Corridor Elementary School Parent Teacher Organization. Fiscal Policies

Transcription

1 Corridor Elementary School Parent Teacher Organization Fiscal Policies Approved by Board of Directors on March 1, 2013

2 FISCAL POLICIES Table of Contents Table of Contents 2 Introduction 3 Key Financial Policies 3 Budget & Finance Committee 4 Fiscal Reporting 4 Budget Policies and Procedures 5 Reserve Policy 6 Grant Applications and Receipts 7 Investment Policies 7 Fiscal Controls 7 Cash Flow Management 10 Insurance 10 Accounting Systems 10 Purchasing 12 Expense Reimbursements 13 Accounts Payable 14 Revenue Receipts 14 Fixed Assets 15 2 of 15

3 INTRODUCTION Corridor Elementary School Parent Teacher Organization ( Corridor PTO ) maintains an accounting system in accordance with Generally Accepted Accounting Principles (GAAP) and the guidelines for nonprofit accounting as stated by the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). Corridor PTO s fiscal standards and management systems are implemented at the direction of the Board of Directors. The Board reviews financial reports, sets policy, reviews the annual budget, and monitors the agency s fiscal management including investment activity. The full membership of Corridor PTO is responsible for annual budget approval. KEY FINANCIAL POLICIES The overriding policy is that the financial condition shall never result in fiscal jeopardy to the organization, or disruptions in the integrity of Corridor PTO services to the membership. Other key policies are as follows: Capital expenditures will be included on each annual budget and must be approved by the Board of Directors. For Corridor PTO s purposes capital expenditures are assets purchased with a measurable useful life of greater than one year and a value of over $500. Expenses, over the course of a budget year, shall not exceed designated revenue, except as approved by the Board of Directors. Funds raised in the current fiscal year are to be budgeted and expended in the subsequent fiscal year. Depreciation expense is not considered an expense for purposes of this policy. Contributions received by Corridor PTO, if restricted, must be used only for the restricted purpose. Amounts accumulated or set aside in designated funds must be used only for the designated purpose. Corridor PTO shall not take on any short or long term debt. The Board shall monitor financial performance by reviewing monthly financial information. The Board shall have access to any and all financial information deemed necessary to carry out its responsibilities. The Board will annually approve an independent accounting firm to prepare the appropriate tax forms. The Board will periodically take the agency tax preparation work out to bid. 3 of 15

4 BUDGET & FINANCE COMMITTEE Description The Budget & Finance Committee is made up of the Treasurer of the Board and at least one other Board member and one general PTO member with financial management experience. Roles and Duties The roles and duties of the Budget & Finance Committee are to meet quarterly. Their duties are to: Be knowledgeable about the financial condition of the agency Ensure that accurate books and records are kept Be aware of the extent of the agency s assets Ensure adequate, timely and transparent financial reporting and disclosure Ensure adequate internal controls to prevent fraud and theft Ensure restricted funds are used in accordance with restrictions Review finance statements Present finance information to the Board at large Develop initial budgets and review budget variances Ensure the exempt status of Corridor PTO by monitoring the timely filing of required reports. (See Outside Reporting) Ensure taxes are timely paid Ensure written policies and procedures are established regarding financial practices Annually review the insurance of Corridor PTO to determine whether appropriate levels and types of coverage are in place Oversee and provide guidance for the general financial well-being of Corridor PTO FISCAL REPORTING Periodic Reports Board financial statements and financial reports. Each month the Treasurer will present the following financial reports to the Board of Directors: Statement of Activities Summary of Revenue & Expenditures with a one year comparison Notes to Financial Statements and updates on investment activities as needed 4 of 15

5 These reports and other financial issues will be discussed in detail. These reports will be distributed to the Board each month. Notes to financial statements may be used to assist the Treasurer on reporting the financial condition of the organization at Board meetings. Ad Hoc Reports. The Treasurer will assist with analysis and other reports that assist the Board with day-to-day or long-range decisions or planning. Outside Reporting Tax reports. To ensure that Corridor PTO responsibly maintains the tax exempt status of the corporation, all required tax forms are completed and filed with the appropriate agency in a timely manner. Grant Reports. After a grant has been received, the Grantor requires progress and financial reports. The Board will be responsible for meeting the progress report requirements set by the grant. The Treasurer will be responsible for meeting any of the financial reporting requirements. These efforts will be coordinated to assure consistency, accuracy and timeliness of reporting. Financial Statements. Financial statements are available to the public. BUDGET POLICIES General Corridor PTO s Board of Directors shall plan and control revenues and expenditures through the development and monitoring of an approved budget for each fiscal year. The responsibility for the development of the annual budget lies with the Board. All budgeted Corridor PTO programs and activities shall be in keeping with the mission statement and Corridor PTO s long-range objectives. Development of Annual Budget The Corridor PTO fiscal year begins July 1. The budgeting process takes place between January and February of each year. A final budget will be adopted in May by a vote of the Corridor PTO membership. To ensure that the annual budget is developed in a participatory manner, the membership of Corridor PTO is involved in the budget process. In developing the annual budget, Corridor PTO board members shall include: Conservative projections of available revenues. A reassessment of existing programs. 5 of 15

6 Capital budget projections. Contingency plans that may be implemented if anticipated project or program funding does not materialize, or if any other deficit appears during the monitoring phase of the budget process. The Finance Committee shall prepare a schedule of critical dates related to the development, review, and approval of the annual budget. The Finance Committee is responsible for coordinating budget requests from Corridor Elementary School staff in order to align with the Corridor PTO mission and meet the needs of the Corridor Elementary School program. Budget Monitoring To ensure that the Corridor PTO budget serves as a useful management tool, the budget is monitored on a continuous basis, and expenses for individual fundraising events are budgeted and monitored to maximize profit. The Treasurer shall prepare and distribute relevant reports to the Board. The Corridor PTO Board of Directors has the authority to approve additional expenditures up to and including $1,000. The general Corridor PTO membership must approve any amount over this. RESERVE POLICY Corridor PTO will establish and keep at a minimum $10,000 of cash reserves at all times, or will be actively working to build the reserve to this level. The cash reserves will be kept separate from the organization s checking accounts in a savings account and will be designated for unexpected operational/administrative expenses ($5000) and for fundraising/program funding shortfalls ($5000). The Budget and Finance Committee will ensure the Board of Directors is made aware of shortfalls to this minimum. Corridor PTO will hold in reserve all funds raised in the current fiscal year to meet the budgeted expenses of the next fiscal year. Budgeted funds not expended in a given fiscal year (surplus funds) will be made available for use in the next fiscal year to fund approved programs and expenses in line with the mission of Corridor PTO. The Corridor PTO Board of Directors has authority to approve surplus expenditures up to and including $1000. The general Corridor PTO membership must approve surplus expenditures larger than $1000. The reserves are an operational protective device. The intention of this policy is not to override Board-approved budget decisions or Board and agency oversight of budgeted revenue and expenses. Having a reserve account assures stability in programs during times of financial short falls. It also allows time to plan for future funding. 6 of 15

7 GRANT APPLICATIONS AND RECEIPTS General Applications for grants will be written to help expand programs or other offerings at Corridor Elementary School. Prior to submission, grant applications must be approved by the Corridor PTO Board of Directors. Grant Monitoring Any required reporting for grants awarded will be completed in a timely manner. The Treasurer will assist with relevant financial information included with a grant report. Notices of Grants Awarded to Corridor PTO The Corridor PTO Board and general membership will be timely informed about grants and contracts awarded to Corridor PTO. INVESTMENT POLICIES Purpose The purpose of the following investment policies is to define the overall guidelines to be followed when making investment decisions regarding the unrestricted and restricted funds of Corridor PTO. Annual Review Investment policies for Corridor PTO shall be developed and reviewed as necessary but at least annually by the Board of Directors. The Board shall approve investment policies. Objectives Investment objectives in order of importance are: Safety preservation of capital and principal. Liquidity timely availability of funds. Yield total return of investments. FISCAL CONTROLS Internal Controls It is Corridor PTO policy to establish a set of internal controls that ensure fiscal integrity, transparent accounting and timely reporting of all financial activity. If the internal 7 of 15

8 controls system of Corridor PTO is investigated by any funding source or regulatory body and changes are recommended to correct internal control weakness, Corridor PTO will promptly make those corrections. Segregation of Duties To provide protection against errors, fraud and embezzlement in cash handling, banking duties, and in other fiscal processes, no one person will have complete authority over an entire financial transaction. If a member of the board Authorizes a purchase order or service contract Acts as custodian of petty cash or travel funds Receives cash and checks for deposit Signs checks They may not Pay the supplier. Approve petty cash reimbursements. Open mail. Reconcile the bank statements, disburse accounts payable checks. Bank Accounts The Board approves Corridor PTO s checking and investment accounts and the authorized signers for these accounts. The Board of Directors must provide written authorization to open, move or close bank and brokerage accounts. If Corridor PTO cash exceeds the FDIC coverage in any bank, a bank account will be opened with a different bank. Check Signing To ensure appropriate scrutiny of Corridor PTO disbursements, all checks drawn on the Corridor PTO checking accounts are prepared by the Treasurer and signed by an authorized signer. The authorized signers are the President and Vice President of the Board. In the event co-presidents are elected to the Board, both will be signers in addition to the Vice President. New signature cards are prepared any time an officer changes. Blank checks must not be signed under any circumstances. The payee, date, and amount must appear on the face of the check before it may be signed. If an item needs to be purchased but the exact amount is unknown, the approved item may be purchased and the receipt submitted for reimbursement. Cash Transfers To ensure adequate cash-flow management and to facilitate the opportunity to earn interest on Corridor PTO funds, the Treasurer may transfer funds from one bank or short- 8 of 15

9 term (e.g. money market) account to another. At the time a transfer needs to be made the Treasurer will contact the appropriate Bank and transfer the funds (transfers may be made on line). After the Bank has been called a journal entry is made into the accounting system and the check register is updated. The Treasurer will then the President and Vice President in regard to the transfer, which will create a record. All transferred amounts are reconciled at month end with the cash journal, the bank or money market statement, and the general ledger. Bank Reconciliations To ensure timely tracking of deposits and disbursements of Corridor PTO funds, all bank accounts are reconciled on a monthly basis. The bank reconciliations are prepared by the Treasurer and are then reviewed by a board member who is not a signer on the account. The board member will be looking for any checks with unauthorized signatures, reconciling fund transfers from one account into another account, and any unexplained withdrawals. Contracting Policy All business agreements between Corridor PTO and other entities shall be in writing and support the Corridor PTO mission. These agreements will establish effective dates and desired outcomes, define financial remuneration, assign risks, and describe the terms and legal requirements necessary to ensure performances. To ensure budget compliance and to facilitate risk management, all contracts to which Corridor PTO is a party are reviewed by the Treasurer and approved and signed by the President or Vice President. Any contract that extends beyond the current fiscal year or is over $1,000 must be approved by the full Board before being signed by the President or Vice President. Personal Services Contracts Personal services may be contracted with an independent contractor or agency, provided the services are approved in advance as a component of the annual budget or are specifically approved in advance of negotiation by the Corridor PTO Board of Directors or full membership as appropriate. The contractor and President or Vice President must sign a written contract detailing the terms of the agreement. Contractors shall be required to carry their own workers compensation and liability insurance as it relates to work being performed for Corridor PTO. A certificate of insurance will be required. Fraud and Embezzlement Any attempt to commit fraud or embezzlement or actual fraud and embezzlement will be grounds for immediate removal from the board and legal action against the offending member. (See Insurance) 9 of 15

10 CASH FLOW MANAGEMENT Corridor PTO s agency checking account balance should maintain a minimum balance of $5,000. Any amount under should be transferred from reserves by the Treasurer. The President and Vice President must be informed in writing or approve in writing all transfers. (See above Cash Transfers). INSURANCE General To ensure adequate risk management and safeguarding of Corridor PTO reserves, the Treasurer maintains an insurance program for Corridor PTO that provides coverage for non-retained risks. All types of liability coverage must cover defense as well as claims. Deductibles are assumed to be an agency liability. Property damage insurance must be replacement cost sufficient to replace all property. Corridor PTO s insurance will include an amount sufficient to cover embezzlement, mishandling of funds, or forgery. Insurance Claims All insurance claims, whether for property damage or personal injury should be processed within 24 hours of the incident. The Treasurer reports incidents directly to the approved insurance carrier. The insurance information is maintained in the insurance file in the Corridor PTO fire safe. ACCOUNTING SYSTEMS Accrual Basis Accounting Corridor PTO records transactions on an accrual basis, recognizing revenue as it is earned and expense as it is incurred. This ensures that the financial statements and other reports issued by Corridor PTO accurately reflect the financial condition of the organization in accordance with generally accepted accounting principles (GAAP) and follow the guidelines for not-for-profit accounting as stated by the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). Double Entry Accounting To ensure that Corridor PTO s accounting records are complete and accurate, Corridor PTO employs the methods of double entry accounting. Double entry accounting assumes that every transaction affects at least two accounts in the system, one being debited and the other being credited to keep the accounting records in balance. Safeguards in the 10 of 15

11 accounting software protect the accuracy of Corridor PTO s double entry accounting system. Functional Basis Accounting To ensure that the economic resources in use by each department, program or cost center can be analyzed individually, Corridor PTO employs functional accounting and records income and expense for management, fundraising, and each specific program function as a separate set of accounts. This is required by GAAP and the IRS for the completion of the annual report for organizations exempt from federal income tax. Fund Basis Accounting To ensure that Corridor PTO maintains its accounts in accordance with appropriate financial reporting requirements and audit standards, Corridor PTO divides its general ledger into self-balancing programs and funds. These funds are Corridor PTO s revenue sources, grants, contracts, special events, and general contributions. Classification of Net Assets In accordance with the Statement of Financial Accounting Standards (SFAS) No. 116 and SFAS No. 117, net assets are separated into three classes: Unrestricted, Temporarily Restricted, and Permanently Restricted. Accounting Software To ensure that all accounting system requirements are met, Corridor PTO accounting records are kept with the support of a computerized system using specialized software. Virus protection software is installed and updated daily in the accounting computer to check for viruses. Computerized accounting records are backed up to an external device on a monthly basis. Accounting Transactions All financial transactions are input into the computerized accounting system. These transactions are cash disbursements, cash receipts, and adjusting journal entries. Each transaction is accounted for by account, revenue source, and program. Cash Disbursements Approved check requests are input into the software system and checks are produced. The system creates a cash disbursement journal that will be posted into a general ledger. 11 of 15

12 Cash Receipts Someone other than a person responsible for cash accounting will document all cash and checks received in detail (amount, date, source). A cash receipts journal will be created when contributions and checks are received. Each receipt will be posted into the general ledger. Adjusting Entries Any transaction that affects a general ledger account that does not run through the cash disbursement journal or the cash receipt journal is input through an adjusting entry. Adjusting entries include payroll, standard monthly adjustments such as depreciation and prepaid insurance, and correcting entries. This produces an adjusting entries journal that will be posted into a general ledger. Chart of Accounts To ensure that the financial transactions of a time period may be systematically analyzed in comparison to the transactions of another time period, each transaction is coded in detail. The coding identifies the fiscal year & period, general ledger account number, revenue source, and program. Cost Allocation Overhead and administrative costs that cannot be readily identified as expenses related to a specific department are allocated in accordance with OMB (Office of Management & Budget) cost principles for nonprofits. Costs are allocated based on the full time equivalency ratio of staffing and usage of square footage for each program. The bases are established using GAAP criteria and supported by current data. PURCHASING Purchasing Authority All expenditures and purchases must be on the approved budget. The Corridor PTO Board can make changes to the approved budget in amounts up to and including $1,000. A vote of the Corridor PTO membership is necessary to approve any changes to the approved budget in amounts greater than $1,000. Items that fall within an approved, itemized, existing program budget (e.g., a fundraising event budget) may be purchased by program co-chairs provided they have verified the expenditures are within approved budget parameters. In the absence of an approved, itemized program budget, program co-chairs will work with the Treasurer and Board of 12 of 15

13 Directors to develop parameters for program purchases. Purchases for new programs will receive extra scrutiny to ensure maximum profit for the organization. Any non-approved expense or purchase shall be at the purchaser s personal expense. Purchase Transaction Documentation Purchases received must be compared with the packing slip or invoice to ensure accurate receipt and billing by the Treasurer. Receipts, invoices, bills, or packing slips must be marked with enough information to assist in categorizing and verifying the expense. This will include the purchaser s signature, date, project or program to which it applies, funding source (if known), and a description of the item(s) or service(s) purchased if not clear from the document. The document should be submitted to the Treasurer within 24 hours of receipt. Returned Purchases The Treasurer must be informed in writing of items being returned for credit or refund at the time of the return. It is the purchaser s responsibility to ensure that items are properly returned so Corridor PTO s accounts will be credited or that a refund will be issued. EXPENSE REIMBURSEMENTS General Corridor PTO has prepared this policy to provide broad guidelines for the reimbursement of business expenses. Guidelines cannot replace reasonable judgment, interpretation, and analysis of individual situations. Specific written procedures govern the expense reimbursement process and documentation requirements. Guidelines The intent of the policies and procedures related to expense reimbursements is to establish a consistent basis for reimbursing organization expenses. The intent of policies and procedures related to expense reimbursements is that all decisions made based on these policies are within the current approved budget. This policy can be changed as circumstances change and the need arises. Purpose To be fair and equitable. An individual working for the benefit of the organization should neither gain nor lose personally because he or she has incurred reasonable 13 of 15

14 business expenses. Individuals incurring similar expenses are to be reimbursed or not reimbursed consistently throughout the organization. To be responsible and prudent in spending the agency s money. A reasonable approach is for agency personnel to spend the money as if it were his/her own. To ensure proper documentation standards are met, as required by the IRS and other agencies. Corporate Credit Cards Corridor PTO does not provide corporate credit cards to its board or membership. Members can use personal credit cards for business related expenses, and will be reimbursed based upon the expense reimbursements policy. Mileage Reimbursement Corridor PTO does not reimburse for miles driven while conducting business of the organization. Business and Entertainment Expenditures and Reimbursements It is the policy of Corridor PTO that business and entertainment expenditures are not incurred, nor reimbursed. ACCOUNTS PAYABLE All program-related invoices, statements, reimbursement requests, check requests, and other accounts payable information must be approved as part of the budgeting process. The member requesting payment must ensure that the invoice or request clearly shows the description of the item(s) or service(s), date, project or program to which it applies, and funding source (if known). The request should be promptly submitted to the Treasurer. Payable checks are processed as received, and at least monthly. Paid invoices and other related backup materials are attached to a copy of the check and filed in the appropriate monthly file. These are retained for seven years. REVENUE RECEIPTS Specific written procedures will govern the handling of the various types of revenue received by the agency and the various ways, places and events where revenue might be received by the agency. The goal of these policies is to ensure internals controls, timely and appropriate accounting and use of revenues. 14 of 15

15 FIXED ASSETS Capitalization and Depreciation Assets purchased with a measurable useful life of greater than one year and a value of over $1,000 will be capitalized. They will be depreciated using straight-line method with useful lives varying between three and fifteen years. Partial year depreciation will be taken in the year of purchase. Identification and Inventory Capital equipment will be identified in the fixed asset journal and marked with an identifying number or code. A complete list of equipment will be periodically generated. A physical inventory of assets will be taken annually by the Treasurer and any adjustments will be made by through an adjusting journal entry into the accounting system software. The fixes asset journal will then be updated. Disposals Equipment of no further value to Corridor PTO may be given away to another nonprofit or sold if deemed to have residual value, or disposed of in a manner seen fit by the Board of Directors. The asset and its accumulated depreciation will be written off. Any related gain or loss will be accounted for. Donated Equipment Donated equipment is recognized at its market value and shown as an in-kind contribution. 15 of 15