above” (5%), Corporate Bonds rated “B (low) to BB (high)” (2%), Corporate Bonds rated “CCC (high) and Below” (1%), conventional mortgages (1%), and government-guaranteed mortgages (2%).
5. Investment grade corporate bond holdings can compose up to 80% of the portfolio.
6. Individual common stocks will be listed on a recognized stock exchange at the time of purchase.
7. Lending of securities is permitted pursuant to appropriate agreements and documentation and approval of the Administrators. With any investments in a PH&N Fixed Income Fund, the Fund may enter into securities-lending, repurchase and reverse-repurchase transactions to generate additional income and/or as a short-term cash-management tool.
8. Equity private placements may not be made without prior approval of the Administrators. Investments in liquid fixed income private placements will be permitted, where liquidity requires an intermediary (no direct placement with the borrower), and a minimum of ten investors.
9. The voting rights on securities held in the portfolio are left to the discretion of the Investment Advisor. The Investment Advisor is expected to act in good faith and to inform the Administrators of any upcoming vote that may significantly affect the value of the securities.
10. Ratings are determined by reference to a recognized rating agency and apply at the time of purchase. In the event of multiple ratings, the majority will be used.

5. Use of Derivatives:

CBABC may use derivatives, such as options, futures and forward contracts, for hedging purposes, to protect against losses from changes in interest rates and market indices; and for assets or cash to cover its commitments under the derivatives. CBABC cannot use derivatives for speculative trading.

6. Financial Advisor Responsibilities:

The duties and responsibilities of the Financial Advisor include:
1. adhering to these policies and procedures;
2. communicating with the Administrators on a regular basis and notifying the Administrators in the event the Investment Advisor believes that the guidelines are adversely affecting performance or are unattainable;
3. notifying the Administrators of any changes in economic or market circumstances which may adversely affect the investment strategy;
4. notifying the Administrators of any changes in the Financial Advisor’s investment personnel or ownership or other factors that may influence the investment process;
With the approval of the Administrators, the Investment Advisor may hold any part of the portfolio in one or more pooled or comingled funds managed by it, provided that such pooled funds are expected to be operated within constraints reasonably similar to those described in the mandate. It is recognized that complete adherence to the mandate may not then be entirely possible; however, the Investment Advisor is expected to advise the Administrators in the event that the pooled fund exhibits, or may exhibit, any significant departure from this investment policy or the mandate of the CBABC.

Appendix "B"

The Canadian Bar Association - BC Branch (the "CBABC")

Member Travel and Expense Guidelines

1. General

Purpose: It is the purpose of this policy to establish those policies and procedures which apply when Members incur travel and other expenses on behalf of the CBABC which are authorized by the Operating Budget.

Review and Distribution: This policy may be reviewed annually, and updated policy and forms and schedules will be provided to all volunteers in the CBABC who may be required to travel or conduct business on behalf of the Branch.

Administration: This policy will be administered by the CBABC Executive Director, and requests for reimbursement are to be submitted to the CBABC Accounting Department for review and approval. The CBABC accepts no responsibility for expenses which are not incurred in compliance with this policy.

2. Travel Arrangements

Authorization: Travel for specific CBABC meetings, such as Board and Provincial Council, are automatically authorized. All other travel on CBABC business (including travel for guests and meetings, etc.), for which it is intended that reimbursement will be requested, requires prior authority from the CBABC Executive Director or designate.

From time to time, the CBABC may require that travel, lodging, or meals be conducted with a particular carrier or facility, for specific events (e.g. Council meetings), in order to achieve economies of scale. On such occasions members affected will be notified in advance.

3. Air Travel

Class and Fare: Members are required to take advantage of advanced booking discounts or seat sales wherever possible (regardless of whether a stopover or stopovers may be required).
Frequent Flier Program: Members are entitled to personal benefit from such programs, provided that under no circumstances may a member select a more costly flight on the basis of participation in such a program.
Unused Tickets: Unused tickets are to be forwarded promptly to the CBABC.

4. Lodging

Preferred Hotels: A list of preferred hotels and discounted rates is available through the CBABC. The CBABC has negotiated rates with these facilities and has assured a suitable level of comfort and convenience for members. Members are expected to utilize these hotels unless there is no availability at hotels on the list.
Accommodation Type: Generally, members are expected to book rooms at the standard room rate offered by the property for the event at which the Member is attending. Any additional costs by use of suites, executive floors and concierge levels, or similar arrangements, are the responsibility of the Member. Reimbursement will be at the preferred hotel discounted rate for standard rooms.
Host Per Diem: Members may, upon request, be reimbursed, as an allowance, the sum of $33.00 per night spent by the Member in a private residence. It is intended that the host per diem be paid to, or used for the benefit of, the host family or friend providing the private residence.

5. Ground Transportation

Car Rentals: Avis and Budget are the CBA preferred suppliers. Members are requested to book the lowest available rate for the vehicle class being rented. Generally, members are expected to rent compact to mid-sized cars for reasons of efficiency of economy. If for safety reasons, or if there are 3 or more members travelling together, the rental of larger vehicles is permitted. In addition, Members may claim actual gas expenses (with submission of receipts), but are then not entitled to claim the kilometerage described in C. below.
Taxis: Taxi transportation is permitted where necessary, to and from airports, hotels and in like circumstances, or (where appropriate in the circumstances) to a personal residence. In addition, taxi expenses for attendance at scheduled meetings of Board, Provincial Council or other meetings may be reimbursed, subject to provision of receipts.
Personal Vehicle, Ferry, Road Toll and Parking Expenses: Where appropriate for reasons of efficiency or economy, travel by personal vehicle will be permitted, and will be eligible for reimbursement at the rate of $0.55/km, for travel on CBABC business, commencing and/or ending at the Member’s home or normal place of business, as the case may be.

Ferry travel and road toll charges will be reimbursed at actual cost for the Member and/or vehicle only, subject to provision of receipts.

Parking expenses for attendance at scheduled meetings of Council, Board, and other meetings may be reimbursed, if a rental vehicle or personal vehicle is used instead of a taxi.

6. Hosting

Certain designated Officers of the CBABC are permitted or required by the President on occasion to host coffee or a meal for other persons on behalf of and in the interest of the CBABC. Identity of the persons entertained, and the purpose, must be provided in the reimbursement request.

7. Personal Expenses

Meals: While traveling on behalf of the CBABC for duties directly related to their positions, and provided the expense is contemplated within the Operating budget, members will be reimbursed for meal expenses, exclusive of alcohol, up to the following limits (inclusive of taxes) and all meal expenses must be documented by receipts:

Breakfast

$15.00

Luncheon

$20.00

Dinner

$40.00
Other Expenses: Members incurring expenses for administration functions incidental to or directly related to the functions of a Committee, Task Force, Section or Council may be reimbursed for certain expenses as follows:

Photocopying: Wherever practicable, photocopying should be done by the CBABC Office; however in cases where it is not practicable to do so, Members may be reimbursed for photocopying at $.06/page or – where actual costs exceed $.06/page – at actual cost (not to include firm administration charges, and not including sources external to the Member’s firm) on approval of the Executive Director and subject to the provision of receipts.

Postage and Courier Charges: Members may be reimbursed at actual cost of courier services or mailing, and are encouraged to exercise discretion in the use of couriers in order to minimize cost to CBABC.

Telephone and Fax Charges: Members may be reimbursed at actual cost (not to include firm administration charges), subject to the provision of detailed accounts and receipts.

Dependent Adult or Child Care: Reasonable expenses for dependent adult and child care incurred in order to attend meetings of Provincial Council, Board or other Committees shall be reimbursed in accordance with the Policy set out in Appendix “C”. Claims should include receipts indicating the date and hours, the name and address of the caregiver, names and ages of the child(ren) or dependent adult, and should be submitted with the appropriate form.

8. Documentation

Suitable receipts in substantiation of claims include:

In the case of air travel, the passenger ticket/invoice confirmation;
in the case of lodging, the hotel folio as well as a payment receipt;
in the case of vehicle rental, the rental agreement and a payment receipt; and
in the case of other expenses, a credit card receipt, cash register receipt, or written receipt showing details of the expense incurred.

9. Reasonableness

When incurring expenses on behalf of the CBABC, Members should always be guided by the principal that the CBABC is a not-for-profit organization with limited resources. Members are asked to be reasonable and use prudence when choosing among options, and to choose the lowest cost alternative wherever possible.

10. Processing

Requests for reimbursement should be made on the appropriate form, and must be fully completed as to date of expense, purpose or nature of expense, and receipted properly.
Forms requesting reimbursement should be submitted to the CBABC Office within 60 days of the expenditure for which reimbursement is requested.

Appendix "C"

The Canadian Bar Association - BC Branch (the "CBABC")

Dependent Adult and Child Care Expense Policy Guidelines

The reasonable expenses for the care of dependent adults and children of Members (“Expenses”) will be reimbursed by the Branch incurred during the hours of scheduled Provincial Council, Board and Committee meetings, and for travel to and from each meeting;
Claims for the Expenses may be made only in those circumstances that other claims for expenses may properly be submitted to the Branch and all general policies applicable to claims for Provincial Council, Board and Committee expenses apply to this policy;
The Expenses may be claimed only for the care of dependent children and dependent adults;
Except with prior leave of the Branch, the care must be provided by a non-family member;
Receipts for actual expenditures for care must be attached to the claim and each receipt must specify the date and hours worked on each date, the name and address of the caregiver and the names of the children or adults cared for during the claim period;
For budgetary purposes, annual estimates of anticipated Expenses are to be submitted to the Branch;