Wikimedia Foundation Audit Committee/2024-02-27
February 27, 2024
Audit Committee Meeting
10:15 am PST - 18:015 UTC
Remote
Participants
WMF Chief Executive Officer: Maryana Iskander WMF Board Chair: Nataliia Tymkiv Audit Committee Chair: Kathy Collins Audit Committee Members: Lorenzo Losa, Raju Narisetti Audit Committee Alternates: Mike Peel, Luis Bitencourt-Emilio *(alternate as of March 2024) Audit Committee Advisors: Julian Singh, Michael Snow, Tanya Capuano Staff Liaison: Jaime Villagomez Other Staff: James Baldwin, Nadee Gunasena, Helen Pang, Shelby Langan, Andy Cooper, Aeryn Palmer, Lisa Gruwell, and Amy Vossbrinck
Kick Off and Approval of December 12, 2023 Minutes
Move to approve minutes: Raju
Seconded: Kathy
Unanimous approval by voting members.
Audit Committee Charter - presented by the Audit Committee Chair
The Chair presented to the Audit Committee the progress made to review and revise the charter. While the Charter rewrite is a work in progress, led by the WMF Controller, we have reviewed other charters and published guidance. The suggested revisions to the Charter are focused on improving transparency and purpose by clarifying and consolidating responsibilities described under the Charter. There was discussion about clarifying where the Committee had approval authority versus review. Further edits or suggestions regarding the Audit Committee Charter are welcomed from Audit Committee Members. Further refinement will take place over the summer with a vote anticipated at the Committee’s August meeting. Management will ask Legal to review the draft revised charter.
FY 25 Budget Planning/Multi-Year Projections - presented by Senior Director of Finance Strategy and Planning
The Sr. Director of Finance presented for Committee feedback on our progress on our multi-year financial model. He discussed changes in assumptions for revenues and pay raises since the December meeting. He also explained the salary market benchmarking process. The modeling presented 3 financial scenarios. Under each scenario, the total revenue _target was matched with the associated expense budget.
The financial scenario modeling presented covers the next three years. Year 1 = FY25 (next year), Year 2 = FY26, Year 3 = FY27
Base Case - This scenario would fund existing commitments with inflationary year-on-year cost increases only. It matches the Foundation’s current moderate expectation for revenue growth. The budgetary increases are principally driven by the largest cost categories: Personnel and Grants. Other budgetary categories such as Staff convening and collaboration drive costs, as do a few other areas, to a lesser extent.
Incremental Investments - This scenario resources minor additional investments in a few _targeted areas including more aggressive fundraising resourcing. Several items have been identified as potential priorities for these additional resources, but this scenario features added investment in grants and, increased in-person Staff team convening and collaboration.
Declining Banner Revenue - This scenario is a conservative, what-if scenario that models banner revenue declining gradually over three years to result in 15% drop from in FY24, with no other significant declines to other revenue streams. The scenario reflects potential reductions in major cost drivers in line with that revenue reduction.
The Base Case Scenario will be presented to the Board in March as the basis for the first draft of the FY25 budget. Between March and June, there will be updated information from our fundraising campaigns and Wikimedia Enterprise revenue that could lead to revising the FY25 budget, which will be presented to the Board of Trustees in the upcoming meeting in March.
Investments - presented by the CFO and the Technical Accounting and Financial Reporting Principal
A revised Investment Policy was presented to the Audit Committee reflecting the feedback from the Audit Committee Meeting on Dec 12, 2023. The following updates were made to the Foundation’s Investment Policy:
An update to reflect policy language, including clarity of roles and responsibilities of the Audit Committee and Treasury, and spending authority.
A moderate increase in the equities asset allocation in Long-Term fund and revision to the Long Term Fund _targeted benchmark to reflect the increased equities asset weighting.
A Spending Approval Policy was added to specifically describe the Foundation’s procedures to withdraw funds from the Short-term Reserve Fund or the Long-term Reserve Fund, in line with the Foundation’s Board approved Annual Plan
The chair flagged changes that were made related to ESG and the new language in the policy that requires annual reporting to the Audit Committee on the ESG profile on the investments.
Move to approve the updated policy: Kathy
Seconded: Luis
Unanimous approval by voting members.
The Committee also endorsed the following decisions regarding the accounting policy elections related to investments: Continue to record fixed income securities as available for sale (fair value), versus held to maturity (amortized cost), in accordance with allowable elections under accounting standards. Unrealized gains/losses will be presented as nonoperating in the Statement of Activities (income statement).
Enterprise Risk Management - presented by the Controller and Director of Product Security
Annually, the Board of Trustees and the Audit Committee approve the risk narrative in the annual plan of the most severe risks to the Foundation.
The Audit Committee reviews and discusses with management the Foundationʼs risk assessment, metrics, the management of major risk exposures, and the steps management has taken to monitor and control such instances.
ERM oversight is monitored by and integrated into:
Senior Leadership and Shared Services in monthly meetings where risks and mitigations, and any metrics are presented to discuss, receive updates on, and learn more about the organizationʼs key risks and strategic direction.
Annual Planning: Oversight and approval of risk management activities is integrated into Annual Plan activities to ensure that the organization has identified and assessed risks the organization faces and has established a process capable of addressing and reducing risks to an acceptable level, and has key metrics in place where feasible.
ERM Leads and Coordinators/Legal and F&A: Oversee the design of ERM and its practices, coordinating risk topics, meeting with risk owners/stakeholders, discussing if mitigations are on track, and developed, including metrics, and guide risk owners and its stakeholders through the presenting process to conduct risk topics in oversight meetings.
The Committee agreed that an ERM update should be part of each Audit Committee meeting.
Form 990 Plan and Timeline presented by Technical Accounting and Financial Reporting Principal
The Foundation is on track to submit the Form 990 to the IRS before May 15. KPMG will present the Form 990 at the April Audit Committee meeting for the Committee’s approval.
In addition to publishing the Form 990, an executive summary, FAQ and Diff post will be provided. The Board of Trustees will have 7 days to review the Form 990 before it is filed with the IRS.
April Agenda Topics and Questions
Next Audit Committee April l6 - 9:30 am PDT/16:30 UTC
Proposed Agenda
Approval of Form 990-KPMG Presentation
Audit Committee Advisory Members Renewal
Further discussion of the Revised Audit Committee Charter
Legal and Fraud Update
KPMG Auditor Selection Approval FY24
ERM Update
Respectfully submitted, Amy Vossbrinck