Sayre School Accounting and Financial Policies and Procedures Manual

Transcription

1 Sayre School Accounting and Financial Policies and Procedures Manual Approved May 15, 2003 Updated 2009 Updated Summer 2011 Access to Records It is the policy of the school to allow the public to inspect the following records of the organization: 1. IRS Form Original applications for tax-exempt status All requests should be directed to the Headmaster or the Director of Finance and Operations. The Headmaster or Director of Finance and Operations of the school will remain in the presence of the individual(s) requesting access to this information. Final regulations under Internal Revenue Code Section 6104 were published in April They were related to the amended disclosure legislation created under the Tax and Trade Relief Act of These regulations instituted the following requirements: Annual Information Return: The school needs to respond to requests for copies of Form 990, for the three most recent filings. Also coved under these rules are related schedules and attachments filed with these forms (such as Schedule A for Form 990). Application for Tax-Exempt Status: Forms 1023 and 1024 are generally completed when an entity is formed. This application, its related schedules and the resultant IRS determination letter must be made available to the public pursuant to these final regulations. Manner of Providing Documents: An individual or group requesting copies of the annual return or the application for exempt status may visit the school. The school will make the copies for the in-person requestor that same day, or the next business day if unusual circumstances arise. Sayre School will charge for the cost of copies and for postage fees (if the request is via mail). For requests made in writing, the school must comply and mail the documents within 30 days from the date the request is received. Penalties: Any person under duty to provide the required information under the public disclosure requirements, and who fails to comply, is subject to a penalty. The amount of the fine is $20 per day until the obligation for disclosure is met, up to a maximum of $10,000. The cap does not apply to failure to provide a copy of the application for tax-exempt status. If two or more people are required to comply with the disclosure procedures, they are jointly and severally liable for the penalties. Willful failure to comply can lead to additional penalties. Requestors who do not receive information to which they are entitled can contact the IRS to report said breach of the disclosure requirements. Accounting Computer File Back-Up Procedure It is the policy of the school to maintain a computer file back-up system for accounting records as follows:

2 2 The accounting software is located on a dedicated file server. An employee not employed in the business office backs the file server up everyday. Tapes are stored in a separate building from where the file server is located. Accounting Method It is the policy of the school to use the accrual basis of accounting that recognizes revenues when have been earned and expenses when they have been incurred. Accounts Payable Accruals It is the policy of the school to accrue unpaid expenses on its financial records. Accounts Receivable Write-off Procedures (Bad Debt) It is the policy of the school to ensure that all available means of collecting accounts receivable have been exhausted before write-off procedures are initiated. If a receivable is deemed uncollectible, the following approvals are required before write-off implementation: Amount Individual $1,000 or less Headmaster and Director of Finance and Operations Greater than $1,000 Headmaster, Director of Finance and Operations and Chair, Finance Committee Annual Leave Payments Vacation time does not accrue from one year to the next, nor is compensation given for unused vacation. Bank Reconciliation It is the policy of the school to address bank statements to the Director of Finance and Operations, unless the account is reconciled by the Director of Finance and Operations in which case the Assistant Director gets the statement. The statements are opened, signed and dated by either the Assistant Director of the Business Office or the Director of Finance and Operations. There is an initial review of checks that have cleared during the prior month. Within 24 hours, the statement is forwarded to the business office staff person responsible for reconciliation of that account. Prior to the annual review or audit, all bank account reconciliations are given to the school s outside accountant to review. Bartering Prohibited It is the policy of the school to prohibit entering into bartering agreements with families whereby tuition is forgone in exchange for goods or services provided by the family member. Any other type of bartering agreement in any form is also prohibited. Board-Designated Funds It is the policy of the school to treat board-designated funds as unrestricted net assets on the statement of financial position. Bonding of Employees It is the policy of the school to bond all employees involved in the financial functions of the school.

3 3 Capitalization Cutoff Points It is the policy of the school to expense assets in the period purchased if these assets cost less than $1,000 individually. Assets costing $1,000 or more individually will be capitalized and depreciated in accordance with the school s depreciation policies. Repairs and improvements to real property will be capitalized if they cost $1,000 or more individually. Cash Management Cash collected each day should be submitted to the Business Office for deposit by an employee (not a student) prior to the end of the business day. If cash cannot be submitted to the business office before the end of the business day, it must be secured in a locked file cabinet overnight and turned into the business office the next business day prior to 12:00 noon. A cash deposit bag or a cash box should be used to transport cash to the business office. Under no circumstances should employees take school cash off campus overnight. Under no circumstances should cash for deposit be left in mailboxes or on someone s desk (in their absence). All cash submitted to the business office for deposit must be counted in advance. A four-part deposit slip should be completed and signed by the faculty/staff sponsor for the club/organization (if applicable) and then brought to the division head s designated representative. The division head s representative verifies the cash for deposit and signs the deposit slip. Either the division head s representative or the faculty/staff sponsor brings the deposit slip and the cash to the business office. The business office staff person receiving the deposit signs the deposit slip and returns a copy to either the division head s representative or the faculty/staff sponsor. A deposit sign-in sheet is located on the desk of the business office administrative assistant. This sheet must be completed by anyone submitting a cash deposit to the business office. The sheet requires the following information: name of person submitting deposit, date, account to credit deposit, and the amount of the deposit. The business office will verify the amount submitted prior to deposit. If there is any discrepancy, the business office will notify the person submitting the cash and adjust the deposit slip to reflect the correct total. Deposit sign in sheets are placed in a folder with cash receipts at the end of each month by the assistant director of the business office. For cash collected by division offices, all cash should be rolled coin and bills placed in an envelope with a note detailing the total enclosed and the department submitting the cash for deposit. For buttery, concession and athletic gate boxes, the four (4) part deposit slip must be filled out when submitting cash to the business office for deposit (one copy should be retained by the person submitting the cash for deposit). For tuition payments made in person by cash or check, cash receipts are completed. The person making payment gets a copy (white) and the other copies (yellow/pink) go to the assistant director of the business office. The yellow copy goes in the cash receipt folder and the pink copy goes with the deposit. A historical record of deposits is maintained in the business office. Deposits are batched and taken to the bank at least twice a week. Revised: FY10 Chart of Accounts

4 4 It is the policy of the school to maintain a chart of accounts. All employees involved in accounting coding responsibilities or budgetary responsibilities will be issued a chart of accounts, and the chart of accounts must be updated on a routine basis. Check Disbursements It is the policy of the school to keep unused check supplies safeguarded under lock and key. All check disbursements will require approved invoices or check request forms. The Director of Finance reviews all invoices or purchase request forms prior to check runs. Resulting checks will be signed by one of the approved signers. If an approved signer is requesting a check, a different approved signer must sign the check. Signed checks that have not been mailed or distributed will be put under lock and key at the end of the day. Checks are run at least twice per week, Tuesday and Friday. Requests for checks must be received at least 24 hours prior to the date of the check run. The Director of Finance and Operations or the Headmaster must approve any exception regarding check runs. Check Endorsement/Stamp It is the policy of the school to endorse checks with a stamp(s) as follows: Check Signers For Deposit Only Sayre School It is the policy of the school to give check-signing authority to the following positions: Headmaster Director Finance & Operations Chair, Board of Trustees Treasurer, Board of Trustees Upper School Director For checks in excess of $10,000, two authorized signatures are required. Collection Procedures It is the policy of the school to submit tuition bills monthly. When accounts are in arrears 30 days the Business Office Assistant Director will contact the parent(s) or responsible party via telephone and attempt to collect the amount due. The Director of Finance and Operations and the Head of School will also be alerted regarding any accounts in arrears. If delinquent accounts (with balances exceeding $1,000) are not satisfied within 10 business days, a late charge of 1.5% is assessed each month until the account is current. Prior to the end of the first nine (9) weeks grading period, a letter is sent from the Director of Finance and Operations to all families with delinquent accounts (exceeding $1,000) indicating that no student grades will be released until the account is current. Prior to the end of the semester, a letter is sent from the Director of Finance and Operations to all families with delinquent accounts (exceeding $1,000) indicating that no student grades will be released, and no transcripts will be released until the account is current. Delinquent families are also notified that they may

5 5 not re-enroll for the following school year unless their account is current. In some cases, depending on the severity of the delinquency and if no agreeable financial arrangements can be made, the student(s) are requested not to return to school. At the end of the school year, a letter is sent from the Director of Finance and Operations to all families with delinquent accounts indicating that failure to satisfy the delinquent balance will result in placing their account with the school s attorneys for collection. If a family does not satisfy the demand for payment, their account is placed with the attorneys. Student accounts that are delinquent for more than one fiscal year are considered bad debt and expensed accordingly. Collections on these accounts through the school attorneys are recorded as income on subsequent financial statements. Computer Passwords It is the policy of the school for users to have unique computer passwords for whoever has access to the computer system. Passwords of employees whose employment is terminated will be cancelled immediately. Contract Signing Authority It is the policy of the school to grant authority to sign contracts to the Headmaster, Chair of the Board, Treasurer of the Board or the Director of Finance and Operations, as long as the financial implications of the contract are included in the school s operating budget. If the financial implication of signing the contract is not included in the school s operating budget, Board of Directors approval is required before authority to sign the contract is granted. Contributions It is the policy of the school to send thank you letters on the school s letterhead acknowledging all contributions, regardless of the amount. The letters shall indicate the dollar amount contributed. The finance committee of the board of trustees reserves the right to vote on acceptance of restricted gifts to the school. Credit Cards It is the policy of the school to issue credit cards to the following individuals: Headmaster Director of Finance and Operations Assistant Director of Finance and Operations Director of Advancement Director of Alumni Affairs Director of Annual Giving and Special Events Director of Technology The school also provides credit cards for faculty that chaperone school trips each year. These cards are kept in a locked cabinet in the Business Office and are only available to faculty for legitimate trip expenditures. Once the school trips have concluded, the cards are returned to the Business Office until needed again in subsequent years.

6 6 Employees not issued credit cards should contact the director of finance and operations to get permission to purchase using a school credit card. It is the responsibility of the employee using a school credit card to obtain written documentation of the purchase and forward that information in a timely manner to the person reconciling that credit card statement. All transactions via credit cards will be supported with receipts and included in records as part of the monthly reconciliation of the credit card statement. Monthly statements will be reviewed by the Headmaster and the Director of Finance and Operations. The Treasurer of the Board of Trustees will review the monthly credit card statements of the Headmaster, and the Headmaster will review the monthly credit card statements of the Director of Finance and Operations. Revised FY11 Deferred Revenues It is the policy of the school that revenues that have not been earned will be included with deferred revenues on the financial statements and recorded as revenue when earned. Depreciation It is the policy of the school to depreciate fixed assets other than real property and electronic equipment using a straight-line method over a 10-year period. Real property will be depreciated using the straight-line method over a 40-year period. Electronic equipment and software will be depreciated using the straight-line method for a 3 or 5-year period. Capitalized repairs and improvements will be depreciated using the straight-line method based on an analysis of the time the repair or improvement is expected to improve the property. Fully depreciated fixed assets will remain on the school s statement of financial position until they are disposed of or otherwise deemed worthless. Assets will be capitalized in accordance with the school s capitalization cutoff point policy. Discounts Lost It is the policy of the school to take advantage of vendor discounts and record the net expense in the financial records. Document Shredding It is the policy of the school to shred confidential and sensitive documents when the time period required to keep the documents has been met. Donated Property It is the policy of the school to record the value of donated property among the fixed assets of the organization if the value of the property exceeds the school s capitalization cut-off point. Endowment Funds It is the policy of the school to include endowments funds with permanently restricted net assets on the organization s statement of financial position.

7 7 Finance Committee Meetings The finance committee of the board of trustees shall meet at least three times during each fiscal year. If necessary, the chair of the finance committee may call additional meetings of the committee during the year. Financial Statement Preparation and Distribution On at least a quarterly basis an abbreviated income statement of the operating fund shall be distributed to the finance committee. It is the policy of the school to prepare and distribute audited financial statements that will include the Statement of Financial Position, the Statement of Activities and Changes in Net Assets, and the Statement of Cash Flows. The statements will be distributed to the board of trustees, the finance committee and the headmaster. Fringe Benefits It is the policy of the school to distribute fringe benefits to the functions of the school based on actual salaries charged to the functions. Fringe benefits include FICA taxes, unemployment taxes, state and local taxes, employee insurance premiums, pension payments. Independent Contractors It is the policy of the school to evaluate criteria established by the IRS when assigning individual employee or independent contractor status. Individuals qualifying as independent contractors will sign a W9 Form (Request for Taxpayer ID #) prior to performing work. They are also required to show proof of insurance coverage. Independent contractors will be issued IRS Form 1099 if compensation is $600 or more. Insurance It is the policy of the school to review the school s insurance policies annually to ensure coverage and limitations adequately meet the needs of the school and employees. Inventory Valuations Spartan Shop, Office Supplies, Food Service It is the policy of the school to carry inventory at the lower of cost or market and to use the first in, first out (FIFO) method of inventory valuation. Investment Policy The school s investment policy is listed in Appendix A: Sayre School Investment Policy. The investments will be reviewed at least annually by the Finance Committee of the Board of Trustees. Each year the Finance Committee will direct the re-investment of long term funds so that targeted ratios are maintained irrespective of the income and capital gains realized during the preceding year on each of the investments. IRS Forms Form 990 It is the policy of the school to allow public access to IRS Form 990 and other documents.

8 8 Form 1099 It is the policy of the school to complete Form 1099 for all individuals and vendors receiving $600 or more from the school. Leases It is the policy of the school to record leases as either capital leases or operating leases in the financial records, based on the appropriate qualification criteria. Loans to Employees It is the policy of the school that the Headmaster or the Director of Finance and Operations can approve loans to employees. Loan amounts and the terms of repayment are subject to the discretion of the Headmaster or the Director of Finance and Operations. All loans must be repaid in full no later than an employee s last day of employment. Long-Term Debt It is the policy of the school to include the current portion of long-term debt (the amount due to be paid within 12 months) with accounts payable on the financial records. Only the non-current portion of long term debts will be included with the long-term debt section of the financial records. Nonsufficient Funds Checks It is the policy of the school to include checks returned by the bank because of insufficient funds in the accounts receivable. If the check(s) in question are eligible for redeposit, the subsequent deposit will reduce the receivable account accordingly. If the checks in question are prohibited from redeposit, the school s collection policy will be implemented. Permanently Restricted Net Assets It is the policy of the school to add all permanently restricted net assets together for statement of financial position presentations. Petty Cash Fund Disbursements It is the policy of the school to maintain a petty cash fund. It is the policy of the school that the Director of Finance and Operations and that person s designee in the business office to ensure that the petty cash fund is under lock and key at all times. Disbursements from the petty cash fund may only be made for approved expenditures. A receipt must accompany every disbursement. The petty cash fund will be replenished as needed and at the end of each month. Photocopying Expenses Out-of-house photocopying expenses will be charged to the function responsible for incurring the expense. Postage Employees are prohibited from using the school s postage meter for personal mail.

9 9 Prepaid Expenses It is the policy of the school to treat payments of expenses that have a time-sensitive future benefit as prepaid expenses on the financial records and to expense them in the proper period. Records of prepaid expenses will be maintained by the business office and will be budgeted for accordingly. Public Access to Records It is the policy of the school to allow public access to Form 990 and the original application for tax exempt status. The Headmaster or Director of Finance and Operations of the school will remain in the presence of the individual(s) requesting access to this information. Individuals will be allowed a reasonable amount of time to review the form, and if a copy is requested, the individual will be charged for the cost of the copy. The original of the Form 990 and the application for tax exempt status will remain at the school without exception. Purchasing Policy Purchasing authority is given to the various divisions and department heads each fiscal year with the understanding that they spend according to their budget allocations. The following options are available for purchasing on behalf of Sayre School: 1. Purchase Orders It is the policy of the school to use a purchase order system. Pre-approved purchase orders will be required for purchases from any vendor totaling more than $1000. Exceptions must be approved by the Director of Finance and Operations. Completed purchase orders may be sent electronically or as hard copies to the Business Office for approval and issuance of a unique purchase order number. Purchase orders must include information regarding the vendor, items to be purchased, estimated or actual dollar value of the purchase, department(s) to be charged, authorized signature of the department head, and vendor support documentation, e.g. order forms, estimate statements, etc.. No items may be ordered prior to purchase order approval by Director of Finance and Operations or his designee. Upon receipt of purchased items, confirmation of receipt must be communicated to the Business Office. Invoices for purchase orders received in the Business Office will be reviewed and approved by the Director of Finance and Operations. If necessary, the originating office (of the purchase order) will be contacted to verify the invoice information before a check is prepared by the Business Office. After verification, checks are prepared and then signed by the Director of Finance and Operations. 2. Request for Funds (Green Form) The green Request for Funds form is used to request payment via check for authorized school purchases, including reimbursement for purchases over $25 made by an employee. Forms should be completed and signed by the departmental head, and receipts, invoices or other relevant documentation should be attached to the form. Completed forms should be sent to the Business Office and must be signed by the Director of Finance and Operations or another personal authorized to sign checks. It is very helpful if the Date Check Needed line is filled out. In some situations purchases may be requested using this form without a receipt or invoice (an example would be for a speaker coming to campus or a request for travel funds for an authorized school trip). In these cases, it is up to the person making the request to provide documentation to the Business Office after the fact.

10 10 3. Petty Cash Request (Yellow Form) The Petty Cash form is used to obtain cash (up to $25) for authorized school purchases or to be reimbursed for authorized purchases (up to $25) made on behalf of Sayre School. All petty cash transactions require that the person making the request present an original purchase receipt within 10 days from the date of the receipt of funds. 4. Vendor Charge Accounts The school has established tax exempt accounts with a number of vendors in Lexington. In some cases, there are purchasing (credit) cards that may be checked out by employees at the Business Office in order to shop for authorized items at these stores. A list of these vendors is available by contacting the Business Office. Employees making purchases from these vendors using a house charge or using a purchasing card must provide written receipts to the Business Office when returning the purchasing cards or making a house charge. Store policies vary with respect to house charge accounts, so prior to going to a vendor for the first time contact the business office staff to find out the specifics for that particular vendor. Records Retention and Destruction It is the policy of the school to retain records as required by law and to destroy them when appropriate. Repairs and Improvements It is the policy of the school to capitalize repairs and improvements to fixed assets or real property owned by the school if the repairs or improvements cost $1,000 or more individually. Repairs or improvements of less than $1,000 will be expensed in the period paid. Depreciation of capitalized repairs or improvements will be based on an analysis of how long the repair or improvement is expected to extend the useful life of the property. Salaries and Fringe Benefits Accruals It is the policy of the school to accrue unpaid salaries and fringe benefits in the financial statements of the school according to function. Segregation of Duties It is the policy of the school to work with the school s independent CPA firm to ensure adequate segregation of duties exist. Suggestions on improving controls through duty segregation will be given serious consideration, and employees will be required to participate in the interest of both the school and the employee. Student Billing Payments Monthly student billing statements are mailed the 15 th of each month, and payments are due on the 1 st of each month. The majority of student billing payments come via the mail. The Headmaster s assistant opens all payments and distributes them to the appropriate mailbox. In some cases individuals will drop payments off at the division offices, and division secretaries should deliver these payments to the business office by the end of the business day. There is also a payment box located in the Library for the convenience of families. This box is checked on at least a weekly basis. Individuals sometimes come directly to the business office to make payments. A receipt is prepared by the business office that includes the parent name(s), student(s) name, date, description of payment, and the amount of payment. The receipt should be signed, and if issued for the purpose of flexible dependent care, Sayre s EIN number ( ) should be written on the receipt. The white original copy should be

11 11 given to the person making the payment, the yellow copy is filed in a yellow folder next to the receipts, and the pink copy should be attached to the check/cash. Payments are batched and deposited on a semi-weekly/weekly basis. All payments are posted through the student billing software to the appropriate family account and distributed to the individual student. Deposit tickets are posted to the school s operating bank account spreadsheet and then filed in the appropriate folder for reconciliation at the end of the month. Telephone Expenses It is the policy of the school to assign unique telephone codes to each employee to distinguish personal versus business related telephone calls. Personal calls reflected on the monthly telephone bill are identified within the business office and charged to each individual. Temporarily Restricted Net Assets It is the policy of the school to add all temporarily restricted net assets together for statement of financial position presentation. Time Sheets It is the policy of the school that all non-salaried employees either complete and sign a time sheet or punch the time clock for every pay period on a weekly basis. Paychecks will not be distributed until approved time sheets or time clock records have been submitted. Employees are required to note accurately all regular hours, overtime, and leave hours. Travel Advances It is the policy of the school to issue travel advances to individuals who have secured the proper travel authorization. These advances are considered accounts receivables from the individuals, and the proper travel accounts are charged when reimbursements for travel expenses are paid. Travel advances are limited to estimated travel expenses. See the travel expense policy. Travel Expenses It is the policy of the school to require all persons traveling on approved school business to complete a cash expense sheet at the conclusion of travel. This sheet should be submitted to the business office accompanied by receipts for all expenses incurred. It is the policy of the school to establish travel expense limitations and guidelines. These guidelines are listed in Appendix B: Travel Expense Guidelines. Travel expense reimbursements will be distributed per the normal check processing. Unrestricted Net Assets It is the policy of the school to include board-designated funds with unrestricted net assets on the Statement of Financial Position.

12 12 Voided Checks If voided checks are physically available, they will be stamped with VOID and filed with the school s cancelled checks. Year-end Procedures The Director of Finance and Operations will be responsible for all year-end reports required by the outside auditor. L:\ADMIN\ACCT\BROOKS\Business Policies Manual.doc

13 13 Appendix A: Sayre School Investment Policy Funds available for long-term investment will be invested in an approximate 60:40 ratio of equities and fixed assets. The equity portion of funds available for long-term investment will be invested in a diversified portfolio of high quality, relatively low risk equities including mutual funds meeting these criteria. The fixed assets portion of funds available for long-term investment will be invested in a portfolio of high quality corporate or government bonds of varying maturity. Cash reserves will be invested in demand deposits, money market accounts, federally insured certificates of deposit, U.S. treasury securities, and repos. A spending policy for unrestricted endowment funds calls for an annual allocation based on 3 percent of a three-year rolling average of the market value of the funds. Amended FY10

14 14 Appendix B: Sayre School Travel Expense Guidelines Authorizations-All travel requests must be for budgeted travel and approved by the Headmaster. Travel Advances-The advance will not exceed the estimated cost. Personal Mileage-Employees will be reimbursed for the use of their personal cars on school business at a rate of $.51 cents per mile. Commuting mileage will not be reimbursed. Public Carrier-The most cost effective means of travel, such as coach fare, must be used. Receipts are necessary. Lodging-Employees will be reimbursed entirely for the basic room charge and applicable taxes. Meals-Receipts are necessary for meals. Tips should be noted on meal receipts. Taxi-Actual taxi fares, including tips, will be reimbursed entirely. Receipts are necessary. Tips should be noted on taxi receipts. Telephone-Personal calls must be limited to 15 minutes per day to be reimbursable. Tips-Reasonable tips for baggage handling will be reimbursed. Receipts are not required. Tips for meals and taxis are discussed elsewhere under these guidelines. Parking and Tolls-Parking fees and toll expenses will be reimbursed. Receipts are necessary. Car Rentals-Car rentals will be reimbursed if approved in advance. Receipts are necessary. NOTE: In some cases, receipts are difficult to obtain; however, the expectation is that anyone traveling on school business should make every effort to obtain receipts.