MORTON SALT Employee Handbook. Internal Control Procedures

Transcription

1 MORTON SALT Employee Handbook Internal Control Procedures 1. Bank Accounts the opening of any new account at any bank or financial institution. All such accounts must be listed in the name of the appropriate company, not private individuals. 2. Authorized Check Signers all changes in the list of individuals authorized to sign checks, drafts, payment orders, giros, wire transfers, applications for letters of credit, and any other means of disbursing funds. Only active employees of the Company may be authorized to sign checks or disburse funds. 3. Financial Arrangements all arrangements with banks or other types of financial institutions to allow specific individuals acting on behalf of the Company to borrow money, purchase or sell marketable securities, purchase or sell foreign currencies, enter into foreign exchange contracts, issue guarantees, or enter into custody agreements. Financial managers must send the CFO or Treasurer a copy of all instructions to banks and financial institutions which designate or change the limits within which an employee is authorized to perform any of the above acts. 4. Blank Checks Custody of blank checks must be assigned to an individual who has no responsibility for signing checks, processing supplier invoices, preparing checks for signature or reconciling bank accounts. Clear segregation of duties must exist between the custody, preparation, and signing of checks. 5. Cash Commitments and Disbursements The Board of Directors authorizes identified employees to execute contracts and disburse funds through the adoption of Enabling Resolutions, and to designate others to do the foregoing on behalf of the Company. Except as authorized through this delegation of authority process, no employee may enter into contracts or disburse funds, whether for capital projects or otherwise, on behalf of the Company. Issued: 3/1/2011 Page 1 of 5

2 Cash disbursements must be supported by an approved Purchase Order, Wire Transfer, or Check Request, unless performed through a Company approved electronic medium that contain appropriate internal controls. Except for small petty cash disbursements, all payments must be made from approved bank accounts by authorized signers within established limits for signing. The full name of the payee must be recorded on the disbursements document and in the Cash Disbursement Ledger. Documents must not be made payable to Bearer, Cash nor the individual approving the transaction. Petty cash must be kept on an imprest basis. 6. Responsibility of Check Signer or Approver of Transfer of Funds The check signer or approver of transfer of funds is fully responsible for determining that supporting documentation is reviewed and that the disbursement is a legitimate Company expense, is reasonable in amount and has been properly approved. When a check signing machine is used, the individual whose signature appears on the check must be assured that appropriate controls have been established over the use of the signature plate and the check signing machine, including reconciliation of the meter on the machine with the number of checks approved for signing. When an electronic transfer of funds is made, the approver of transfer of funds must be assured that appropriate controls are established with the institution completing the transfer. The Chief Financial Officer must approve all non-purchase order payment requests, including wire transfers, that are $50,000 or more. 7. Travel Expenses The employee must ensure that the expense statement accurately describes the purpose of the expense, is reasonable in amount and is limited to authorized expenses for business travel or business entertainment. The supervisor is responsible for approving travel and entertainment expenses, including making certain that travel expense statements are computed accurately and properly supported by receipts. Travel expense statements must not be used for reimbursement of other types of expenditures (such as commissions, rebates, consultant fees, personal travel or other non-business expense) nor for the purchase of assets. Employees should refer to the company s travel policy for further details. 8. Employee Loans Loans to employees and salary advances that are not prohibited by law may be made according to local policies duly approved by a Vice President of Human Resources and the Chief Financial Officer. 9. Employee Compensation All payments to employees as wages, salaries, bonuses, etc. must be justified based on services rendered to the Company and recorded as compensation on the Company s books and tax reports. Employees may not be asked to refund a portion of their compensation or to spend it in an illegal or unethical manner. Employees will be paid in the currency of the legal entity by which they are employed. Issued: 3/1/2011 Page 2 of 5

3 10. Financial Organization Financial management personnel are responsible for the credit function, accounts receivable, and cash receipts. Sales personnel must not release material without credit approval, deliver invoices or credit notes to customers nor make collections from customers. 11. Pricing Sales personnel calling on customers must not establish selling prices except within preestablished guidelines approved in writing by marketing or business management. All price reductions (such as discounts, allowances, rebates, credit notes, samples, and free-of-charge shipments) must be approved by a sales or marketing manager. 12. Credit Notes A credit note may be issued only for a valid business reason, which must be accurately stated on the face of the credit note and must refer specifically to the original invoice whenever possible. The responsible legal entity or business unit finance manager or his or her finance designee must review all credit notes for accuracy, reasonableness, and approval by an authorized manager unless an alternative practice has been approved in writing by the Chief Financial Officer of the Company. Customers must not be overbilled and given an offsetting credit. 13. Billing All shipments must be reported daily in order to initiate the billers process promptly. Pre-billing is permitted only with the approval of the Chief Financial Officer and the appropriate Vice President of Sales. 14. Cash Receipts All checks payable to the Company and cash receipts, including refunds and rebates received from suppliers for any reason (such as price reduction, return of material, return of deposit, cancellation of contract, duplicate payment, erroneous payment), must be deposited promptly in a Company-named bank account. Checks received from customers must not be endorsed to a third party as a means of paying invoices. Cash receipts must not be added to petty cash funds. Third-party checks endorsed to the Company must not be accepted. 15. Bank Account Reconciliation Bank accounts are to be reconciled in accordance with corporate policy. Bank accounts must be reconciled monthly by an individual who has no responsibility for cash receipts or cash disbursements. The bank must be instructed to mail the statements directly to the individual who is responsible for ensuring the accounts are reconciled properly. The bank account reconciliation must be reviewed and approved by the local financial manager or designated finance individual and agreed to the paper bank statements. Issued: 3/1/2011 Page 3 of 5

4 16. Sales Agents and Distributors All new sales agents and distributors and changes in arrangements with existing sales agents and distributors must be approved in advance by the Vice President of Sales or designated individual. The background and business ability of any new agent or distributor must be reviewed carefully to determine experience, ability and financial resources. Only respected and competent agents and distributors who can obtain business for the Company on the merits of our products may be approved. The services required and compensation to be paid to the agent or discount allowed to the distributor must be specified and a written contract executed. All contracts must be retained according to corporate retention policies and stored appropriately. Exceptions to the above additionally must be approved by the General Counsel. 17. Sales Commissions and Rebates The amount of the commission must be as provided in the written agreement and commensurate with the services rendered by the sales agent. The commission rate must be uniform for a given product in a given area for similar services provided. Payments must not be made in cash or to unnamed or otherwise disguised bank accounts. All commissions must be recorded in the Company s financial records with full documentation indicating payees, rates, customer orders and products and must be supported by authorized credit notes. No payments may be made in a country other than the country of the agent s or distributor s residence, where the agent or distributor or the Company contracting entity has its principal place of business, or where the services are rendered. Sales rebates must be supported by written documentation and authorized credit notes. Accounting entries must be made so that the net selling price for the product reflects the final price to the customer. All payments must be payable to the customer and sent to the same country as the original invoice. Exceptions to the above additionally must be approved by the General Counsel and must be supported by appropriate documentation. 18. Consultants And Other Advisors All arrangements with consultants, import agents, purchasing agents, attorneys, accountants and other individuals or organizations providing professional services must be based on the Company s need for technical or professional advice or assistance. The background and professional ability of any new agent/consultant should be reviewed carefully, and only respected and competent individuals and organizations may be engaged. All new agents/consultants and changes in arrangements with existing agents/consultants must be approved by a the CEO or the appropriate Vice President. Arrangements with accountants or financial consultants must be approved by the Chief Financial Officer, and arrangements with attorneys, by the General Counsel. Whenever possible, the fee or method of determining the fee (for example hourly billing) should be established before the services are rendered, a contract should be executed, and Purchase Order completed and approved. In all cases, the invoice received must fully and accurately describe the services rendered and the bases for the fee charged. All contracts are to be approved according to Company policies and procedures. Issued: 3/1/2011 Page 4 of 5

5 19. Unusual Business Transactions All transactions outside the Company s normal course of business (such as the sale of scrap or surplus equipment, sale of off-grade or obsolete materials or supplies, sale of utilities or services, lease or rental of Company-owned land, buildings or equipment, raising crops or livestock on company property, or engaging in new business activities) must be approved by the CEO or a Vice President, in writing. The local financial or site manager is responsible for establishing procedures to monitor the price and quantity of assets and services sold, to prepare invoices promptly, and to deposit receipts in the Company s bank account. The use of an auction or other means of disposal in which price and customer cannot be determined in advance must be approved by the local financial or site manager. 20. Accounting Records All records and documents supporting the Company s financial statements and government reports must accurately reflect the nature, purpose and date of corporate transactions. All accounting entries must be controlled by the local financial manager or designated individual so that no fictitious or unauthorized entries will be made in the Company s book of account. Required correcting entries should be recorded in a transparent and timely manner without consideration to either financial performance or the availability of offsetting adjustments during the period. Such adjustments should not be amortized to reduce their impact to the financial statements. The account classification of correcting entries should be based on the classification of the original error without regard to budgetary matters or the existence of offsetting adjustments. ADDENDUM RELATING TO THE FOREIGN CORRUPT PRACTICES ACT The foregoing internal control procedures are enforced to ensure, among other things, the Company s compliance with the Foreign Corrupt Practices Act. These procedures shall be followed at all Company locations, except where other practices are expressly authorized in advance in accordance with the provisions described below. Provisions for Authorizing Exceptions to the Internal Control Procedures Exceptions to these procedures may be granted for justifiable business needs and in accordance with the laws of the U.S. and the countries in which the Company does business. The purpose of an exception is to facilitate the conduct of business in accordance with local business practices and customs. Any exception requires notification to and the pre-approval of the Chief Financial Officer (where noted, the granting of exceptions to certain procedures additionally requires the pre-approval of the General Counsel). The Company s auditors maintain a log of all granted exceptions. An exception will lapse by its own terms within five (5) years, and a request for an extension of the exception requires the same level of business justification as the original request. Any exceptions that are granted must have appropriate mitigating controls and are regularly reviewed by the Company s auditors. Issued: 3/1/2011 Page 5 of 5