THE REACH HEALTHCARE FOUNDATION Statement of Internal Controls

Transcription

1 THE REACH HEALTHCARE FOUNDATION Statement of Internal Controls Accounting System The REACH Healthcare Foundation uses a fund-based accounting system, utilizing Quickbooks Nonprofit Premiere Edition software. Only the President/CEO, Chief Financial Officer, Operations Manager, Treasurer, and the Treasurer s designee from the Finance Committee shall have access to all accounting-related records and software. Separate user names and passwords will be used to log any activity on the accounting system. In the absence of the Chief Financial Officer or Operations Manager due to vacation, illness or business travel, the President/CEO and Treasurer shall determine another qualified employee or designee to perform any or all accounting related duties. Bank Accounts The REACH Healthcare Foundation shall maintain accounts at financial institutions recommended by the Finance Committee of the Board of Directors, and approved by the Board of Directors. All deposits in these accounts shall be appropriately secured by the financial institution. The Chief Financial Officer will strive to ensure the Foundation s daily bank account balance does not exceed FDIC coverage limitations for an extended period of time. is responsible for ensuring that the value of the securities pledged by the financial institution is adequate to appropriately secure any transfers into the Foundation s bank accounts before such funds are transferred. Checks Accounting software-compatible laser checks, with check protection features shall be ordered and received by the Operations Manager. Blank check stock shall be maintained by the Operations Manager in a locked and secured area. Voided and/or spoiled checks shall be properly mutilated and retained. Signatures The Chairman and Treasurer of the Board of Directors, President/CEO, Chief Financial Officer and/or other designees shall be authorized as signors on any and all banking, securities and investment accounts by The REACH Healthcare Foundation Board of Directors. However, it is not intended that the CFO sign checks as a part of day-to-day operations, rather, that right should be reserved for situations in which the President/CEO is unavailable. Checks for amounts over $10,000 shall be signed by two authorized signors, with one signature being either the President/CEO or CFO and the second signature being the Chairman or Treasurer of the Board of Directors. All financial institutions at which the REACH Healthcare Foundation maintains accounts shall be notified immediately by the Chairman, Treasurer, President/CEO or CFO regarding any changes of authorized check signors. The signing of blank checks is prohibited. The use of facsimile signatures shall be prohibited except for purposes of processing checks by a third-party processor (e.g. payroll). Financial Statements Detailed financial statements shall be prepared by the Foundation s CFO, and reviewed by the President/CEO, Treasurer and The REACH Healthcare Foundation Finance Committee on a monthly basis, and prior to each regularly scheduled Board meeting. Summary financial statements shall be submitted to the Board of Directors at each regularly scheduled meeting for approval, and shall include monthly and YTD balance statements and income/expense statements. Approved Proposed to by the Board of Directors 06/21/1205/16/13

2 CASH Cash Receipts All employees handling cash shall be bonded. All mail, other than bank statements, will be opened by the Administrative Assistant, who will forward any cash receipts to the Operations Manager. The Operations Manager will document receipt of any and all checks and cash receipts on a spreadsheet and endorse all checks for deposit only, make copies of all checks and cash received, and forward to the CFO. The CFO shall prepare a deposit slip and make the bank deposit in the appropriate account on a daily basis, as received. All contributions and any related restrictions shall be noted and recorded by the CFO, which shall then be posted accordingly on the general ledger by the CFO. Wire transfers shall be recorded directly to the general ledger by the CFO. The Operations Manager shall create a tax-receipt letter for all contributions and mail it to the donor. The original deposit and supporting documentation shall be filed by month/year. All unidentified receipts, insufficient funds checks and other similar items shall be investigated by the Operations Manager. Cash Payments All disbursements except payroll, petty cash disbursements, debit memos and wire transfers, shall be made by check. Payroll payments shall be made by direct deposit to employee s accounts. All invoices and payment requests received shall be forwarded immediately to the Operations Manager. The foundation s custodian will execute wire transfers to the foundation s operating account or to active investment managers at the request of the CFO or CEO. A wire transfer, of this nature, requires the notification of at least two of the following: Chairman, Treasurer and/or CEO (unless the CEO was the initiator of the transaction). Wire transfer requests to an account other than the foundation s operating account, or to a party other than an active investment manager, or from an account not held with the custodian requires the written authorization of the CEO (if the CFO initiates the transaction) or the Chairman or Treasurer (if the CEO initiates the transaction) prior to transfer. All invoices and payment requests shall be reviewed and recorded upon receipt by the Operations Manager in the accounting system, noting any related project/department assignment as necessary. Month-end statements from vendors shall be reconciled to invoices received by the Operations Manager to avoid duplicative charges, payments, and to locate non-current invoice dates. Prior to the writing of checks, the CFO shall review each invoice and indicate approval by initialing the invoice. Checks shall be prepared only from an invoice, not a vendor statement. Accounts payable checks shall be prepared by the Operations Manager twice each month, on or near the 15 th and the last day of each month. The Chairman, Treasurer, President/CEO and CFO shall have check signing authority. Checks for amounts under $10,000 shall require one signature and may be signed by either the President/CEO or the CFO. However, it is not intended that the CFO sign checks as a part of typical day-to-day operations; rather, that right should be reserved for situations in which the President/ CEO is not available. Checks for amounts over $10,000 shall require a second signature by either the Chairman or Treasurer of the Board. Checks shall be mailed by the Administrative Assistant. The Administrative Assistant shall retain the payment voucher portion of the check, attach it to a copy of the invoice or payment request, and return all Page 2 of 9

3 supporting documentation to the Operations Manager for filing by month/year. Program Operations and Grants Expenditures The Board of Directors of The REACH Healthcare Foundation will be vested with the responsibility of expending foundation resources for the purposes outlined in the Articles of Incorporation. The Board is free to appropriate for expenditure or accumulate so much of the endowment fund as the Board determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established, provided that the Board acts in good faith and with the standard of care required under the Uniform Prudent Management of Institutional Funds Act (K.S.A , et.seq.), and only after giving due consideration to the factors identified therein; plus such additional expenditures, if any, that are required by the minimum distribution requirements of Code 4942 (regardless of whether the Foundation is a private foundation or a public charity) or any other distribution required by federal, state or local law. In accordance with Amendment 5 to the Asset Purchase Agreement, the Foundation may expend on grants in any fiscal year of the Foundation no more than the greater of (i) the net appreciation, realized and unrealized, in the fair market value of the Foundation's assets over the historic dollar value of such assets, calculated in accordance with the Uniform Management of Institutional Funds Act in effect in Kansas on the effective date of the Asset Purchase Agreement, or (ii) an amount equal to 7% of the fair market value of the Foundation's assets, plus such additional expenditures, if any, that are required by the Internal Revenue Code (the Code ) (including, without limitation, under the minimum distribution requirements of Section 4942 of the Code), regardless of whether it is a private foundation within the meaning of Section 509 of the Code or a "public charity. For purposes of subsection (ii) above, the fair market value of the Foundation s assets for any given year shall be established as of the end of the third quarter of the immediately preceding fiscal year of the Foundation (the FMV Quarter ), and shall be determined by calculating the average of the market value of the Foundation s assets as of the FMV Quarter and each of the 11 consecutive quarters immediately preceding it The Program & Policy Committee has established and approved a separate policy document outlining the Foundation s grants review, due diligence and approval process in detail. With respect to the financial controls integrated into the grants process, the following parameters and levels of authorizations have been established: All grants for amounts $150,000 and below, and within the limits of the current Board approved budget, may be reviewed and approved by the President and CEO. All grants greater than $150,000 shall be reviewed and approved by the Program & Policy Committee, and then submitted to the Board of Directors for its review and approval, unless specific discretion has been otherwise given to the President and CEO or Program & Policy Committee by the Board of Directors. For all grant awards, with the exception of the Foundation s Employee Matching Gifts Program, the following documentation will be maintained in the grant file at a minimum: An agreement or understanding outlining the specifics of the funding arrangement A copy of the organization s 501(c)(3) Federal Tax Determination Letter Page 3 of 9

4 The budget for which the funding was requested and is to be used A list of the grantee s Board of Directors with organizational affiliations A copy of the organization s most recent federal tax form 990 For all grant awards exceeding $30,000, the following additional documentation will be required and maintained in the grant file: The organization s Certificate of Incorporation or Not-for-Profit Articles of Incorporation A copy of the organization s most recent audited financial statements A copy of the organization s current, and unaudited, financial statements for the period of time subsequent to the audit, including both a balance sheet and income statement The organization s current detailed organizational budget as approved by their Board All grant awards $30,000 and below are issued in a single payment based on the President and CEO s authorization. For grant awards exceeding $10,000, the number of payments, timing of payments and amounts are based on recommendations by program staff and approved by the President and CEO and outlined in the fully executed grant agreement. For those grant awards issued in multiple installments, the release of subsequent payments are initiated by staff and approved by the CFO contingent upon receipt of a satisfactory interim report and compliance with the spending thresholds and other contingencies outlined in the grant agreement. All budget revisions requested by grantees and reviewed by program staff during the grant award period will be reviewed and approved by the CFO. From time to time, the Foundation undertakes and approves Initiative-type funding. For this sort of programmatic expenditure, a formal recommendation from the Grants Committee must be approved by the Board of Directors outlining the need, structure, outcomes and cost. The Foundation s Program staff, with approval of the President and CEO, has discretion to authorize expenditures within the scope of a Board approved initiative so long as the costs do not exceed the Board approved budget and there is full compliance with the Foundation s other financial internal controls. Finance Committee approval will signify budgetary and internal control compliance for all initiative based contracts and agreements over $30,000. Any changes to the scope and/or costs of an initiative project must be reported to and approved by the Board of Directors. The Foundation s President and CEO is authorized to approve discretionary grant awards of up to $150,000 per grant. Total Staff Discretionary grants for a given year cannot exceed 20% of annual Board-approved grant and program budget. The Foundation s CFO shall calculate an estimate of required grant expenditures, if applicable, on a monthly basis for review by the President and CEO, Treasurer and the Finance Committee. Payroll The REACH Healthcare Foundation retains the services of an outside payroll vendor to prepare payroll and payroll tax filings. Employees shall be paid on the l5th and last day of each month. Payroll input shall be prepared internally and forwarded to the payroll vendor by the Operations Manager at least two full business days prior to the scheduled payday. The payroll vendor shall prepare the payroll checks and/or direct deposits, employee retirement contribution checks, and all tax payments. The payroll vendor shall prepare year-end employee W-2 forms, which shall be Page 4 of 9

5 reviewed by the CFO and President and CEO prior to distribution to employees. Payroll reports, paychecks and/or direct deposit advice records shall be downloaded from the payroll vendor by the Operations Manager, who shall review the payroll register for accuracy and forward to the CFO for approval before distribution to employees. Once The REACH Healthcare Foundation has received the payroll, payroll reports provided by the payroll vendor are filed in a secured location by the Operations Manager by month. Payroll expenses and tax payments shall be drafted from The REACH Healthcare Foundation checking account by the payroll vendor. The Foundation s CFO shall record payroll liabilities, tax payments, and paid time off accruals, if deemed significant by the external auditors, in the general journal, and the Operations Manager shall record the net pay and payroll processing fees in the check register. Only the President/CEO, Operations Manager, Board Chairman, Board Treasurer and the CFO shall have access to computerized and physical payroll records. Any changes to personnel data shall promptly be reported to the Operations Manager, who shall immediately communicate such changes to the payroll vendor Preparation The Foundation s Operations Manager will be responsible for determining 1099 eligibility and for gathering IRS Form W-9 from outside vendors who provide professional services to the Foundation. The Foundation s CFO will prepare 1099 s in accordance with all regulatory guidelines. Petty Cash The Operations Manager maintains a petty cash fund in a locked and secured area of no more than $250 for minor out-of-pocket expenses incurred by employees for business-related expenses. No petty cash disbursements will be made over $50. A petty cash voucher will be completed in ink by the employee with each petty cash disbursement made, noting the amount, employee name, and need for the request. A note will be made on the purchase voucher regarding the purpose of the expense, and the President/CEO or CFO s approval shall be indicated on the voucher. The employee will then return any purchase receipts or invoices, and any change from the original disbursement. The Foundation s CFO will reconcile petty cash monthly, and when the available cash falls below $25, and will make a reimbursement request to refund petty cash, to be reviewed and approved by the President/CEO. Petty cash reimbursement checks shall be made payable to the Operations Manager, who will cash the check and deposit the receipts in the designated area. Check cashing out of petty cash is prohibited. Bank Reconciliations Bank reconciliations shall be prepared within one week of receipt of bank statements. All bank statements shall be forwarded unopened by the Administrative Assistant to the Foundation s President/CEO. The President/CEO will open the statements and review for unusual activity, particularly checks cleared for the month and signed by the CFO. All unusual activity should be investigated and resolved. After review, the President/CEO will forward the statement to the CFO. The Foundation s CFO shall perform all bank reconciliations and prepare related reports. With respect to deposits, bank reconciliations will include comparisons of dates and amounts of daily deposits as shown on the statement with the cash receipts journal; investigation of bank transfers to determine that both sides of the transaction have been properly Page 5 of 9

6 recorded on the books; and an investigation of any items rejected by the bank. With respect to disbursements, bank reconciliations will include comparisons of canceled checks with the disbursement journal as to number, date, payee, and amount; a review and accounting of the sequence of check numbers; an examination of canceled checks for authorized signatures, irregular endorsements and alterations; and a review of voided checks, which shall be retained in a separate file in the Foundation s financial files. The Foundation s CFO shall prepare a monthly list of checks outstanding for over 90 days and shall investigate and stop payment as appropriate. A list of outstanding accounts payables items shall be prepared monthly by the Foundation s CFO and reviewed by the President/CEO and Treasurer. Completed bank reconciliations with supporting documentation attached shall be provided to the President/CEO for review. Reimbursement Requests The REACH Healthcare Foundation reimburses mileage expenses at the current IRS rate per mile. Employees of the Foundation, and Board members who travel more than 50 miles one way to attend Board-related meetings and functions, shall accumulate mileage expenses by keeping beginning and ending mileage and totaling all miles traveled within the current month. Mileage and travel reimbursement request forms shall be used and are included in the REACH Employee Handbook. All other work-related expenses are also recorded on the reimbursement request, and receipts or other forms of documentation are attached. Reimbursement requests, once approved by the President and CEO, are forwarded to the Operations Manager prior to the last day of the month for reimbursement, and shall be reviewed and approved by the CFO in the same manner as invoices received by the Foundation. Reimbursement requests submitted by the President and CEO for amounts more than $500 per month shall be reviewed and approved by the Treasurer or his/her designee prior to payment. Out-of-pocket expenses greater than $100 may be reimbursed prior to the end of the month if a special check request is made by the employee to the President/CEO. When attending conferences or seminars, staff members are reimbursed for mileage and provided a $45 per diem, which may be requested in advance of scheduled trips. Travel expense requests must be made at least two business days prior to the 15 th or last day of the month, two weeks in advance of the scheduled trip. Hotel and airfare expenses should be paid for either by making a check request one month in advance of the scheduled trip, or by using the agency credit card. Employees should see the Employee Handbook for further clarification on travel related expenses. Company Credit Cards The President/CEO may issue and distribute company credit cards to certain authorized management and support staff for business-related expenses. When more than two weeks advance notice is available, a check request should be made. As employees incur charges to the credit card, they shall forward receipts for each charge the Operations Manager for entry as a liability. Upon receipt of the monthly credit card statement, the Operations Manager shall reconcile the actual charges/credits to the statement to the recorded liabilities and process the appropriate payment. A detailed list of credit card liabilities shall be reviewed, approved and initialed by the Treasurer or his/her designee on a monthly basis. The charging of personal expenses to the Foundation credit card is prohibited. Page 6 of 9

7 INVESTMENTS AND DERIVATIVES At the request of the Finance Committee, all contractual relationships related to purchases and sales of investments and derivatives shall be executed and authorized by the President and CEO and/or CFO who shall be bonded. The Foundation s legal counsel will review investment related contracts, as considered necessary by management. These purchases and sales shall be reviewed and approved by the Board of Directors as part of their review and approval of monthly financial statements as presented by the Treasurer and/or designee. Investments shall be made in keeping with investment policies adopted and approved by The REACH Healthcare Foundation Board of Directors, and shall only be made for purposes authorized by laws and the Board of Directors. As a general rule, under the guidance and authorization of the Treasurer, the CFO will use new cash inflows and outflows to rebalance the investment portfolio in the direction of the most recent asset allocation target policy as approved by the Finance Committee and Board of Directors. Safekeeping All securities owned by The REACH Healthcare Foundation shall be held in the name of The REACH Healthcare Foundation, and shall be adequately protected and maintained, either in a safety deposit box or on deposit with a trustee or financial institution authorized and approved by The REACH Healthcare Foundation Board of Directors. The removal or transfer of all securities held by The REACH Healthcare Foundation shall require the approval of each of the following three designees as vested by The REACH Healthcare Foundation Board of Directors: Chairman, Treasurer and President/CEO, and/or the trustee or financial institution with custody or the designated trustee or financial institution in keeping with the Foundation s investment policies. Recordkeeping Detailed records shall be maintained by the Foundation and/or trustee or financial institution with custody regarding the description of the investment or derivative, date of acquisition and purchase price, physical location of item, interest/dividend/income rates and accrual/receipt dates, restriction on segregation or pooling and on disposition or use of income or proceeds, and the lapse date of any restrictions. Recordkeeping for securities and investment income shall be performed by the Foundation s CFO, and reviewed and approved by the President/CEO, the Treasurer and the Finance Committee of The REACH Healthcare Foundation. Investment income shall be deposited in the proper account as received, and completely and accurately posted to the investment records in the proper class of net assets. Schedules of investments showing all income received shall be prepared monthly by the Foundation s CFO and reviewed by the Treasurer. Reconciliation Monthly statements provided from the Board designated custodian(s) of securities held by The REACH Healthcare Foundation shall be promptly reconciled to the internal detail by the Foundation s CFO, and reviewed by the President/CEO and Treasurer of The REACH Healthcare Foundation. SUPPORT & REVENUE Estimated revenue budgets for The REACH Healthcare Foundation shall be prepared annually by the Finance Committee for review and approval by the Board of Directors. These budgets will be Page 7 of 9

8 compared to actual revenues, and any significant differences shall be investigated. All contributions, gifts, grants, etc., and related restrictions or requirements shall be approved by the Board of Directors prior to acceptance. The names of donors shall be published in the Foundation s annual report. Complaints from donors about omission from such publications or discrepancies regarding the amount of the gift shall be promptly investigated by the Treasurer and/or Treasurer s designee. A file will be created for each donor to the organization and maintained in the organization s administrative files by the Operations Manager. The file shall include the donor s name and contact information, the amount and date of gift, any related restrictions of all contributions received, and a copy of the contribution receipt letter mailed to the donor. Restricted contributions shall be recorded in the general ledger by the Foundation s bookkeeping service as to temporarily or permanently restricted. PURCHASE & SERVICE CONTRACTS AND AGREEMENTS Except for legal services, and audit services, and recurring service/maintenance agreements, all contractual relationships related to purchases and sales of equipment, new service agreements and consulting services for amounts less than $30,000, and within the limits of the current Board approved budget, shall be reviewed and approved by the President and CEO. All contracts and new service agreements above $30,000 and less than $100,000, including those recommended by other committees of the Board of Directors, shall be reviewed and approved by the Finance Committee. All contracts and new service agreements above $100,000 shall be reviewed and approved by the Finance Committee, and then submitted to the Board of Directors for its review and approval. These limits will apply to amounts for the life of the contract or agreement, as opposed to annual expenditures. The President/CEO, who shall be bonded, shall be authorized to execute all approved contracts and agreements. The CFO shall be authorized to renew recurring service/maintenance agreements less than $30,000. PURCHASES Expenditures by The REACH Healthcare Foundation shall be coded according to a specific general ledger account and noted as either Management and Administrative or Programs by the Operations Manager. These codes shall be reviewed and approved by the CFO or President/CEO. Any single expense that totals more than 50% of a budgeted line item shall be reviewed and approved by the President/ CEO and either the Chairman or Treasurer of the Board of Directors prior to payment. Page 8 of 9

9 Purchases of goods or services from members of the Board of Directors or employees, or their relatives, shall be considered a potential conflict of interest and shall be reviewed by the Executive Committee of the Board of Directors. PROPERTY AND EQUIPMENT Property and equipment that has not fully depreciated shall only be disposed of with the approval of the Board of Directors. Property and equipment purchases over $1,000 shall be capitalized, and those items under $1,000 shall be expensed. Repairs and maintenance of equipment shall be expensed. A detailed record of fixed assets shall be maintained by the Operations Manager and reviewed by the CFO of all property and equipment purchased by the Foundation, including description, date purchased, location, and any restrictions on use. Insurance for an amount that would provide for the full replacement value of property and equipment shall be reviewed annually by the Board of Directors and secured and renewed by the Operations Manager. The following straight-line depreciation schedule shall be established and followed for all property and equipment expenditures over $1,000: Computers and Audiovisual Equipment Three Years Furniture and Fixtures Seven Years Leasehold Improvements Term of Current Lease DEBT AND OTHER LIABILITIES The borrowing of funds shall be carried out only upon the authorization of the Board of Directors of The REACH Healthcare Foundation. The original signed loan document shall be maintained in the Foundation s administrative files by the Operations Manager. COMPUTER CONTROLS Information backup procedures are in place and functioning to safeguard all accounting, grants management and other Foundation data. The Foundation will contract with an independent information technology provider who will assist the Foundation in backup procedures as follows: the immediate mirror storage of data on a second server onsite; the nightly disc-to-disc backup of changed files to a secondary backup server onsite; the nightly Internet backup of changed files to a secure disaster recovery staging center offsite; and quarterly full server images to be stored offsite. The President/CEO shall serve as the administrator of the computer network and determine all rights and permissions for Foundation employees. Employees shall have individual network login and passwords to restrict access to only those network applications which are relevant to their positions and job responsibilities. Terminated employees shall have their access to the computer network and files suspended immediately. Remote access to the network server shall be granted only to those employees the President/CEO deems necessary for the timely and successful completion of job duties. Page 9 of 9