Special Section
Consolidated Financial Statements for the Year Ended December 31, 2020 REPORT OF THE NATIONAL SECRETARY/TREASURER The annual financial audit was performed by the firm selected by NARFE’S Audit Committee. NARFE’s annual financial reporting is shown as a Consolidated Statement of Accounts in accordance with AICPA standards. All accounts—investment accounts, general operating and capital accounts, and NARFE-PAC funds are consolidated for one summary report. NARFE has ended fiscal year 2020 with a surplus in general operating funds. NARFE policy on investments only in equities and bonds remains very conservative. The NARFE investment portfolio is well managed by Morgan Stanley with oversight by NARFE’s secretary/treasurer and final decisions by the National Executive Board (NEB). We ended 2020 with an increase in investment earnings. Fiscal year 2020 was a different year. Like every other business, our financial operations were affected by the pandemic. Many normal costly events handled in the past were curtailed, resulting in overall savings. From oversight by the Budget and Finance Committee to more emphasis on accountability by the NEB, we are adjusting to a new normal. The Configuration Advisory Board (CAB) charter was updated, and they instituted a new tracking system for improved monitoring of our new data management system (AMS). AMS should be fully implemented in 2021 as we deal with some quirks that affect not only Headquarters accounting but also the verification of reports for the field organizations. As we determine further improvements to the accountability of NARFE operations, we are aware of the human elements—our staff and our members—to whom we owe our gratitude for their dedication and assistance. A special thank you to Region VII Vice President Rodney Adelman for his persistence as he urged for better controls and documentation in his extra roles as the NEB’s chair of the Audit Committee and compliance officer for the past five years. He has provided outstanding service to NARFE. —Kathryn E. Hensley
REPORT OF THE NATIONAL EXECUTIVE BOARD AUDIT COMMITTEE The National Executive Board (NEB) Audit Committee held a videoconference on April 5 with our auditors, Marcum LLP, first with the NARFE National Officers and staff and then privately, to review the draft audit of NARFE’s financial statements for the year ended December 31, 2020. National Audit Committee members participating were Region VII Vice President Rodney Adelman (Chair), Region II Vice President Gary Roundtree Sr., and Region IX Vice President Linda Silverio. The auditors provided a comprehensive review of NARFE’s Consolidated Financial Statements and their Governance Letter. The auditors reported finding no material weaknesses in internal controls and have provided an unqualified opinion on our financial statements, a “clean” audit. Of note, the 2020 audit was done entirely remotely due to Covid-19 precautions. The audit confirmed a $1,432,726 gain in net assets, primarily due to investment income of $1,185,039 and a reduction in expenses of $1,465,209. However, membership loss continues to be a concern. Pursuant to the Audit Committee’s recommendation, the NEB unanimously voted on April 23 to accept the audit. Based on the results of the audit, the Committee commends NARFE senior management and staff for their contributions to qualitative financial reporting. After having served as the National Audit Committee Chair for the last five audit cycles and as the NARFE Compliance Officer since the position’s inception in late 2016, I have decided to step down from these positions. It is time for some “new blood” and a different perspective. It has been a pleasure to serve. —Rodney L. Adelman, Chair
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