What are fiscal policy statements?

 Fiscal Policy Statements

1.      All cash accounts (except petty cash) owned by the firm 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 one thousand dollars ($1,000) will be capitalized.

3.      Employee or public personal checks will not be cashed through the petty cash fund.

4.      No salary advances will be made under any circumstances.

5.      No travel cash advances will be made except under special conditions and pre-approved by the Executive Director.

6.      Reimbursements will be paid upon complete expense reporting and approval using the official firm form. Reimbursements to the Executive Director will be authorized by the Board Chair.

7.      The Owner/President  is the signatory on  the firm’s bank accounts.

8.      Bank statements will be reconciled monthly. All bank statements will be given unopened to the Owner/President  for review.

9.      Correction fluid and/or tape will never be used in preparing timesheets or any accounting documents.

10.   Accounting and personnel records will be kept in locked file cabinets in the Owner/President’s office and only parties with financial and/or HR responsibility will have access to the keys.

What is a procedure for financial reports?

 Financial Reports

The Bookkeeper will prepare the monthly and annual financial reports for distribution to the Owner/President. 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.

What is an internal control for end of month and fiscal year-end close procedures?

 End of Month and Fiscal Year-End Close

1.      The Owner/President will review and sign off on all month- and year-end journal entries. They will be printed and filed for audit trail purposes. The Audit Manager will perform these duties for clients.

2.      At the end of each month and fiscal year end, the Owner/President  or Audit Manager will review all balance sheet accounts including verification of the following balances: cash accounts match the bank reconciliations, fixed assets accounts reflect all purchases, write-downs 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 including federal and state payroll tax filings.

4.      Once the final monthly and fiscal year-end financial statements are run, reviewed, and approved by the Owner/President or Audit Manager, no more entries or adjustments will be made into that month or year’s ledgers.

5.      At the end of the fiscal year, the Owner/President will prepare the annual Return for the firm. The Audit Manager will perform this function for clients. The return will be presented to the client representatives for their review and approval. The Audit Manager or client staff will then file the return with the Internal Revenue Service by the annual deadline.

6.      All other appropriate government filings including those required by the state tax board and attorney general’s office will be completed and filed with the appropriate agency.

What is an internal control for payroll processing?

 Payroll Processing

1.      Timesheets are to be prepared by all staff on the approved form and submitted semi-monthly on the 15^th and 30^th  of the month.  If the 15^th and/or 30^th of the month fall on a weekend or holiday, the timesheets are to be submitted the day prior to the weekend or holiday. Exceptions to the submittal date may occur and will be communicated accordingly.

2.      Timesheets are to be kept on a daily basis and completed in ink – unless prepared electronically.

3.      Any corrections to timesheets are to be made by making a single line through the error and writing in the correction. Correction fluid and/or tape are not allowable.

4.      Timesheets are to be signed and dated by the employee and the employee’s supervisor for submission to the Owner/President or Bookkeeper.

5.      Any changes to the standing information of the payroll register from the prior period including addition of new employees, deletion of employees, or changes in base pay rate must be accompanied by an Employment Information Form and signed by the Owner/President before the change can be made.

6.      The Bookkeeper will process payroll in a timely manner and record vacation time, holiday hours, sick time, and any other information deemed necessary to properly reflect time worked.

7.      Paychecks will be distributed by the Operations Manager on the 16^th and 31^st of each month. If the 16^th and 31^st fall on a weekend or holiday the paychecks will be distributed the day before.

8.      If the employee requests that his/her check be turned over to a third party, the request must be made in writing prior to distribution.

9.      Employees may choose direct deposit to a designated bank account. Their paycheck is deposited directly into the designated account on the payroll date. The employee will receive a verification stub.

10.   The Owner/President will review payroll expenditures and allocations monthly.

11.    All quarterly federal and state payroll reports will be prepared and filed appropriately.

12.   All W-2 statements are issued to employees prior to January 31^st of the following year for the prior calendar year.

What is an internal control for personnel records?

 Personnel Records

1.      All personnel files contain the following documents: an application and/or resume, date of employment, position and pay rate, authorization of payroll deductions, W-4 withholding authorization, termination data where applicable, a signed confidentiality agreement, a signed acknowledgement of receipt of Employee Handbook, an emergency contact form, and other forms as deemed appropriate by the Operations Manager.

2.      All employees will fill out an I-9 form and submit the allowable forms of identification to the Operations Manager.

3.      The completed I-9 forms will be kept in a secure location separate from the personnel files.

4.      All personnel files are to be kept in a secure, locked file cabinet and accessed only by authorized personnel.

What is a capitalization policy for property and equipment?

 Property and Equipment

Property and equipment includes items such as:

1.      Office furniture and equipment

2.      Computer hardware

3.      Computer software

4.      Leasehold improvements

It is the organization’s policy to capitalize all items which have a unit cost greater than one thousand dollars ($1,000). Items purchased with a value or cost less than one thousand dollars ($1,000) 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

Leasehold improvements                                            Length of lease

1.      A Fixed Asset Log is maintained by the Bookkeeper 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 Owner/President.

3.      Annually, a physical inspection and inventory will be taken of all fixed assets and reconciled to the general ledger balances.

4.      The Owner/President shall be informed in writing of any change in status or condition of any property or equipment.

5.      Depreciation is recorded at least annually. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Any impaired assets discovered during the inventory will be written down to their actual value.

What is an internal control over petty cash fund?

 Petty Cash Fund 

Petty cash funds are maintained by the organization. The funds are to be used for miscellaneous or unexpected purchases and the same approval procedures apply as mentioned in the cash disbursement section.

1.      The petty cash fund will not exceed $250 and is kept in a locked file cabinet at all times.

2.      The Owner/President oversees the petty cash fund. The Owner/President may delegate this responsibility to the Bookkeeper.

3.      All disbursements made from petty cash are acknowledged in writing by the receiving party.

4.      All money returned to the petty cash fund is counted and verified by the Operations Manager and another staff member. Receipts for items purchased with petty cash must be included with the return and should include appropriate account allocations as well as supervisor approval.

5.      The Owner/President and the Bookkeeper together will periodically count the cash in the petty cash fund.

6.      No checks will be cashed by the petty cash fund.

What is a bank accounts reconciliations procedure?

 Bank Account Reconciliations 

1.      All bank statements are given unopened to the Owner/President. The Owner/President reviews the statements for unusual balances and/or transactions.

2.      The Owner/President gives the statements to the Bookkeeper 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 Bookkeeper will verify that voided checks, if returned, are appropriately defaced and filed.

4.      The Bookkeeper will investigate any checks that are outstanding over six months.

5.      The Bookkeeper 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 Owner/President.

What is an accruals policy?

Accruals

To ensure a timely close of the General Ledger, the firm may book accrual entries both for its own operations and those of its clients. Some accruals will be made as 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.

What is a basic credit card policy and internal control for charges?

         

Credit Card Policy and Charges

All staff 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 the firm receives funds.

 The receipts for all credit card charges will be given to the Owner/President or Bookkeeper within two (2) weeks of the purchase along with proper documentation. The Owner/President will verify all credit card charges with the monthly statements. A record of all charges will be given to the Bookkeeper with applicable allocation information for posting. A copy of all charges will be attached to the monthly credit card statement when submitted to the Owner/President for approval and signing.

What are basic internal controls for cash disbursements & expense allocations?

I.         Cash Disbursements & Expense Allocations

Cash disbursements are generally made for:

1.      Payments to vendors for goods and services

2.      Taxes/license fees

3.      Staff training and development

4.      Memberships and subscriptions

5.      Meeting expenses

6.      Employee reimbursements

7.      Marketing/promotional materials

 

Checks are processed weekly. Invoices submitted to the Owner/President by Wednesday will be processed and paid by Friday of the same week. Checks can be prepared manually within one day, but this should be limited to emergency situations.

Requests for cash disbursements are submitted to Accounting in three ways:

1.      Original invoice

2.      Purchase request (submitted on approved form)

3.      Employee expense report or reimbursement request

All invoices must have the account code written on them and approved by the Owner/President prior to being submitted to accounting.

Every employee reimbursement or purchase request must be documented on the approved form with travel authorization, receipts, nature of business, program allocation, and funding source (if applicable) 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 Owner/President reviews all requests for payment and:

1.      Verifies expenditure and amount

2.      Approves for payment if in accordance with budget

3.      Provides or verifies appropriate allocation information

4.      Provides date of payment taking into account cash flow projections

5.      Submits to the Bookkeeper for processing

The Bookkeeper processes all payments and:

1.      Immediately enters them into the Accounts Payable module

2.      Prints checks according to allocation and payment date provided by the Owner/President

3.      Submits checks, with attached backup documentation, to Owner/President for approval and signature.

4.      Stamps invoice “paid”

5.      Mails checks and appropriate backup documentation

6.      Files all backup documentation in the appropriate file

7.      Runs an accounts payable aging at the middle and end of each month and submits to the Operations Manager to assure timely payment of all invoices

 

What are the responsibilities of a bookkeeper?

 

Bookkeeper

1.      Overall responsibility for data entry into accounting system and integrity of accounting system data

2.      Processes invoices and prepares checks for signature

3.      Makes bank deposits

4.      Processes payroll

5.      Maintains general ledger

6.      Prepares monthly and year-end financial reports

7.      Reconciles all bank accounts

8.      Mails vendor checks

9.      Manages Accounts Receivable