Internal Controls Policy

Transcription

1 Internal Controls Policy Purpose. This policy governs the internal controls over the processes of the Sunflower Community Association with respect to the financial and purchasing systems. Financial System. The Financial System includes Accounts Payable, Accounts Receivable, General Ledger, Cash Receipts, Cash Disbursements, and Payroll functions. The Board of Directors has the authority to employ a professional management company to manage the Financial System and all pertinent parts. 1. All Accounts Payable transactions shall have supporting documentation. Payments to vendors shall have the following: a. An invoice with the vendor s name, address, description of work or products and pricing. b. A signature of a representative of the Association who received the goods or services when possible. c. A copy of the purchase order and/or contractor copy of agreement/invoice. d. A copy of the check stub or a copy of the debit/credit receipt. e. Automatic payments shall be compared to the invoices and the monthly bank statement. 2. All Accounts Receivable transactions shall be matched with bank deposits and reconciled monthly to the bank statements. 3. General Ledger (GL) entries shall have an explanation of the reason for the entry. Monthly, the Board Treasurer or a designated Board member, shall review GL entries on the General Ledger Report and the Sunflower(Front Desk) Daily Tally sheet, date and initial the reports and file them for year-end audit review. 4. Financial Reports shall be prepared monthly by the AAM,LLC and provided to the Board of Directors and the Finance Committee. Financial reports shall consist of a Balance Sheet, Income Statement and proof of Cash which reconciles the beginning and ending balances in all accounts. 5. Cash and Check Control Procedures: Internal Control Policy Page 1 of 5

2 a. The Petty Cash Fund consists of cash and original receipts for purchased items or services not to exceed $100. It cannot be used to cash personal checks or for loans. The Petty cash funds shall be reviewed by a Board or Finance Committee Member providing unannounced inspections at least twice a year and a written report prepared describing scope, methodology and results. All petty cash shall be locked up. b. Other Funds Collected at the front desk includes funds for Casino Trips, Fitness Club, Ladies Lunch, etc. Such funds collected shall be reconciled at least semi-monthly. Funds collected for groups shall be disbursed, when requested, to the authorized representative of each group. A receipt detailing the breakdown of money disbursed shall be prepared and signed by a front desk Resident Services Coordinator and the group representative. The original receipt is given to the representative and a copy retained at the front desk. The funds collected for the Association (faxes, advertising, photocopies, guest cards, etc.) are deposited into the Association Operating account. c. Deposits All checks received for the Association shall be immediately stamped for deposit. Cash deposits shall be made at least monthly. All cash and checks shall be locked up in a safe until they can be deposited. d. Assessment Payments Payments received are secured in a locked safe until processed. All checks received at the Community Center are date stamped and then logged by the General Manager, Administrative Assistant, and/or Resident Services Coordinators. The checks are then mailed to the bank lockbox payment address. e. Association Checks Two designated Board Members shall review invoices at least one time per week. Authorization to pay items will be given to the General Manager before any checks are processed. The Board of Directors may authorize two executives at AAM, Internal Control Policy 4.01 Page 2 of 5

3 LLC to sign checks. No checks may be payable to cash. No checks may be signed in blank. A valid payee is required on all checks before they are signed. The Management Company is responsible for insuring all unused checks are properly secured to avoid fraud. The Treasurer or another Board Member will perform a surprise semi-annual verification of unused and voided checks for the CIF accounts and Vanguard Money Market account in double custody, write up a report, and file it. 6. Credit Card a. Authorized user is the General Manager. b. The credit limit is $3000. c. No single item may be purchased that exceeds $1000. d. Two Board members must review all Credit card activity on statements each month and provide written acknowledgement and approval as proof of review and validity of purchases. Purchasing System. The purchasing process shall be monitored for obtaining of competitive proposals/bids. Responsibilities. 1. The Board of Directors shall be responsible for the following: a. The selection and retention of banking, legal management services, and CPA services. b. The Annual Budget. c. The Annual Financial Report to the Members which shall consist of a Balance Sheet and Income Statement. d. Acceptance of the auditor s Management Report and Audit Report. e. The evaluation of the overall Internal Control system and review of implementation of any corrective action recommended by the auditor. 2. The Management Company shall be responsible for the following: a. Accurate record keeping of the financial affairs of the Association. b. Compliance with Association Procurement Policy. c. Identifying and overseeing that qualified banking, legal and CPA services as well as all other service providers are performing in compliance with policies, procedures and, if applicable, their Internal Control Policy 4.01 Page 3 of 5

4 contracts. d. Preparing the Annual Budget. e. Providing access to Members of the final Audit Report. 3. The Finance Committee shall be responsible for the following: a. To become educated in the financial affairs of the Association b. At the Board s request and direction, research and report on financial issues c. On a monthly basis, review and compare actual expenditures to budget estimates. d. Recommend to the General Manager adjustments to any monthly journal entries. In addition, advise the General Manager of any other specific new regular or irregular journal entries or of any necessary actions that the Finance Committee recommends. e. Meet quarterly to prepare a written report, to the Board of Directors and General Manager that reviews and analyzes the quarterly and year to date actual expenditures to budget estimates. f. Advise the Board on unbudgeted purchases exceeding $1, from Reserve funds and identify monies available for Board approval. g. When requested, update the Reserve Study quarterly with figures provided by the Sunflower Community Association s General Manager s office. h. When requested, review the financial impact of in-place and new proposed contracts submitted to the Sunflower Community Association. i. During the second quarter of the current fiscal year, acquire verification of Reserve Study replacement items which are near or at their useful life from an appropriate Association Committee or other source. The resulting recommendations will be used in budget preparation. j. During the fourth quarter of the current fiscal year, up date the Reserve Fund s cash flow requirements for the following three (3) fiscal years and report recommendations to the Board of Directors, and General Manager s office. k. Review and refine the Sunflower Community Association s General Manager s proposed budget for upcoming fiscal year the submission to the Board of Directors no later than 45 days prior to the end of the current fiscal year or other date set by the Board of Directors. When requested, the Finance Committee may initiate the budget process. l. Annually, during the first quarter of the new fiscal year, review the Internal Control Policy 4.01 Page 4 of 5

5 financial status, accounting procedures, and dispersing equipment or inventory of all Sunflower Community Association s Chartered Clubs. m. Review accounting firms annual audit report for the Board. Provide assistance to the auditor as needed. n. Review eligible investments. o. Determine and recommend appropriate investments for the Long- Term and Short-Term investment portfolios. p. Review and evaluate, at least annually, the overall performance of all investments and the individual performance of the investment services provided by the custodian and securities broker/dealer and fees. q. In cases of any conflict or contradiction between this policy and the adopted Charter for the Finance Committee, this policy shall prevail. Internal Control Policy 4.01 Page 5 of 5