Friends of the Canyon County Animal Shelter, Inc. FINANCIAL POLICIES AND PRACTICES

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1 Friends of the Canyon County Animal Shelter, Inc. FINANCIAL POLICIES AND PRACTICES Adopted December 31,

2 REVIEW OF INTERNAL CONTROLS ACCOUNTING SYSTEM The fiscal year for Friends of the Canyon County Animal Shelter, Inc.is January 1 to December 31 st. It operates in accordance with generally accepted accounting principles and utilizes an accrual basis of accounting, which was started in the fiscal year At year-end the auditors make the necessary accrual adjustments. Complete and accurate accounting records are maintained on a current basis in order that budget review is possible. FINANCIAL AUDIT An independent public accounting firm completes an audit of the financial statements and the schedule of expenditures and federal awards annually following fiscal year-end. The purpose of the audit is to assure that the statements and schedule are prepared in accordance with Generally Accepted Accounting Principles. The Executive Director and Bookkeeper or designated office staff will provide all information for the accounting firm. Upon completion of the audit, the auditors review the financial statements with the board and makes recommendations as to changes that may need to be made in order to improve financial management. Friends of the Canyon County Animal Shelter, Inc. is also responsible for the completion and submission of required IRS forms for non-profit agencies. IRS form 990 is to be completed by Friends of the Canyon County Animal Shelter, Inc. and filed within five months of fiscal year end, pursuant to IRS code and requirements. BUDGET PREPARATION AND REVIEW Friends of the Canyon County Animal Shelter, Inc.Executive Director and financial staff work closely in developing a budget plan showing how management intends to acquire and use resources and also how it intends to monitor the acquisition and use of resources in the coming fiscal year. The budget is reviewed by the finance committee prior to submission to the Board. The budget is presented at a Board meeting prior to the start of the new fiscal year and is reviewed and approved to become effective January of each year. MONTHLY BUDGET CASH FLOW MONITORING The following reports are prepared by the bookkeeper or designated office staff for the monthly Board of Director meeting: A monthly profit and loss actual versus budget comparisons on a cash and accrual basis. A balance sheet with assets and liabilities. A statement of temporarily restricted assets. The statement is presented to the Board of Directors at the monthly meeting. Reconciled Bank Statements. Check register for each account. The Executive Director presents the statement and is prepared to answer questions concerning the statements and reports. 2

3 RESERVE FUNDS Agency reserve funds are maintained at a brokerage firm in a money market account. Bookkeeper or designated office staff will maintain excess funds in a money market account, while avoiding unnecessary transfers between the checking and money market account for cash flow purposes. Expenditures from money market account require pre-approval from the Board President or Treasurer. DISPOSAL AND SALE OF ASSETS Any asset disposed of or sold must first be approved by the Board President and then determined with the Bookkeeper or designated office staff whether they are on the fixed asset listing. ASSETS INVENTORY An inventory of current assets will be conducted prior to the fiscal year audit. CASH MANAGEMENT Cash is divided into cash on hand and cash in the bank. Cash includes currency, coin, checks, bank drafts, money orders, balances in checking or savings accounts at a bank, and demand certificates of deposits at a bank. Cash also includes balance in the Deferred Revenue account. Cash does not include postage stamps, IOU s, notes receivable, or grants receivable. BANKING Friends of the Canyon County Animal Shelter, Inc. cash transactions involve bank checking accounts. It deposits daily receipts into the bank checking accounts and writes checks on the bank checking accounts to pay its bills. Transfers from the money market account to checking may be performed by Electronic Funds Transfers (EFT s) or written check for cash flow purposes. EFT s may also occur between related accounts. Some deposits are electronically deposited by grantors into accounts other than checking accounts and then transferred into the checking account. CASH RECEIPT and DEPOSITS 1. From the moment cash is received until it is deposited in the bank, it is safeguarded completely. 2. The bookkeeper or designated office staff opens all mail and retains all check drafts in order to make a record of cash received in a receipt log. The treasurer reconciles this receipt log on a monthly basis with computer journal entries. 3. The bookkeeper or designated office staff will make copies of all check drafts for bookkeeping and financial use. Then the bookkeeper or designated office staff will prepare a bank deposit slip, preferably on the same day of business that it is received and deposit the money at the bank. The deposit slip must show the date and amount of the deposit with checks and currency listed separately. Copies of deposit slips and checks are retained by the bookkeeper or designated office staff. Deposit books are retained by the designated office staff. Deposits may be made through bank tellers or at automatic teller machines. 3

4 4. On occasion, small amounts of currency received (less than $100) may be deposited to petty cash instead of the bank. Double signatures to verify currency are required. CASH DISBURSEMENTS 1. With the exception of petty cash disbursements, all disbursements are to be by check, credit card or electronic funds transfer. No cash receipts should be disbursed. 2. All checks should be pre-numbered consecutively. All checks are kept in a secure place and controlled and accounted for by the Bookkeeper or designated office staff. 3. Friends of the Canyon County Animal Shelter, Inc. Expense Voucher Form must be used to submit bills and to request approval of any and all expenses, including credit accounts, credit cards, EFT s, and other means of expenditure. For any anticipated expense exceeding $100, an expense voucher must be submitted to the Executive Director for preapproval. Invoices, receipts, registration forms, or other documentary evidence must accompany this form. Vouchers shall be signed and dated by those submitting and authorizing it. EXCEPTION: A list of pre-authorized regular expenses shall be established by the bookkeeper or designated office staff in conjunction with the Executive Director and Treasurer. These payments are exempt from having an authorized expense voucher because of their regularity in timing and amount and in order to cut down on paperwork. 4. Each check prepared shall be accompanied by the Expense Voucher Form and supporting documents. The person authorizing the disbursements of cash should be certain that payment is in order and that it is made to the proper payee. 5. Two signatures shall appear on each check. It is preferable that one is by the Executive Director and authorized staff member, or by the Treasurer and authorized staff member. 6. Invoices are attached to the check stub, expense voucher, cost allocation record, and invoice or receipt and maintained on file by the bookkeeper or designated office staff in sequential check order. Some disbursements may be kept in groups, such as FICA tax payments or medical insurance liability payments. 7. All voided and spoiled checks are to be retained and mutilated to prevent their unauthorized use. ELECTRONIC FUND TRANSERS (EFT S) In order to expedite payments of obligations, EFT s may be authorized by the Executive Director. EFT s are restricted to the following: Direct Deposit of Payroll Checks and Employee Reimbursements prepared by the Bookkeeper or designated office staff and receiving approval by the Executive Director before direct withdrawal from checking account. This includes a regular charge for such services. Deposit of Withheld Federal Taxes prepared by bookkeeper or designated office staff along with payroll and scheduled for direct withdrawal from checking account at the same time. Does not need pre-authorization since it is a liability of the payroll cycle. Credit Card payments prepared by bookkeeper or designated office staff for timely payment of credit card in order to avoid finance charges. Prepared in check format and signed by two authorized signatories, but withdrawn using signed check number directly from checking account. 4

5 Intra-Bank Transfers transfers between bank checking / savings accounts shall be authorized and initiated by bookkeeper or designated office staff with no other approval. A paper and electronic record shall be kept. Various Bank Fees Merchant Services charges a certain percentage on all credit card transactions deposited and a statement is provided monthly. Some checking accounts charge a nominal fee (<$5.00) for use of services. These fees shall be reported on a monthly cash statement, but need no authorization. All other electronic forms of payment necessary shall be made by company credit card in accordance with policy. EFT Deposits (Federal Government, Credit Cards) shall be allowed and records of scheduled or actual deposits shall be maintained appropriately. BANK RECONCILIATIONS The Bookkeeper or designated office staff should obtain the bank statement and the paid checks and prepare the bank reconciliation statement as early as possible in the month. The treasurer then verifies the bank reconciliation with a signature and a date. Copies of bank reconciliation will be filed according to the bank account. The person signing the checks should not have access to the returned checks paid by the bank. THE SIGNATURE CARD A bank and money market signature card is to be signed by the Executive Director, authorized employee(s), and/or the Treasurer, Board President and other Board Member as approved. The signature card is retained at the bank to identify the signatures as they appear on the returned checks. A separate copy is maintained in the bookkeeper or designated office staff s file. The bookkeeper or designated office staff is not allowed to be a check signer. CREDIT CARD AND OTHER CREDIT ACCOUNT DISBURSEMENTS Multiple credit accounts may be established in the name of Friends of the Canyon County Animal Shelter, Inc. Each account will have an updated authorized list of signers when no card is necessary for purchase. For credit accounts that do require a card (MasterCard, Pitney Postcard, Office Max, etc.) cards will be maintained by the designated office staff in a secure place. Cards will be checked out to employees who present an expense voucher with a preauthorized amount by their supervisor or the Executive Director. Employees are responsible for use of the card while in their possession. LINE OF CREDIT Friends of the Canyon County Animal Shelter, Inc. may establish a line of credit (LOC) in an amount up to but not exceeding $50,000. The LOC shall be established through a Financial Institution approved in advance by the Board. Funds withdrawn on the LOC may be used for operating and administration expenses only. The Executive Director, the Board President, and the Treasurer must approve in advance all LOC withdrawals. The Bookkeeper or designated office staff will be responsible for tracking the amount due to the financial institution, and reconciling the outstanding balance with the monthly 5

6 statement received from the Financial Institution. The Treasurer will review the reconciliation performed by the Bookkeeper or designated office staff and report any activity and the monthend balance of the LOC to the Board at each Board meeting. The funds withdrawn from the LOC will be repaid as soon thereafter as possible, so as to minimize the interest expense incurred. If the program is unable to pay the outstanding balance to the Financial Institution in accordance with the LOC agreement, the Board President and Treasurer shall be notified immediately. PETTY CASH The petty cash account fund shall normally not exceed $ The office manager has control over the petty cash account and is responsible for its safekeeping. The office manager will submit a petty cash reconciliation report to the bookkeeper with the first five days of each month. The bookkeeper and Executive Director are not allowed control over the petty cash funds. In order for money to be distributed from petty cash funds, an authorized expense voucher must be presented. Additionally, the person receiving the cash signs a separate petty cash voucher to verify the receipt of cash. The person receiving the money is responsible for providing a receipt and appropriate change totaling the amount of cash removed from the petty cash fund and properly completing the expense voucher. When the petty cash fund balance is relatively low, it is replenished. A check is drawn, payable to the Petty Cash Fund, for an amount that will bring the petty cash fund to a normal level. Reconciliation of the petty cash fund shall be done by the person responsible for petty cash and will be reviewed and approved by the Bookkeeper or designated office staff and the Treasurer. REIMBURSEMENTS Reimbursements will be made to employees for miles traveled for business purposes and for other business related expenses, as stated in the Personnel Guidelines. Proof of the expenditure must be provided in the form of a receipt and attached to a reimbursement form and submitted to the Bookkeeper or designated office staff after being authorized by the Executive Director. Reimbursements are made on a monthly basis, at the same time as payroll. INVESTMENT POLICY Friends of the Canyon County Animal Shelter, Inc. will strive to maintain an average of 150% of the budgeted monthly expense in cash or cash equivalent investments with maturities less than one month. Remaining funds shall be invested in cash equivalent investments or high-grade instruments with final maturities not more than six months from date of purchase. Maturities shall be staggered so that an approximate equal value of principal matures in each month of the investment period. High-grade investments shall be defined as US Government instruments, commercial paper graded Moody s AA equivalent or higher, senior corporate debt rated AA or better, municipal 6

7 debt rate Moody s AA equivalent or better, bank certificates of deposit, or repurchase agreements. Cash equivalent investments shall be defined as checking, savings, money market funds, or high return investments with final maturities less than one month from date of purchase. PROCUREMENT POLICIES For purchases worth more than $500, the Executive Director or designees shall seek out at least three different sources to purchase from in order to get the best price. Before an authorization is granted for purchase, the Executive Director must grant authorization. Within 30 day of granting authorization for purchase, the Executive Director must submit the bids to the board for review. For purchases worth more than $1000, the same policy shall be followed except board authorization must first be granted. DONATION POLICIES RESTRICTED AND UNRESTRICTED CASH DONATIONS All restricted and unrestricted cash donations should be recorded as income in the appropriate restricted and unrestricted income account. Friends of the Canyon County Animal Shelter, Inc. will honor contributions made by donors who wish to remain unknown. Personnel and volunteers recognize the importance of the donor s desire to remain anonymous and will maintain the donor information in strict confidence. Bookkeeper or designated office staff shall maintain a list of temporarily restricted funds on a monthly basis and report such fund balances to the board with a monthly report. All cash donations will be issued a receipt and thank you in a timely manner. Care will be taken to dispose of copies of donor contribution records in a manner as to prevent ID/check fraud. IN-KIND DONATIONS Donations of in-kind goods and services are received by Friends of the Canyon County Animal Shelter, Inc. when they can be used in direct relation to the services already provided by the agency. There are two separate reasons for recording in-kind contributions: a) Donor Records in-kind donations of tangible goods can be receipted as a taxdeductible contribution. In-kind services can never be receipted as a tax deductible contribution. (See IRS Pub 526) b) Agency Records in-kind donations of tangible goods and services should be recorded under certain conditions as income and expense. This will be reported on an accrual basis in our annual audit as if actually received and expended. A clear record of such receipt shall be made, even when a donation receipt is not issued to the donor. Determination of when to be recorded as in-kind contribution is made based on GAAP standards. (Specifically SFAS 116 and a checklist for 7

8 factors to be considered in determining whether or not an organization would typically need to purchase services if not provided by a donation.) COST ALLOCATION Friends of the Canyon County Animal Shelter, Inc. uses the direct allocation method found in OMP Circular A122, Cost Principles for non-profit organizations. This means all shared costs that are not specifically attributable to any one program will be passed on to the programs according to the cost allocation percentage. Fundraising and Administrative costs will normally notbe included in this distribution unless the transaction can be specifically tied to either of those programs. Unless specified below, the cost allocation percentage will be determined and updated each quarter by the bookkeeper or designated office staff. This will result in a spread over various programs according to an objective standard. In some cases where, because of funding restrictions, costs cannot be passed to a specific program, other programs will pick up the remaining percentage and have it split among them equally. Allocation of expense amounts will be recorded as paid for by the most restrictive grant allowable by program so as to reserve unrestricted funds. Records shall be maintained for cost allocations and kept with expense vouchers and check stubs. The general formula is as follows: Number of hours worked by employees in each program for previous quarter Number of gross hours worked for all programs for previous quarter The following expense accounts will use other formulas: Building Expense / Operations: % of square footage in use by program Telephones: % of telephones used by each programs staff Copier Lease/Copier Maintenance/Postage Meter Rental/Paper Stock: % of postage being purchased for each program (generally the amount of mail going out is a good indicator of paper being purchased and used for copies and printing). Program Insurance: Based on program exposure percentage. Other percentages shall be used, as long as they are applied in a consistent manner to the same types of expenses. These percentages can also be used on in-kind or cash donations to the program where the income should be spread appropriately. INSURANCE Friends of the Canyon County Animal Shelter, Inc. maintains General Liability, Professional Liability, Hired Car/Non-owned Auto, Company Auto, Property Coverage, and Directors and Officers insurance coverage. It is required that all employees and volunteers have personal automobile insurance. 8