Spending and Budget Exception Policy

Owner: Treasurer
Originally Board Approved: 2017
Last Revised: January 23, 2019
Last Reviewed: January 23, 2019

1. PURPOSE

In the normal course of MODS’ operation, there will be instances where operating revenues or expenses materialize at a level higher or lower than budgeted for. This policy concerns the process by which willful exceptions to budget are approved, as a means of ensuring sound financial management relative to the budget that the MODS board approves at the beginning of each fiscal year.

In addition, this policy is meant to bring clarity as to the mechanism by which all spending – budgeted or unbudgeted – is approved.

2. POLICY

2.1 DEFINITIONS

‘Willful exception’: relates to decisions or actions taken by MODS’ staff or board members that carry a known or anticipated financial impact - e.g. conscious expenditure; deliberate reduction of program fees. Distinct from non-willful budget impacts - e.g. lower-than-budgeted program revenues resulting from lower-than-budgeted enrollment.

‘Net adverse financial impact’ (NAFI): refers to expected unfavourable impact to MODS’ income statement, i.e. expense over budget, or revenue under budget.  The word ‘net’ provides for the fact that new programming is often created in year that has revenue offset to any incremental expense.  For instance, an unbudgeted expense of $5K has zero NAFI if it comes hand in hand with $5K of incremental revenue. Note: NAFI can either be known with certainty (e.g. invoiced expense) or expected with less than 100% certainty (e.g. best estimate of impact of a pricing decision).

2.2 BUDGET EXCEPTIONS

Willful exceptions to MODS’ budget require the following approval(s) by level of materiality:

  1. NAFI of <$1K: requires approval of Director of Business & Sport Development.
  2. NAFI of $1K-$3K: requires acknowledgment by DBSD and approval by MODS Treasurer.
  3. NAFI of >$3K: requires acknowledgment by MODS Treasurer and approval by MODS Board (by majority vote).

2.3 SPENDING AUTHORITY

By default, any spending on MODS' behalf - budgeted or unbudgeted - must have the prior approval of the Director of Business & Sport Development, who maintains day-to-day responsibility for the execution of MODS' budget. Only by majority vote of MODS' board of directors may an expense be: approved where previously denied by BSD Director, or denied where previously approved by BSD Director. For clarity, such spending approval is required for any staff, director (board member) or any other person intending to incur expense on MODS’ behalf. For amounts exceeding $50, approval must be documented in writing; for amounts less than $50, verbal approval is sufficient.

The Director of Business & Sport Development is authorized to approve any single expenditure of less than $10,000 that is accounted for in MODS’ board-approved budget. For single expenditures exceeding $10,000, written acknowledgment — in the form of cheque signature or written communication — is required from MODS’ Treasurer or President.

Where reimbursements for expenses are to be paid to someone with signing authority for MODS, reimbursements exceeding $500 must have the prior approval of MODS’ President or Treasurer (not to be the person being reimbursed). For reimbursements less than $500, no prior approval is required. All reimbursements to staff or other authorized signatories are to be reviewed – along with their supporting documentation - routinely by MODS’ Treasurer.

Any spending falling outside the budget is subject to the Budget Exception Policy as outlined above.