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2006 AUDIT AND TREASURER'S REPORT TO THE MEMBERSHIP

• SCB Receives a Clean Audit for 2006
• Treasurer Report's for Fiscal Year 2006

SCB Receives a Clean Audit for 2006

The financial audit for 2006 is now complete, and we are pleased to have a "clean" audit opinion from Rubino and McGeehin, our new audit firm. The audit took longer than expected because of our transition to the new firm. Although the delay is regrettable, the audit process offered important guidance on how to improve SCB accounting. Examples include continued careful control of meeting bank accounts by the Executive Office as well as limited use of an outside accounting firm for quarterly review of some accounting entries. We are implementing all of the audit recommendations.

The success of the audit would not have been possible without the effort of our dedicated staff. We now look forward to a (faster!) audit for the 2007 fiscal year, which will begin soon.

The 2006 Audited Financial Statements are posted on SCB's Web site at www.conbio.org/AboutUs/finalaudit112907.pdf

Maynard Davis, Chair, Audit Committee
maynard.davis@wwfus.org

Treasurer Report's for Fiscal Year 2006

The audit of our 2006 finances has been completed and we received a good report. Our financial tracking and reporting system has been brought into conformance with the auditor's preferences, which means I can now provide you with audited financials for 2006. In future years, the lag between the end of the fiscal year and the audit report will be shorter. As I noted in the November 2007 newsletter, the rules governing financial management and audits have become more stringent and we had a new auditor for 2006.

Highlights

-- We ended the year with a positive balance (about $98,000). Income was 102% of planned and expenses 97% of planned. This reflects continued effort by the Executive Office to control expenses and factors such as the timing of new hires (e.g. we hired a Policy Director in late 2006, but had budgeted for the full year).

-- Overhead costs (administration and development) not directly attributable to programs are quite low (< 5%).

-- Our cash position at the end of the year -- always just a snapshot -- was good (about $371,000), with significant additional assets somewhat less liquid but available.

-- SCB's main sources of revenue continue to be publications (about 50%) and the annual meeting (about 27%). Our flagship journal, Conservation Biology, continues to generate funds for other programs, as it has for many years. Nevertheless, I am pleased that income was more diverse in 2006, with more support coming from contracts and grants (e.g., grants to regional sections and for our policy program). This diversification is due to the efforts of the Executive Office staff and members of the Board of Governors.

-- The 2006 annual meeting raised 140% of planned income; expenses also were somewhat higher than planned (115%). The meeting showed a surplus even after providing support for students and some international attendees. Income from future annual meetings will vary, in part based on venue, and in part because a substantial portion of the revenue is derived from sponsors and exhibitor fees rather than registration.

-- Expenses also were mostly associated with publications (about 47%) and the annual meeting (~26%).

-- Staff costs comprised 27% of expenses, and contractor costs (accounting, professional services) another 5.5%.

-- Although income was higher than planned, there were some significant differences between planned and actual income for several programs. Income from Conservation Biology was lower than planned, partly due to a decline in income from individual subscriptions. SCB received $45,000 from Blackwell to support membership services (the database for individual subscribers). Income for Regional Sections and local chapters increased due to higher than anticipated income from the Europe Section meeting. Conservation magazine continues to raise funds and secure sponsors as its circulation grows.

-- The Board Designated Reserve stood at $1,184,026 at year end, representing 12.5% growth from investment income. This was above the market average and particularly respectable given market volatility. Although the balance may appear substantial it represents less than six months of core operational expenses, considered by many to be a minimum reserve. SCB faces several challenges. In 2008 we will need to move to a new office; a purchase makes good economic sense and will require a portion of the reserve as a down payment. As initial support for internationalization comes to a close, funding the Sections outside of North America and Europe remains a challenge. Reserves also are important in being able to take advantage of unanticipated opportunities.

With respect to fiscal management, we will work to implement the auditor's recommendations for improvements and further integration of financial and program reporting in order to gain a better understanding of how expenditures relate to program goals and achievements.

David Johns, Treasurer

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