To all: Matt O'Donnell, CPA PDR Certified Public Accountants US Hwy 19 N. Ste 101 Clearwater, FL Tel: Fax:

Transcription

1 From: Matt O'Donnell Sent: Wednesday, October 22, :27 AM To: Kathryn Driver; Karmen Lemberg; Cc: Nancy Ridenour Subject: HFA Pinellas - Accounting Procedures Final Draft To all: Please see attached final draft of the accounting procedures. Nancy and I have reviewed all changes that have been made since we sent the first draft in September and evaluated the changes to ensure they further the purpose of having a simple, easy to follow set of guidelines for internal control. From the most recent draft we ve removed discussion of a report of all new vendors generated by the Chief Accountant since this doesn t accomplish the goal of preventing unauthorized vendors from being used. In QuickBooks, there is no preventative control for this. We have several detective controls that we believe mitigate the risk of significant fraudulent activity. We ve also removed the control for having surprise audits of petty cash since the fund is hardly ever used and the amount of petty cash is not significant. It would be hard to determine if this control was being performed consistently and it doesn t seem worth the time. We recently learned that the has a purchasing card. This makes sense for practical reasons but it changes the segregation of duties. We ve added a comment that the Board Chairman should review her credit card statement when he signs the check to the credit card company each month. We believe this document strikes the appropriate balance between strong controls and efficiency. Please let us know if you have questions or comments. Matt O'Donnell, CPA PDR Certified Public Accountants US Hwy 19 N. Ste 101 Clearwater, FL Tel: Fax:

2 Housing Finance Authority of Pinellas County Accounting Procedures October 2014

3 The purpose of these procedures is to provide guidelines to management on proper procedures for key accounting processes. These procedures were designed with proper segregation of duties in mind. It is our goal to reduce the opportunity for fraudulent activity by maintaining proper segregation of duties. Please see Appendix A for Segregation of Duties matrices that illustrate the separation of the authorization, custody, recording, and review duties. Please note that the monitoring controls discussed below are especially important as they mitigate risks that are inherent to these accounting processes. Budget Procedures Separate budgets will be prepared for the General Fund and any Special Revenue Fund authorized by the Housing Finance Authority of Pinellas County (HFA Pinellas). The staff will develop the budgets and the budgets shall be approved by the Board of Directors (Board) at a regular board meeting, prior to October 1st of each year (AP01). The Chief Accountant is responsible for documenting and monitoring the budget (AP02). Budget methodology, key assumptions, and supporting schedules will be included in the supplemental documentation to the budget provided to the Board during the budget submittal process. Purchasing Procedures All purchases $5,000 or greater require approval by the Board (AP03). When a purchase is included on an approved budget line item or is included in an agreement that has been executed by the Board, the purchase is deemed to have received prior approval by the Board. The may approve all non-budgeted purchases up to $4, without prior approval of the Board (AP04) and such purchases must be reported to the Board of Directors at the next regular meeting of the Board. All staff are authorized to make budgeted purchases of up to $150 without prior written approval. Budgeted purchases above that amount require approval from the (AP05). All non-budgeted purchases require prior written approval from the. A Purchase Request Form must be completed for each purchase. Credit Card Procedures The Program Administrator or will transact all purchases paid for with the credit card (AP06). If the purchase involves goods that are being delivered, the person submitting the Purchase Request Form will forward delivery documents (i.e. packing slip or invoice, etc.) to the Program Administrator upon receipt of the goods. Upon receipt of the monthly credit card statement, the Receptionist will deliver the statement to the Program Administrator. The Program Administrator will mark on the statement the amount to pay and complete a Payment Request Form for that amount. The Program Administrator will forward the invoices and other supporting documentation for all purchases along with the statement to the Chief Accountant. The Chief Accountant reconciles the credit card statement to the supporting documentation prior to payment (AP07). The Board Chairman reviews all credit card purchases made by the (AP08). Housing Finance Authority of Pinellas County Page 1 of 5

4 Petty Cash Procedures The Program Administrator is the Custodian of the $75.00 Petty Cash Fund (AP09). The funds will be kept in a locked file cabinet and only the Program Administrator has the key. If it is necessary for the Program Administrator to be reimbursed from Petty Cash, the Chief Accountant or must approve the reimbursement. Petty Cash Disbursement Slips are to be completed and signed prior to reimbursement of the expense. The business purpose is to be noted on the Petty Cash Disbursement Slip. Receipts are to be attached to the Petty Cash Disbursement Slip. The petty cash fund is to be reconciled by the Chief Accountant (AP10). The Custodian should be present during the reconciliation. The petty cash fund is to be reconciled prior to replenishment of the fund. Documentation of the Petty Cash Fund reconciliation will be completed on the Petty Cash Reconciliation Form. The Petty Cash Reconciliation Form is to be signed by the Chief Accountant and the Program Administrator. The Petty Cash Replenishment Form is to be completed when requesting replenishment of the Petty Cash Fund. Replenishment of the fund requires cutting a check to the. The will review the Petty Cash Reconciliation Form prior to cashing the check and giving the cash to the Program Administrator in order to replenish the fund. Travel Reimbursement Procedures Upon completion of the travel, the traveler will complete a Travel Reimbursement Form and attach all necessary receipts. The approves all Travel Reimbursement Forms, except her own which are approved by the Board Chairman (AP11). Travel Reimbursement Forms must be accompanied by adequate supporting documentation and are submitted to the Chief Accountant along with a Payment Request Form for payment. Receipt of Goods The Receptionist will verify that shipments received are as described on the delivery document (i.e. packing slip, bill of lading, invoice, etc. included with shipment) and notify the purchaser when shipments are received (AP12). The purchaser will attach the delivery documents to the invoice and Payment Request Form. In no case is the purchaser allowed to verify the delivery document; in the absence of the Receptionist, Chief Accountant or, either of whom is NOT the purchaser, must perform the verification. Housing Finance Authority of Pinellas County Page 2 of 5

5 Requests for Payment When the invoice is received, the unit costs on the invoice should be reconciled to the documentation containing the original price quote, where appropriate. The purchaser will mark the invoice OK to Pay along with their initials and date, complete a Payment Request Form with the appropriate approval signature, and forward these and any other related documents such as invoices and delivery documentation as described above to the Chief Accountant. In instances where only a portion of the goods or services is received, the invoice must be marked so as to identify the items received and the payment request should only reflect those items. The method of payment, check or Automated Clearing House (ACH), will be indicated on the Payment Request Form. Specific draw request procedures will be written for each promissory note or agreement executed by the Board or program designed by HFA Pinellas. Each set of procedures will be listed by resolution and the procedures will be consistent with the term sheet of the same. Accounts Payable Procedures Payment Request Forms and supporting documentation are forwarded to the Chief Accountant for processing in the accounting system for payment (AP13). The Chief Accountant keys the invoices into the accounts payable sub-ledger. The Chief Accountant can update the vendor file. (AP14). This is the only duty in which the Chief Accountant is involved in an authorization role. Because of this, it is important for the check signers to inquire about any significant payments to vendors they do not recognize. ACH Payment Procedures The current System Administrator is the and the Board Chairman is the backup. The Authorized User is the Chief Accountant and the Program Administrator is the back-up. The Roles are as follows: System Administrator - has access to transaction reports, releases batches, create batch reports, and set up vendors. The System Administrator cannot create a batch in the ACH system. (AP15) Authorized User - has access to transaction reports, create batches, delete batches, and create batch reports. The Authorized User cannot add, change, or delete a vendor. (AP16) -- The Chief Accountant will prepare batches and generate a batch report. The batch report and the invoices will be given to the. The will release the batch and document the date and time the batch was released on the batch report. In the absence of the, the Chairman is authorized to release batches. Housing Finance Authority of Pinellas County Page 3 of 5

6 The invoices and the batch report will be given to the Chief Accountant so payment can be recorded in the accounting system (AP17). Processing Payments Made by Check The Chief Accountant prepares checks in QuickBooks (AP18). The Program Administrator prints a report from the QuickBooks A/P Ledger showing all bills that are currently due. The reviews this listing and determines which invoices should be paid for the check run. (AP19) Blank check stock is kept in a locked fireproof cabinet along with the Check Log except when in use. The controls the key. The updates the Check Log that shows the range of check numbers used for each check run and the date. The initials this log before every check run. The Program Administrator verifies the listing with her initials as well. This makes sure that all check numbers are accounted for. (AP20) After printing, the checks and the supporting documentation will be given to the Executive Director for signing. The reviews all supporting documentation prior to signing (AP21). After signing the checks, the will give the checks to the Program Administrator so that they can obtain the second signature from the Board Chairman (AP22). The Receptionist will then copy the checks after they have been signed and attach the supporting documentation. The copied check and the documentation will be returned to the Chief Accountant for filing. The Receptionist will place the signed check and any supporting documentation in envelopes and mail the checks to the payees (AP23). The Chief Accountant is responsible for recording check payments in the accounting system after the appropriate approval. The Chief Accountant will stamp paid on the invoice and Payment Request Form immediately after it is recorded in the accounting system. Capital Assets and Depreciation Assets with cost greater than $2,500 will be capitalized. Capital asset purchases should be marked as such on the Payment Request Form so the Chief Accountant can properly process the item as a capital purchase. All capital assets shall be tagged as property of HFA Pinellas when purchased. Asset useful lives will be decided in accordance with the organization s capitalization policy. The Chief Accountant will maintain the listing of capital assets and will assess depreciation on a straight-line basis. The list will be maintained in the HFA Pinellas directory in the shared drive. Housing Finance Authority of Pinellas County Page 4 of 5

7 Check Deposits When checks are received, the Receptionist will log them in the Department Check Log (CR01) and immediately endorse the checks with the HFA Pinellas deposit stamp. The Receptionist will then forward the checks to the Program Administrator. The Program Administrator will copy each check. The Program Administrator prepares the bank deposit (CR02). Each check will be listed separately on the deposit slip. Deposits should always be made within five business days from the date entered in the check log. Checks are always to be kept in a locked file cabinet until they are deposited. Only the Program Administrator has the key. The or Receptionist will perform this duty when the Program Administrator is not available. The will take the deposit to the bank and bring back the receipt. (CR03) The Program Administrator will file a copy of the deposit receipt from the bank along with the deposit ticket and the check copies. Documentation of the accounts affected by the deposit should be generated. The Program Administrator will give the copy of the deposit slip, the documentation, the copied check, and the deposit receipt to the Chief Accountant to record the deposit in the accounting system (CR04). The Program Administrator will provide a copy of the deposit slip and bank deposit receipt to the Receptionist and the Receptionist will update the Check Log to indicate the date on which each check was deposited. A copy of the Check Log will be sent to Financial Reporting each month for use in the cash reconciliation process. Wire Transfer Deposits Wire transfer confirmations for monies received and paid are received by the via and are forwarded to the Chief Accountant. The Chief Accountant will record the Wire Transfers in the accounting system. (CR04) The effective date of the transaction in the accounting records will be the confirmed date of the wire transfer. Monitoring Procedures Upon receipt of the monthly bank statements, the Receptionist will forward them unopened to Financial Reporting. Reconciling bank accounts is the responsibility of Financial Reporting (MN01). The Chief Accountant will provide the deposit and wire transfer documentation to Financial Reporting each month. Bank reconciliations will be reviewed and approved by the (MN01). This reconciliation process allows Financial Reporting to verify all payments made and received during the month to the activity recorded on the bank statement. The Chief Accountant will prepare a check register of all payments made each month. This list of payments will be made part of the financial reports provided to the Board of Directors at each regular Board meeting (MN03). Financial Reporting creates monthly financial statements and budget-to-actual reports that are reviewed by the and the Board of Directors (MN04). Housing Finance Authority of Pinellas County Page 5 of 5

8 Appendix A-1 Accounts Payable and Disbursements Control Description Authorization Custody Recording Review AP01 The BOD approves the budget each year BOD AP02 Chief Accountant Monitors the Budget Chief Accountant AP03 Purchases > $5,000 require prior approval by the BOD BOD AP04 AP05 Non-budgeted purchases < $5,000 require prior approval by the Budgeted purchases < $5,000, > $150 require prior approval by the AP06 The Program Administrator and make all credit card purchases /Program Administrator /Program Administrator AP07 The Chief Accountant reconciles the credit card statement Chief Accountant AP08 The Board Chairman reviews all credit card purchases made by the Board Chairman AP09 The Program Administrator is petty cash custodian Program Administrator AP10 The Chief Accountant reconciles the petty cash account Chief Accountant AP11 AP12 The approves travel reimbursement requests except her own which are approved by the Board Chairman The Receptionist receives all goods and verifies the contents of packages received /Board Chairman Receptionist AP13 The Chief Accountant processes payments in QuickBooks A/P sub-ledger Chief Accountant AP14 The Chief Accountant can add vendors to the QuickBooks A/P sub-ledger Chief Accountant * AP15 sets up vendors and releases batches for ACH payments. Board Chairman is the back-up /Board Chairman AP16 The Chief Accountant creates batches for ACH payments. Program Administrator is the back-up Chief Accountant/Program Administrator AP17 The Chief Accountant records ACH payments in QuickBooks Chief Accountant AP18 The Chief Accountant prepares checks Chief Accountant AP19 The approves which invoices are paid for each check run AP20 AP21 AP22 The and Program Administrator both initial the Check Log which ensures that no checks are used between authorized check runs /Program Administrator reviews all supporting documentation and signs the checks Program Administrator obtains the second check signature from the Board Chairman, who reviews supporting documentation prior to signing Board Chairman Program Administrator Board Chairman AP23 The Receptionist mails the signed checks to payees Receptionist Monitoring MN01 Financial Reporting reconciles the bank statement on a monthly basis Financial Reporting MN02 reviews bank reconciliations MN03 The BOD reviews all cash disbursements monthly BOD The and the BOD review financial MN04 statements and budget monthly /BOD * We consider this a segregation of duties issue that must be mitigated by strong monitoring controls.

9 Appendix A-2 Cash Receipts Control Description Authorization Custody Recording Review CR01 The Receptionist open all mail and logs all checks received Receptionist CR02 CR03 CR04 The Program Administrator prepares the bank deposit The delivers the deposit to the bank and returns with a deposit receipt The Chief Accountant records receipts (checks and wire transfers) in the accounting system Program Administrator Monitoring Chief Accountant MN01 Financial Reporting reconciles the bank statement on a monthly basis Financial Reporting MN02 reviews bank reconciliations MN03 MN04 The BOD reviews all cash disbursements monthly The and the BOD review financial statements and budget monthly BOD /BOD

10 Appendix B Names and Titles Board Chairman Chief Accountant Receptionist Program Administrator Financial Reporting Board of Directors Kathryn Driver Rodney S. Fischer 1Source Partners - Deborah Budaj Liana Rollins Karmen Lemberg KBLD, LLC Various