Extension Financial Operations & Financials 101. Extension Financial Operations

Transcription

1 & Financials 101

2 Overview

3 Our Commitment As a result of the internal audit and comprehensive review, we are charged with and committed to: Increasing accountability and compliance throughout Extension Ensuring we continue to be the best stewards of all resources (regardless of fund source) Providing service and support to county offices with regard to financial operations

4 Financial Operations Team Director of Extension Director of County Operations District Directors Director of Financial Operations Business Analyst Fiscal Compliance Officers District Board Treasurers Council Treasurers County Managers County Fiscal Coordinators Bookkeepers/Accountants County Staff Volunteers

5 Organizational Structure Director of Extension & Director of County Operations CAFE BUSINESS CENTER District Directors Director of Financial Operations Chris Shotwell County Mangers & Fiscal Coordinators Fiscal Compliance Officer Ty Back (D1,D2,D3) Business Analyst Tina Ward (D4) Fiscal Compliance Officer TBD (D5,D6,D7)

6 Changes Being Considered/Implemented Development of the Financial Operations Team Development of new website All travel reimbursements made via SAP travel module (TRIP) pilot phase Development of county billing & invoicing system Development of new training offerings for various staff and stakeholders Implementation of standardized accounting system in all counties Development of standardized reporting Update to program review process with regard to financial operations Update to current budget process to make more efficient

7 EFO Website Website: Extension Links University Links Other Links Schedules & Calendars

8 Currently in the pilot phase 7 counties selected (one per district) All were trained and started using TRIP in February (for Jan travel) Moving on with a phased implementation D3 selected as the district to bring online first Will be adding counties each month of next 4 months All 15 counties will be online by Aug 1 (for Jul travel) Will have 160+ employees trained to use TRIP Will provide better idea for volume and efficiency Will continue with phased implementation as we learn more from D3 Will modify as necessary depending on feedback received

9 TRIP Type: Day Trip No Per Diem in Day Trip Fields in Red are required Miles Registrations Other Expenses Parking Tolls

10 TRIP Type: Overnight Trip Employees are entitled to per diem

11 Required Field Choose what best reflects the nature of the trip

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14 Total Miles

15 Review KERS Logged each day of travel in KERS Summary Page Print Monthly Mileage Log Have Fiscal Coordinator Sign it Scan it to your computer Log in to TRIP

16 Questions

17 Day Trip Overview

18 Overnight Trip Overview

19 TRIP Walkthrough

20 Questions

21 Break

22 Financials Why are financial guidelines important? 2. How do they protect volunteers? 3. Steps needed to ensure compliance

23 Examples of Issues in Counties Duplicate reimbursements paid Falsified receipts and invoices Falsified mileage reports Falsified time recorded and paid Employee attendance problems Theft of county owned property Improper use of county vehicles Improper use of county credit cards

24 Internal Controls Increasing the perception of detection Financial transparency Separation of duties Controlling the accessibility to cash Safeguarding cash Bank reconciliations Check signers Policies and procedures

25 Cash Handling Receipts provided for all monies Pre-Printed and Pre-numbered Amount Mode of payment (check, cash, etc) Name of the person making the payment Purpose of the payment Date Sequential Number for reference Account applied to Initials of the person receiving the funds This Photo by Unknown Author is licensed under CC BY-NC-SA

26 Cash Handling Only one person per cash drawer Count Cash and reference receipts at the end of each shift/day Never count in view of the public Do Not permit unauthorized persons in area where cash is being handled Do Not Leave Cash Unattended

27 Cash Safeguarding Deposit <$500 weekly Deposit >$500 daily Locked Safe overnight w/minimum access Safe Log Inputs Withdrawals NO SIGNED BLANK CHECKS!! This Photo by Unknown Author is licensed under CC BY-SA

28 Separation of Duties Maintain Separation in: Receiving Funds Making Deposits Writing Checks Reconciliation of the account This Photo by Unknown Author is licensed under CC BY-SA

29 Expenditures Vouchers Receipts Tax Exempt Certificates No Extension Employees can sign checks This Photo by Unknown Author is licensed under CC BY

30 What changed to bring this issue to the Federal Laws forefront? Beginning in 2007, ALL tax exempt entities were required to begin filing annual tax forms to the IRS. Accountability in Kentucky CES Groups* *groups with income This Photo by Unknown Author is licensed under CC BY

31 Guiding Principals for CES Approach to a Solution Provide financial accountability and transparency Be accountable yet minimally disruptive Establish a tax exempt basis for UK CES Provide options rather than dictate actions

32 Assumptions for Each Program Area Functioning Program Council Active Membership Review financial documents Develop a budget Conduct annual audit Complete annual financial statement This Photo by Unknown Author is licensed under CC BY File financial records in the County Extension Office

33 Possible Exemption Paths Governmental Exemption District Boards (KRS ) 501(c)3 Tax Exempt Status Entities may chose to be their own 501(c)3 organization This Photo by Unknown Author is licensed under CC BY-SA

34 Kentucky Cooperative Extension Service County District Board County Extension Council ANR Program Council FCS Program Council 4-H Program Council Other Program Council

35 All Groups Must Provide Financial Accountability Budget Transparency Group Oversight Adherence to UK money handling and financial procedures Electronic recordkeeping * *income greater than $250 This Photo by Unknown Author is licensed under CC BY

36 Volunteer Group Exemption Choices Governmental Exemption 501(c)3 Organization Option A Option B Option C

37 Governmental Exemption Option A Maintain Control of funds Maintain Individual Bank Account(s) General Oversight by County Program Council

38 Governmental Exemption Option A Each Entity will Maintain an Entity bank Maintain an Entity EIN number Annual Budget Annual Financial Report Annual Audit (by peers) UK Money Handling Procedures

39 Governmental Exemption Option A Each Program Council will Maintain a Council bank account Maintain a Council EIN number Annual Budget Annual Financial Report Annual Audit (by peers) UK Money Handling Procedures Donor letters given by District Board

40 Governmental Exemption Option A District Board Holds Exempt Status Prepares Donor Letters Program Council Annual Budget Annual Financial Report Maintains Council bank account Maintains Council EIN Entity Annual Budget Annual Financial Report Annual Audit Maintains Entity s bank account Maintains Entity's EIN

41 Governmental Exemption Option B Funds are handled centrally by Program Council Funds are tracked separately and electronically General Oversight by Officers of Entity and Agent

42 Governmental Exemption Option B Each Entity will Maintain financial control of their account Annual Budget and submit to Program Council UK Money Handling Procedures Submit vouchers, receipts, deposit info to Council treasurer

43 Governmental Exemption Option B Each Program Council will Maintain a Council bank account Maintain a Council EIN number Annual Budget Annual Financial Report Annual Audit (by peers) UK Money Handling Procedures Donor letters given by District Board

44 Governmental Exemption Option B District Board Holds Exempt Status Prepares Donor Letters Program Council Annual Budget Annual Financial Report Maintains Council bank account Maintains Council EIN Entity Annual Budget Submit vouchers, receipts and deposits to Program Council Treasurer

45 Governmental Exemption Option C All funds (council and entity) are handled centrally by District Board Funds are tracked separately and electronically General Oversight by Officers of Entity and Agent

46 Governmental Exemption Option C Each Entity will Maintain financial control of their account WILL NOT have a bank account or EIN Annual Budget and submit to District Board and Agent UK Money Handling Procedures Submit vouchers, receipts, deposit info to Extension District Treasurer

47 Governmental Exemption Option C Each District Board will Generate Financial reports to the Program Council Audit funds as part of District Board Audit requirements UK Money Handling Procedures Donor letters

48 Governmental Exemption Option C District Board Holds Exempt Status Provides Financial Reports to Council Audits Entity s Moneys according to guidelines Tracks Entity Funds separately and electronically Program Council Provides Oversight of District Board Entity Annual Budget Submit vouchers, receipts and deposits to District Board Treasurer

49 501(c)3 Organization Exempt from federal tax Most common non-profit organization Mandatory for gaming Raffles, lotteries, or other forms of gaming as fund-raising Council/Entity remains a program of the Land Grant Institution Memorandum of Understanding with Kentucky CES

50 501(c)3 Organization Maintains own bank account Maintains own EIN Sign Memorandum of Understanding with Director of Cooperative Extension Service Annual Budget, Annual Financial Report, Annual Audit Follow UK Financial Guidelines File copies of IRS 990

51 501(c)3 Organization File copies of IRS letter of determination County Program Council County Extension Council Extension District Board Director of Extension This Photo by Unknown Author is licensed under CC BY-NC-ND Provide acknowledgment letters to donors

52 How to Apply for 501(c)3 New 3 page form in 2014 Costs $400 to apply Must be filed electronically Apply through IRS Form 1023EZ This Photo by Unknown Author is licensed under CC BY-NC-ND Receipts less than $50,000 and assets less than $250,000

53 EXTENSION RELATED TAX EXEMPT ENTITIES AS REPORTED IN KERS (AS OF APRIL 2018) 501(c)3 14% Option C 7% Option A 68% Option B 11%

54 How to apply for EIN No Cost Form SS-4 Simple 1 page form Online or Mail Must apply under either individual SS# or another EIN Permission from DB or Council if using EIN

55 Financial Guidelines Each group must determine how they will handle funds No Extension employee will have any signature authority >$100 cash should be kept in a financial institution >$250 annual income should be kept in electronic system Consider dual signatures where possible An annual budget, periodic financial statements and an annual financial report should be prepared An annual audit should be conducted

56 Annual Budget Sample Group Name Treasurer s Name Starting Balance Projected Income Budgeted Expenditures Savings and Investments Total Funds Available Signed and dated by Treasurer and President

57 Annual Financial Report Group Name Treasurer s Name Starting balance Total Income Total Available Funds Actual Expenditures Savings and Investments Total Year End Balance Signed and dated by President and Treasurer

58 Audit Checklist and Report Group Name Fiscal Year End Checklist of items reviewed Notes regarding any issues or concerns found by committee Notes regarding any recommendations made by committee Certification of audit committee Signatures of audit committee

59 Annual Inventory Report Group Name Date Acquired Item Description Dollar Value Storage Location Disposal Date Signatures

60 Audit Committee 1. Check Each month s bank statements 2. Examine all voided checks 3. Total all funds received 4. Total all deposits 5. Total all expenditures 6. Examine Annual Financial Report 7. Check beginning totals and ending totals against income and expenses 8. Check Inventory 9. Complete Audit Checklist and Report

61 Reporting Compliance Budget is current: Financial Report is current: Audit is up to date: 135 Inventory is up to date: 89 Budget within fiscal year '18 Financial Report within fiscal year '18 Audit withing fiscal year '18 Inventory within fiscal year '18

62 What Leaves Organizations Vulnerable to Fraud/Mismanagement?

63 How to Prevent Issues in your Entity Strong Board of Directors Audit committee Background Checks Treasurer Bonding Make Reporting Easier Periodically review internal controls Greenlee, Janet & Fischer, Mary & Gordon, Teresa & Keating, Elizabeth. (2007). An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents. Nonprofit and Voluntary Sector Quarterly - NONPROFIT VOLUNT SECT Q / Transparency Regular Reporting Know your risks This Photo by Unknown Author is licensed under CC BY-NC- SA

64 Questions

65 Contact Info Chris Shotwell Ty Back