Paw Paw Public Schools Business Office Procedures Manual Updated August 2013-1 -
TABLE OF CONTENTS Section 1 General Section 2 Cash Management Section 3 Expenditures Purchasing Section 4 Expenditures Accounts Payable Section 5 Payroll Section 6 Revenue and Receivables Section 7 Investments Section 8 Fixed/Capital Assets Section 9 Grant Programs - 2 -
SECTION 1. GENERAL INFORMATION The district uses the MI-Case software from KRESA for the accounting, human resources and student accounting functions. The accounting and human resource software resides on the district server. The student accounting software, Pinnacle SIS, is a web based application with the data residing at a MI-Case location. We can, and do, utilize the ability to print at KRESA. KRESA provides user group meetings and training sessions during the year. The user group meetings are approximately quarterly. District staff members usually attend the user group meetings. Additionally help is available via the phone and through web-ex access if the KRESA staff needs to see the screens we are working on. Web-ex access requires district staff to authorize that particular session and we are at our computers and on the phone with help personnel during the entire session. SECTION 2. CASH MANAGEMENT A. POLICIES 1. At its annual July organizational meeting, the Paw Paw Public Schools, Board of Education authorizes all banks, the accounts and persons permitted to be designated as check signers. a. The district utilizes PNC for the general and payroll accounts. b. All other bank accounts are at Chemical Bank with MILAF also authorized as a banking institution. 2. On June 14, 2006 the Board of Education formally adopted an executive limitations regulation regarding the investment of funds that limits the school district's allowable deposits and addresses the specific types of risks to which the school district's cash assets are exposed. B. CASH RECEIPTS 1. Incoming US mail is opened by the assistant bookkeeper. In her absence it is opened by the payroll bookkeeper or the administrative assistant. 2. Receipts of currency and checks by individual schools or departments are prepared for deposit at the location. The few checks that come to the central office are prepared for deposit by the assistant bookkeeper just like the schools do. The deposits are then placed in pre-numbered, tamper-evident bags that are picked up by the district delivery driver and taken directly to the bank for deposit. The location keeps a log of the use of the bags and sends that to the central office when they request new bags. The number tags and deposit copies are sent to the central office where the assistant bookkeeper checks the bag numbers, reviews the deposit slip and ensures data is ready for input to the system. If there is a difference between the bank count and the location count we input the bank count and the assistant bookkeeper notifies the building. Data is input by the assistant bookkeeper. 3. Check stubs are retained with backup materials and a copy of each check is retained also, except for the trust & agency deposits. Proper account numbers are written on the stub or copy. - 3 -
4. Deposit slips are three part NCR copies. The three copies go to the bank with the check(s) and the bank returns two copies when the deposit is made. a. One copy is attached to the back-up materials. b. The second copy is utilized differently internally depending on the fund. 5. Receipts are entered into the accounting software by the assistant bookkeeper. They are filed by receipt number and by month 6. Receipts are added to the cash sheet. They are compared to bank deposits, to the postings to cash receipts journals, and at month end. 7. For the cafeteria receipts, the currency and check deposits are prepared by cashiers and sent directly to the bank in the clear prenumbered bags. No copies of these checks are made prior to the deposit. The food service director can verify the cash out on line from the Meal Magic system and can tell if the register is short or over. Cashing of checks out of cash register receipts is prohibited. 8. The game receipts are deposited by the athletic director. Other athletic receipts and athletic related trust & agency receipts are collected by the athletic secretary and deposited using numbered, tamper-evident bags. C. CASH DISBURSEMENTS 1. All disbursements, including payroll, are made by check except for very few small petty cash purchases. 2. Checks are numbered sequentially. The blank checks are received with preprinted numbers. The accounting software keeps track of what the next check number should be and these check numbers are verified during check runs. Blank check stock is maintained in a locked cabinet in the business office area. 3. Requests for checks, invoices, and any other backup to authorize the check are approved by the Executive Director of Business Operations or the superintendent before checks are issued. a. The payable batch is compared to the support data as this is being approved. The batch is signed and dated when the support has been approved. If changes are necessary based on the review notes are made on the original batch document, changes are made and a new batch report is printed. When the checks get signed the batch (or corrected batch) report are presented with the unsigned checks to verify the vendors etc on the checks to what was originally approved. Checks are signed as they are verified to the approved batch list. 4. Checks are only made payable to a specific payee and are not written to "Cash" or "Bearer" or to a blank vendor. 5. Checks are run from the accounting software after input by the assistant bookkeeper. The assistant bookkeeper runs checks for the general account, the cafeteria account, the trust & agency account, the Cedar Street Center (CSC, formerly called Learning Tree) account and the building & site accounts. Computer generated checks are issued for all bank accounts. The system prints all information on the check, no prefilled blanks are used in - 4 -
the printer. In an emergency we can type up using the inventory of blank checks. The payroll checks and the debt fund checks are prepared by the payroll bookkeeper. 6. A record of checks written is retained in the MIcase system from which we run a disbursements journal. 7. Supporting documentation is attached to a voucher copy of the check to avoid duplicate payments. 8. All checks are hand signed in the district. The authorized check signers are determined at the July organization meeting and consist of: a. Superintendent, b. Executive Director Business Operations, and c. Payroll Bookkeeper. 9. Checks written in an amount of $10,000 or more require a second signature. 10. All non-check disbursements, such as wire transfers and ACH transfers between accounts, are approved by the Executive Director of Business Operations. The accounts that can be transferred between are limited at MILAF and cannot be changed without written authorization. Only district bank accounts, the VBISD ACH for the substitute teachers, and the payment of the purchase cards are currently approved. Additionally there are direct ACH s for employee net checks and deductions, MPSERS and the IRS. RECONCILIATIONS 1. Bank accounts are reconciled for the end of each month. The general fund account, cafeteria, trust & agency, Cedar Street Center (CSC, formerly called Learning Tree) and building and site accounts are reconciled by the Executive Director of Business Operations. The secretary has no deposit or check creation duties. Bank statements are received unopened from banks for all accounts. Additionally the executive director does access account information on line for all accounts. 2. Reconciliation procedures include the following: a. Comparison of bank statements with the disbursement journal for number, date, payee and amount b. Review of sequence of check numbers Upon completion of the reconciliation process, if the reconciliation is done by someone else, the Executive Director of Business Operations reviews the statements and approves adjustments to cash accounts. SECTION 3. EXPENDITURES PURCHASING A. PURCHASING POLICIES 1. Purchases are made in accordance with applicable legal requirements. Purchase orders are not required for purchases under $250 unless request by the employee s supervising administrator or being processed for order by the assistant bookkeeper; however, all purchases of less than $250 per order must receive prior administrative approval. This - 5 -
has been much better in the current year. Sometimes this was a problem, mostly with trust and agency accounts, but the Executive Director of Business Operations contacted the administrator in each case indicating that there was a problem and reminded them that there had to be a purchase order. 2. Standard services for transportation, maintenance and cafeteria areas do not require purchase orders, but open purchase orders for the year may be issued. Other items require purchase orders unless the person holds and uses a purchasing card. 3. Competitive bids are required for all purchases costing over the current State of Michigan mandated amount. 4. Purchase orders are prepared by the assistant bookkeeper upon receipt of a purchase requisition and the copy of the requisition as entered into the MiCase system by the area secretary. In limited instances, a purchase order form may be prepared by the individual department and then forwarded to the business office for approval. Purchase order numbers are assigned in Mi-Case electronically maintaining sequential numbering. The building secretaries input requisitions during the year but didn t go to an electronic approval by the principals and central office yet. The buildings print the request, have the budget administrator sign off and send it to us. Some locations do not have a secretary and continue to use the NCR forms. We will expand this in the future. Approvals will be done electronically in the system. 5. All purchase requisitions must be approved by an appropriate building administrator or director. Purchase requisitions for items costing more than the current State of Michigan mandated amount must be approved by the Board of Education or its designee. 6. All purchase orders are reviewed and approved by the Executive Director of Business Operations. 7. Copies of purchase orders are distributed to the vendor, acquiring department and a copy is retained in the business office. We print the PO s off the system and continue to use different colored copies for different reasons. B. PURCHASE CARD POLICIES 1. The board approved the use of purchasing cards during the 2007/08 school year. The users are very restricted and do not include any school building staff. 2. The Purchase Card Policy applies to all to ensure appropriate purchase card use in the event a purchase is made on a purchase card rather than through a purchase order. 3. All holders are administrative level or business office staff. These are to be used for items that need to be prepaid, or purchased immediately. These items do not need to have a purchase order prior to purchase. 4. At the end of the normal monthly billing cycle, the cardholder is required to complete an online expense report reconciling all items purchased and attaches all receipts to the report. If the person cannot access the online report for some reason they are allowed to do a paper report that they attach the receipts to. - 6 -
5. The expense report is submitted to the business office where the report is checked, by the assistant bookkeeper, to ensure all receipts are attached and that the report matches the hard copy statement mailed to the district. The account input is then done. 6. The card is paid via ACH from the MILAF account. C. APPROVAL PROCESS FOR NEW VENDORS 1. All new vendors must be approved by the business office prior to a requisition being approved or a purchase order issued. Unless a credit application is needed the vendors can just be set up by the assistant bookkeeper. If a credit application is needed the Executive Director of Business Operations approves and signs the application. 2. After a vendor is approved, the information is input by the assistant bookkeeper. D. ENCUMBRANCES 1. Data is checked when processing encumbrances to assure that the amount on the approved purchase order matches the amount on the invoice. Differences will exist and they are investigated by the assistant bookkeeper. 2. Open purchase orders are closed at the end of the fiscal year to avoid carryover amounts, or rolled to the next year if items are on backorder. E. RECEIVING 1. A copy of all purchase orders and two copies of the requisition are forwarded to the recipient's building to be received by the designated staff member. 2. The designated person in the school building uses the purchase order, requisition and shipping documents to inspect items for condition and proper quantity. 3. The designated person in the school building sends shipping paperwork to the business office indicating shipments received and noting any errors in quantity received, damage, etc, a copy of the requisition is returned to the assistant bookkeeper when the building believes the order is completed. 4. The assistant bookkeeper matches receiving paperwork against invoices for payment. SECTION 4. EXPENDITURES - ACCOUNTS PAYABLE A. ACCOUNTS PAYABLE POLICIES 1. All vendor invoices are routed directly from incoming mail to the assistant bookkeeper. 2. Invoices are matched against receiving paperwork to determine that they are not duplicate invoices (duplicates are destroyed) and against approved copies of purchase orders. Account distribution is reviewed for reasonableness. 3. All payables are approved by the Executive Director of Business Operations before an invoice is paid. - 7 -
4. Payments are generated from invoices only; payments are not made based on statements. Vendors month-end statements are reconciled to record liabilities based on invoices accrued and reviewed for non-current invoice dates. 5. We tested the ability to have reimbursements included on the paychecks rather than issue a physical check. In this manner we would deposit the reimbursement for the employee. This was successful, with the ability to charge the appropriate account numbers however description information related to the reimbursement is not in the FA system and, except for bus driver meal reimbursements related to long trips, we have discontinued that approach because of the lack of descriptive information in the FA. 6. B. ACCOUNTS PAYABLE PROCEDURES 1. The assistant bookkeeper inputs a payables batch and prints it along with the backup for the Executive Director of Business Operations to approve. Because we are now getting the payable batches approved all invoices (those that reference a purchase order and those that do not) are provided for approval from the Executive Director of Business Operations during the review process. 2. Upon proper approval, checks are printed as needed, usually once a week. 3. Discounts, freight terms, etc., are checked for accuracy when payables are entered into computer. 4. Checks are numbered consecutively by the computer system. 5. Employees processing payables are independent of those performing receiving, inventory and general ledger functions. 6. Access to accounts payable functions is limited to those employees who have a logical need for access. 7. When the checks are received for signing the original batch and the batch report is also provided so that random verifications can be done that the vendor, etc., has not been changed prior to issuing the physical check. SECTION 5. PAYROLL A. PERSONNEL, EMPLOYMENT AND RATE AUTHORIZATIONS 1. Requests for new personnel are initiated only by central office administrators, principals or area supervisors. 2. The district requires an employment application to be completed by all applicants and conducts an investigation of prospective new hires that includes background and reference checks, fingerprinting, drug screen and contact with former employers. Personnel files for certified staff are maintained by the administrative assistant to the Superintendent. Personnel files for the non-certified staff and the contracted custodians are maintained by the administrative assistant to the Executive Director of Business Operations. - 8 -
3. Classes of positions and corresponding pay rates in the system are periodically compared to the contractual rates by the Executive Director of Business Operations during the budget preparation and update process as well as during negotiations. 4. Personnel files are maintained for each employee. Files in the personnel department contain applications and reference investigations, information on hire date, original and updated pay rates and positions, earnings records and termination data where appropriate. Files in the payroll department contain W-4 forms, authorizations for payroll deductions, information on pay rates and positions and benefit applications. 5. Personnel and payroll files are only accessible to appropriate employees working in the central office. B. PAYROLL PREPARATION AND TIMEKEEPING 1. Employees are responsible for maintaining their own time sheets and this is separated from payroll preparation. 2. Supervisors or building principals approve time sheets before the sheets are forwarded to the payroll department. 3. The payroll bookkeeper uses attendance data on time cards as well as that on the absence reports to enter paid time. She double-checks computation of hours on time cards and time sheets, reviews cards for approval by a supervisor or principal (including overtime hours), notes any alterations on time cards and verifies pay rates. 4. The absence information is input by the payroll bookkeeper if she determines that a person does not have enough paid time coming to use a paid absence code she contacts the building administrator and the time is adjusted. The employee is contacted to inform them of the change. This is done via an email from the payroll bookkeeper. 5. Most pay is done via direct deposit as all contracts in the district include this as a requirement. At the end of the year we changed to an email notification system. After giving the support staff a few times to get used to this we will no longer print or distribute the direct deposit notices. 6. A few paychecks are issued each pay as these are only substitutes. Since all teacher substitutes are contracted through PESG there are few substitutes in the payroll system. Paychecks are numbered sequentially by the MI-case human resource software package. The starting check number is verified before checks are printed. Check numbers are verified during the reconciliation process by the Executive Director of Business Operations. Checks are MICR-signed by the printer with the Executive Director of Business Operations; Barbara Khaja s, signature. 7. Blank check stock is only accessible to employees in the business office. There is also an inventory of blank check stock secured at KRESA as they print the employee paychecks at that site. The checks are transported by KRESA staff to the payroll area in the central office in a secure briefcase. 8. Checks are drawn on an account separate from the general checking account. - 9 -
9. Check stubs and direct deposit reports contain detailed information on gross pay, withholdings, deductions, and leave time balances. 10. Checks are given to the payroll bookkeeper for distribution. Holds those for staff that pick them up, and puts stamps on remaining to mail at 2:00 p.m. on pay day. Direct deposits will no longer be done this way. 11. Prior to the pay day the amount to transfer to the payroll checking account is determined by the payroll bookkeeper. That information, along with backup information relating to payroll recap, IRS transfers and pay wage base for various benefit computations are all provided to the Executive Director of Business Operations who reviews the payroll proof and documentation prior to making the payroll transfer. If the funds were held at MILAF the wire is the amount that is needed by payroll and is directly wired or ACH d to the payroll bank account. We send all annuity payments to one location for distribution. The total is sent by ACH by the Executive Director of Business Operations to the EPARS account held at the ISD. The ISD account is then released to EPARS. 12. Voided or spoiled checks are marked "Void" and maintained in a file. 13. The payroll bookkeeper reconciles gross and net pay amounts on tax returns to payroll registers monthly, quarterly and annually. 14. Access to payroll records and materials is limited to those with a need for such access. C. YEAR-END PREPARATION OF W-2s 1. The total of W-2 wages, including taxable fringe benefits, is reconciled to the general ledger and payroll register before W-2 information is printed or transmitted. 2. W-2s are prepared by the MI-case software after the data is reconciled by the payroll bookkeeper. D. PAYROLL BANK ACCOUNT 1. A separate bank account is used for payroll. 2. Deposits to the payroll bank account are compared to the payroll register during each pay period and during the reconciliation process. 3. Payment of wages in cash is prohibited. E. PAYROLL WITHHOLDINGS 1. Procedures are in place to ensure that payroll taxes are paid when due and that payroll returns are filed as required. 2. Procedures are in place to ensure that other withholdings, such as 403(b) payments, direct deposits, cafeteria plan deductions, etc., are remitted in a timely manner, most on a pay date basis. - 10 -
SECTION 6. REVENUE AND RECEIVABLES A. PROPERTY TAX AND INTERGOVERNMENTAL RECEIVABLES 1. Tax levies are established by the Board of Education in accordance with applicable legal requirements. 2. Taxes are collected by the townships and then remitted to the district. 3. Intergovernmental revenues are accrued each fiscal year in accordance with GAAP requirements. B. RECEIVABLES POLICIES 1. Reimbursement claims are filed and invoices prepared by the payroll bookkeeper, mostly food service, transportation field trips, or billings to other school districts. These are very minor and are booked as revenue when the funds come in except for the end of the fiscal year. SECTION 7. INVESTMENTS A. INVESTMENT POLICIES 1. Authorization for acquisition and disposition of investments is vested with the Paw Paw Public Schools Board of Education. 2. The Board of Education has formally adopted an investment policy that limits the school district's allowable investments and addresses the specific types of risk to which the school district may be exposed. 3. The Executive Director of Business Operations is charged with the responsibility of determining that investments are of the character and type permitted by legal requirements and that the income earned is dispersed for authorized purposes. B. SAFEKEEPING 1. All securities are held in the name of Paw Paw Public Schools. 2. The district s funds (except the building & site funds managed by MILAF) are invested in CD s or in the MILAF accounts. There are no securities to hold as all are maintained at the banking institution or at MILAF. C. RECORDKEEPING 1. Detailed records are maintained including the following information: a. Date of acquisition, identification, purchase amount or cost b. Physical location of item (none are held in the district) c. Interest/dividend/income rates and accrual receipt dates d. Ownership by fund - 11 -
2. Investment income is recorded on a timely basis. Investment earnings are credited to the fund "owning" the investment. Any adjustments of investment accounts are approved by the Executive Director of Business Operations. 3. Calculations of fair value and investment income are periodically reviewed for accuracy by the Executive Director of Business Operations. SECTION 8. FIXED CAPITAL ASSETS A. PURCHASED ASSET POLICIES 1. The district utilizes DEYO/Stone Associates to provide asset management appraisal information. a. An original appraisals report was created on June 30, 2003. b. Since that time the district has annually provided to DEYO capital changes which are used to update and provide a new report. c. For the year ended June 30, 2011 we had DEYO do a physical inventory to verify and correct the records. d. The report provided fixed asset information and insurable value information. 2. Custodians of assets are to report any changes in their status such as transfers, sales, scrapping, obsolescence or excess. 3. Sales of assets are approved by appropriate officials. B. DEPRECIABLE ASSET POLICIES 1. Estimated life and method of depreciation are initially reviewed and authorized by a responsible official. 2. The computation of depreciation is done by DEYO and provided to the district. 3. Estimated life is periodically reviewed for adequacy based on actual experience. C. FIXED/CAPITAL ASSET POLICIES 1. Titles of sites, buildings, vehicles, etc., are held in the name of Paw Paw Public Schools. 2. Items are adequately safeguarded from loss due to fire, theft or misplacement. 3. Disposition or transfer of assets requires appropriate supporting documentation. 4. Periodic review and appraisals are completed to meet insurance considerations. SECTION 9. GRANTS A. GENERAL POLICIES 1. Accounting procedures, chart of accounts and other records are structured to provide for identifying receipts and expenditures of program funds separately for each grant. - 12 -
2. The accounting system used provides for accumulating and recording expenditures by grant and by cost category as shown in the approved budget. 3. Grant financial reports are prepared for required accounting periods and filed within the time period required by agencies. Reconciliations of grant financial reports are prepared, reviewed and approved before filing. 4. A determination is made that grant financial reports and claims for advances and reimbursement agree with supporting financial records and the general ledger. 5. When grant provisions or regulations impose requirements that are more restrictive than the school district's normal policies and procedures, the employee overseeing the grant informs the appropriate staff of this situation. B. PROGRAM RECEIPTS 1. The school district has procedures in place, including cash requirement projections, which minimize the time between the transfer of funds from the federal government and disbursement of those funds. The Executive Director of Business Operations approves requests for advances or reimbursements from grant funds. C. PURCHASING 1. The Executive Director of Business Operations reviews costs charged to direct and indirect cost centers in accordance with applicable grant requirements and applicable federal management circulars pertaining to cost principles. 2. In the event that grant-loan agreements or regulations impose requirements that differ from the school district's normal policies, such as competitive bid requirements, these differences are communicated to appropriate employees. D. DIRECT PROGRAM EXPENSES 1. The school district has established procedures that preclude charging federal award programs with unallowable costs and expenditures in compliance with the terms of OMB Circular A-87. E. PAYROLL 1. All wages paid for grant activities are paid at or above the federal minimum wage. 2. The school district has a written non-discrimination policy in place prohibiting discrimination based on race, sex, age or marital status in its employment practices. F. PROPERTY AND EQUIPMENT 1. The school district's depreciation policies or methods of computing use allowances are in accordance with the standards outlined in federal circulars or agency regulations. G. INDIRECT COSTS 1. The school district has an indirect cost allocation plan or negotiated indirect cost rate prepared in accordance with the provisions of OMB Circular A-87. - 13 -
2. Audit cognizance of the plan has been established and the rates are acceptable to all participating federal and state agencies. 3. The school district has procedures in place that provide reasonable assurance that consistent treatment is applied in the distribution of direct and indirect charges to all grants. - 14 -