How member bills are calculated
How it used to work
Under the previous billing calculation, members were billed on the basis of 4% of the previous month’s actual expenses (including direct costs, excluding depreciation and bad debt), followed by a reconciliation of the full fiscal year at the close of the audit.
We recently had a spate of members being hit with surprisingly large reconciliation bills at the close of the audit. Causes of these underbilled amounts included bills that were not approved in a timely fashion and thus are not captured in the monthly billing process; expenses that were dated in a prior month based on bill date or period of service, and so similarly were not captured in the monthly billing process; and expenses that were accrued during the audit as a normal part of closing the books for a full fiscal year.
How it works now
At the ArtsPool Operations Committee meeting on June 12, 2019, the Committee approved a change to the procedures for calculating members’ monthly ArtsPool fees to alleviate end-of-year pressure and ensure more accurate billing throughout the year. Beginning with the July 2019 bill, ArtsPool will:
- Each month, pull a report for billing purposes on expenses billed during the member’s full fiscal year to date;
- Subtract out expenses actually billed on during previous months of the fiscal year; and
- Compute the member’s 4% fee on the basis of the difference.
In this manner, post-dated and late-approved expenses will be captured throughout the year, rather than all at once at the end of the audit.
A full-year reconciliation will still be necessary to capture any new expenses booked at the direction of the auditors, but this billing process change will make that final reconciliation less impactful.
What this means for members
In general, to the extent that members have been submitting and approving bills in a timely fashion, you should see no ongoing change to the amounts of your ArtsPool bills. To the extent that members have been submitting or approving bills late, you may see a small rise in your monthly ArtsPool bill, but this will be offset by a less impactful end-of-year reconciliation.
- For members with fiscal years ending June 30, this new process will begin with your first bill of FY20. A reconciliation of the full FY19 according to the old procedure will still be necessary.
- For members with fiscal years ending at other times in the year, your July bill will include a reconciliation of your FY19 to date under the new process.