Wikimedia Foundation Audit Committee/2021-08-03

Audit Committee Meeting

August 3, 2021

12:00 PDT. 19:00 UTC

Participants:

WMF: James Baldwin, Tanya Capuano, Tony Le, Raju Narisetti, Tony Sebro, Julian Singh, Michael Snow, Nataliia Tymkiv, Jaime Villagomez, Amy Vossbrinck, Jodi McMurray. KPMG: James Womboldt and Jeremy Peters.

Recording of Approval of the Minutes

Tanya moved to approve. Raju and Nataliia seconded. The vote was unanimous.

FY 20-21 Audit Plan

Jeremy Peters, Audit Partner, and James Womboldt, Audit Senior Manager, from KPMG presented the audit plan that is scheduled to begin on August 2, 2021 and completed by the end of September 2021.

The presentation focused on the following areas: Executive Summary including KPMG’s commitment to delivering a client experience focusing on Quality, Experience, Productivity & Insights; KPMG’ goal towards Diversity, Equity & Inclusion; KPMG’s client service team, and the audit fees.

Planning and Risk Assessment including the application of materiality in the context of the audit to ensure the preparation and fair presentation of the financial statements, considering misstatements and significant risks such as management overriding controls to manipulate accounting records and perpetrate fraudulent financial statements. Other risks include the appropriate application of new and updated accounting standards with the effective date during the reporting period. Independence is a responsibility shared between the Foundation and KPMG to ensure there are no business/employment relationship between the Foundation and KPMG and its covered persons.

Responsibilities include timely communication between the Foundation, especially from those charged with governance and KPMG with information relevant to the audit and financial reporting process. Inquiries is a critical activity of an audit to ensure that KPMG is covering topic areas of interest and concerns to the Audit Committee.

The Audit Committee was asked if there were any areas of further attention that the Committee wanted KPMG to focus on during this year’s audit or that were not noted as part of the audit plan. The Audit Committee expressed their satisfaction with the audit plan’s scope.

Internal Software Capitalization Policy

The Foundation staff presented the policy, the background analysis and the timing for the implementation of the policy. The criteria established for internally software capitalization consideration are described under Accounting Standards Codification, ASC 350-40. After the approval from the Audit Committee, staff will operationalize policy for fiscal 20-21 including capitalizing eligible costs by recording and reporting these costs accordingly.

Raju moved for Committee Approval for the policy: Tanya seconded. The vote was unanimous. FY 20-21 Preliminary Financial Results The Foundation staff presented the preliminary FY20-21 financial results.

The success of our financial outcomes for FY20-21 reflects our prudency in managing through the uncertainties of the COVID-19 pandemic. Due to COVID the WMF Annual Plan and budget were built on a risk-based, prudent budget (referred to as the yellow scenario). When the Staff determined that the risk of a donation decline was not likely, the Foundation accelerated its mid-year financial recalibration to make a several impactful investments during the 2nd half of the fiscal year: Increased our hiring speed to reverse the slow downs experienced during the first half of the year and we achieved our goal of 472 staff by the end of the fiscal year; Increased our programmatic investments by $4M above the budget including grantmaking, which improved our functional programmatic ratio to 74% of total expense; Increased our total cash and investments balance to $225.2M (+25% Year over year).

Business Operations Improvement Update

The CFO established the Continuous Process Improvement (CPI) team with the objective of taking a foundation wide approach to holistically and systematically identify process pain points and patterns and make improvements in the foundation’s business workflows. The team also made significant strides in improving training of Staff on these workflows. Other OKRs are: Continue to define and document risk-control activities for more workflows; Undertake an analysis of our ERP system to identify opportunities to optimize and leverage them to support organizational objectives; Reduce manual payroll processing activities to improve scalability and design the operationalization of the workflow to support Wikimedia Enterprise.

Next Audit Committee Meeting

The Foundation staff will coordinate with the Audit Committee to plan the timing of the meeting around the Board Meetings, tentatively late September or early October. The topics to be covered will include: FY 20-21 Audit Results; Wikimedia Endowment Consolidation Assessment.

Potential Agenda Items for Future Meetings. Financial Management and Planning - Quarterly and Mid-Year Financial Update and annual Plan; ERM Update; Business Operations Update; Investment Update; Annual form 990.

Respectfully submitted: Amy Vossbrinck