FINANCIAL MANAGEMENT POLICIES AND PROCEDURES

Transcription

1 FINANCIAL MANAGEMENT POLICIES AND PROCEDURES 1. GENERAL PURPOSE The purpose of these policies is to establish guidelines for developing financial goals and objectives, making financial decisions, reporting the financial status of the Association, and managing the Association s funds. 2. FINANCIAL RESPONSIBILITIES It is the responsibility of the Board of Directors (board) to formulate financial policies and review operations and activities on a periodic basis. The Board delegates this oversight responsibility to the Treasurer of the Board and the Finance Committee of which the Treasurer is the Chair. This responsibility is shared through delegation with the Executive Director (E.D.) and the Director of Operations (D.O.) The Agency E.D. acts as the primary fiscal agent, implementing all financial policies and procedures. The E.D., with oversight of the Finance Committee is responsible for the coordination of the following: Annual budget presentation, management of investments, selection of the outside auditors, and approving revenue and expenditure objectives in accordance with the Board approved long-term plans. The D.O., with oversight by the E.D. and Finance Committee, has the day-to-day operations responsibility for managing the Association s funds, ensuring the accuracy of the accounting records, bank reconciliation review, preparation of the Chart of accounts, reporting Formats, Accounts Payable, Payroll input and processing, Cash Receipts input, Journal Entries for General Ledger, Form 1099 reporting, and assisting in the preparation of Form 5500 reporting, and Form 990 reporting. 3. BUDGETING PROCESS The Agency s E.D., D.O., and Treasurer shall present to the Finance Committee and Executive Committee an annual operating budget draft sixty (60) days prior to the end of the fiscal year. This operating budget is then submitted to the Board of Trustees for review and approval at the December board meeting. The Finance Committee shall review and approve the recommended fiscal year budget revenues and expenditures, and submit it for approval to the Board of Directors. 4. FINANCIAL STATEMENTS The Agency s financial statements shall be prepared on an accrual basis in accordance with Generally Accepted Accounting Principles ( GAAP ). The presentation of the Financial Statements shall follow the recommendation of the Financial Accounting Standards No. 117, Financial Statements of Not-For-Profit Organizations (SFAS No. 117). 1

2 Under GAAP, net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the agency and changes shall be classified as unrestricted, temporarily restricted and permanently restricted. The D.O. shall prepare and present Monthly Financial Statements in a format approved by the E.D. and Finance Committee. The statements shall be presented to the E.D., senior management, and the Finance Committee for review. 5. RESTRICTED FUNDS Separate from unrestricted funds, resources for various purposes are classified for accounting and maintained for each fund. These funds were created by the board to both reactively address unanticipated emergencies in the lives of the people we serve, and to proactively plan to meet our mission and vision. These restricted funds also provide a pathway for donors who wish to support specific activities as allowed by the restricted funds. Several funds are in place for this purpose including but not limited to board designated funds and other restricted funds. Board Designated Funds The board of trustees holds restricted funds for Facilities, Direct Aid & Community Development. The Facilities fund is restricted for the future purchase of a facility and for repairs, maintenance and improvements to the current or future facility. It is part of the ACL s financial strategy to grow assets to purchase, and make improvements to a facility with an approximate value of $1 million. The Direct Aid fund is restricted to meet the needs of people with intellectual/developmental disabilities in Boulder and Broomfield Counties. It is intended to assist in situations which impact or threaten the wellbeing, health, safety or security of the person or an immediate family member (see Direct Aid Policy for more details). Community Development funds enable the ACL to respond to opportunities to create an inclusive community through training and public policy advocacy, and by sponsoring activities that provide direct contact between people with developmental disabilities and other members of the community. 6. AUDIT The Agency will have an audit of its financial statements annually, within 6 months of the end of each the fiscal year. The audit shall be completed by a firm of Independent Certified Public Accountants. The E.D. and the D.O. shall have direct responsibility in overseeing the implementation of the Annual Financial Audit. The Finance Committee shall have board oversight. The E.D. and the D.O. shall recommend to the Finance Committee for approval, the selection of a firm to perform the annual audit. In addition, the Finance Committee shall assist when necessary in the audit preparation, and report the final results to the Board of Directors. A representative of the audit firm shall be invited to attend the annual presentation to the Board if the audit report is other than unqualified, or if the auditor s report material weaknesses in internal controls or reportable conditions. 2

3 The Auditor prepares the Form 990 and it shall be reviewed by the E.D., the D.O., and the Finance Committee before it is presented to the full board for approval and submission to the IRS. 7. RECORDING RECEIPTS The following procedures for cash received through the mail or given to a staff person shall be in place: Mail should be opened by a staff person that is not involved in the accounting function. All cash and checks received shall be forwarded to the D.O. who will endorse checks with the Association s official stamp, and record all checks and cash by date, name of company or individual, designation, and amount for accounting purposes. A record of cash and checks received shall include date of deposit, name of sender and amount. A copy of the bank deposit slip is retained in chronological order. Cash and checks are kept in a secure location and deposited into the Association s bank account twice per month. The same procedures followed for cash receipts shall be followed when monies are received by employees as contributions for special events. Funds received electronically, such as online contributions, ACH payments and stock transfers should be properly recorded by the D.O. The D.O. shall make the appropriate entries in the accounting software and shall reconcile all deposit slips to the bank account. 8. RECEIPTS TO DONORS The D.O. and Development Director (D.D.) shall ensure that all donors and contributors shall receive proper acknowledgement of their contributions in accordance with IRS Guidelines. 9. EXPENDITURES PROCEDURES All expenditures shall be approved by the Association s E.D. and other Association employees, within limits established in the ACL Employee Manual and other Association Policies. All expenditures shall be coded by account number using the Association s Chart of Accounts. The D.O. maintains standard accounting records containing all aspects of the Association s financial operations. Invoices shall be approved by the Agency s E.D. and distributed to the D.O. for check payment preparation. Upon payment of a bill, a duplicate of the check stub shall be stapled onto the bill. The paid invoices shall be filed alphabetically according to company/individual name and shall be kept on a fiscal year basis on file. 10. SIGNATURE POLICY The E.D. shall sign all checks in the name of the Association. In the absence of the E.D., the signature of a designated and authorized member of the board must be obtained. 11. LEASES AND OTHER CONTRACTUAL AGREEMENTS The association conducts a major part of its operations from leased facilities. Leases and other contractual agreements are negotiated and executed by the E.D. New leases in excess of an amount determined by the board require the approval of the Finance Committee. 3

4 The E.D. is authorized to develop and enter into contractual agreements with vendors, bankers, and third parties for the purpose of ensuring the Association s general operations. The Finance Committee shall review such agreements and make recommendations when necessary. 12. NOTES, LOANS, DEEDS, CONVEYANCES, ETC. All notes, loans and other indebtedness to be contracted in the name of the Association (except open accounts, and all other routine banking transactions) and shall require the approval of the board and the signature of the E.D., unless otherwise specified by the board. The E.D. shall execute all notes, loans, deeds, conveyances, mortgages, leases, contracts and other instruments in the name of the Association unless otherwise directed by the board. 13. BANK ACCOUNTS AND INVESTMENT ACCOUNTS The D.O. shall maintain and oversee Bank and Investment accounts, and ensure the Association s day-to-day financial operations. Several accounts may be maintained by the Agency as follows: 1. Checking Accounts 2. Savings Accounts 3. Brokerage Accounts These accounts may be changed as the Association s financial conditions and requirements change. 14. CHECKING ACCOUNT All checks, cash, money orders, and credit card deposits, are reviewed by the D.O. and deposited in the appropriate Accounts. Fund-raising events, foundations and corporate donations and miscellaneous contributions, shall be deposited into the accounts. Monies shall be transferred between accounts when necessary, by the D.O. Checks are written as needed to meet obligations, or ongoing operational expenditures. 15. BANK RECONCILIATIONS Bank reconciliations shall be completed monthly by the D.O. The Financial Statements shall be compiled by the D.O. The Statements shall be then reviewed by the E.D. and presented to the Finance Committee. All Bank Statements, Credit Card Statements, and Investment Reports will be reconciled every month by the D.O., and records will be kept in the Association s office. 16. INSURANCES Reasonable and adequate coverage will be maintained to protect the Association s interests as well as the Board of Trustee s and the Association s employees. The following insurance policies shall be kept on a yearly basis: Commercial Property Contents, General and Professional Liability Insurance, Directors and Officers Liability Insurance, Workers Compensation Insurance. Insurance Policies shall be carefully reviewed by the Agency s E.D. and D.O. before renewal each year. 17. PROPERTY AND EQUIPMENT Property and equipment shall be stated at historical cost and purchased items with a cost over $1,500 shall be depreciated. Depreciation is computed over the estimated useful lives of the assets using the straight-line method. A Depreciation schedule shall be prepared and maintained by the Association s D.O. on an annual basis. 4

5 18. TAX REPORTING The Agency is exempt from federal income taxes under Section 501 (c) (3) of the Internal Revenue Code as amended. Accordingly, no provisions for income taxes shall be reflected in the financial statements. INVESTMENT POLICY This policy is solely in reference to the liquid assets of ACL and does not address management of fixed assets such as the property and facility housing ACL operations. PURPOSE The purpose of this IPS is to assist the ACL and the Investment Advisor (Advisor) in effectively supervising, monitoring and evaluating the management of the ACL s assets. STATEMENT OF OBJECTIVES The objective of this investment policy is to 1) safeguard ACL s financial reserves for use in case of any unanticipated revenue shortfall or other expenditures or investments as directed by action of the Board of Trustees; 2) provide for some income from those reserves; and 3) build reserves for future enhancements to ACL facilities and services. RESERVE FUNDS The ACL will hold a minimum of the equivalent of six (6) months anticipated operating expenses and a maximum of twelve (12) months anticipated operating expenses in liquid assets, with allowances for relatively predictable revenues such as monthly arc Thrift Stores disbursements. TIME HORIZON The time horizon for a short-term asset is less than 5 years, for a medium-term asset is 5-10 years, and a long-term asset as a maturity of 10 years or greater. Short-term assets will consist of assets available for expected short-term needs (after an allowance for predictable revenues) and will be held in short-term investments. Most of the liquid assets will be invested with a time horizon greater than five years. Therefore, interim fluctuations should be viewed with appropriate perspective. The Finance Committee shall from time to time determine the short-, medium- and long-term needs of the organization and may recommend the reallocation of investments among short-, medium- and long-term to ensure that the investment allocation is consistent with the annual operating budget as adopted by the Board of Trustees to achieve its strategic plan. PERFORMANCE EXPECTATIONS Management of the portfolio will adhere to the Prudent Standards of Investment Practice and shall assume reasonable degrees of investment risk to achieve the objectives. Asset diversification and high asset quality should be emphasized. 5

6 ASSET ALLOCATION GUIDLINES Minimum Goal Maximum Cash and cash equivalents 3%-5% of funds under management Remaining Current Assets: Fixed Income 0% 40% 90% Equities 0% 60% 70% Alternative Assets 0% 10% 15% INVESTMENT REPORTS Investments shall be reported with the monthly financial statements at cost or market value. The Finance Committee, shall review and determine the general investment strategy for all funds. DUTIES AND RESPONSIBILITIES: Board of Trustees Oversee the finances of the organization Form and maintain a Finance Committee composed of the Treasurer of the ACL, who shall serve as the Chair of the Finance Committee, and up to four other voting members of the ACL, approved by the Board. Members of the Finance Committee should have an interest and knowledge in financial matters. The Executive Director shall also serve on the Finance Committee as a non-voting member Act on recommendations from the Finance Committee Make investment decisions where assets are held in brokerage accounts Finance Committee Develop and maintain the Investment Policy Statement Manage the ACL s total liquid assets within the Investment Policy framework Review and make recommendations to the Board of Trustees regarding the ACL s immediate and long-term finances in relation to investment time horizons to serve the best interest of ACL consistent with the annual operating budget and with the ACL Strategic Plan In conjunction with the Board of Trustees, hire competent external professional investment managers. Oversee performance of investment managers, and recommend manager changes from time to time as they deem in the best interest of the ACL Investment Manager Where investments are held in fee based accounts, the Board grants full discretion to the Investment Manager to make portfolio changes within the context of the stated investment policy Use the same care, skill, prudence and due diligence that experienced investment professionals would use to achieve similar portfolio objectives, in accordance and compliance with the Uniform Prudent Investor Act 6

7 Counsel the Board and Finance Committee regarding recommended changes in investment policy that may influence the manner in which the portfolio is managed, in order to ensure fulfillment of the objectives of ACL Report and provide monthly statements to the Executive Director Executive Director Report investment performance at least quarterly to the Finance Committee Communicate investment decisions by the ACL Board of Trustees to investment managers GIFT ACCEPTANCE POLICY The Association for Community Living in Boulder County (ACL) accepts gifts for purposes that will help the organization further and fulfill its mission. The ACL urges all prospective donors to seek the assistance of personal legal and financial advisors in matters relating to their gifts, including the resulting tax and estate planning consequences. The following policies and guidelines govern acceptance of gifts made to the ACL for the benefit of any of its operations, programs or services. Use of Legal Counsel: The ACL may seek the advice of legal counsel in matters relating to acceptance of gifts when appropriate. Review by counsel is recommended for: A. Gifts of securities that are subject to restrictions or buy-sell agreements. B. Documents naming ACL as trustee or requiring the Association to act in any fiduciary capacity. C. Gifts requiring ACL to assume financial or other obligations. D. Transactions with potential conflicts of interest. E. Gifts of property which may be subject to environmental or other regulatory restrictions. Restrictions on Gifts: Decisions on the restrictive nature of a gift, and its acceptance or refusal, shall be made by the Executive Committee, in consultation with the Executive Director. The ACL will not accept gifts that: Would result in the ACL violating its corporate charter Would result in ACL losing its status as an IRC 501(c)(3) not-for-profit organization Are too difficult or too expensive to administer in relation to their value Would result in any unacceptable consequences for ACL or its members Are for purposes outside ACL s mission. Gifts Generally Accepted Without Review: Cash. Cash gifts are acceptable in any form, including by check, money order, credit card, or on-line. Marketable Securities. Marketable securities may be transferred electronically to an account maintained at one or more brokerage firms or delivered physically with the transferor's 7

8 endorsement or signed stock power (with appropriate signature guarantees) attached. All marketable securities will be sold promptly upon receipt unless otherwise directed by ACL s Finance Committee. In some cases marketable securities may be restricted, for example, by applicable securities laws or the terms of the proposed gift; in such instances the decision whether to accept the restricted securities shall be made by the Executive Committee. Bequests and Beneficiary Designations under Revocable Trusts, Life Insurance Policies, Commercial Annuities and Retirement Plans. Donors may make bequests to ACL under their wills, and name ACL as the beneficiary under trusts, life insurance policies, commercial annuities and retirement plans. Charitable Remainder Trusts. The ACL will accept designation as a remainder beneficiary of charitable remainder trusts. Charitable Lead Trusts. The ACL will accept designation as an income beneficiary of charitable lead trusts. Gifts Accepted Subject to Prior Review: Certain forms of gifts or donated properties may be subject to review prior to acceptance. Examples of gifts subject to prior review include, but are not limited to: Tangible Personal Property. The Executive Committee shall review and determine whether to accept any gifts of tangible personal property in light of the following considerations: does the property further the organization s mission? Is the property marketable? Are there any unacceptable restrictions imposed on the property? Are there any carrying costs for the property for which the organization may be responsible? Is the title/provenance of the property clear? Life Insurance. The ACL will accept gifts of life insurance where ACL is named as both beneficiary and irrevocable owner of the insurance policy. The donor must agree to pay, before due, any future premium payments owing on the policy. Real Estate. All gifts of real estate are subject to review by the Executive Committee. Prior to acceptance of any gift of real estate, The ACL shall require an initial environmental review by a qualified environmental firm. In the event that the initial review reveals a potential problem, the organization may retain a qualified environmental firm to conduct an environmental audit. Criteria for acceptance of gifts of real estate include: Is the property useful for the organization s purposes? Is the property readily marketable? Are there covenants, conditions, restrictions, reservations, easements, encumbrances or other limitations associated with the property? Are there carrying costs (including insurance, property taxes, mortgages, notes, or the like) or maintenance expenses associated with the property? Does the environmental review or audit reflect that the property is damaged or otherwise requires remediation? 8