FRIENDS OF THE BOSQUE DEL APACHE NATIONAL WILDLIFE REFUGE, INC.

Transcription

1 FRIENDS OF THE BOSQUE DEL APACHE NATIONAL WILDLIFE REFUGE, INC. FINANCIAL POLICIES AND PROCEDURES MANUAL This Financial Policies and Procedures manual contains financial policies that apply to the Friends of the Bosque del Apache National Wildlife Refuge, Inc. (referred to as Friends). The Board of Directors has the authority and fiduciary responsibility to establish policies for financial matters. The Board s Treasurer has the responsibility to provide general oversight of all transactions of the Friends and finance-related guidance to the Executive Director on behalf of the Board. The Executive Director has the responsibility to ensure all policies and procedures contained in this manual are properly executed. The policies and procedures in this manual are intended to supplement the Bylaws of the Friends of the Bosque, and are not intended to replace or supersede. The Bylaws will take precedence in any conflict between the provisions of the Bylaws and this manual. The policies and procedures are intended to be guides to management and to be descriptive of suggested procedures to be followed. The Friends reserves the right to revoke, change or supplement these guidelines at any time without notice. Recommended changes to this manual will be forwarded to the Executive Director and Treasurer for consideration. If the recommended changes are deemed necessary, they will be submitted to the Board of Directors for approval. Finally, this manual supersedes any previous manuals, as well as management memoranda that may have been issued on subjects covered in this document. A glossary of relevant finance terms used in this manual is located in Appendix A. [Note: Due to staffing limitations, the Executive Director is identified as having various responsibilities that would normally be those of a junior clerk. The same is true for the use of a contract bookkeeping service.] i

2 Table of Contents I. PURPOSE... 1 II. GENERAL POLICIES... 1 III. INTERNAL CONTROLS... 2 PURPOSE... 2 INTERNAL CONTROL ACTIVITIES... 3 MANAGEMENT PRACTICES... 3 ACCOUNTING CONTROLS... 4 MORAL AND ETHICAL STANDARDS... 4 LOYALTY... 4 CONTROL MODIFICATION... 4 IV. SERVICE OBJECTIVE... 4 V. CONTROL OF FINANCIAL FUNCTIONS... 5 VI. ACCOUNTING PRINCIPLES AND PRACTICES... 5 CONVENTIONS... 5 Fund Accounting... 5 Expenditure Authority... 5 Basis of Accounting... 5 Asset Accounting... 6 Financial Statements... 6 MINUTES OF BOARD MEETINGS... 6 VII. FINANCIAL MANUAL AND DESKTOP GUIDES... 6 FINANCIAL POLICIES AND PROCEDURES MANUAL... 7 INTERPRETATIONS... 7 ii

3 DESKTOP GUIDES... 7 VIII. BANKING AUTHORITY... 7 BANK SELECTION... 7 SIGNATURE AUTHORITY... 7 CREDIT CARD ACCOUNTS... 8 BANK RECONCILIATION... 8 IX. INCOME... 9 GRANTS AND CONTRACTS... 9 Policy... 9 Procedures... 9 CASH AND CHECKS RECEIVED... 9 Policy... 9 Procedures Acceptance of Credit Card GIFT ACCEPTANCE General Acceptance Policies Substantiating Charitable Contributions Contributions of $250 or More Goods and Services Unreimbursed Expenses as a Donation FUNDRAISING CASH RESERVES REPORTING X. ACCOUNTING FOR EXPENSES iii

4 POLICY PROCEDURES VENDOR CREDITS, REFUNDS, AND REIMBURSEMENTS CASH DISBURSEMENTS Check Authorization Checks PETTY CASH AND CHANGE BANK FUNDS Petty Cash Funds Change Banks REPORTING XI. PURCHASING POLICY PROCEDURES Purchases over $10, Purchases between $5,000 and $10, Purchases between $2,500 and $ 5, Purchases under $2, Sole Source Purchases for $ 2,500 and above CREDIT CARD PURCHASES PAYROLL ACCOUNTING Time Accounting/Records Employee Pay Distribution/Records XII. CONTRACT LABOR EMPLOYEE VERSUS CONTRACT LABOR iv

5 CONSULTANT OR CONTRACTOR? RESEARCHERS XIII. TRAVEL EXPENSES XIV. PROPERTY EQUIPMENT REAL ESTATE LEASES Equipment Real Estate XV. LOANS XVI. INSURANCE XVII. BUDGETS BOARD AUTHORIZATION OF LIMITED FINANCIAL CONTROL TO MANAGERS AND COMMITTEE CHAIRPERSONS XVIII. INVESTMENTS POLICY PROCEDURES XIX. TAXES FEDERAL Corporation Income Taxes Unrelated Income Taxes STATE OF NEW MEXICO Gross Receipts Taxes XX. AUDITS v

6 POLICY PROCEDURES XXI. FRAUD AND EMBEZZELMENT POLICY PROCEDURES XXII. FISCAL SPONSOR (AGENT) POLICY PROCEDURES XXIII. FINANCIAL STATEMENTS POLICY PROCEDURES RESPONSIBILITIES XXIV. PROTECTING THE FRIENDS 501(C)(3) NONPROFIT CHARITY TAX STATUS POLICY PROCEDURES RESPONSIBILITIES List of Tables Table 1.Employee and Contract Labor (Independent Contractors or Consultants) Table 2: Designated Managers and Chairpersons Table 3: Gross Receipts Tax Requirements vi

7 Appendixes A B Glossary Petty Cash & Change Bank Examples Sample Petty Cash Voucher Petty Cash Reconciliation Sheet Change Bank Reconciliation Sheet C Competitive Procurement Sample Request for Proposal (RFP) Sample Proposal Evaluation Instructions Sample Proposal Evaluation Form D E Purchase Memo for Record & Sole Source Justification Form Travel Claim Form Local Travel Form Detailed Travel Form F G H Annual Budget Cycle Friends of Bosque del Apache Investment Guidelines Description of Unrelated Business Activities vii

8 I. PURPOSE The Friends commitment to support the mission of the Bosque del Apache NWR (referred to within this document as the Refuge) requires that the Friends use its resources for purposes as outlined in its Bylaws. One of the tasks of administrators at all levels is to ensure the wise and most effective use of Friends resources for these purposes. The primary responsibilities of the financial function of the Friends administrative processes are to: Maintain accounts and prepare reports that show the financial impact of Friends activities and programs. Advise and help staff accomplish the mission of the Friends through the best use of financial resources. Provide for the stewardship of funds entrusted to the organization. II. GENERAL POLICIES The Board of Directors promulgates or creates financial policies, delegates administration of the financial policies to the Board Treasurer, and reviews operations and activities. The Executive Director has management responsibility for the day-to-day operations of the Friends, including financial management with oversight by the Board Treasurer. Current job descriptions will be maintained for all employees, and will indicate all financial duties and responsibilities. Financial duties and responsibilities must be separated so that no one employee has sole control over cash receipts, disbursements, payroll, reconciliation of bank accounts, billings, and general ledger. All full-time employees involved with financial procedures shall take vacations of at least 5 consecutive work days each year. During such periods, back-up personnel who have been cross-trained in their duties will assume any necessary responsibilities. (See discussion in Personnel Manual). A blanket employee dishonesty insurance coverage in the amount of $ 250, ,000 shall be maintained. Professional financial service providers contracts will be established and reviewed annually. The Executive Director will maintain a current and accurate log of the chart of accounts, job accounts, and accounting classes. 1

9 Financial reports will be provided to the Board of Directors on a monthly basis, including Balance Sheet, Income Statement, and Budget Comparison reports for prior and current accounting periods. The Friends will arrange for an annual audit and certification of the books and records by a qualified independent certified public accounting firm if required by regulation. Reports required by governmental agencies will be accurate, timely, and in compliance with that particular agency s appropriate reporting guidelines. The Friends will maintain a current computerized double-entry accrual accounting system to record all Friends transactions. All transactions will be recorded accurately and assigned to the appropriate account and memo field, in accordance with generally accepted accounting principles (GAAP). A complete and current chart of accounts will be maintained. Any accounting system will utilize adequate computer security (password protection) to protect against unauthorized access. A bi-weekly backup of the accounting system data will be performed. Adequate safekeeping facilities, such as off-site storage, fireproof storage areas and restricted access file cabinets, will be provided for custody of accounting data backups. The policies contained in this manual and supporting procedures will be reviewed biannually by the Board Audit/Finance Committee. Document retention will be managed as indicated in the Friends of the Bosque del Apache Document Retention and Destruction Policy. III. INTERNAL CONTROLS Internal controls are systems of policies and procedures that protect the assets of the Friends, create reliable financial reporting, promote compliance with laws and regulations and enable effective and efficient operations. These systems are not only related to accounting and reporting but also relate to the Friends communication processes, internally and externally, and include procedures for: (1) Management Practices; (2) Accounting Controls; (3) Moral and Ethical Standards; and (4) Loyalty. PURPOSE The Friends uses a system of internal controls to protect its assets; ensure the integrity and reliability of its information; secure compliance with laws, policies, and procedures; and ensure the performance of its business objectives. 2

10 Internal controls are processes that are established, reviewed, and continually monitored by the Friends Board of Directors. It is the responsibility of the Board to ensure an adequate internal control system is actually implemented and used. It is management s responsibility to establish and maintain adequate internal control over financial reporting. One of the basic elements of internal control is that no individual should handle all aspects of a financial transaction. This is referred to as segregation of duties; it creates an internal system of checks and balances. INTERNAL CONTROL ACTIVITIES Internal control activities are the policies, procedures, and systems used to help ensure proper general management and strong corporate organizational governance. This includes both the organization s written documentation and the activities used to measure and evaluate performance and conduct. Specific control activities include internal and external reviews, authorizations and approvals, and the tools used to evaluate and measure performance and test the adequacy of the organization s internal controls system. The organization s financial internal controls are contained within this document. MANAGEMENT PRACTICES Best management practices maximize efficiency and encourage compliance with the Friends policy, procedure, and government regulation. All relevant policies and procedures are in writing. Employees are educated in internal controls and participate in the process. It is the responsibility of all employees to understand the internal controls and ensure they are effective. Control activities are properly monitored. The Friends assets are properly safeguarded. Especially vulnerable assets are physically secured, i.e. computers. Strategic plans, forecasts, budgets, and actual performance are monitored against baseline values. The Board of Directors reviews and approves the accounting system of record for the organization. The Friends has records management and retention policies and procedures. Records are inspected to ensure they are properly current, classified, coded, and retained. Internal control documentation exists and complies with the Friends and government requirements. All published Financial Statements are audited by an independent auditing firm and an auditor s report is included when required. 3

11 ACCOUNTING CONTROLS The Friends records are to be in compliance with generally accepted accounting principles (GAAP). Employees are expected to maintain accurate and reliable financial and account records that comply with GAAP and organization policies and procedures. The Executive Committee has specific legal obligations to ensure the organization provides full, fair, accurate, timely, and understandable financial reports and internal controls. Accounting controls relate to protecting the Friends assets and ensuring the accuracy of financial reports. The Friends uses policies and procedures associated with the activities concerned with authorizing, processing, recording, and reporting financial transactions. The accounting controls shall ensure that information resulting from these activities is accurate, reliable, and useful. MORAL AND ETHICAL STANDARDS All employees are expected to adhere to sound moral and ethical standards. LOYALTY All employees, volunteers, and Board members have a duty of loyalty to the Friends and may not take personal advantage of any opportunity that properly belongs to the Friends. (See Friends Conflict of Interest Policy) CONTROL MODIFICATION Policies, procedure, division of duties, forms, best practices, and other internal controls shall only be modified as authorized by the Friends Executive Director with approval from the Board of Directors. IV. SERVICE OBJECTIVE Financial management provides information that helps management allocate and use resources (for example, money, time, employees, equipment, etc.) more effectively. It also helps the public, donors, auditors, and others to evaluate how effective management is in achieving the goals of the organization. The Treasurer helps the Executive Director and other managers: Direct, coordinate, and control financial operations Maintain records and procedures that protect all interests of the Friends Make workable budgetary plans The Audit/Finance Committee assists the Board of Directors in its oversight responsibilities relating to fiscal management. It directly supports the Treasurer in the 4

12 execution of his duties including budget preparation and monitoring, managing Friends assets, and internal control. (See Audit/Finance Committee Charter) V. CONTROL OF FINANCIAL FUNCTIONS The Treasurer has been delegated the responsibility for financial functions and services by the Board of Directors and the Friends Bylaws. VI. ACCOUNTING PRINCIPLES AND PRACTICES All accounting practices of the Friends are to conform to generally accepted accounting principles (GAAP) and practices for charitable organizations (unless otherwise stated in this policy manual) and to the requirements outlined in the following publications: AICPA Non-Profit Guide Financial Accounting Standards Board Standards Governmental Audit Standards CONVENTIONS The accounting procedures given in this section are intended to outline only the more relevant conventions that apply to Friends accounting operations. They are not meant to include all the concepts, assumptions, conventions, principles, or rules upon which generally accepted accounting principles are based. Fund Accounting The Friends uses double entry bookkeeping and fund accounting to record and classify business transactions. In fund accounting, resources for various purposes are classified for accounting and reporting under the following provisions: Activities or objectives as specified by donors Regulations, restrictions, or limitations imposed by sources outside the Friends Directions of the Board of Directors A fund is an accounting entity with a self-balancing set of accounts for recording assets, liabilities, fund balances, and changes in fund balances. Separate accounts are maintained for each fund to record the use of resources. For financial statement accounting and reporting purposes, however, funds are combined. Expenditure Authority The Friends accounting records provide for the control of financial activity in comparison with established fiscal plans in the form of budgets and other expenditure authority provided by the Board of Directors. Basis of Accounting Adequate documentation will be maintained to support all journal entries and transactions. The Friends will maintain its accounting records on the accrual basis in a 5

13 manner that facilitates the preparation of audited financial statements conforming to generally accepted accounting principles. In accrual accounting, revenues (money coming in) are recorded when earned, not necessarily when received. Expenditures (money going out) are recorded when materials or services are received, not necessarily when they are paid. Receivables and payables are accrued for year-end reporting purposes. Expenses incurred at a reporting date, but not yet paid, are accrued. Expenses paid, but applicable to future periods, are deferred. The same terms are used with revenue. Revenue earned at a reporting date, but not yet received, is accrued. Revenue received, but applicable to future periods, is deferred. Asset Accounting Assets owned by the Friends are recorded at cost or, in the case of donated assets, at fair market value at the time of donation. The capital assets are depreciated over their estimated useful lives utilizing the straight-line method of depreciation. Financial Statements The Friends reports on its financial condition and fiscal results of current operations in the following basic ways: Balance Sheet The Statement of Activities report (including a comparison to the budget) Cash Flow Report Additional reports are prepared as needed to provide relevant management information. MINUTES OF BOARD MEETINGS It is essential that minutes of the board meetings be kept accurately and in detail, since they are documentation of the Board s financial and other guidance and approvals. All minutes should be signed by the President and the Secretary after approval by the Board of Directors. VII. FINANCIAL MANUAL AND DESKTOP GUIDES The Treasurer prepares and updates documents that outline how the accounting of the Friends is conducted and how records are kept. These documents provide information and instruction on: Standard financial policies and procedures of the Friends Standard financial practices of the Friends Basis for control over the assets of the organization in business operations 6

14 FINANCIAL POLICIES AND PROCEDURES MANUAL This Financial Policies and Procedures manual contains basic financial policies uniformly applied to the Friends. The Board of Directors controls the policies in the Financial Policies and Procedures manual. The Treasurer, acting under the direction of the Board, monitors the implementation of the manual, provides interpretation of the manual to the staff and members, and develops proposed changes to the manual for consideration by the Board. INTERPRETATIONS Since situations may arise in which the Manual is unclear, the Executive Director may request the Treasurer to provide an interpretation of the policies as they pertain to a specific case. All interpretation provided by the Treasurer will be in writing and will be reviewed for possible future inclusion in the Manual. DESKTOP GUIDES Each administrative area within the Friends may produce its own Desktop Guide that further details the implementation of these policies and procedures within its respective daily operations. The Treasurer will be responsible for the review and approval of all Desktop Guides. Once approved, the Desktop Guides will be appended to this manual solely for informational purposes. VIII. BANKING AUTHORITY BANK SELECTION The choice of primary depository will be reviewed periodically by the Treasurer, Executive Director and Audit/Finance Committee. They will recommend such changes as are appropriate to the Board of Directors for approval. Decisions regarding allocation of liquid assets to and from savings or investment accounts will be made by the Executive Director in consultation with the Board Treasurer. All such decisions will be communicated promptly and fully to the Board of Directors in the Treasurer s Report to the Board. SIGNATURE AUTHORITY The Friends Board President, Vice President, Treasurer, and the Executive Director are authorized to sign all checks for the Friends within the limitations listed below and in the Cash Disbursement section. The Executive Director is the primary authorized signer for all withdrawals and checks with the Board members listed above as the designated alternates. 7

15 In the event that an authorized signer is the payee of funds from the checking account, the check must be signed by another authorized signer. The Executive Director is authorized to transfer funds electronically between checking and savings as necessary to cover loan repayments, payroll, and other operational needs, and to maximize interest earned on savings whenever feasible. Checks over $2,000 will require a written approval from another authorized signer. This may be either a signature on the face of the check or via . If is used, the needs to identify the purpose of the check, the recipient of the check, and the amount and be retained for audit purposes. CREDIT CARD ACCOUNTS The Executive Director will recommend to the Board the appropriate staff members to have the COSTCO American Express Card. Only the Executive Director and Board Treasurer are authorized users of the Wells Fargo Credit Card. The Executive Director will request Board approval for any additional credit card(s). Credit Cards cannot be used for any personal purpose, even on a temporary loan basis. The Credit Cards should be used to book airline and other Friends business travel expense when possible. BANK RECONCILIATION Bank and credit card statements will be received and opened for review by the Executive Director; who will forward them to the bookkeeping service. The bookkeeping service will reconcile bank and credit card statements monthly, and enter and/or prepare payment for credit cards as necessary. The Executive Director will approve any adjustments. The Treasurer of the Board will receive a monthly report from the bookkeeping service on any discrepancies discovered during the reconciliation process. The Executive Director should take appropriate action on all checks outstanding over 90 days. Appropriate action includes, but is not limited to attempting to contact the payee, tracing the postal or other transmittal status, and issuing a stop-payment order with the bank of origin. Subsequent action will depend on the above outcome(s) and, if payment on the original check has been stopped, include issuing a duplicate check. 8

16 IX. INCOME GRANTS AND CONTRACTS A grant is the transfer of funds from a government body, corporation, or foundation to the Friends for a project deemed consistent with the purpose of the Friends. The basic elements of a grant include: specific purpose, prescribed schedule, financial arrangements and conditions, and requirements for in-progress reporting and final report. Some grants operate on a reimbursement basis, so that the Friends organization spends its own money first then is reimbursed by the grant. Required invoice information is identified in the grant award document. Policy Acceptance of a grant requires approval of the Board of Directors. Grants should be viewed as a contract between the Friends and the donating organization. The President of the Board is designated as the Contracting Officer for the Friends, the Executive Director is designated as the Contracting Officer s Representative, and members of the Friends or the Refuge will be designated as Contracting Officer Technical Representative (if needed on a particular contract). Procedures The Friends will ensure that: Prior to grant acceptance, it is reviewed for consistency with the Friends mission, appropriateness of the funding source, and utility (without extraordinary operation or report restrictions); The Friends have, or can secure under the terms of the grant, the necessary personnel or other resources necessary for the successful completion of a grant before it is accepted; The necessary monitoring system is in place to ensure compliance with all requirements of the grant; All grants are listed in the accounts as restricted funds to support the particular purpose indicated by the grant documents; No grants will be accepted that list a successful Doctoral dissertation or Master s thesis defense requirement as a condition of payment. CASH AND CHECKS RECEIVED Policy Incoming mail should be opened and any cash contents logged by persons other than those with access to accounts receivable records. A person with no access to cash should compare cash received records and authenticate deposit slips with mail listing. This is part of the monthly bank reconciliation effort performed by the bookkeeping service. Checks should be stamped For Deposit Only by the person opening the mail. 9

17 Receipts should be issued for all funds received other than store sales and memberships of $25 or less (we have 800 members at this level and receipts would be cumbersome). Receipts of checks and cash should be deposited each week if possible, but no later than once an accounting cycle. Individuals handling cash should not make entries to the general ledger or subsidiary ledgers. Ledgers will be reconciled with bank deposit slips from store receipts. Procedures The Executive Director or designated staff member opens any mail addressed to the Friends, Festival of the Cranes, or to an individual through the Friends. All checks or cash received is to be recorded in the cash log, which will identify the source and amount of funds. All checks received will be immediately endorsed For Deposit Only to the account of the Friends. The checks and cash will then be forwarded to the bookkeeping service, which will enter the funds into the accounting system and complete the deposit slip in duplicate. Receipts and deposit slip will be placed in an envelope for the appropriate bank. In the case of store receipts, the Store Manager will reconcile receipts of checks, cash, and credit cards with register printouts. The Store Manager will complete a deposit slip in duplicate and make the deposit. The Store Manager will pass the reconciliation, deposit slip duplicate, and bank deposit receipt on to the Executive Director for review and submission to the bookkeeping service for entry into the electronic ledger. Documentation for all non-store receipts (a copy of check, letter, etc.) will be linked to its deposit as described in the Desktop Guides. Copies of the checks with their documentation are filed in the appropriate location, e.g. membership file, Festival file, donor file, project file, program file, grant file, etc. All receipts will be deposited intact. No disbursement (paying invoice in cash) will be made from cash receipts prior to deposit. The only exception to this is the separation of government funds (monies received for passes and entrance fees) out of the daily store receipts. Detailed cash handling procedures for the Nature Store, Festival of the Cranes, membership, donations, and grant payments will be described in the appropriate individual Desktop Guides. Acceptance of Credit Card All transactions at the Nature Store and through the Friends website may be made via credit cards approved by the Board Treasurer with the Executive Director. Approved credit cards and other credit payment systems will be listed in the appropriate Desktop Guide. Registration, membership fees, donations, and any other accounts receivable may be paid using any of the credit cards listed. Credit card processing will be done through the Nature Store point-of-sale system or through the Festival credit card machine, whichever is appropriate. 10

18 GIFT ACCEPTANCE General Acceptance Policies The Board of Directors is the final authority on acceptance of all gifts, whether they are in the form of cash or tangible property (donations in-kind). In determining acceptance of a gift, Board considerations will include, but not be limited to: transportation costs, storage costs, selling/marketing costs, maintenance and/or repair costs, and item s usefulness to the Friends. Gifts that are considered non-standard contribution will require review by the Board prior to acceptance. Gifts that are suspected to be generated or received from illegal activities will not be accepted. All donors will be encouraged to discuss tax and legal considerations regarding the donation with their own professional advisors. Determination of the gift value is the responsibility of the donor. Should the value exceed the current amount required by IRS regulations concerning Form 8283, a qualified appraiser must confirm the value. IRS Form 8283 must be filled out by the donor, the appraiser, and the Friends. The Friends will complete IRS Form 8282 for gifts received in excess of $5,000, (or the current amount required by IRS regulations concerning Form 8282) and sold within three (3) years of receipt. A copy of the form will be sent to the IRS and to the donor in accordance with IRS regulations. All gifts will be recorded with restrictions (if any are posed by the donor), including relevant terms and conditions associated with the gift. IRS regulations will be periodic reviewed to ensure reporting and recording compliance by the Friends. If any differences between this policy and IRS regulations exist, the IRS regulations will take precedence. Substantiating Charitable Contributions Since the Friends is a 501(c)(3) public charity, it is eligible to receive tax-deductible contributions in accordance with IRS regulations. Below is a discussion of the notification and reporting requirements in accordance with IRS regulations (For a full discussion of this issue see IRS Publication 1771, Charitable Contributions - Substantiation and Disclosure Requirements). Quid Pro Quo Contribution Policy Under IRS regulations, the Friends must provide a written disclosure statement to donors of a quid pro quo contribution in excess of $75. A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution portion of the payment is $60. Even though the part of the 11

19 payment available for deduction does not exceed $75, a disclosure statement must be filed because the donor's payment (quid pro quo contribution) exceeds $75. The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the value of the goods or services that the donor received. The Friends must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary to provide another statement when the associated contribution is actually received. The IRS can impose a penalty on the Friends if it does not make the required disclosure. The penalty is $10 per contribution, not to exceed $5,000 per fund-raising event or mailing. It is the Friends policy to furnish a quid pro quo written disclosure statements for all fund raising events, regardless of dollar amount donated. No disclosure statement is required when: The goods or services given to a donor meet the standards for insubstantial value as defined in various IRS regulations, i.e. a coffee mug. There is no donative element involved in a particular transaction with the Friends, i.e. a purchase at the Nature Store. Contributions of $250 or More A donor cannot claim a tax deduction for any single contribution of $250 or more in a calendar year unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the Friends. It is not necessary to include either the donor s social security number or tax identification number on the acknowledgment nor is the Friends required to report this information to the IRS on behalf of the donor. A separate acknowledgment will be provided for each single contribution of $250 or more. Separate contributions of less than $250 will not be aggregated. The Friends will provide such an acknowledgment within 30 days of receipt of the contribution. The written acknowledgment will contain the following information: name of organization amount of cash contribution description (but not the value) of non-cash contribution 12

20 statement that no goods or services were provided by the Friends in return for the contribution, if that was the case description and good faith estimate of the value of goods or services, if any, that the Friends provided in return for the contribution(a quid pro quo contribution). Goods and Services As mentioned above the Friends acknowledgment must describe goods or services the Friends provides in exchange for a contribution of $250 or more. It must also provide a good faith estimate of the value of such goods or services because a donor must generally reduce the amount of the contribution deduction by the fair market value of the goods and services provided by the organization. Goods or services include cash, property, services, benefits or privileges. However, there are important exceptions as described below: Token Exception---Insubstantial goods or services the Friends provide in exchange for contributions do not have to be described in the acknowledgment. Membership Benefits Exception---An annual membership benefit is also considered to be insubstantial if it is provided in exchange for an annual payment of $75 or less and consists of annual recurring rights or privileges, such as: free or discounted admissions to the charitable organization s facilities or events discounts on purchases from the organization s gift shop free or discounted parking free or discounted admission to member-only events sponsored by an organization, where a per-person cost (not including overhead) is within the lowcost articles limits Unreimbursed Expenses as a Donation Normally the Friends reimburses an individual s out-of-pocket expenses when they are traveling in support of the Friends. See the Travel section of this manual for more details. However, there can be a time when large personal expenses will not be reimbursed by the Friends. In those cases the unreimbursed expenses are considered to be a contribution of a special type of in-kind donation. The IRS requires the individual to obtain an acknowledgement letter from the Friends for single contributions of $250 or more. Two cases come to mind when it would be in the interest of the Friends to support this type of donation. The Friends may ask an individual to attend an out-ofstate conference on behalf of the Friends, but the Friends cannot pay for his out-ofpocket expenses. Another case may be when an individual travels to Socorro to work as a volunteer during the Festival of the Cranes and spends more than $250 in motel and food expenses. In these and similar cases the Friends will supply an acknowledgement letter to the donor, if the donor requests it. In addition to the dollar value of the donation, the written acknowledgement must include: a description and dates of the services provided by the donor a statement of whether or not the Friends provided goods or services in return for the contribution 13

21 a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution A number of smaller amounts of unreimbursed expenses over a period of time cannot be grouped together to reach the $250 threshold. FUNDRAISING Approval by the Executive Director and Board of Directors is required for all fundraising activities. The Friends will ensure that all solicitation materials and promotional activities for the Friends will be clear and accurate. This will include the organization s name, mission, history (with accurate dates where relevant), financial position, contact information, and purposes of the fundraising activity. Funds collected during any fund raising activity shall be restricted to use for the purposes publicized by the event. Budgets for any fundraising event should include a 10% buffer above the estimated costs of the event. All income from fundraising activities will be clearly identified to ensure a comparison of expense and income related to the activity is possible. The Executive Director will provide an annual report at the end of the Fiscal Year on all fundraising efforts and their associated costs. For fund raising events, the Friends will provide attendees a receipt that identifies what portion of the donation is not tax deductible, if any (e.g. meal, etc.).[see Substantiating Charitable Contributions Section in GIFT ACCEPTANCE above for more details.] The Executive Director will confirm that the Friends are in compliance with any State of New Mexico s charitable solicitation laws prior to initiating a fundraising event. CASH RESERVES The Board shall designate a portion of its unrestricted Net Assets as an Operational Reserve. The purpose of the reserves is to cover situations that could impair the Friends operations, for example: seasonal or irregular cash flows (e.g. peak vs. dry income or expense periods); unpredictable operational expenses (e.g. greater demand for services, inordinate increases in operational expenses); unexpected events (e.g. loss of a benefactor, financial or property damage or loss, fundraiser cancellation due to weather, etc.). The Board of Directors will determine the amount of reserves based on historical trends and previous experience. These reserve levels will be reviewed on an annual basis. The Board of Directors may choose to report this Board designated reserve as a separate line item under Net Assets. A separate account for reserves is not required. 14

22 REPORTING Major categories will be established in sufficient detail (e.g. membership, Nature Store, donations, etc.) to be able to identify income sources. These sources will be further split into Unrestricted, Temporarily Restricted, and Permanently Restricted categories. These restrictions will also be reported in the Net Assets section of the Statement of Financial Position in the Financial Statements. X. ACCOUNTING FOR EXPENSES POLICY For financial purposes, expenses include all costs paid to external parties. All expenditures shall be analyzed and approved in accordance with this manual or other guidance from the Board of Directors. Expenses are the costs used to produce revenue or to secure property or services. PROCEDURES Expenses are recorded as debits. The Friends reports credits to expenses as Expense Credits. Expenses are to be analyzed for reasonableness. Reasonableness should consider both the nature and amount. Expenses are not to exceed that which would be incurred by a rational person under similar circumstances. In determining the reasonableness of a given expense, consideration is given the following: Whether the expense is ordinary and necessary for the operation of the Friends. Whether the purchaser(s) acted with prudence. Whether there is a significant deviation from the established practices of the Friends. Whether the expense is considered generally accepted, sound, and complies with the laws, regulations, and Friends policies. Ultimately, the analytical responsibility rests with the check signer or petty cash custodian who pays such expenses. VENDOR CREDITS, REFUNDS, AND REIMBURSEMENTS Goods returned to the vendor and price adjustments are two of the many reasons a vendor will issue a credit memo to the Friends. Often travel expenses to the national meeting of Friends are reimbursed after the fact. In all of these cases, a credit is entered in the accounting software to the same account number as the original expense. This way the original invoice and credit memo offset one another and can be selected for payment together during the next payment cycle, or in the case of a reimbursement the credit is applied in a later payment cycle than the original expense. 15

23 CASH DISBURSEMENTS Check Authorization All invoices will be immediately forwarded to the appropriate staff member (i.e. Nature Store Manager, Festival of the Cranes Manager), chairperson, or manager who will review all invoices for mathematical accuracy, validity, conformity to the budget (or other Board authorization) and compliance with bid requirements. The staff member/chairperson/manager then provides the approved (indicated by initialing) invoice for payment to the Executive Director. approval of an invoice is acceptable if the explicitly and uniquely cites the invoice and a copy of the is attached to the invoice for the records. The Executive Director ensures that all conditions and specifications on a contract or order have been satisfactorily fulfilled and prepares the invoice for payment by coding the invoice with an appropriate expense or other chart of accounts line item number, class, memo, and job number (where applicable). The invoice with documentation is provided to the bookkeeping service which verifies documentation and coding, enters it into the electronic accounting system, and then prepares the payment check for signature. All supporting documentation must accompany the check for signature. For those rare occasions when a check must be delivered before the next accounting cycle, full documentation as described in the Administrative Desktop Guide will be provided to the bookkeeping service on their next visit. Authorized signers on Friends accounts include the Executive Director, President and Treasurer of the Board. The signer has the responsibility to review all supporting documentation prior to signing the payment check. Checks The Executive Director is responsible for the accounting of all blank checks. All checks, including payroll checks (with the exception of direct deposit payroll items) will be signed by the authorized signers on the Friends accounts. The bookkeeping service will generate checks for approved invoices through the accounting system. Voided checks will have VOID written boldly in ink on the face and have the signature portion of the check removed. Voided checks will be kept on file by check number. In no event will: o Invoices be paid unless approved by an authorized signer o Blank checks (checks without a date or payee designated) be signed in advance o Checks be made out to cash, bearer, petty cash, etc. o Checks be prepared on verbal authorization, unless approved by two authorized signers. (Documentation will be a Memo for the Record/ .) o Checks have the payee and signer be the same person. 16

24 If a check is not received within 30 days of being issued, the original check may be voided and a duplicate check may be issued. A stop payment order will be issued to the bank for all checks missing more than 30 days and whose value is equal to or exceeds $100. PETTY CASH AND CHANGE BANK FUNDS Petty Cash Funds The Friends office will have a $100 petty cash fund and the Executive Director will be the custodian of this fund. The Nature Store will have a $300 petty cash fund and the Nature Store Manager will be the custodian of this fund. The total cash on hand plus completed petty cash vouchers must equal the fund amounts for each fund at all times. (See Appendix B for example of voucher.) The largest single amount that can be reimbursed from a petty cash fund is 50% of the fund s total, i.e. $50 for the Friends office and $150 for the Nature Store. A petty cash voucher must be accompanied by supporting documentation for each transaction. The voucher must include the name and signature of person being reimbursed, the date, and a brief description of item purchase. The proper account and memo code should be included if known. The appointed fund custodian is personally responsible for the petty cash fund and will be the only person with access to it. Petty cash vouchers (with documentation) will be provided to the bookkeeping service, which will verify documentation and coding, and enter transactions into the electronic accounting system at least quarterly or when the fund reaches 25% of the total, whichever is sooner. The fund will be replenished by a check prepared by the bookkeeping service to the fund custodian for the total amount of vouchers being presented. Unannounced counts of petty cash will be made by an appointed Board member at least once a month. The Petty Cash Reconciliation Form in Appendix B will be used for unannounced counts and by the bookkeeping service when replenishing the petty cash fund. Change Banks One permanent change bank will be maintained by the Nature Store Manager in the amount of $350. During the Festival of the Cranes, additional temporary change banks may be established by the Executive Director as required in accordance with the Festival Desktop Guide. Change bank custodians will be designated in writing and held to the same standards and unannounced counts as petty cash custodians. Custodians will sign for the fund upon receipt and receive a signature upon turning in the fund. Unannounced counts of change banks will be made by an appointed Board member at least once a month. 17

25 The Change Bank Reconciliation Form in Appendix B will be used for unannounced counts. REPORTING As with income reporting, major categories or funds will be established to identify all expenses by project e.g. Festival of the Cranes, Nature Store, Administration. All expenses will be further reported by type of funds used: Unrestricted, Temporarily Restricted, Permanently Restricted (not used at this time) categories. The Friends special category of Board Reserved is a means to quickly identify all the Unrestricted funds used to support the Friends programs. XI. PURCHASING POLICY It is the Board s desire that purchases made on behalf of the Friends be for the best price for the quality received. This does not mean that the lowest bidder will always be used if the quality of the offering does not meet the required standard. This does mean that rigorous procedures need to be followed when selecting a vendor. Any competitive procurement from the same vendor for three consecutive years must be re-competed. Sole source procurement for amounts over $ 5,000 will not be the norm and only approved when fully justified. Any sole source justified procurement from the same vendor for three consecutive years must be re-justified. Merchandising Committee vendor selection for the Nature Store needs only to meet the sole source requirements listed above. The purchase policies contained herein apply to Friends purchases on behalf of other organizations. The one exception is grants in support of the Refuge when a vendor product is identified within the body of the grant. It is assumed the government followed its procedures to identify an appropriate vendor. In those cases, the Board acceptance of the grant also gives its approval for the staff to purchase the selected vendor equipment or service without any further review. PROCEDURES The Executive Director is responsible to ensure that all purchases are within the approved annual budget. How much rigor is used for procurement will be dictated by the dollar value of the purchase as listed below. Sole source purchases for large value items are to be by exception only. 18

26 Purchases over $10,000 All purchases, including services, estimated at over $10,000 must be approved in advance by the Board of Directors. Purchases over $10,000 will be required to undergo a competitive bid procedure. All bid requests will contain clear specifications and will not contain features that unduly restrict competition. (See Appendix C for a Sample Request for Proposal.) The Audit/Finance Committee will be responsible for bid evaluation and award. Written evaluation criteria will be established prior to bid solicitation and will be used to evaluate all bids. (See Appendix C for a Sample Proposal Evaluation Form.) The Executive Director will be responsible to ensure that all conditions and specifications of a contract, bid, or order have been satisfactorily fulfilled and will be responsible for timely follow-up of these purchases. Purchases of over $10,000 will not be fragmented or reduced to components of less than $10,000 to avoid the bid process. Purchases between $5,000 and $10,000 All purchases, including services, estimated to be between $5,000-$10,000 will require a written verification of best available price. The Executive Director will be responsible for best available price evaluation and award. Best available price determination will be documented by a Memo for the Record as a cover letter on the written price quotes and filed with the other documentation in the winning vendor file. Information in the Memo for the Record will include why the particular vendors were selected (e.g. past performance, only one in the region, etc). (See Appendix D for form.) Purchases between $2,500 and $ 5,000 All purchases, including services, estimated to be between $2,500-$5,000 will require a verbal verification of best available price. The Executive Director will be responsible to obtain the verbal quotes and the best available price evaluation and award. Best available price determination will be documented by a Memo for the Record and filed with the other documentation in the winning vendor file. (See Appendix D for form.) Purchases under $2,500 Administrative units and project managers are authorized to purchase items to support their projects; however, any item over $500 must have the Executive Director s prior approval. The Nature Store and Festival of the Crane Managers are authorized to obligate the Friends to purchases without prior approval within their budget allocation. 19