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ECF Accounting Policies and Procedures Manual 09.03.20131 EASTVALE COMMUNITY FOUNDATION ACCOUNTING POLICIES AND PROCEDURES MANUAL Board Approved: September 3, 2013 2 Table of Contents I. Introduction .......................................................................................................................... 3 II. Division of Responsibilities .................................................................................................. 4 III. Chart of Accounts .................................................................................................................6 IV. Cash Receipts ......................................................................................................................7 V. Inter-Account Bank Transfers ...............................................................................................8 VI. Disbursements .....................................................................................................................9 VII. Credit Card Policy and Charges .........................................................................................11 VIII. Accruals …..........................................................................................................................12 IX. Bank Account Reconciliations ............................................................................................13 X. Property and Equipment ....................................................................................................14 XI. Personnel Records .............................................................................................................15 XII. End of Month and Fiscal Year End Close ..........................................................................16 XIII. Financial Reports ...............................................................................................................17 XIV. Fiscal Policy Statements ....................................................................................................18 3 I. Introduction The purpose of this manual is to describe all accounting policies and procedures currently in use at Eastvale Community Foundation and to ensure that the financial statements conform to generally accepted accounting principles; assets are safeguarded; guidelines of grantors and donors are complied with; and finances are managed with accuracy, efficiency and transparency. All of Eastvale Community Foundation’s Board of Directors and staff with a role in the management of fiscal and accounting operations are expected to comply with the policies and procedures in this manual. 4 II. Division of Responsibilities The following is a list of personnel who have fiscal and accounting responsibilities: Board of Directors 1. Reviews and approves the annual budget. 2. Reviews annual and periodic financials 3. Four members of the Board are authorized signers on the bank accounts 4. Signers review and sign all issued checks 5. Reviews and approves all contracts 6. Reviews and approves all expenditures 7. Reviews and approves all financial reports 8. Reviews and approves all grant submissions 9. Approves inter-account bank transfers 10. Approves inter-account bank transfers 11. Reviews and approves all reimbursements and fund requests 12. Monitors and manages all expenses to ensure most effective use of assets 13. Executive Director initiates donor thank you acknowledgments Chief Financial Officer 1. Develops annual budget 2. Reviews and signs all issued checks 3. Reviews and approves all grant submissions 4. Opens all bank statements and reviews completed monthly bank reconciliations 5. Monitors program budgets 6. Reviews all payrolls 7. Reviews and manages cash flow 8. Reviews and approves all incoming and outgoing invoices 9. Monitors grant reporting 10. Oversees expense allocations 11. Maintain internal accounting controls and procedures 12. Initiates donor thank you letter acknowledgements 13. Reviews all financial reports 14. Processes invoices and prepares checks for signature 15. Records bank deposits 16. Processes and Records payroll 5 17. Maintains general ledger 18. Prepares monthly and year-end financial reports 19. Reconciles all bank accounts 20. Records Accounts Receivable 21. Not an authorized signer on the bank accounts 6 III. Chart of Accounts Eastvale Community Foundation has designated a Chart of Accounts specific to its operational needs, as well as the needs of its financial statements. The Chief Financial Officer is responsible for maintaining the Chart of Accounts and revising as necessary. The Chart of Accounts is attached to this manual as an addendum. 7 IV. Cash Receipts Cash receipts typically arise from: 1. Contracts and Grants 2. Direct donor contributions 3. Fundraising activities The principal accounting steps in the cash receipts cycle are: The Executive Director opens, date stamps and distributes the mail. A designated board member enters all checks into a log, stamps all checks ‘for deposit only,’ and makes one (1) copy of each check. The checks are given to the secretary whom will scan and digitally file them online via drop box. All cash received will be counted, verified and signed off by the Executive Director and a designated board member. A receipt will be given to the paying party and a copy kept for internal purposes. The cash will be kept in a locked, secure location and deposited within 72 business hours. 8 V. Inter-Account Bank Transfers The Chief Financial Officer monitors the balances in the bank accounts to determine when there is a shortage or excess in the checking account. The Chief Financial Officer recommends to the Executive Director and designated board member when an electronic transfer should be made to maximize the potential for earning interest on uncommitted funds. After board approval, a designated board member will make the transfer. 9 VI. Disbursements Typical cash disbursements are made for: 1. Payments to vendors for goods 2. Payments to vendors for services provided 3. Other a. Taxes/license fees b. Memberships c. Meeting costs d. Marketing materials e. Reimbursement to employees for travel Requests for disbursements are submitted to Accounting in three ways: 1. Original invoice 2. Purchase request (submitted on approved form) Every employee reimbursement or purchase request must be documented on the approved form with travel authorization, receipts, nature of business, and program allocation before approving for reimbursement as follows: Lodging - an itemized receipt from the hotel detailing all charges, the person(s) for whom the lodging was provided and the specific business purpose. Meals and Entertainment - a receipt must be provided showing the cost of food, beverage and gratuities, including the names of every person for whom food or beverage was provided, and the specific business purpose. Other Expenditures - a receipt from the vendor detailing all goods or services purchased including the class of service for transportation) and the specific business purpose. The Chief Financial Officer reviews all requests for payment and: 1. Verifies expenditure and amount 2. Approves for payment 3. Provides appropriate allocation information 4. Provides date of payment The Chief Financial Officer processes all payments and: 1. Immediately enters into the Accounts Payable Module 2. Prints checks according to allocation and payment date 10 3. Submits checks, with attached backup documentation, to authorized signers for approval and signature. All checks in excess of $500.00 require a second signature from an authorized board member 4. Stamps invoice ‘paid’ 5. Returns checks and appropriate backup documentation to the Chief Financial Officer to be mailed and all backup documentation to be filed in the digital drop box 6. Runs an accounts payable aging at the end of each month and submits to the Executive Director to assure timely payment of all invoices 11 VII. Credit Card Policy and Charges All board members who are authorized to carry an organization credit card will be held personally responsible in the event that any charge is deemed personal or unauthorized. Unauthorized use of the credit card includes: personal expenditures of any kind; expenditures which have not been properly authorized; meals, entertainment, gifts, or other expenditures which are prohibited by budgets, laws and regulations, and the entities from which Eastvale Community Foundation receives funds. The receipt for all credit card charges will be given to the Chief Financial Officer within 30 days of the purchase along with proper documentation. The Chief Financial Officer will verify all credit card charges with the monthly statements. A record of all charges will be given to the Chief Financial Officer with applicable allocation information for posting. A copy of all charges will be attached to the monthly credit card statement when submitted to the Chief Financial Officer for approval and signing. 12 VIII. Accruals In order to ensure a timely close of the General Ledger, Eastvale Community Foundation sometimes finds it necessary to book accrual entries in lieu of actual payment. In some instances these accruals will be made as automatically recurring entries. Accruals to consider: 1. Monthly interest earned on money market accounts, certificates of deposits, etc. 2. Recurring expenses, including employee vacation accrual, prepaid corporate insurance, depreciation, etc. 13 IX. Bank Account Reconciliations 1. All bank statements are given unopened to the Chief Financial Officer. The Chief Financial Officer reviews the statements for unusual balances and/or transactions. 2. A designated board member gives the statements to the Chief Financial Officer for timely reconciliation as follows: a comparison of dates and amounts of deposits as shown in the accounting system and on the statement, a comparison of inter-account transfers, an investigation of any rejected items, a comparison of cleared checks with the accounting record including amount, payee, and sequential check numbers. 3. The Chief Financial Officer will verify that voided checks are appropriately defaced and filed. 4. The Chief Financial Officer will investigate any checks that are outstanding over six months. 5. The Chief Financial Officer will attach the completed bank reconciliation to the applicable bank statement, along with all documentation. 6. The reconciliation report will be reviewed, approved, dated and initialed by the Bard of Directors. 14 X. Property and Equipment Property and equipment includes items such as: 1. Office furniture and equipment 2. Computer hardware 3. Computer software It is the organization’s policy to capitalize all items which have a unit cost greater than five hundred $500 dollars. Items purchased with a value or cost less than $500 will be expensed in the period purchased. The depreciation period for capitalized assets is as follows: Computer Hardware 36 months Office Equipment 60 months Office Furniture 60 months Computer Software 36 months 1. A Fixed Asset Log is maintained by the Chief Financial Officer including date of purchase, asset description, purchase/donation information, cost/fair market value, donor/funding source, identification number, life of asset. 2. The Log will be reviewed by the Board of Directors. 3. Annually, a physical inspection and inventory will be taken of all fixed assets and reconciled to the general ledger balances. 4. The Board of Directors shall be informed in writing of any change in status or condition of any property or equipment. 15 XI. Personnel Records 1. All personnel files for paid and unpaid employees contain the following documents: an application and/or resumes, date of employment, position and pay rate, authorization of payroll deductions, W-4 withholding authorization, I-9 form, termination data where applicable, an emergency contact form, and other forms as deemed appropriate by the designated board member. 2. All paid employees will fill out an I-9 form and submit the allowable forms of identification to the Executive Director. 3. All personnel files are to be kept in a secure, digitally filed via drop box and accessed only by authorized personnel. 16 XII. End of Month and Fiscal Year End Close 1. The Chief Financial Officer will review and sign off on all month and fiscal year end journal entries. They will be printed and filed for audit trail purposes. 2. At the end of each month and fiscal year end, the Chief Financial Officer will review all balance sheet accounts including verification of the following balances: cash accounts match the bank reconciliations, fixed assets accounts reflect all purchase and retirements, accounts receivable and payable accounts match outstanding amounts due and owed. 3. The income and expense accounts review will include reconciliation to amounts received and expended and verification that payroll expenses match the payroll reports. 4. Once the final monthly and fiscal year end financial statements are run, reviewed and approved by the Board of Directors, no more entries or adjustments will be made into that month or year’s ledgers. 17 XIII. Financial Reports The Chief Financial Officer will prepare the monthly and annual financial reports for distribution to the Board of Directors. The reports will include: balance sheet, statement of income and expenses, budget versus actual report for each program which has an established budget, a budget versus actual report for the organization, accounts receivable aging, accounts payable register and aging, cash flow projection, and any other requested reports. Periodic and annual financial reports will be submitted to the Board of Directors for review and approval. 18 XIV. Fiscal Policy Statements 1. All cash accounts owned by Eastvale Community Foundation will be held in financial institutions which are insured by the FDIC. No bank account will carry a balance over the FDIC insured amount. 2. All capital expenditures which exceed five hundred dollars ($500) will be capitalized. 3. No salary advances will be made under any circumstances. 5. No travel advances will be made except under special conditions and pre-approved by the Board of Directors. 6. Reimbursements will be paid upon complete expense reporting using the official Eastvale Community Foundation form. 7. Any donated item with a value exceeding $50 will be recorded and a letter acknowledging the donation will be sent to the donor within two weeks of the receipt of the donation or the date of the event. 9. All volunteer time shall be recorded as in-kind donations. 10. The Executive Director and three designated Board Members are the signatories on Eastvale Community Foundation bank accounts. Disbursements exceeding $500.00 require a second signature by an authorized board member. 11. Bank statements will be reconciled monthly. All bank statements will be given unopened to the Chief Financial Officer for review. 12. Correction fluid and/or tape will never be used in preparing timesheets or any accounting documents. 13. Accounting and personnel records will be kept in secure. Only parties with financial and/or HR responsibility will have access to the files.