ACCOUNTING AND FINANCIAL POLICY MANUAL

Transcription

1 ST. JOHN S EPISCOPAL CHURCH DALLAS, TEXAS ACCOUNTING AND FINANCIAL POLICY MANUAL Revised Effective September 1, 2012 The Vestry of St. John s Episcopal Church (the Parish ) adopts this Accounting Manual in accordance with Section 9.04 of the Parish s Bylaws. This Manual contains financial policies and procedures to be followed by employees and volunteers of the Parish in the performance of their duties, and it constitutes the Policies and Procedures Manual required in the said Section In receiving, owning, expending, using, and accounting for funds and other properties, the Parish shall reasonably comply with generally accepted accounting practices and other generally accepted practices as applied to organizations described in Section 501(c)(3) of the Internal Revenue Code in general and to Episcopal parishes in particular. For that purpose, reference is made to the Manual of Business Methods in Church Affairs published by the Domestic and Foreign Missionary Society of the Protestant Episcopal Church in the USA, July 2007; provided that such Manual shall be evidence of good practices but shall not be binding upon the Parish.

2 Table of Contents I. Structure and Responsibilities 1 A. Finance Committee 1 B. Audit Committee 2 C. Treasurer 3 D. Bookkeeper 4 E. Supervision of Bookkeeper 4 F. Employee Handbook 5 G. Accounting and Financial Support Services 5 II. Internal Controls 6 A. Separation of Duties 6 B. Bond Requirement 7 C. Access to Financial Information; Confidentiality 7 D. Offerings 7 E. Financial Reporting and Audit 8 F. Changes to Policies 9 III. Budget, Reporting, and Recordkeeping 10 A. Books and Records 10 B. Budget 10 C. Reconciling Bank Accounts 11 D. Check Writing 11 E. Reimbursement Procedure 12 F. Major Expenditures 13 G. Capital Asset 14 H. Record Retention 15 I. Payroll Reporting and Tax Reporting 15 J. Bank Account for Ministry Fund 17 K. Staff Credit Card Usage Reports 18 L. Lay Ministry Budgets, Reimbursements, and Expenditures 19 M. Lay Ministry Guidelines 20 N. Inventories of Assets 20 O. Fundraising 21 IV. Designated and Restricted Funds 22 A. General Provisions 22 B. Designated Funds 22 C. Restricted Funds 22 D. Bank Account for Restricted and Designated Funds 23 E. Reallocation of Restricted Funds 23 V. Asset Maintenance 25 A. Voting of Securities 25 B. Investments 25 i

3 ST. JOHN S EPISCOPAL CHURCH ACCOUNTING AND FINANCIAL POLICY MANUAL I. STRUCTURE AND RESPONSIBILITIES A. FINANCE COMMITTEE Revised as of September 1, 2012 The purpose of this policy is to prescribe the composition and duties of the Finance Committee of the St. John s Vestry. Pursuant to Section 5.03 of the Bylaws of St. John s Parish, the Vestry shall designate a Finance Committee, to which the following provisions shall apply: The Finance Committee shall consist of (a) at least two Vestrypersons, (b) the Treasurer, and (c) one member of the Parish who is not a Vestryperson and who shall serve a one-year term. The Rector shall appoint the Chairman of the Finance Committee, who shall be a person other than the Treasurer. Designation of the Finance Committee shall occur at the first Vestry Meeting following the Annual Meeting. The duties of the Finance Committee shall be as follows: (1) Prepare the annual budget of the Parish and oversee lay ministry budgets and expenditures; (2) Oversee cash control and review monthly expenditures; (3) Review and recommend to the Vestry, by majority vote, all nonrecurring financial matters of the Parish, such as investments, portfolio management, real and personal property agreements, and insurance matters; (4) Review the monthly Financial Statements of the Parish; (5) Prepare the annual financial statement of the Parish and the financial portion of the annual parochial report to the Diocese; (6) Cause adequate insurance coverage to be maintained on all Parish buildings and their contents; (7) Recommend an Audit Committee to the Vestry; (8) Select a Chancellor for approval by the Vestry; (9) Perform such other financial duties as assigned by the Vestry; (10) Audit the Rector s Ministry Fund in accordance with Section III.J; (11) Cause the inventory and cataloguing of assets to occur as required in Section III.N; and ACCOUNTING AND FINANCIAL POLICY MANUAL Page 1

4 (12) Identify and recommend to the Vestry the source(s) of accounting and financial support services required in Section I.G. The Finance Committee shall act by majority vote of the whole Committee. The Finance Committee shall keep regular minutes of its proceedings and shall make regular reports to the Vestry. The minutes shall be passed on to succeeding Finance Committees. The Finance Committee shall meet as needed but at least once during each calendar quarter. Telephone meetings and meetings conducted by shall be permitted, provided that a unanimous written consent or counterparts thereof are signed by all members of the Committee and filed with the minutes of the proceedings of the Committee in accordance with Section 4.07 of the Bylaws. B. AUDIT COMMITTEE The purpose of this policy is to prescribe the composition and duties of the Audit Committee of the St. John s Vestry. The Vestry shall appoint an Audit Committee at the March Vestry meeting. The Finance Committee shall have proposed members of the Audit Committee for the Vestry s consideration, but the Vestry shall make the final determination of the Committee s membership. The Audit Committee shall consist of at least three persons, none of whom may be Finance Committee members or other persons who handle monies or investments of the Parish or have check signing authority. Audit Committee members shall serve for oneyear terms, and no member may serve two consecutive terms. The duties of the Audit Committee shall be as follows: (1) Select and approve the hiring of the auditor(s) to audit the Parish s financial and accounting practices, consistent with Audit Guidelines for Congregations in the Manual of Business Methods in Church Affairs. (2) Receive and review the auditors reports; (3) Investigate and resolve any questions, concerns, inconsistencies, or irregularities the auditors identify; (4) Present the Audit Report to the Vestry and recommend changes in accounting or financial practices or policies to the Vestry as appropriate; and (5) Review the Employee Handbook annually and recommend to the Vestry any changes to the Handbook that are necessary and/or appropriate. The Audit Committee shall meet within two weeks of its initial appointment and shall meet as frequently thereafter as necessary to perform the duties prescribed above. The Finance Chairman shall meet with the Audit Committee (a) at its initial meeting for the purpose of explaining the Audit Committee s duties and answering questions and (b) on such other occasions as the Audit Committee may request. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 2

5 The Audit Committee shall keep regular minutes of its proceedings and shall make regular reports to the Vestry. C. TREASURER The purpose of this policy is to prescribe the qualifications and duties of the Treasurer of St. John s Parish. As required by Section 7.07 of the Bylaws of St. John s Parish, the Vestry shall appoint a Treasurer of the Parish, to whom the following provisions shall apply: The Vestry shall appoint the Treasurer at the annual Vestry meeting. The Treasurer need not be an elected Vestryperson and, if not an elected Vestryperson, the Treasurer shall be an ex-officio, nonvoting Vestryperson. The duties of the Treasurer shall be as follows: (1) Serve as the financial officer of the Parish; (2) Have charge and custody of and be responsible for all funds of the Parish and all securities owned by the Parish; (3) Keep full and accurate accounts of receipts and disbursements in books belonging to the Parish; (4) Deposit all such funds and other valuable effects in the name and to the credit of the Parish in such depositories as may be designated by the Vestry; (5) Disburse the funds of the Parish as the Vestry may order, taking proper vouchers for such disbursements; (6) Render to the Vestry at its regular meeting, or when the Vestry so requires, an account of all of his or her transactions as Treasurer and of the financial condition of the Parish; (7) Give such bond as the Vestry may require, in accordance with Section II.B of this Manual, for the faithful performance of the duties of the Treasurer and for the restoration to the Parish of all books, papers, vouchers, money, and other property of whatever kind in the Treasurer s possession or control belonging to the Parish in the event of the Treasurer s death, resignation, retirement, or removal from office; (8) Perform all duties incident to the office of Treasurer and such other duties as may from time to time be assigned to the Treasurer by the Vestry, the Rector, or the Senior Warden; (9) Assist the Vestry with the maintenance of this Manual, including recommending changes and additions to the Manual as appropriate from time to time; and (10) Furnish the supervision of the Bookkeeper as required in Section I.E. With the approval of the Vestry, the Treasurer may delegate performance of some or all of the foregoing duties to the Parish s bookkeeper and/or one or more other clerical employees of the Parish. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 3

6 The Vestry, at the annual Vestry meeting, may appoint one or more Assistant Treasurers, who need not be Vestrypersons. The Assistant Treasurer(s) shall give such bonds as the Vestry may require, shall assist the Treasurer in the performance of his or her duties, and shall, in the order of their seniority, function as the Treasurer in the absence of the Treasurer. D. BOOKKEEPER The purpose of this policy is to provide for the hiring or appointment of a bookkeeper to manage the Parish s day-to-day financial matters. The Vestry may cause the Parish to hire or appoint a bookkeeper, on a part-time or full-time basis, on such terms as the Vestry determines appropriate. The duties of the bookkeeper include but are not limited to 1. maintaining books of account for Parish income, expenses, and assets; 2. handling banking matters, including reconciling Parish bank account statements; 3. preparing drafts of monthly operating statements for the Treasurer; 4. preparing a draft of the annual financial statement for the Treasurer; 5. preparing checks for signature for appropriate signatories with respect to Parish payables and maintaining appropriate documentation concerning same; 6. preparing and maintaining pledge reports and statements; 7. preparing billings to St. John s School; 8. assisting with the annual audit of the Parish s financial records; 9. assisting with preparing the annual budget for the parish; 8. processing the Parish payroll information; 9. filing reports as required with the Internal Revenue Service; and 10. performing such other day-to-day financial tasks as the Vestry may require. The duties of bookkeeper may be combined, if the Vestry so determines, with the duties of the Parish Administrator. E. SUPERVISION OF BOOKKEEPER The purpose of this policy is to establish consistency in the implementation of and compliance with this Manual by providing for a single source of guidance and instruction to the Bookkeeper. It is necessary for the Bookkeeper to have a single source of guidance and instruction on accounting and recordkeeping issues that arise from time to time, to prevent the Bookkeeper from receiving inconsistent instructions from multiple sources and to ensure consistency over time in the compliance with this Manual. Accordingly, the Bookkeeper shall look solely to the Treasurer for such guidance and instruction. The Treasurer shall consult with the Finance Committee as necessary to ensure that the Finance Committee concurs with the Treasurer s interpretation or application of this Manual in providing such guidance and instruction to the Bookkeeper, and the Treasurer shall account to the Finance Committee with respect to all such guidance and instruction given. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 4

7 F. EMPLOYEE HANDBOOK The purpose of this policy is to ensure that the Parish has an adequate Employee handbook and that such Handbook appropriately addresses matters affecting the Parish s finances and need for internal controls. The Parish shall have an Employee Handbook, prescribing policies and procedures for hiring, employment, compensation, benefits, and other matters pertaining to Parish employees. While the Employee Handbook is not truly a financial policy matter, it addresses subjects that affect and/or are affected by Parish financial and internal control matters. Accordingly, the Audit Committee and the Benefits Committee (if and when the Parish appoints a Benefits Committee) shall review the Employee Handbook annually and recommend to the Vestry any changes it deems necessary or appropriate. G. ACCOUNTING AND FINANCIAL SUPPORT SERVICES The purpose of this policy is to ensure that the Parish Administrator has the capability either personally or through delegation to maintain Parish books and records in accordance with this Manual, generally accepted accounting principles (GAAP), and other applicable standards. The Parish shall secure the services, on either a paid or a volunteer basis, of one or more persons with a working knowledge of GAAP, the US Treasury Regulations, and other financial and accounting principles and rules affecting the Parish, to prepare or to assist the Parish Administrator in preparing Parish financial statements and other financial documents. The person(s) providing these services should possess knowledge of QuickBooks or such other financial and accounting software program(s) as the Finance Committee may approve from time to time for the maintenance of Parish financial records. If the Parish has a Bookkeeper other than the Parish Administrator and the Bookkeeper possesses the skills specified in this section, then the Parish will have satisfied the requirements of this section. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 5

8 II. INTERNAL CONTROLS A. SEPARATION OF DUTIES The purpose of this policy is to provide for the allocation of responsibility for the Parish s various financial matters among multiple individuals, to ensure the integrity of the Parish s financial and accounting systems. The following persons shall have the following responsibilities with respect to the Parish s finances: (1) Senior Warden. The Senior Warden shall review the monthly operating statements and annual financial statements but shall not participate in the day-to-day counting, recording, or other accounting for Parish funds. (2) Finance Chairman. The Finance Chairman shall review the monthly operating statements and annual financial statements but shall not participate in the day-to-day counting, recording, or other accounting for Parish funds. (3) Treasurer. The Treasurer shall perform the duties described in Section I.C of this Manual, subject to the Treasurer s power to delegate such duties. Additionally, the Treasurer shall appoint the counting teams described below. (4) Bookkeeper. The Bookkeeper shall perform the duties described in Section I.D of this Manual, including maintaining the financial books and records of the Parish. (5) Counting Teams. The Treasurer shall appoint four or more teams of parishioners who shall take turns counting and recording the cash and checks received in the alms basins at Sunday and weekday services and at other Parish events. The Treasurer shall work with the bookkeeper and the Finance Committee to develop a suitable process for counting and recording such collections, which shall include counting team members signing the records they complete. These records include (a) Summary Report (Envelopes); (b) Summary Report (Loose Checks); and (c) Grand Summary Report (Envelopes & Loose Checks). Each Sunday, a counting team shall count and record the alms basin receipts for that Sunday and the preceding Monday through Saturday and shall deposit same into the Parish s bank account. Each team shall consist of a captain and two or three additional members. The Treasurer shall reassign the team members among the teams on approximately an annual basis so that the same team members do not work together indefinitely. If practicable, within the limits of willing and available volunteers, the Treasurer shall appoint new team captains periodically. The Treasurer shall ensure that every team member is adequately trained in the counting procedures and understands the fiduciary responsibility of serving on the counting team. Additionally, various individuals within the Parish shall have signature authority over the Parish s bank accounts as prescribed in Section III.D of this Manual. The Rector and other individuals not listed above in this Section II.A shall have no authority over Parish financial matters except as this Manual may expressly provide. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 6

9 B. BOND REQUIREMENT The purpose of this policy is to comply with Section 9.03(b) of the Parish s Bylaws, concerning bond requirements. Except as provided in the following paragraph, the Vestry shall determine whether it is necessary for the Treasurer and/or any other individual to be bonded. As of the initial effective date of this Manual, the Parish has crime insurance coverage through the Church Insurance Company of Vermont. Such insurance includes coverage with a limit of $100,000 and a deductible of $1,000 for employee dishonesty. Such insurance also includes fidelity bond coverage guaranteeing against losses caused by the dishonesty of employees, clergy, Vestry members, and volunteers of the Parish while participating in Parish activities. Accordingly, as long as this insurance coverage remains in place, bonding of the Treasurer or other Parish employees or volunteers shall be unnecessary. C. ACCESS TO FINANCIAL INFORMATION; CONFIDENTIALITY The purpose of this policy is to describe parishioners rights to access to Parish financial information and the expectations of confidentiality with respect to Parish financial matters. The general financial condition of the Parish and the contents of the Parish s financial reports are matters that all members of the Parish are entitled to know. Members of the Parish normally receive such information at the time of the Annual Parish Meeting, but upon reasonable notice to the Finance Chairman via the parishioner s Vestry representative, any member of the Parish may receive updated information on these matters between Annual Parish Meetings. The Vestry may from time to time prescribe a reasonable process for parishioners to submit, and for the Treasurer, Finance Chairman, or Finance Committee to respond to, questions about Parish financial matters. Additionally, any parishioner may receive a copy of the Parish s monthly financial statements, after the Vestry has approved the statements. The Parish Administrator shall maintain a copy of each Vestryapproved monthly financial statement in the Parish office and shall furnish a copy via or hard copy to any parishioner who requests it. Notwithstanding the foregoing, certain specific aspects of the Parish s finances should remain confidential, including the amount and status of individual members pledges. All Vestrypersons, Parish employees, Parish officers, and others with access to such information shall use all appropriate measures to protect the confidentiality of such information. D. OFFERINGS The purpose of this policy is to prescribe the method of accounting for offerings received by the Parish. Offerings received at services or other events shall be counted and recorded on a weekly basis. (See Section II.A(5) concerning the counting teams who shall perform this function.) Counting shall occur each Sunday ACCOUNTING AND FINANCIAL POLICY MANUAL Page 7

10 following the last Sunday morning service, and each week s counting shall cover all offerings received since completion of the prior Sunday s counting. Counting and accounting for the offerings shall include the following activities: 1. Recording each amount designated as payment on a pledge, by pledge envelope number if possible or else by payer s name; and 2. Recording each check not designated as a pledge payment and noting its designation either for a particular fund or purpose or for the general fund; 3. Recording separately the respective totals of coins, currency, and checks received in pledge envelopes and as loose collections, using such forms as the Treasurer may from time to time provide for such purposes; 4. Endorsing all checks for deposit to the Parish s bank account; preparing a bank deposit, including such deposit slips, adding machine tapes, and other items as the Parish s bank may from time to time require; and depositing the bank deposit into the Parish s general operating bank account by means of the bank s night depository immediately following completion of the week s counting; and 5. Leaving the completed forms, the pledge envelopes, and copies of adding machine tapes reflecting all checks received and deposited for the Parish Administrator. The individuals performing the counting function shall sign and date the forms they complete with respect to the offerings they count. All loose checks without designations and cash received on the first Sunday of each month shall be allocated to the Rector s Ministry Fund and shall be so designated in the counting records for that Sunday. E. FINANCIAL REPORTING AND AUDIT The purpose of this policy is to provide for the preparation of monthly financial statements and an annual audit. The Treasurer shall cause current financial statements to be prepared for each month and shall present same to the Vestry at the Vestry meeting immediately following the conclusion of such month. Such statements shall consist of a revenue and expense statement (income or operating statement), a statement of financial position (balance sheet), an accounting of restricted and designated funds, and an accounting of miscellaneous income. The revenue and expense statement shall reflect figures both for the current month and for the year to date and shall include a comparison to budget. The accounting of restricted and designated funds shall clearly distinguish donor-restricted funds from Vestry-designated funds. The Audit Committee shall cause an annual audit of the Parish s financial statement and financial practices to be conducted. The audit will be performed by a Certified Public Accountant or such other accountant as the Audit Committee determines appropriate. The audit of the financials for a calendar year shall be conducted by September 30 of the immediately succeeding calendar year. The Audit Committee shall receive and review the auditor s report and shall take such other actions as are described in Section I.B above with respect to the audit. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 8

11 F. CHANGES TO POLICIES The purpose of this policy is to ensure stability of financial controls by prescribing the method for amending the policies set forth in this Manual. The policies set forth in this Manual may be changed only by the Vestry on recommendation of the Finance Committee. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 9

12 III. BUDGET, REPORTING, AND RECORDKEEPING A. BOOKS AND RECORDS The purpose of this policy is to prescribe the requirement and method of maintaining records of Parish financial matters. The Treasurer shall cause complete and accurate books and records of account to be prepared and maintained with respect to all receipts and expenditures of the Parish. Such records shall comply as reasonably appropriate with generally accepted accounting practices for organizations described in Section 501(c)(3) of the Internal Revenue Code in general and to Episcopal parishes in particular. The records shall be audited in accordance with Section II.E of this Manual. The books and records of account shall be maintained using the cash method of accounting. The books and records shall include, without limitation, record of amounts received from and/or paid to St. John s School, the Diocese of Dallas, and/or other third parties with respect to which the Parish serves as a funds conduit. The Parish s financial statements shall reflect such amounts in an appropriate manner. B. BUDGET The purpose of this policy is to prescribe the process for the preparation and adoption of an annual budget for the Parish. Every year, on or before November 1, the Finance Committee shall cause a proposed budget for the Parish for the next calendar year to be prepared. For that purpose, the Finance Chairman shall establish a Budget Committee, which shall be accountable to the Finance Committee. The Chairman of the Budget Committee shall be the Finance Chairman or such other person as the Finance Chairman may designate. The Budget Committee shall prepare the proposed budget with input from the clergy, the Parish staff, the Finance Committee, and all program and special event chairmen in the Parish. The budget process will coincide with the annual pledge drive. The Finance Committee will strive to present a balanced budget to the Vestry, although the Vestry may approve a deficit budget under unusual circumstances. The Finance Chairman shall present the proposed budget to the Vestry at the Vestry meeting in December. Upon consultation with the Vestry and the Rector, the Finance Committee shall finalize the budget, and the Vestry shall approve the budget for presentation at the Annual Parish meeting in January of the year to which the budget applies. Ideally, the approval of the final budget shall occur in December. The Vestry shall compare monthly financial reports to the budget. Any significant expenditures in excess of the budget must be approved in advance by the Finance Committee. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 10

13 C. RECONCILING BANK ACCOUNTS The purpose of this policy is to ensure the proper reconciliation of the Parish s bank accounts on a monthly basis in order to maintain the integrity of the financial statements and create the necessary documentation for audit purposes. The Parish should receive statements from its bank for all its accounts each month. The Bookkeeper, under the Treasurer s supervision, shall reconcile these statements with the Parish s accounting system according to the dates shown on the bank statements. Reconciliation shall occur within ten days after receipt of the bank statement. At least quarterly, the Finance Chairman or Treasurer shall review the bank statement reconciliations. The Bookkeeper shall perform an automated reconciliation for each account on the Parish s accounting system. Appropriate journal entries to an account may be necessary to record deposits, interest, service charges, etc. Once an account has been reconciled, a copy of the reconciliation should be printed and attached to the corresponding bank statement and kept in the monthly file. The Bookkeeper should perform a cursory check to be sure the balance sheet reflects the appropriate amounts shown on the reconciliation. D. CHECK WRITING The purpose of this policy is to ensure proper accountability and safeguards of the Parish s cash assets. The Parish does not maintain a petty cash account. All disbursements should be made according to the following guidelines: (1) All payments should be made using pre-numbered checks. If a check must be voided, it should be kept in the monthly records. (2) Supporting documentation, such as an invoice, should be attached to a copy of the check or check stub and maintained in the files. If an expense is not charged to the general operating account, the account to be charged should be clearly noted. To establish that invoices and other payables have received appropriate review and approval, the Parish Administrator, Finance Chairman, or other person with the authority and knowledge to determine the appropriateness of each invoice or request for payment should initial the documentation to reflect his or her approval of the proposed expenditure. (3) Except for checks drawn on an account described in Section III.J of this Manual, all Parish checks shall require two signatures. The Treasurer shall be among the persons having signature authority on the Parish bank account(s). The Senior Warden, in consultation with the Rector and the Finance Chairman, shall determine which other individuals should have signature authority. It is recommended, but not required, that the Senior Warden and the Finance Chairman be among the persons having signature authority. The Rector and/or other clergy generally shall not have ACCOUNTING AND FINANCIAL POLICY MANUAL Page 11

14 signature authority over the Parish bank accounts; provided that the Parish may establish a bank account for the Rector s Ministry Fund in accordance with Section III.J of this Manual, and the Rector may have signature authority with respect to such account. The Treasurer shall establish a practice whereby the persons who sign checks normally are not the same as the persons who approve expense and reimbursement requests and prepare checks. For example, if the Parish Administrator and Finance Chairman normally process check requests and prepare checks, then the Treasurer, the Senior Warden, and/or other signatories other than the Parish Administrator and the Finance Chairman normally should sign the checks. This policy recognizes that emergent needs for check signatures can arise that will require exceptions to this general practice, but in such a case the circumstances necessitating the exception must be documented. (4) Signature stamps shall not be used for signing checks. Changes in signature authority shall be effected by filing the proper paperwork with the bank where the Parish s accounts are located as soon as reasonably possible after any change in the identity of the Treasurer, Senior Warden, and/or any other office the holder of which has signature authority over Parish bank accounts. (5) The check, together with the supporting documentation, should be presented to two authorized signatories for signature. When the Treasurer is available, the Treasurer normally should be one of the two persons signing all checks. The signatories asked to sign Parish checks should review the supporting documentation and should sign the checks only if they are confident the expenditures in question are appropriate. (6) Check stock and all banking materials (deposit slips, deposit envelopes, etc.) should be kept in a secure place. E. REIMBURSEMENT PROCEDURES The purpose of this policy is to provide for the reimbursement of budgeted and approved expenditures. Expenditures for which reimbursement is expected should be made in good faith either pursuant to an express budget duly approved in advance or in the ordinary course of an individual s activities on behalf of the Parish. Any nonroutine expenditure exceeding $250 must be approved in advance by the Finance Chairman or the Treasurer as a condition to reimbursement, unless the Finance Chairman or the Treasurer in his or her discretion allows reimbursement despite a failure of advance approval. Requests for reimbursement of personal funds spent for Parish purposes shall be accompanied not only by supporting documentation as required by the check writing policy but also by a completed and signed Reimbursement Request Form, which shall be available at the Parish Office and on the Parish web site and provided to all committee chairmen. Reimbursement requests not accompanied by both the documentation and the form shall not be fulfilled without a showing of good cause for fulfilling them. Requests for reimbursement of personal funds spent for Parish purposes must be submitted within 30 days after the expenditure. Moreover, a request for reimbursement of any personal expenditure made during December must be submitted no later than the first week of January of the immediately succeeding year. Failure to meet these deadlines may be deemed a waiver of the right to reimbursement, unless the person seeking reimbursement presents good cause for the delay and either the Finance Chairman or the Treasurer approves the reimbursement. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 12

15 Requests for reimbursement of personal funds spent in connection with Parish special events (e.g., patronal festival, receptions, picnics, St. Andrew s Day party) are subject to the additional requirements set forth in Section III.L. The Parish is exempt from paying Texas sales tax on items purchased for Parish purposes. Any person making a purchase on behalf of the Parish should obtain a copy of the Parish s sales tax exemption certificate from the Parish administrator and should present the certificate to the vendor at the time of the purchase to make use of the Parish s sales tax exemption. The Parish will not reimburse sales tax paid on items purchased for Parish purposes. F. MAJOR EXPENDITURES The purpose of this policy is to require certain approvals for major expenditures of the Parish for capital improvements, repairs, or large purchases. The following requirements shall apply to Parish expenditures, in addition to the requirements above concerning reimbursement of expenditures: Routine expenditures consistent with express line items in the Parish budget shall not require specific approval. Expenditures for a capital improvement or other special project must be in accordance with a budget that the Vestry has approved in advance for such improvement or project. Any such expenditure in excess of $500 must be either the subject of a specific line item in the budget or approved in advance by the Finance Chairman and Treasurer. Nonroutine expenditures (e.g., for unbudgeted repairs and maintenance) in excess of $750 shall require approval in advance by the Finance Chairman and the Treasurer; provided that the Treasurer or any Vestry member acting alone may approve such an expenditure if the Treasurer or such Vestry member determines in good faith that the expenditure is required on an emergency basis and the Finance Chairman and Treasurer are not both readily available to approve it. Notwithstanding anything to the contrary in this Manual, any expenditure of over $5,000 that is not the subject of a line item in the Parish budget shall require advance approval by the Vestry. Any expenditure of over $5,000 for goods or services, whether or not part of a budgeted project, may be made only following a bid process in which the Parish seeks at least three bid proposals. The Vestry shall either (i) review the proposals and determine which proposal, if any, to accept or (ii) delegate to the Finance Chairman and/or Treasurer the responsibility for reviewing the proposals and determining which proposal, if any, to accept. The requirement of three proposals shall not apply if, as a practical matter, only one or two potential suppliers of the goods or services in question are reasonably available. Notwithstanding the foregoing, the Parish shall establish a list of approved vendors for purposes of expenditures likely to occur in emergency conditions (e.g., plumbers and roofing contractors), and emergency expenditures shall not be subject to the bidding process if made to a vendor on the approved list. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 13

16 G. CAPITAL ASSET POLICY The purpose of this policy is to establish guidelines for identifying, recording, depreciating, and disposing of capital assets. Definition A capital asset is a tangible item of value that has an anticipated useful life of one year or more and an initial value of $5,000 or more. All computer equipment, whether or not it meets the $5,000 threshold, will be expensed when purchased, due to its rapid obsolescence. - Recording of Capital Assets The Parish will capitalize an asset meeting the above definition of capital asset on the books and records. Major classes of capital assets include a. Land: recorded at cost, plus all closing costs. b. Buildings: recorded at cost plus all related expenses such as construction interest and closing costs. c. Major improvements to land or buildings: recorded at cost. d. Furniture and fixtures: recorded at cost. - Record-Keeping Concerning Capital Assets The Parish shall maintain the following information for all capital assets: a. Asset classification, i.e., land, building, furniture and fixtures b. Date of purchase c. Purchase price d. Description e. Estimated useful life f. Current year depreciation expense g. Prior years accumulated depreciation To initiate this policy, the Treasurer will review current capital asset accounts with the Bookkeeper and shall recommend beginning classifications as of January 1, Depreciation of Capital Assets The Parish shall depreciate capital assets in accordance with applicable GAAP or federal income tax standards. The Parish s monthly and annual operating statements shall reflect annual and cumulative depreciation. Disposition of Capital Assets The Parish shall maintain the following information in a separate schedule for capital assets that it sells: a. Date of sale b. Sales price c. Description d. Original purchase price e. Amount of prior years accumulated depreciation ACCOUNTING AND FINANCIAL POLICY MANUAL Page 14

17 f. Amount of gain or loss on sale (difference between sales price and remaining undepreciated value) H. RECORD RETENTION This Parish needs to maintain financial records for general legal purposes, for studying the Parish s history, and for analyzing trends. This policy provides recommended retention periods for financial documents. While it does not cover every type of record or document, it should serve as a guideline for the retention of similar records. The recommended retention period for financial and related records is shown below. Recommended Retention Permanent As long as property is held Item Audit Reports Annual Financial Statements Bylaws and Other Governing Documents Finance Committee Minutes IRS examinations, rulings, comments Annual General Ledger Journal of Cash Receipts and Disbursements Deeds and Easements Zoning Variances or Rulings 7 years Canceled Checks Individual Donor Records Payroll Records Tax-related reports(forms 990, W-2, 1099, etc.) Annual Report to Congregation Insurance Policies 7 years after completion of performance Contracts and Agreements 3 years Bank Statements and Reconciliations Deposit Slips Monthly Financial Statements Invoices, including expense reports Fire or Accident Reports 3 years after final disposition Asset/Liability Records I. PAYROLL REPORTING AND TAX REPORTING The purpose of this policy is to prescribe the requirements for the Parish s federal and state reporting of payroll, sales, income, franchise, and other taxes. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 15

18 The Treasurer shall ensure that the Parish files all required federal or state tax returns and reports and pays all applicable taxes by their respective due dates. (1) Income Taxes. The Parish is exempt from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. As required in the Parish s Articles of Incorporation, the Parish shall refrain from all activities not permitted to an organization described in Section 501(c)(3), including without limitation lobbying, the supporting or opposing of candidates in elections for public office, and the inurement of any Parish assets or income to any private person other than as a component of the Parish s performance of its tax-exempt functions. The Parish shall file Internal Revenue Service Form 990 on or before May 15 of each year, together with all required related schedules, or such other return(s) as the Internal Revenue Code may hereafter require. (2) Franchise Taxes. The Parish is exempt from Texas franchise tax. The Treasurer shall be cognizant of any change in Texas law that could render the Parish subject to such tax in the future. (3) Sales and Use Taxes. The Parish is exempt from the payment of Texas sales and use taxes in connection with the purchase of items used for Parish purposes. All persons purchasing items for Parish purposes shall present a copy of the Parish s sales and use tax exemption certificate to the vendor as evidence of the exemption. Any person using personal funds to purchase items for the Parish s benefit and seeking reimbursement of the expenditure shall be responsible for obtaining a copy of the exemption certificate and using it in connection with the making of the purchase. Sales tax paid on Parish-related purchases as a result of the purchaser s failure to present the exemption certificate normally shall not be subject to reimbursement by the Parish. The Parish is not exempt from charging Texas sales tax on sales of taxable items. The Parish shall collect and remit Texas sales tax on all such sales. If the Parish does not have a Texas sales tax permit, the Treasurer shall obtain such a permit prior to the Parish s making any sales of taxable items. (4) Payroll Taxes. The Parish shall file all required state and federal payroll tax returns and pay all applicable payroll taxes. These returns and taxes include without limitation the following returns and taxes: a. Forms W-2 Wage and Tax Statements, to be (i) furnished to employees no later than January 31 of each year with respect to the preceding calendar year and (ii) filed with the Internal Revenue Service no later than the last day of February of each year along with Form W-3, Transmittal of Wage and Tax Statements; b. Form 941, Employer s Quarterly Federal Tax Return, concerning federal Social Security and Medicare Taxes, to be filed each April 30, July 31, October 31, and January 31; ACCOUNTING AND FINANCIAL POLICY MANUAL Page 16

19 c. Forms 1099, Reports of Miscellaneous Income, concerning payments totaling $600 or more to any individual or unincorporated entity, as more specifically required in the instructions to the Form 1099, to be (i) furnished to the payees no later than January 31 of each year with respect to the preceding calendar year and (ii) filed with the Internal Revenue Service no later than the last day of February of each year. As of the effective date of this Manual, the Parish is not subject to state payroll taxes. (5) Charitable Contribution-Related Forms and Reports The Parish shall file IRS Form 8282 with respect to any sale of non-cash donated property within three years after the date the Parish received the property. The Parish shall supply to parishioners and other donors any forms required by the Internal Revenue Code, at such times as such Code may require, to substantiate the Parish s receipt of contributions and the deductibility of the contributions for federal income tax purposes. J. BANK ACCOUNT FOR MINISTRY FUND The purpose of this policy is to permit the Rector to use a bank account for the purpose of applying his Ministry Fund. The Vestry may cause the Parish to establish a bank account for the Rector s use for the purpose of applying the Rector s Ministry Fund (formerly known as the Rector s Discretionary Fund). Should the Vestry authorize such an account, the following provisions shall apply to the account: (1) The account shall be in the Parish s name and shall have the Parish s taxpayer identification number associated with it. (2) Whenever possible, disbursements from the account shall be made by checks payable to vendors, such as utility companies, landlords, or grocery stores, rather than to the individuals requesting assistance. Cash disbursements should not be made except in the case of an emergency when use of a check would fail to satisfy the need. In the event of a cash disbursement, the Rector must make full documentation regarding the date, purpose, and use of the funds, including the person for whose benefit they were used. (3) The Rector shall account to the Parish Administrator in writing on a monthly basis concerning the amount and nature of each expenditure from the account. The accounting shall include appropriate receipts and/or other written substantiation concerning each expenditure and identification of the purpose of the expenditure and the person(s) for whose benefit it was made. The Parish Administrator shall retain these records within the Parish s financial records. (4) The monthly bank statements for the account shall be mailed to the Parish Administrator, who shall verify that all deposits made into the account correspond to disbursements from the Parish s general bank account. The Rector shall be responsible for reconciling the account each month. The Rector shall then provide the bank statement and all back-up invoices and/or letters to the Parish Administrator, who shall review and verify the sufficiency of the back-up documentation, note on ACCOUNTING AND FINANCIAL POLICY MANUAL Page 17

20 the monthly account statement that all verifications have been made, and then file the account statement with the Parish financial records. (5) All funds intended for the Rector s Ministry Fund shall first be deposited into the Parish s general operating bank account. Such funds shall be recorded on the Parish s books of account and thereafter transferred to the separate bank account for the Ministry Fund. No funds from any source whatsoever shall be deposited directly into the Ministry Fund bank account. (6) All funds that enter the Rector s Ministry Fund shall be the property of the Parish and shall be included in the Parish s financial statements. Such funds and the expenditures thereof shall be included in the regular audit of the Parish s financial statements along with all other Parish income and expenditures. All funds in the Rector s Ministry Fund shall remain with the Parish in the event the Rector departs the Parish. (7) The Finance Committee shall review the records concerning the account on at least a quarterly basis. Minutes of the Finance Committee shall reflect when such reviews have occurred and shall reflect any matters the Finance Committee deems notable with respect to the account. The Finance Committee shall have the power, however, to review the account records at any time. (8) Funds in the Rector s Ministry Fund shall be used only for appropriate purposes, which typically include uses that address needs among parishioners and community members. Appropriate uses include payments for food, rent, utilities, medical bills, and other charitable purposes and ministry expenses not covered in the Parish s regular operating budget. Funds in the Ministry Fund shall not be used for any purpose that benefits the Rector. K. STAFF CREDIT CARD USAGE REPORTS The purpose of this policy is to ensure that Parish staff members who use Parish credit cards provide adequate documentation of their use of the credit cards and take responsibility for maintaining and presenting the documentation. Any Parish employee who uses a Parish credit card shall maintain clear and complete expense reports concerning all uses of the card, including as to each instance of usage a record of the date, the amount of the charge, and the specific Parish purpose of the charge. If the employee uses the card to pay for a meal, the expense report shall also state the names and titles or positions of the parties who participated in the meal. At least once a week, the employee shall (1) reconcile the charges to the credit card statement and (2) submit to the Parish Administrator a list of charges accompanied by the expense reports and supporting documentation, including the receipt for each expenditure. If a receipt for a particular expenditure is unavailable or has been lost, the employee shall create a record as a replacement for the missing receipt. Preparing and maintaining the expense reports, documentation, and reconciliation shall be the responsibility of the employee who uses the credit card and not of the Parish Administrator. The Parish shall adopt a standard form of expense report form that accommodates supplying all the information required in this policy. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 18

21 L. LAY MINISTRY BUDGETS, REIMBURSEMENTS, AND EXPENDITURES The purpose of this policy is to ensure accountability among lay ministry leaders for their use of Parish funds while making them cognizant of the financial circumstances and limits within which their ministries operate. Each fall, the Budget Committee shall ask each lay ministry leader for his ministry s budget request for the coming calendar year. The ministry leader shall submit the budget request promptly. The budget request shall include an itemization of the expenses the ministry leader anticipates making and a projection of any income the ministry expects to receive as contributions, ticket sales, fundraiser receipts, reimbursements for ministry-related supplies, or other amounts in addition to the ministry s allocation from the general Parish budget. Following the Vestry s adoption of the budget for the year, the Finance Committee shall inform each lay ministry leader of his ministry s budget allocation for the year, including how much of that allocation consists of anticipated income of the types described above. At the same time, the Finance Committee shall ask each lay ministry leader to submit a budget for the year for his lay ministry, which also shall include those anticipated income items. The lay ministry budgets are not intended to be binding upon the ministries but, instead, are intended as general guides for the ministries for spending their budget allocations for the year. Each lay ministry leader shall submit his ministry s budget to the Finance Committee within the time-frame the Finance Committee specifies, which must be a reasonable time-frame. Each lay ministry leader shall make every reasonable effort to prevent his ministry s expenditures from exceeding its budget allocation. If spending in excess of a ministry s budget becomes necessary, the lay ministry leader must obtain approval from the Finance Chairman or Treasurer before making the excess expenditures, except in the case of an emergency. The organizers of a Parish special event (e.g., patronal festival, receptions, picnics), in cooperation with the appropriate lay ministry leaders, must set a budget for the event in advance thereof, and the budget must receive approval by the Finance Chairman or Treasurer as a condition to the expenditure or reimbursement of Parish funds for the event. Expenditures exceeding the budget for the event will be paid or reimbursed only with the approval of the Finance Chairman or the Treasurer. Any individual expenditure in excess of $100 must be reflected in a specific line-item of the budget for the event, or else it may be paid or reimbursed only with the express permission of the Finance Chairman or the Treasurer. A lay ministry leader s request to the Parish Administrator for expenditure of Parish funds for ministry purposes or for reimbursement of personal funds spent on ministry purposes is subject to the following requirements: The expenditure must be the subject of a line item in the lay ministry s annual budget and, if applicable, of the budget for the special event to which it relates (unless an extra-budgetary expenditure is approved in accordance with the this Section III.L); the ministry s budget must contain sufficient funds to cover the expenditure or reimbursement (subject to the same exception); and the person requesting the expenditure or reimbursement must submit the Parish s standard check request form and documentation supporting the nature and purpose of the expense. As recommended by the Parish s outside auditor, this policy requires that the person making the request for funds complete and submit the standard check request form personally and not ask the Parish Administrator or another individual to submit it on his or her behalf. ACCOUNTING AND FINANCIAL POLICY MANUAL Page 19