- Audit Committee Meeting
- September 28, 2015
- Wikimedia Foundation Office/San Francisco
- 10:00 - 11:30 PDT (17:00 - 18:30 GMT)
- Participating by phone:
- Matt Bisanz, Abhijith Jayanthi, Denny Vrandecic, and Alice Wiegand
- Participating in person:
- Garfield Byrd, Terry Gilbey, Tony Le, Amy Vossbrinck, and Stu West
- Participating from KPMG:
- Nancy Rose, Karen Cordeiro, and Jeremy Peters
- 1 Approval minutes
- 2 Audit Report with KPMG
- 3 Questions
- 4 Chapter Financial Review Reports – Norway, Estonia and Italy
- 5 Change in Gift Threshold(s) requiring internal review/board approval
- 6 RFP Audit and Tax Service Report
- 7 Real Estate RFP Report
- 8 Personnel Change
- 9 Action Items
- 10 Executive Session
The minutes from the July 30, 2015 Audit Committee Meeting were approved via email and posted prior to this meeting.
Audit Report with KPMG
Nancy Rose, the lead engagement partner and Karen Caderio from KPMG presented the audit findings. Jeremy Peters from KPMG assisted with the audit this year and will be the lead engagement partner going forward.
The engagement responsibilities for WMF management, the WMF Audit Committee and KPMG were reviewed.
There were no significant changes made in the KPMG audit plan dated August 3, 2015. There were no material deficiencies found and the audit was clean. Items to which KPMG drew the Audit Committee’s attention were:
• Because the Chapters are independent entities, transactions between the Chapters and WMF are not considered related party transactions
• One grant for $150,000 that should have been reported in 2014 was reported in 2015 so the 2015 P&L was overstated by that amount.
There were no disagreements with WMF management.
Management now breaks out expenses in more granularity than in previous years, which was the only change in reporting noted by KPMG.
Why is it necessary for WMF to make a yearly assessment regarding the independence of the Chapters? U.S. law requires that transactions between WMF and the Chapters be conducted at arms length. If, during the audit, KPMG determined that the transactions were not conducted at arms length then a more extensive disclosure regarding the transactions would be required. Further disclosures are not needed.
There was a question regarding the growth of both program and overhead expenses. Program expenses grew by 12% while overhead expenses grew by 25%. Outside groups frequently check program vs. overhead expenses to access the effective use of donated funds. The primary causes for the increases in overhead were trademark work in the Legal Department and the remodeling of the 5th floor. WMF could choose to allocate those expenses across the programs, but it does not. WMF does allocate rent across programs. For the last five years WMF has continued to spend between 66 – 68% of the budget on program.
Income levels for WMF may change going forward as the Foundation looks to establish an endowment and the ability to raise funds on line – with the shift to more people accessing Wikipedia on mobile devices – is not as robust. WMF may be hitting the limit regarding what is natural and possible to raise.
The question was asked regarding adequate staffing in the WMF Finance Department. Tony indicated that the department is adequately staffed. WMF is in the process of drafting the JD to hire a new CFO. The Audit Committee will be asked to interview the one or two final candidates for the position.
The Audit report was approved and will be signed on September 29, 2015. It will be emailed to the Board and to the Audit Committee.
Internal Audit This fall, KPMG will be conducting an internal audit/gap analysis (comparing the actual performance of WMF to the desired performance). This audit will enable the Foundation to focus on growth issues and check internal controls and operational processes.
The results of the KPMG internal audit will be shared with the new CFO.
Garfield thanked Tony for all of his hard work on the audit. Terry thanked Garfield and the Finance Team and acknowledged Garfield’s legacy.
KPMG representatives left the meeting.
Chapter Financial Review Reports – Norway, Estonia and Italy
Garfield reported out on the just completed Financial Site Visits to the WMF Chapters in Oslo, Tartu and Milan.
Change in Gift Threshold(s) requiring internal review/board approval
The Audit Committee agreed that the threshold for Board review of gifts/grants should be raised to $100 - $250, with a carve out for anything unusual depending on the donor. Restricted grants should also continue to be reviewed by the Board. Garfield will amend the Wikimedia Foundation Gift Policy to reflect these recommended changes and send the document to the Legal Department with a copy to the Stu, Chair of the Audit Committee.
The amended policy recommendation will be presented to the Board by the Chair of the Audit Committee via email or at the next Board Meeting.
RFP Audit and Tax Service Report
RFPs were submitted by: KPMG; BDO; Burr, Pilger, Mayer; Clifton, Larson, Allen; Crowe Horwath LLP; Grant Thornton LLP; McGladrey LLP; and Moss Adams LLP.
A selection will be made by the end of October and the finalist(s) presented to the Audit Committee by the Chair of the Audit Committee for consideration. Work with the firm chosen will cover FY 2016-17 and is anticipated to begin in March 2016.
WMF may want to consider setting up a 10 – 20 hour trail project for the final candidate firm(s) just to better understand their ability communicate and to access their understanding of the tech/non profit world.
Real Estate RFP Report
This item was added to the agenda during the meeting. The lease on the current office space in San Francisco expires September 2017. Through an RFP process, CBRE was selected as the WMF real estate partner. It is estimated that the assessment phase will take about six months at which time it will be appropriate to take the findings to the Board for their input.
An assessment will be done regarding space needs going forward. WMF is currently paying $40.00/sq. ft. but similar spaces in the Bay Area are now going for $70.00/sq. ft. Moving would also be expensive; the cost would be manageable but not insignificant.
Garfield will be leaving his position as Chief of Finance and Administration effective October 1, 2015. He will continue on a consulting basis through December 31, 2015 to monitor the annual renewal of insurance policies and WMF investments.
Stu thanked Garfield for the extraordinary transformation of WMF that he helped to oversee.
Garfield - Amend the Wikimedia Foundation Gift Policy to reflect the recommended changes and send the document to the Legal Department with a copy to the Chair of the Audit Committee. Tony – Send the signed Audit Report to the Board and to the Audit Committee.
There was a brief executive session.
Submitted by Amy Vossbrinck