Chapter Treasurer s Handbook

Transcription

1 2013 Chapter Treasurer s Handbook Society of Cable Telecommunication Engineers, Inc. Revised: June 2013

2 Table of Contents Introduction... 4 Treasurer s Responsibilities... 5 Fiduciary Responsibility... 5 Duties of the Treasurer... 5 SCTE, SCTE National Chapters, and The IRS... 7 SCTE Tax-Exempt Status... 7 Benefits to SCTE Chapters... 7 IRS Requirements... 8 Managing Chapter Funds Cash Receipts and Disbursements Establishing Bank Accounts Adding Local Volunteer Signatures Adding Staff Signatures Bank Account Name IRS Paperwork Bank Accounts Reconciling Checking Accounts Chapter Revenue Bank Deposits Cash Disbursements Financial Reporting Chart of Accounts Financial Statements Capital Asset Log Submitting Quarterly Financial Reports Internal Controls Banking issues Cash Handling Credit Cards Merchant Service Accounts SCTE Credit Card Processing Electronic Funds Transfers Purchases and Disbursements Hiring Policy May 2013 Page 2

3 Charitable Contributions Raffles, Bingo, Pull-tabs and Other Games of Chance Prize Policy Issuing Credit Record Retention Policy Sarbanes-Oxley Whistleblower Protection Document Destruction Audits External Audit Internal Audit Conclusion Appendix A Financial Reports Bank Reconciliation Quarterly Financial Report Schedule A-Training Seminars/Meetings Schedule B- Vendor Days Schedule C Golf Tournament Schedule D Other Operating Income Schedule E Donations Expense Reports Schedule F Board Meals Schedule G Other Operating Expenses Petty Cash Appendix B Capital Asset Log Appendix C Form W-9 Appendix D Credit Card Purchase Form Appendix E Record Retention Policy Appendix F Whistleblower Policy May 2013 Page 3

4 Introduction Congratulations on your election to the office of Treasurer for your chapter. The SCTE Board of Directors and National staff welcome you to this important and challenging leadership role and we extend our support through the Chapter Treasurer s Handbook. The elected chapter Treasurer has an important role in protecting and guiding the chapter and the SCTE organization. He or she must work within the parameters of the association s financial guidelines while complying with applicable legal requirements, bylaws, policies, and risk management. SCTE stands ready to help the elected chapter Treasurer in this vitally important role. The information presented in this handbook provides the fundamentals regarding the management of chapter funds and financial reporting. This handbook is intended to be used as a guideline for the local chapters and meeting groups of SCTE, leaving the chapter and meeting group Treasurer with a better understanding of her/his functions and duties, leading to more effective governance and financial management. Therefore, she/he should read this document in its entirety and work closely with the outgoing chapter Treasurer to ensure a smooth transition. The SCTE Board of Directors and staff thank you for your time, effort and support of SCTE. May 2013 Page 4

5 Treasurer s Responsibilities Chapter and meeting group treasurers have one of the most important positions within the Society. These individuals not only manage the finances for their own local groups, but also play a key role in providing the national headquarters with information needed to complete the Society s annual tax reports and independently audited financial statements. Thus, it is imperative that treasurers work in partnership with their boards of directors and with SCTE Headquarters to appropriately manage their chapter or meeting group s finances. Fiduciary Responsibility Financial health and stability are fundamental to the success of every chapter since all operations are ultimately dependent upon financial resources. The treasurer is therefore one of the most important chapter officers who will dramatically impact the stability of the chapter through effective management. The treasurer holds the chapter funds in trust. It is her/his responsibility to keep accurate financial records, maintain adequate internal controls to safeguard the funds, and keep the chapter board apprised of the financial health of the chapter. The board members, as fiduciaries, must use the chapter s funds to accomplish the mission of SCTE and must properly account for these funds. All elected & appointed voting board members have a duty to enforce financial controls and to be vigilant for signs of trouble. Their duties include reviewing cash and cash reserve levels, financial statements, reasonableness of expenses, accounting controls and safeguards, and approval of all expenses. Duties of the Treasurer Upon assuming office: Review Chapter Treasurer s Handbook Review Chapter bylaws Review the chapter events and financial position of the past year with your predecessor. Notify banks of signature change on accounts and have check signing privileges signed over at the chapter s local bank. Collect all chapter property that the retiring Treasurer has been using, e.g. ledgers, checkbooks, software, computers, supplies, records, contracts, etc. Review the capital asset log with the retiring Treasurer and verify the location of all fixed assets belonging to the chapter. Verify that the retiring Treasurer has deposited all cash on hand. If all cash has not been deposited, however, count the cash with the retiring Treasurer and sign a statement of undeposited cash received from the retiring Treasurer, for the chapter records. May 2013 Page 5

6 Duties of the Treasurer Ongoing duties: Maintain accurate records of all receipts and disbursements. Collect meeting and registration fees at any chapter meeting activity incurring a charge. Or if applicable, invoice members and sponsors for these fees. Deposit income on a regular basis and keep permanent records of all deposits (deposit slips). Disburse funds only as authorized in the minutes or the annual budget. Any amounts due exceeding those approved should be brought to the attention of the chapter board and further approval obtained. Obtain the signature of required officer(s) on all checks before release. Order checks and other necessary supplies as needed. Maintain accounts as established by the organization. Perform bank statement reconciliation(s) each month. Prepare accurate and meaningful financial reports. Submit timely financial reports to SCTE headquarters. Report at chapter meetings on financial condition of the chapter. Comply with all information requests from SCTE headquarters and/or external auditors. Report income paid to third parties for services performed or prizes awarded, to the headquarters. Obtain Form W-9 (Appendix C) from these recipients. Implement and maintain internal controls for the chapter. Comply with bylaws, policies and procedures. Although not required at this time, preparation of an annual budget is highly recommended. Outgoing duties: Turnover to the new Treasurer: all files, checkbooks, log sheets, computer programs, financial spreadsheets, and financial information belonging to the chapter. Turnover all assets in possession to the new Treasurer and review asset log and locations of all assets with the new Treasurer. Arrangements for new bank signature cards and address changes for bank statements, if necessary, is the responsibility of the outgoing Treasurer. Meet with the new Treasurer to explain in detail what actions are complete and what are in process. A written or verbal transition report should also include a review of the chapter s financial position, the current or proposed budget, if applicable, and any pertinent financial information, policies and/or procedures that will lend to the success of the new Treasurer. May 2013 Page 6

7 SCTE, SCTE National Chapters, and The IRS SCTE Tax-Exempt Status In 1977 the Internal Revenue Service approved the SCTE s application for taxexempt status under Internal Revenue Code Section 501(c)(6). Under this code section for professional societies and trade associations ( business leagues ), the Society is exempt from taxation on the income derived from carrying out our purpose. Income from activities not included in our purpose is taxable, primary examples of this are advertising income and member list rentals. Our exempt purpose, as stated in our bylaws,. is to develop, increase and spread both theoretical and practical technical knowledge of cable television and broadband communications systems thereby providing opportunities for the professional and technical growth of its membership and the industry. Benefits to SCTE Chapters SCTE maintains a group exemption that enables the SCTE chapters located in North America to be included under SCTE s tax-exempt status and employer identification number. In order to operate under the SCTE umbrella, the chapters must have articles of incorporation and bylaws that mirror those of national. As a result of this group exemption: All chapter and meeting group financial activity is consolidated with SCTE National to form one independently audited financial statement. All Internal Revenue Service reporting is included on one set of tax returns. Chapters are included under SCTE s liability insurance policies. This organizational structure relieves local chapters and meeting groups from having to fulfill many of the requirements for a non-profit organization. These requirements include: incorporating under state laws; applying for non-profit status under the Internal Revenue Service Code; having all financial records audited annually by a certified public accountant; and, preparing annual tax returns. May 2013 Page 7

8 IRS Requirements In order to maintain tax-exempt status under 501(c)(6), the IRS requires that an association (and its chapters) abide by the following regulations: members must have a common business interest; purpose must be to promote that interest; purpose may not be to engage in a regular business of a kind ordinarily carried on for profit; activities should be directed to the improvement of business conditions, as distinguished from the performance of particular services for individual persons; cannot be organized for profit no part of net earnings may inure to the benefit of any private individual. dditional IRS requirements include the following: Chapters must fully disclosure that any amounts received are not deductible as charitable contributions. Note: Only those paid to 501(c)(3) organizations are considered charitable contributions. To comply with this IRS requirement, it is necessary to include the following disclosure statement on all solicitations of funds: Contributions or gifts to Society of Cable Telecommunications Engineers, Inc. are not tax deductible as charitable contributions. However, they may be tax deductible as ordinary and necessary business expenses. No selling tickets for raffles or other games of chance. In 2008, the IRS started requesting detailed raffle information including appropriate state license held and all costs and revenue associated with holding the raffle. Also, gaming activities do not serve the exempt purpose and could result in unrelated business taxable income. Therefore, SCTE and chapters do not participate in fundraising through games of chance. IRS requires that prizes awarded with a value of $600 or more must be documented and the recipient is sent a Form More information on prizes is included in section H of Internal Controls. Because of our structure, the Society depends on each of our chapters and meeting groups to fulfill our stated purpose and to maintain clear and accurate financial records to prove that all activities are undertaken to carry out our mission. It is crucial that chapters follow the IRS regulations that impact our tax-exempt status. Because of the real or perceived affiliation between a national association and its chapters, as well as among chapters themselves, an unfavorable IRS audit result of chapter s finances may have significant ramifications for the entire organization and possibly result in the loss of the Society s tax-exempt status. May 2013 Page 8

9 In summary of this section: never tell a company or individual that gifts to your chapter are tax deductible. Do not accept paid advertising or contributions in exchange for advertising. Advertising income is taxable to our organization and should not be an income option provided to vendors under any circumstance. No officer should endorse any product or service while functioning as an officer of the chapter or meeting group. Ensure that all activities engaged in by your group support the exempt purpose of the Society. Ensure that the financial records show that all activities support our purpose. All expenses incurred must be in support of the society s mission and purpose. No selling tickets for raffles or other games of chance and make sure to document prizes that the chapter purchases and awards to individuals. As this handbook emphasizes, SCTE has assumed primary responsibility for compliance with Internal Revenue Service regulations for the national chapters and meeting groups by including them under SCTE s tax-exempt status approval. To ensure that all activities support our non-profit mission and to ensure the accuracy and accessibility of all financial records to prove that our activities are within our mission, SCTE has established the requirements that chapters and meeting groups must follow. Any questions or concerns about these requirements should be directed to SCTE headquarters staff. If a chapter or meeting group fails to comply with the requirements outlined here, the chapter or meeting group may be placed on probation, conditional status, or be disbanded by the National Board of Directors. These steps will be taken to protect the Society and its members. Thus, all treasurers, presidents and officers must be readily familiar with these requirements and implement them on an ongoing basis. May 2013 Page 9

10 Managing Chapter Funds Cash Receipts and Disbursements The Treasurer is required to keep accurate financial records of income and disbursements of all monies. All transactions must be recorded in either separate cash receipts and cash disbursements journals or in a single check register/ledger. These journals or ledger will provide an on-going history of the chapter s or meeting group s finances and is the source of the information to complete the quarterly financial reports, which is then used to complete SCTE s tax returns and financial statements. No financial transaction should be made without appropriate supporting documentation. All supporting documentation must be kept for as long as stated in the record retention policy (Appendix E). Examples of supporting documentation that must be retained for chapter receipts include (but not limited to) the following: Receipts and invoices issued to meeting attendees; Corporate sponsorship contracts and/or invoices; Registration forms; Bank deposit slips and receipts; Copies of checks and money orders deposited. Copies of merchant card statements and credit card processing info from National headquarters. Note: Chapter invoices must include a remittance address to avoid payments being sent to the SCTE Headquarters office. Examples of supporting documentation that must be retained for chapter disbursements include (but not limited to) the following: Invoices and/or receipts Purchase order, when available Canceled checks Petty cash receipts Vouchers Check requests Expense reports with receipts Backup or supporting documentation is necessary for many reasons. To ensure that expenses are legitimate and approved by the board. To resolve discrepancies in deposit or check amounts in bank records or the ledgers. To explain differences in payment amounts and invoices. To provide proof of payment (canceled check). To support financial reports in the event of an IRS audit, independent audit, or internal audit. May 2013 Page 10

11 The bookkeeping system used by the treasurer should be easily understood and should adhere to the basic principles of accounting. Establishing Bank Accounts The chapter treasurer must maintain a checking account with its local bank. To minimize the number of banks used by the Society, we request that every effort be made to use Wells Fargo or Bank of America whenever possible. SCTE headquarters has a relationship with both of these institutions and can assist with opening accounts and facilitate bank signature cards. Once a new meeting group has been established and approved by the SCTE Board of Directors, one of the first items of business is opening a bank account. The treasurer may wish to phone several banks to compare types of commercial checking accounts and the fee schedules. Some banks will provide a lower fee structure for nonprofit organizations. The bank account must (see internal controls for more detailed information on requirements): Be in the group s name Be under SCTE s Tax Identification Number Have two SCTE staff members (the SCTE president or his authorized representatives) as authorized signers Adding Local Volunteer Signatures We recommend having at least two local volunteers on the signature card. This way there are two individuals who can sign checks and if anything were to happen then there would be at least one local individual who would have access to the account. A majority of chapters have the treasurer and president on the account; however it is up to your chapter on which officers you want on the bank account. Both local signers should be present to update a local signature card. Some banks will require staff signatures and/or a letter from staff to update the card (see the next section for more information). If your branch does not require our signature for an update, please make sure to get a copy of the updated card for our auditor s files. Updates to cards can be sent to SCTE (rfenton@scte.org). Adding Staff Signatures SCTE Staff is on 70 accounts nationwide, so we are use to adding individuals to accounts. Currently, the two staff signers are Robin Fenton, Director of Chapter Support Catherine Oakes, SVP of Operations We are aware of the paperwork and requirements from both Wells Fargo and Bank of America, however if you plan on using a different bank we can certainly talk to the bank May 2013 Page 11

12 manager to discuss the requirements. We can fax over information to the branch but we do not fax social security numbers, however we can call that information into the local branch. Depending on your local branch, there are two methods that a majority of banks will use to get the local signature cards to our office. 1) The local branch or a chapter volunteer will send us the bank signature card or the signature card addendum which we will have notarized and sent back to the branch. Signature cards and signature card addendums can be sent directly to our office. SCTE Attn: Robin Fenton 140 Philips Rd Exton, PA ) The local branch will send the information either electronically or hard copy through interoffice mail. Below are the local address and phone number for the local Bank of America and Wells Fargo branch, however please send us an letting us know that the signature card is sent via inner office so that we can follow-up with our local branch. Bank of America Branch Number - PA W. Uwchlan Ave Lionville, PA Direct Number Wells Fargo 100 W Lincoln Hwy Exton, PA Direct Number Bank Account Name As mentioned previously, the account needs to be in the chapter name, however the IRS does check the tax id against the account name and therefore, we recommend the following naming structure for your account: Society of Cable Telecommunications Engineers D/B/A <CHAPTER NAME> Chapter IRS Paperwork If your bank issues you any IRS paperwork, you must submit that paperwork to SCTE within 15 days of receiving the paperwork. If we do not receive the paperwork in a timely manner, we may be unable to assist the chapter. May 2013 Page 12

13 Bank Accounts Checking accounts. All chapter expenditures should be paid by check. The Treasurer must maintain a checking account and must balance the checkbook and reconcile any differences on a monthly basis. Requesting a month-end closing date for your account will make reconciliation and submission of quarterly financial reports much easier for you. Canceled checks or photocopies of canceled checks must be returned to you with your monthly bank statement and both must be retained for verification and financial review purposes (see Record Retention Policy at Appendix E for time frames). Savings accounts. All excess funds not immediately needed to operate the chapter may be deposited in an insured interest-bearing savings account. Other permitted investment vehicles are limited to FDIC insured Money Market accounts and Certificates of Deposit. Copies of monthly savings account statements must be provided as part of the quarterly remittance. Use only one bank. If possible, the chapter should maintain all of its funds in one centrally located bank. This will prevent having to transfer funds from one bank to another as each new treasurer takes office. One bank will also insure the integrity of a savings account and may save in banking fees. Transfer of funds from the old to the new treasurer can be accomplished by signing new cards at the bank. Reconciling Checking Accounts Treasurers must reconcile the monthly statement received from the bank against the ledger promptly each month. This process provides an accurate reflection of the chapter s or meeting group s finances by ensuring that all checks written against the account have cleared and that all deposits were transacted correctly. Again, since the bank statement may include direct debits or credits by the bank, the reconciliation process also takes these transactions into account. It is important that treasurers reconcile the bank statement promptly since some banks have a very short deadline for receiving notification of their errors. The following steps should be followed to reconcile the bank statement to the group s ledger. 1. Add any interest shown on the bank statement to the ledger for the month. Deduct any service charges from the ledger for the month. 2. Sort the canceled checks by numeric order. Check off the cleared checks in the ledger and confirm that the bank has paid the same amount that the check was drawn for. Every check number must be accounted for. 3. List by check number and amount any checks drawn during the month that have not cleared the bank. Total the amount of the outstanding checks. 4. Sort the deposit receipts by date. Check off the cleared deposits in the ledger and confirm that the bank shows the same amount deposited. May 2013 Page 13

14 5. Total any deposits made during the month that do not appear on the bank statement. 6. Add any outstanding deposits and deduct any outstanding checks to the bank balance. 7. The balance after step 6 should exactly match the ledger balance as of the end of the month (after adding interest or deducting service charges). Remember that all check numbers must be accounted for. Do not write checks out of numerical order or skip checks. If a check is voided, show the void transaction as an addition into the checking account balance and the corrected check as a new transaction Chapter Revenue A chapter records all income received, such as SCTE member dues, meeting registrations, corporate sponsorships, and golf tournaments, in a cash receipts journal. The treasurer must issue a receipt for any physical cash received. In the event of an IRS audit or inclusion in the year-end audit by independent auditors, it is important that the source of each financial transaction is recorded accurately. For example, chapters and meeting groups will receive funds, such as SCTE membership dues and certification fees that are collected as items payable to SCTE. In this case, the chapter records the amounts received as income when deposited and records it as an expense when forwarded to headquarters. SCTE policy prohibits chapters and meeting groups from endorsing products or services or from accepting paid advertisements from vendors. Chapters are also prohibited from selling member lists to vendors. These two forms of revenue are not related to the association s exempt purpose and will create taxable income for SCTE. Bank Deposits All income received must be deposited within 10 business days of receipt and recorded immediately in the cash receipts journal. Deposit slips and documents supporting the revenue (such as receipts, invoices, contracts, etc) must be retained. Cash Disbursements The treasurer should issue checks for payment of chapter obligations only on receipt of proper documentation and approvals. All obligations should be paid by check. At no time can a chapter obtain a credit card in SCTE s name or by using SCTE s employer identification number. No checks should be written without an original invoice or check request supported by a receipt. To create an effective audit trail, treasurers should mark invoices with the check number, the account expensed to, and the date paid. Treasurers should avoid paying any expenses in cash or writing checks payable to cash. If treasurers need to maintain a petty cash fund, the following procedures may be helpful in administering the fund. establish a $100 ceiling for the petty cash account which represents May 2013 Page 14

15 the maximum amount of money which can be maintained as petty cash; retain paid receipts and mark each one with the date paid from the petty cash fund and the expense code from the chart of accounts; when the fund is low, add up the paid receipts (total receipts plus the balance remaining in the fund should equal the original amount assigned to the petty cash fund); issue a check payable to Petty Cash for the total of the paid receipts only (remember the petty cash ceiling); and group the paid receipts for which a check was just written, note the check number and issue date on a form, and file the form and receipts in the file of bills paid; Approved expenses The chapter bylaws state that chapter expenses are to be approved by the majority of the chapter board of directors. SCTE Headquarters and potential outside auditors will review amounts incurred and listed on the quarterly reports, but not substantiated in chapter minutes or via vote. Reasonable expenses All expenses incurred by the chapter or by a volunteer for reimbursement by the chapter must be reasonable in nature. The term reasonable is added to ensure that the expense is in keeping with the resources of the organization and is not beyond what a normal person would consider appropriate. Reimbursed expenses As a general rule, expenses should be paid directly to the vendor. Officers should refrain from paying chapter or meeting group expenses personally, then requesting reimbursement. Only in extreme circumstances should personal credit cards be used for chapter expenditures. Volunteers will only be reimbursed for reasonable expenses incurred on behalf of the chapter or meeting group. As with all expenses, treasurers must require volunteers to submit a summary of the expenses they incurred with paid receipts before issuing any reimbursements. The expense report should also include a statement by the volunteer that the expenses would not be reimbursed by any other sources, such as the person s employer, to verify that the reimbursement would not represent a duplicate payment. Large numbers of checks payable to individual officers or to cash raise questions about the appropriateness of the expenditure. As such, as part of the quarterly compliance procedure, any checks written to individual officers/board members must be copied and sent to headquarters along with a copy of the expense report with all receipts that support the dollar amounts. (See Appendix A) An expense report must be completed for all reimbursements. Receipts, with the exception of reasonable gratuities, must document all costs. ** It is important to note that any check written to a board member May 2013 Page 15

16 cannot also be signed by the same individual. Appropriate uses of Chapter Funds Administrative expenses Member events/awareness Education and training Equipment used 100% for chapter business (such as registration computer) Inappropriate uses of Chapter Funds Paying chapter leaders or other volunteers for their volunteer work. Purchasing equipment that is for both personal and chapter use. Loans or advances to anyone. Purchase of gasoline by volunteer (IRS mileage allowance only) Unapproved and unbudgeted expenses Unreasonable expenses Financial Reporting The Society has developed a bookkeeping system for its chapters that conforms to the requirements of Section 501(c)(6) of the Internal Revenue Code. The necessary forms are included in this manual under Appendix A and are available in electronic format from SCTE staff or the SCTE website. For reporting consistency and to facilitate chapter consolidation, all chapters must follow the methods detailed in this section of the treasurer s manual. Treasurers using Excel or spreadsheet software must use the SCTE quarterly report form found on the SCTE website and in Appendix A. Treasurers using off the shelf software such as Quicken/Quickbooks, Money Manager, etc. may submit reports from the software, but must use the format and chart of accounts provided in this handbook. QuickBooks SCTE currently pays for the use of 40 online QuickBooks accounts for the use of the chapters. If your chapter is interested in one of these accounts, let Robin Fenton know and you will be added to the waitlist. Chapters that are using the SCTE online QuickBooks accounts do not need to submit the quarterly Excel spreadsheet. However, they do have to update and reconcile the QuickBooks account each quarter. They must also submit bank statements and any required receipts. Training is available for chapter treasurers using QuickBooks. If you have any questions concerning QuickBooks, contact Robin Fenton. Chart of Accounts A chart of accounts enables a chapter to categorize its operations. Each account is assigned a title and number and is classified under a general category or type of account assets, liabilities, revenue, expenses, and net assets. May 2013 Page 16

17 Revenue and expenses should be separated between those related to chapter provided programs and events and those that are necessary to operate the chapter. Financial information is reported to the IRS in this format on Form 990 and providing it to the national staff in these categories will facilitate the reporting process and also enable the financial evaluation of each program. The following is a standard chart of accounts that can be used by those chapters that have a more detailed reporting system: Account Number Account Name Assets 101 Cash-Checking Account 102 Cash-Savings Account 103 Certificates of Deposit 104 Petty Cash 105 Equipment Liabilities 201 Accounts Payable Net Assets 301 Net Assets Income Program related revenue 401 Member Registration Revenue -Training Seminars 402 Non Mbr. - Registration Revenue Training seminars 403 Sponsorships Seminars/meetings 409 Other income seminars/meetings 411 Member Registration Revenue Vendor Days 412 Non Mbr. - Registration Revenue Vendor Days 413 Sponsorships Vendor Days 414 Vendor tables 419 Other income vendor days 421 Member registration revenue - Golf Tournament 422 Non Mbr registration revenue Golf Tournament 429 Other income golf tournament Operating revenue 501 Certification Fees 511 Membership Dues 521 Interest Income 531 Other Income (non program related) Expenses Program related expense Training Seminars/Meetings May 2013 Page 17

18 600 Equipment rental 601 Meals 602 Refreshments 603 Room rentals/facilities rental 604 Lodging 605 Speaker courtesy 609 Other expense Vendor Days 700 Equipment rental 701 Meals 702 Refreshments 703 Room rentals/facilities rental 704 Lodging 705 Speaker courtesy 706 Promotional marketing 707 Prizes and Raffles 709 Other expense Golf Tournament 800 Equipment rental 801 Meals 802 Refreshments 803 Room rentals/facilities rental 804 Lodging 806 Promotional marketing 807 Prizes and Raffles 809 Other expense Program related expense 900 Bank Service charges 901 Certification fees to hdqtrs. 902 National dues to hdqtrs. 903 Merchant discount 904 P.O. Box rental 905 Office expense 906 Training materials 907 Refunds/returned checks 908 Donations 909 Travel/lodging 910 Board meals 919 Other operating expenses Note that the chart of accounts group program related revenue and expenses by program type. For example, revenue related to training seminars/meetings are reported using accounts and the corresponding expenses are reported using the 600 May 2013 Page 18

19 accounts. Vendor day revenue is reported using accounts and related expenses are reported under the 700 accounts. This categorization methodology of revenue and expenses is also used on the quarterly financial reports. Quarterly financial reports (Appendix A) are as follows: SCTE Quarterly Financial Report This form is used to summarize all of the schedules. Schedules are used to detail income and expenses by category. Schedule A Training Seminars/ Meetings Only revenue and expenses related to training seminars and meetings should be included on this schedule. Any income and expense related to the event that is not represented on this form should be listed in the other income/expense box and a description provided. A schedule should be filled out for each income producing seminar/meeting and the sum carried to the Quarterly Financial report. Schedule B Vendor Day Only revenue and expenses related to a Chapter vendor day should be included on this schedule. Any income and expense related to the event that is not represented on this form should be listed in the other income/expense box and a description provided. Schedule C Golf Tournament Only revenue and expenses related to a golf tournament should be included on this schedule. Any income and expense related to the event that is not represented on this form should be listed in the other income/expense box and a description provided. Schedule D Other Operating Income Other revenue not directly connected to a training seminar, vendor day, golf tournament, dues, certification fees or interests should be reported on Sch. D. Schedule E - Donations As discussed later under charitable contributions, all donations made must be itemized to comply with IRS requirements. A chapter must obtain a Form W9 from any recipient that is not a 501(c)(3) organization, since this will be taxable income to them, and submit that Form W9 to SCTE. Please see Charitable Contribution Policy. Expense Reports (CLC, EXPO and Other) All requests for expense reimbursements must be made by completing an expense report and attaching original invoices or receipts. See Board Expense Reimbursement for additional information. Schedule F Board Meals All payments for board meals, outside of those already detailed on expense reports, should be itemized on Schedule F. The IRS requires a listing of May 2013 Page 19

20 individuals, the business purpose, and place to substantiate the expense for business meals. Schedule G Other Operating Expenses Operating expenses are those that are necessary to operate the chapter and are not connected to any program or event. Operating expenses should be summarized on the SCTE Quarterly Financial report. Any operating expense that is not represented on the Quarterly report should be included in other operating expense and listed in detail on Schedule G. Petty Cash A petty cash register should be used to track petty cash balance. This should detail petty cash activity. For example, the starting balance of $100 should be the first record in the register. Each disbursement should be recorded and deducted from the balance. As petty needs to be replenished, a check should be written to Petty Cash totaling the amounts disbursed and bringing the cash balance back to $100. All receipts should be grouped and kept with the canceled check representing the reimbursement. Financial Statements Three primary financial statements are: 1. Statement of Financial Position (Balance Sheet) 2. Statement of Activities (Income Statement) 3. Statement of Changes in Financial Position (Cash Flow Statement) All three of these statements represent the actual financial position of a chapter. In order for the chapter leaders to understand the chapter s current financial position and support fiscal policies, communication between you and the chapter should be frequent and comprehensive. Although the Treasurer s report does not need to be as sophisticated as the 3 financial statements listed above, it should include: Amount of funds available to the chapter as of end reporting period Total net income/loss as of the date being reported Chapter program revenue & expense to date The treasurer s report should be on the agenda for every chapter board meeting and be included in the minutes or as an attachment to the minutes. Capital Asset Log Purchases of fixed assets are only permitted if used 100% for chapter business. All purchases of this nature must be tracked on a capital asset log (see Appendix B). The following information should be included on this log; purchase date, cost, purpose, Chapter leader using the asset, and physical location. When transitioning from the May 2013 Page 20

21 board, the assets must be transferred to the replacement. A copy of the log must be remitted to SCTE on an annual basis, with the 4 th quarter financial report. Submitting Quarterly Financial Reports Chapter and meeting groups must submit a quarterly financial report to the national headquarters detailing the group s income and expenses for the quarter. Copies of each month s bank statement, volunteer reimbursement receipts and the bank statement reconciliation report must be included with the Quarterly Financial Report. The timely and accurate completion of these reports is critical for complying with IRS requirements. Quarterly financial reports and supporting documentation must be submitted on or before the following deadlines: April 30 - First quarter report covering January, February and March July 31 - Second quarter report covering April, May, and June October 31 -Third quarter report covering July, August, and September January 31 -Fourth quarter report covering October, November, and December If insufficient documentation is submitted, SCTE staff may request that the chapter send all supporting documentation, including copies of any personal credit card statements supporting purchases. Internal Controls Financial trust is a major chapter leadership responsibility. This trust requires careful attention to policies and procedures designed to protect the chapter s assets. It requires that board members become conversant with the chapter s system along with the methods of safeguarding funds. To fulfill its fiduciary obligations and to avoid potential liability for misconduct, the board of directors must establish sound internal controls. Internal control refers to a system of policies and procedures that minimizes the likelihood of misappropriation of chapter assets or misstatement of chapter accounts. Banking issues Bank account set-up Use SCTE Chapter name and SCTE EIN Chapters and meeting groups must maintain a bank account(s) in the name of the chapter or meeting group, using SCTE s employer identification number issued by the IRS. Contact headquarters for this information. Do not open accounts using an officer s name or social security number. Opening an account in an individual s name and social security number, rather than SCTE s EIN, will result in taxable income to that individual and it will be the individual s responsibility to inform and correct with the IRS. Inform SCTE Headquarters May 2013 Page 21

22 The bank name, address, and account number must be reported to headquarters within 15 days of opening, or 15 days of changes made to the account (e.g. new signers added and existing removed). Primary mailing address A post office box should be used as the primary mailing address for each chapter and meeting group. Bank statements should be sent to the post office box. Headquarters must be informed of the post office box when it is opened. Check Signing Authority Required authorized signers Two national headquarters staff, either the SCTE National CEO or CFO and his/her designated representative, must be an authorized signer on all chapter and meeting group accounts and any vehicles of cash management. This requirement permits SCTE to escrow the funds of any of its chapters or meeting groups that are no longer functioning or that have exhibited serious financial irregularities. These funds will then be reissued to a chapter or meeting group when it reorganizes in the same geographic area in accordance with the chapter bylaws. After three years, undistributed chapter escrow funds will revert to general SCTE funds. Check signing policy To be consistent with SCTE National policy, checks written in an amount under $2,500 can be signed by one authorized signer. Checks written between $2,500 and $20,000 require two signatures by two authorized signers. Checks written for amounts over $20,000 will require two signatures, with one being of an authorized SCTE staff member. In order to comply with this policy, at no time may a debit card transaction exceed $2,500. At no time may a check made payable to an individual also be signed by that individual. Investment Policy Permitted Investments Chapters may invest chapter funds, in excess of normal checking account and operational requirements, in the low risk and FDIC insured type of investments (i.e. savings accounts, certificates of deposits, money market). Before making any such investment, the treasurer must get chapter board approval, make sure the SCTE staff is aware of such investment and ensure that two headquarters staff employees are authorized on the account(s). At no time may investments be made in mutual funds, bonds, and equities. Cash Handling Cash transactions should be kept to a minimum. When cash is received at an event for registration fees, dues, and other charges, a receipt should always be issued and the May 2013 Page 22

23 copy retained by the treasurer and included as supporting documentation. The receipt should include the name, amount, purpose and invoice number if applicable. The amount of cash received should be recorded in a cash log which includes the same information along with the number of the receipt issued. The treasurer must be able to account for all receipt numbers. When possible this cash should be used to pay expenses at the event (or a portion of the expense) and a receipt obtained for the cash payment. Cash should not be distributed as prizes (see prize policy below). Cash payments should only be made to vendors that are able to provide a receipt that is acceptable documentation by the IRS. Ensure cash collections are under the control of two people whenever possible. Credit Cards Merchant Service Accounts Chapters may want to accept credit cards as a means of payment. Credit cards not only are a convenience for members but also eliminate the need to collect cash at a public function. Accepting credit cards, however, will cost money in the form of processing fees through a merchant service account. When it comes to merchant services account, chapters have several options: SCTE will process credit cards through the headquarters merchant service account. See the SCTE Credit card processing section for more information. Chapters can open a Square account. Square is an Apple or Droid based app that will run credit cards. Square, ( accepts Visa, MasterCard, Discover and America Express for 2.75% per swipe. Square processes the credit cards and then automatically deposits the funds into your chapter account. One of the nice features with Square is that your customers can sign the receipt with their finger and receive electronic receipts via text or . You do need a square card reader that will attach to your phone or ipad. The readers are available at most electronic retailers or if you signup for Square online they will mail you a free Square Card Reader. Just a note of caution, this app is really for in person transactions (credit cards taken at the vendor day or at the technical training). Manual transactions (keyed-in on the phone instead of swiping) cost 3.5% + 15 per transaction and you are limited in the amount keyed-in. If your chapter does decided to use square you must abide by all square policies (such as their receipt policy) and all funds must be deposited into the chapter account on a daily basis (this is the default setting for square). After reviewing the app ( we have the following suggestions/recommendations: User Name Please use the user name SCTE <Chapter Name> Chapter as that will show up on all of the transactions. Make sure to follow their receipt policy Receipts - When your customer is present at the time of the transaction and signs the Square Signature Screen, you benefit from the Payment Network rules for card present transactions. You agree to request that your customer personally sign for all transactions greater than $25.00 when your customer is present. You must make a written receipt available to your customers for any transaction greater than fifteen dollars ($15.00). You may give your customers the option to receive or decline a written receipt. As a convenience, but not in lieu of a written receipt, you may also offer Square electronic receipts for delivery through SMS or to your customers. May 2013 Page 23

24 Finally, if possible (and I believe it is in the account section of the website), please add the following statement to your receipts "Contributions to the <Chapter Name> Jersey Chapter of the Society of Cable Telecommunications Engineers are not deductible as charitable contributions for federal income tax purposes." Keep in mind that the user agreement with square can change at any time. Chapters are welcome to research other merchant service accounts with their banks or QuickBooks. Many of these have a monthly fee associated with the account along with a per transaction fee. Let us know if you are opening a merchant service account so that we can make sure that the proper safeguard are in place. After careful consideration, the SCTE Board and staff have decided that the use of PayPal by the SCTE Chapters does not provide the necessary safeguards for funds and has the potential to create several issues with the IRS if not closely monitored. Therefore, PayPal must not be used by the SCTE Chapters. SCTE Credit Card Processing Credit card processing is handled at the headquarters level by either submitting information to accounts payable using the Credit Card Purchase Form (Appendix D) or by notifying chapter support that the chapter would like to enable online registration for an upcoming event. Online registration is the preferred method of receiving credit card information as it does reduce additional administrative paperwork. Note that SCTE only accepts Visa, Mastercard, and American Express and needs to receive all credit card charges no later than 45 days following an event. If you are submitting the credit card information via the paper form that can either be faxed or ed to our offices. If you are ing the charges over, due to the PCI compliant rules, the electronic file must have an encryption of 128 bit or higher. SCTE withholds 3% of the total administered and forwards that directly to the credit card companies on your behalf. Chapters should record the net amount received as income, since the processing fees are already being recorded at SCTE. The accounts payable department does not distribute processed credit card payments to the chapters until the credit card transactions have cleared the bank. Please also note that accounts payable sends checks to the chapter mailing address on a bi-weekly basis or deposits the money directly in the chapter account through an Electronic Funds Transfer (EFT). Should you have any questions, please contact accounting. Electronic Funds Transfers SCTE now has the ability to directly deposit credit card transactions into your chapter bank account. This will hopefully help in reducing the number of times that the treasurer has to go to the bank and deposit checks. Instead of sending your chapter a check, accounts payable will transfer the amount directly into the chapter bank account and May 2013 Page 24

25 then the treasurer the statement showing the credit card transactions run and the total directly deposited into the account. If you are interested in having your credit card transactions directly deposited into your chapter bank account, complete and sign the Automatic Deposit Authorization Form. Purchases and Disbursements Payments by check Expenditures should always be in the form of bank checks. However, when necessary, the treasurer obtains receipts for all cash and debit card transactions. At no time should a debit card transaction exceed $2,500, the limit for onesignatory checks. Payments on original invoice In order to keep an audit trail of expenses, require an original receipt or invoice for each disbursement. This practice is the single most important way to avoid the appearance of fraud or the serious consequences of missing funds. In any event that a receipt or invoice is missing, every attempt must be made to obtain a replacement from the vendor. If this isn t possible, the treasurer must explain this on an expense voucher. Approved in minutes All expenses should only be paid if they were allotted in the approved budget or documented in the minutes. If the treasurer has an item that is not covered in the budget, greatly exceeds the amount budgeted, or is different than what was approved in the minutes, he/she must obtain approval from the chapter board of directors or chapter President, per the chapter bylaws, before disbursing funds. Board expense reimbursement Reimbursements are given after a purchase, for items that have been allotted for in the budget or approved in the minutes. Each person requesting reimbursement must submit an expense report that includes a description of the item, description or reason for the request, amount due, name, and a signature of the officer authorizing the expense. An expense report is currently included in Appendix A for CLC and Expo expenses. A blank version of this report may be used for reimbursement of other expenses. Hiring Policy A copy of the minutes approving this expense should be attached if applicable. Attach original receipts or an invoice to the form. Receipts, with the exception of reasonable gratuities, must document all costs. It is requested that the forms be submitted for payment within 30 days of incurring them, and not more than 90 days. Chapters may hire temporary help for assistance with the administrative operations of the local chapter. Individuals or companies owned by individuals May 2013 Page 25