Well, were US Chess to charge a rating fee to rate events of which US Chess is the organizer, would involve making a journal entry to credit revenue and to debit tournament expense for the same amount. So it does not change the bottom line for the financial statements at all.
There is no separate pot of money for events, so we are not going to be transferring money around. All entry fees and related revenue items flow into the general US Chess checking account, while all event expenses are paid out of that same account.
Were we to make such book entries then rating fee income would be higher while tournament net revenue would be lower by the same amount. We would simply be moving stuff around on our own statements.
One can make an argument to do so, but the organization has not done it that way in the past and so we are comparing apples to apples when we look across years.
I’m not sure how this is an “advantage” compared to affiliates who do pay rating fees. We are talking about events that no one else gets to do - the 4 (or 2 in a SuperNational year) national scholastic tournaments and the US Open. There may be another one or two - like the Blind. But these are not really competing with events affiliates may be doing. US Chess doesn’t run its own series of regular events.
Every so often someone calls and tells the office - or posts in the forums - that US Chess needs to be doing events in their area. We don’t do that - in part so that we are not competing with affiliates.
It’s not particularly difficult to identify the cost of rating the event (divide the number of rated games by 4, prefix that quotient with a dollar sign, and voila) - but it’s essentially pointless. As Mr. Priest noted, there would be two line items - one to detail the income, and one to detail the expense, and they would cancel each other out. If anything, US Chess loses staff time (ergo, money) doing this, and introduces two potential points of error in its event accounting as well. The gain from such superfluous accounting doesn’t seem to be worth the cost.
Indeed - bid events are charged ratings fees, like every other event run by affiliates.
I guess we can charge US Chess US Chess ratings fees and move amounts around on the financial statement if folks want to do so. We know the numbers of games.
I can see doing it for some internal cost allocation reasons, but we are not that big anyway so it makes little difference in planning and budgeting. Also, since the national office doesn’t compete with these level of events against affiliates I’m not sure that matters either.
Tournament accounting is always interesting and is an aspect of decisions on whether to even hold a tournament or FIDE rate an event. It is intriguing that the USCF does not account for rating expenses of its own tournaments. The answer that it does not affect the bottom line is not convincing. It is noted in another thread that the Two Sigma donation is a line item, even though it does not affect the bottom line.
Speaking as a CPA who deals extensively with small business clients (many with revenues far greater than US Chess), my professional advice on booking rating fees on self-run events would be: don’t go there. There is no upside, and several potential downsides.
If you really want to capture the cost of ratings for a particular self-run event, there are ways to do that without booking phantom revenue.
For GAAP accounting purposes such entry would be reversed.
For tax reporting such entry would be reversed.
As far an ADM would go as mentioned earlier, I’m not sure what the point of such ADM would be. But if it were to mandate certain accounting practices, then I think such a motion would be out of order as the delegates do not have that as one of their enumerated powers.
If it were to mandate that US Chess not charge certain fees, then I think such a motion would still be out of order as the delegates do not have that as one of their enumerated powers.
:mrgreen: