Accounting Policies and Procedures Manual

Transcription

1 Accounting Policies and Procedures Manual

2 TABLE OF CONTENTS Page No, INTRODUCTION... 1 FISCAL YEAR OF ORGANIZATION... 1 FINANCIAL OPERATIONS, GENERAL LEDGER AND CHART OF ACCOUNTS... 2 GENERAL LEDGER AND CHART OF ACCOUNTS... 3 ACCOUNTING ESTIMATES... 4 JOURNAL ENTRIES... 5 EXPENDITURES AND DISBURSEMENTS... 6 ACCOUNTS PAYABLE PROCEDURE... 6 CHECK WRITING PROCEDURES... 8 ELECTRONIC PAYMENT AND TRANSFER... 9 ASSET, LIABILITY AND NET POSITION BANK RECONCILIATION PROCEDURES INVENTORY PREPAID EXPENSES CAPITAL ASSETS FIXED ASSET DEFINITION APPROVAL PROCESS FIXED ASSET PURCHASING PROCESS MONITORING FIXED ASSETS ACCRUED LIABILITIES ACCRUED LEAVE VACATION AND PERSONAL LEAVE REVENUE RECOGNITION AND CASH RECEIPTS FINANCIAL REPORTING AND MANAGEMENT BUDGETS PREPARATION AND ADOPTION BUDGET MONITORING BUDGET MODIFICATION ANNEXURE A - PROCUREMENT POLICY ANNEXURE B - EXPENSE POLICY... 31

3 INTRODUCTION The Regional Transit Authority of Southeast Michigan (RTA) was created by Public Act No. 387 of Its 10-member board is appointed for three year terms by the county executives of Wayne, Oakland and Macomb counties, the chair of the Washtenaw County Board of Commissioners, the Mayor of Detroit, and the Governor of Michigan. The purpose of the RTA is to plan for and coordinate public transportation in the fourcounty region, and the City of Detroit, and to deliver rapid transit in a region where none exists. It is the entity through which transit providers must apply for state and federal funds, and through which those funds are allocated to providers. The RTA is also responsible for developing a Regional Master Transit Plan to guide present and future service and is empowered to put funding questions on the ballot for public vote. RTA will receive funding from both the federal government and the state. Therefore, RTA adopts accounting policies and procedures that are consistent with federal regulations and the laws of the State of Michigan. These procedures will apply to all financial transactions irrespective of the source of the funds. Specific requirements for transactions involving funding by the Federal Transit Administration are so identified. FISCAL YEAR OF ORGANIZATION RTA s fiscal year begins October 1 and ends September 30. 1

4 FINANCIAL OPERATIONS, GENERAL LEDGER AND CHART OF ACCOUNTS Overview This manual puts in place basic accounting, and policies and procedures designed to protect and secure RTA, ensure the maintenance of accurate records of financial activities and ensure compliance with governmental and private funding source reporting requirements. Responsibilities of Accounting Department The Accounting Department is responsible for the financial operations of the Authority as follows: General Ledger Budgeting Cash and Investment Management Asset Management Grants and Contracts Administration Cash Receipts Cash Disbursements Accounts Payable Payroll Financial Statement Processing External Reporting of Financial Information Bank Reconciliations Reconciliation of Sub-Ledgers Compliance with Government Reporting Requirements Annual Audit Leases Under the direction of the Chief Executive Officer (CEO) and the Authority Board, the Chief Operating Officer (COO), together with the assistance of staff and outside accounting firm, is responsible for preparing financial reports for appropriate officials, board officers, and outside agencies. 2

5 GENERAL LEDGER AND CHART OF ACCOUNTS RTA will use QuickBooks to record accounting transactions. QuickBooks provides for separate, self-balancing sets of accounts in accordance with generally accepted accounting principles. RTA s policy is to establish a chart of accounts which accumulates all financial transactions of the Authority. The chart of accounts includes fund/account codes for general ledger activity as prescribed by the FTA and MDOT. CHART OF ACCOUNTS The chart of accounts is the framework for the general ledger system, and therefore the basis for RTA s accounting system. The chart of accounts consists of account titles and account numbers assigned to the titles. General ledger accounts are used to accumulate transactions and the impact of these transactions on each asset, liability, net asset, revenue, and expense. RTA s chart of accounts is comprised of following types of accounts: 1. Assets 2. Liabilities 3. Net Position 4. Revenues 5. Expenses All employees involved with account coding responsibilities or budgetary responsibilities will be issued a current chart of accounts. On a monthly basis, the chart of accounts will be revised, and an updated copy will be distributed to these individuals. 3

6 CHART OF ACCOUNTS (Continued) The chart of accounts is monitored and controlled by the COO and outside accounting firm. Responsibilities include the handling of all account maintenance, such as additions and deletions. Any additions or deletions of accounts should be approved by the COO with consultation of the outside accounting firm, who ensures that the chart of accounts is consistent with the organizational structure of the authority and meets the needs of each department. The general ledger codes follow this pattern: 1XXXX 2XXXX 3XXXX 4XXXX 5XXXX Assets Liabilities Net Position Revenue Expenses A complete list of account codes is available by generating QuickBooks Chart of Accounts Report. The report also shows how codes are grouped and totaled for various reporting purposes. ACCOUNTING ESTIMATES RTA will utilize numerous estimates in the preparation of its interim and annual financial statements. Some of those estimates include: Useful lives of property and equipment Collectability of receivables Fair market values of investments It is RTA s policy that all such estimates shall be reassessed, reviewed, and approved by the COO with consultation of the outside accounting firm on an annual basis. Documentation shall be maintained supporting all key conclusions, bases, and other elements associated with each accounting estimate. All material estimates, and changes in estimates from one year to the next, shall be disclosed to the Board, and RTA s external audit firm. 4

7 JOURNAL ENTRIES All general ledger entries shall be supported by journal vouchers or other documentation, which shall include a reasonable explanation of each such entry. Examples of such journal entries include: 1. Recording of non-cash transactions 2. Corrections of posting errors 3. Non-recurring accruals of income and expenses Certain journal entries, called recurring journal entries, may occur in every accounting period, quarterly, or annually. Some of those entries include: Payroll Accruals Amortization of prepaid expenses Depreciation of fixed assets Accruals of recurring expenses Support for recurring journal entries shall be in the form of a schedule associated with the underlying asset or liability account or, in the case of short-term recurring journal entries or immaterial items, in the form of a journal voucher. The General format of Journal entry should be as follows: JE # Account Number Description Debit Credit 5

8 EXPENDITURES AND DISBURSEMENTS OVERVIEW The Accounts Payable procedures are designed to ensure that disbursements are properly made based on adequate documentation and proper authorization. Authorization for expenditures will follow the approval limits and procurement procedures set by RTA s Procurement Policies and Procedures Manual. Accounting staff will ensure that the appropriate level of approval is obtained for each disbursement. Payment for supplies or services will be made based on invoices, not statements. In the event that an invoice for services or supplies is lost, a memo explaining the expense and detailing cost is submitted with the request for payment and approved by the COO or their designee. All vendors must submit an IRS form W-9, Request for Tax Payer Identification and Certification or equivalent to the Accounting Department prior to payment. A determination is made by RTA s Accountant and approved by the COO, on the need to file an annual IRS Form 1099-Misc. on payments made to vendors. As per the IRS rules, an annual IRS Form 1099-Misc is required for any payment made to independent contractor who is not an employee, the payment is made for services in the course of trade or business and made to an individual, partnership, estate, or in some cases, a corporation in excess of $600 during the year. Form W-9s should be mailed to all current vendors each year prior to Form 1099 preparation to assure information is current. ACCOUNTS PAYABLE PROCEDURE When invoices are forwarded to the Accounting Division, the Staff Accountant reconciles the invoice amount and vendor to the approved purchase order and receiving document. In the case of services and contracts where a purchase order was not generated, the Staff Accountant forwards them to the appropriate department manager for approval. When the invoices are approved for payment or the matching, in the case of goods, is completed, the Staff Accountant recalculates the amount to verify the mathematical accuracy. 6

9 ACCOUNTS PAYABLE PROCEDURE (Continued) The Staff Accountant prepares a voucher package, which consists of a check request, invoice, purchase order, receiving report and/or invoice approval form and Accounts Payable generates a batch for edit and reviews. The voucher package is submitted to the COO for review and approval. Once the voucher package is approved for payment, the Staff accountant records the transactions in the Accounts Payable System. Each voucher package will be reviewed by the COO for proper account coding, appropriateness of expenditure. Each invoice will be marked ENTERED or POSTED when entered as a payable in the accounting system and the check and all corresponding documentation is marked PAID when the payable is processed for payment. On a weekly basis, the Staff Accountant will submit a cash requirement along with voucher packages and Accounts Payable listing to the COO for review and selection of items to be paid. 7

10 CHECK WRITING PROCEDURES Checks will be processed on a weekly basis. Checks will be written through QuickBooks. Checks are not to be post-dated, signed blank, or made out to cash. A copy of each check is attached to the voucher package, and will be filed in check number order in the respective paid vendor files. Voided or spoiled checks will have the signature block torn off and will then be filed in numerical order. Once the checks will be written, the staff accountant will forward the package along with supporting documents to the COO for signature. The COO will perform the following procedure before signing the checks. The voucher package will be compared with the invoice and the check amount. The batch of checks will be reviewed in check number sequence to assure no checks are unaccounted for. The summary transmittal will be reviewed to assure that the first check in each batch of checks begins with the next sequential check after the last batch processed. The summary transmittal is initialed by the reviewer to indicate that all checks in the current batch have been verified to assure there is no gap in the check sequence. If there are no questions to be resolved, the summary transmittal and signed checks will be returned to the Staff Accountant as authorization to mail or release the check to the vendor. Checks are mailed to vendors by the Accounting Manager unless specific arrangements had been made in advance for pickup of checks at the office. If a check is picked up, the person picking up the check must provide identification which agrees with the payee on the check or must have verifiable written authorization from the payee to pick up the check. 8

11 ELECTRONIC PAYMENT AND TRANSFERS All Electronic payments and transfers will be approved as noted above. The following additional procedures will be followed for these payments: Wire transfers, electronic transfers, and stop payments cannot be set up and approved by the same person. Password security is set to allow wire transfers, electronic transfers, and stop payments to be set up by the RTA s staff. Transfers can only be approved and sent by the COO or CEO as administrator. Internal transfers between the operating and grant accounts must by documented and approved by the CEO. When a wire transfer, electronic transfer, or stop payment has been set up by the staff accountant, the documentation supporting the transaction is given to the COO/CEO for verification and approval before the transaction is initiated. 9

12 ASSET, LIABILITY AND NET POSITION ACCOUNTS Assets Cash and Cash Equivalents RTA will seek to maximize its return on surplus operating funds. To meet this objective, one interest bearing operating account will be maintained. Personnel in the following positions in RTA will be authorized to sign checks and approve ACH and wires drawn on the general operating and payroll accounts. Those positions are: Chief Executive Officer Chief Operating Officer It is the policy of RTA to promptly notify the Authority s financial institution of changes in authorized signatures upon the departure/resignation of any authorized signer. 10

13 BANK RECONCILIATION PROCEDURES 1. INTRODUCTION This Directive presents procedures to be used in preparing monthly bank reconciliations. Regional Transit Authority of Southeast Michigan (RTA) must reconcile the bank and book balance of all bank accounts to determine the reasons for any differences and to correct any errors in the accounts. The bank reconciliation will be performed no later than 7 days after receipt of the monthly bank statement to safeguard assets, check the accuracy and reliability of agency-maintained accounting data and permit the timely reporting of account balances. 2. RECONCILATION PROCEDURES Broadly defined, a reconciliation is a comparison of different sets of data to another, identifying and investigating differences and taking corrective action, when necessary, to resolve differences timely. Reconciling monthly bank account statements to the QuickBooks General Ledger is an example of reconciling one set of data to another. This control activity helps to ensure the accuracy and completeness of transactions that have been posted to RTA s accounts. To ensure proper segregation of duties, the person who approves transactions or handles cash receipts should not be the person who performs the reconciliation. A critical element of the reconciliation process is the resolution of differences. It does not do any good to note differences and do nothing about it. Differences should be identified, investigated and explained (i.e., corrective action must be taken). If an unidentified withdrawal (i.e., bank debit) is posted to RTA s account, then the reconciler should immediately contact the bank to ascertain the reason for the unidentified charge. Where appropriate, bank personnel should reverse 11

14 BANK RECONCILIATION PROCEDURES (Continued) 2. RECONCILATION PROCEDURES (Continued) the bank charge or an adjusting entry should be made to the QuickBooks General Ledger. Reversals by bank personnel must be confirmed to the following months' bank statement. Similarly, RTA deposits not shown on the monthly bank statement must be investigated and a determination made that the deposit was posted to the account in the month immediately following the reconciliation period. All bank account reconciliations should be documented and approved by management. When reconciling the bank accounts, the following items should be included in the procedures: 1. Forward unopened bank statements directly to the employee who will perform the reconciliation. 2. Compare the total of the returned checks to total charges on the statements and examine check signatures and endorsements on a test basis. 3. Compare deposits listed on the bank statements to deposits in transit on the prior reconciliation and to records of deposits made since the last reconciliation. 4. Deposits not recorded by the bank should be listed as deposits in transit. 5. List any charges or credits shown on the bank statements that have not been recorded in the QuickBooks General Ledger. Once the reconciliations are prepared an review will be performed by an outside accounting firm on a monthly basis. All the bank reconciliations will be signed and dated by both preparer and reviewer. The Staff Accountant will monitor the cash flow needs on a daily basis to eliminate idle funds and to ensure that payment obligations can be met. Cash transfers between accounts will be performed on an as-needed basis. 12

15 INVENTORY It will be RTA s policy to accurately account for all inventories on a quarterly and year end basis and to price them in accordance with GAAP. RTA will account for purchased inventory items at cost, using the first-in, first-out method of valuation. Unit cost shall be computed by adding freight, insurance and other shipping costs to the actual cost of purchased inventory, dividing this total amount by the number of units purchased. RTA will perform a physical count of inventory on an annual basis. Any inventory items that appear damaged, obsolete or otherwise unable to be used will be excluded from the counts. A detailed record of the physical count will be kept by the individuals involved in taking the inventory. At the conclusion of the physical count, the inventory count sheets will be extended by applying the most recent unit costs to the physical quantities of each item on hand. The general ledger balance will be adjusted to reflect the total inventory on hand as determined by the physical count. 13

16 PREPAID EXPENSES RTA will treat payments of expenses that have a time-sensitive future benefit as prepaid expenses, such as insurance and taxes, and to amortize these items over the corresponding time period. For purposes of this policy, payments of less than $500 will be expensed as paid and not treated as prepaid expenses, regardless of the existence of a future benefit. Prepaid expenses with future benefits that expire within one year from the date of the financial statements will be classified as current assets. Prepaid expenses that benefit future periods beyond one year from the financial statement date will be classified as non-current assets. As part of the account coding process performed during the processing of accounts payable, all incoming vendor invoices will be reviewed for the existence of timesensitive future benefits. If future benefits are identified, the payment will be code to a prepaid expense (asset) account code. The Staff Accountant will maintain a schedule of all prepaid expenses. The schedule will indicate the amount and date paid, the period covered by the prepayment, the purpose of the prepayment, and the monthly amortization. This schedule will be reconciled to the general ledger balance as part of the monthly closeout process. A review will be performed on a monthly basis by an outside accounting firm on a monthly basis to ensure accuracy. 14

17 CAPITAL ASSETS PURPOSE The purpose of this policy is to establish procedural requirements associated with the acquisition, disposal, fixed asset recording and monitoring processes. BACKGROUND As a recipient of grant funding, RTA must comply with various federal, state and local requirements with regard to fixed asset controls and reporting. RTA will comply with these regulations in addition to sound fiscal management procedures within budgetary guidelines. To ensure full compliance with the requirements of federal and state grants, RTA has established procedures consistent with the general grant management procedures as provided under Federal Transit Administration and Office of Management and Budget (OMB) guidelines. FIXED ASSET DEFINITION: Equipment means all tangible, nonexpendable, personal property that has a useful life of more than one year and an acquisition cost that exceeds $2,500 per unit. 15

18 APPROVAL PROCESS: Requesting Department initiates a Special Requisition which is reviewed by the Budget Staff to ensure that it is included in the approved budget. Items that are to be funded with grant funding are reviewed by the Project Manager. If a Project Manager has not been assigned, the Grant Department will perform this review. This review is to ensure that the requested purchase is consistent with the project as defined in the grant document. The Special Requisition is then submitted to the Accounting Department Grant Principal Financial Analyst who assigns the proper Grant Tracking Number and Accounting Code. FIXED ASSET PURCHASING PROCESS: Once the Special Requisition has been fully approved, the Purchasing Department procures the item using the procedures established in the RTA s Purchasing Policy (Attached as Annexure A) which is based on the Federal Transit Administration s Best Practices Procurement Manual. The asset is received, physically tagged, and entered into QuickBooks by the Staff Accountant. Accounts Payable verifies that the documentation for the purchase is complete, including sign-off by the Project Manager if applicable, and then processes the document for payment as prescribed in the earlier section. 16

19 MONITORING FIXED ASSETS: A physical inventory of the RTA s Fixed Assets will be conducted every two years in compliance with FTA regulations. A Subsidiary Fixed Assets Ledger is maintained by the Accounting Department which records the following required information: Title (i.e. who holds title to the asset) Description Tag Number Identification Number Date in service Acquisition Date Cost of Asset Funding Source(s) including percentage of Federal participation in the cost Depreciation Location Use Condition Status Disposal date when applicable Useful Life 17

20 LIABILITIES Accrued Liabilities The accounting department shall establish a list of commonly incurred expenses that may need to be accrued at the end of an accounting period. Expenses that shall be accrued by RTA at the end of an accounting period include: Management Fees Legal Fees Audit Fees Planning Fees Contract Administration Fees RTA records a liability for unearned revenue (revenue received but not yet earned) in accordance with the revenue recognition policies described in the Revenue section of this manual. ACCRUED LEAVE - VACATION AND PERSONAL LEAVE RTA permits employees to carry forward varying amounts of unused leave per year. Any unused leave is payable to an employee upon termination of employment. Accordingly, RTA will record a liability for accrued leave to which employees are entitled. The total liability at the end of the fiscal year shall equal the total earned but unused hours of leave, up to a maximum, multiplied by each employee s current hourly pay rate. 18

21 REVENUE RECOGNITION: RTA will receive revenue from several types of transactions. Revenue from each one of these is recognized in the financial statements as described below: A. Interest and Non-Transit Revenue Interest received on cash balances is recorded monthly by journal entry. Miscellaneous Non-Transit revenue is recorded as received. B. Advertising Revenue The RTA Accountant will administrate the billing for fees generated from advertising. Gross receipts from advertising fees will be recorded as revenue and the associated commissions paid will be recorded as expense. C. Contract Revenue Contract Revenue is recorded when billed through the Accounts Receivable subsidiary ledger. D. Federal/State Grant Awards RTA will receive both operating assistance and capital assistance under various federal/state grant awards. Operating assistance is recorded as earned in the operating fund general ledger. Capital assistance for capital assets, capital projects and passenger amenities programs is recorded in the grant fund general ledger. Cash Receipts The cash receipts policies and procedures ensure that all in-coming funds are properly recorded and safeguarded through separation of duties and proper documentation. 19

22 REVENUE RECOGNITION (Continued): Procedures: a. Mail is to be opened promptly by the Accountant. b. All checks, money orders and cash are promptly logged into a Cash Receipts Log maintained by accountant. He will restrictively endorse the back of any checks received; and enter into the Cash Receipts Log prior to distributing checks to designated staff. c. Documentation for receipts (letter, stubs, etc.) is provided with the checks/cash when forwarded to designated staff for processing and deposit. d. Funds awaiting bank deposit are kept in a locked file/safe with access limited to staff designated by the COO. e. The Accountant verifies the checks and cash to documentation received, makes copy of checks and prepares deposit for delivery to bank. f. Bank confirmations are delivered to the Accountant to attach to back up documentation. The deposit is entered into the accounting system by the Accountant or the outside accounting firm, and then filed in chronological order into a Cash Receipts file/folder for the month. g. At the end of the month, the accountant or the outside accounting firm prepares a summary of cash receipts log verifying that all bank account totals add up to total funds received for the month and then prints out the summary, retaining one copy, for the auditors, and a second copy for the Accountant or the outside accounting firm to verify against the deposits listed on the bank statement(s). All requirements for receiving federal and state grants for capital and operating projects will be as per the signed Public Transportation Projects Agreement between RTA and the Michigan Department of Transportation. 20

23 FINANCIAL REPORTING AND MANAGEMENT RTA s policy is to prepare accurate financial statements in accordance with generally accepted accounting principles and distribute them in a timely and cost-effective manner. The standard set of financial statements will be produced on a monthly and annual basis. These financial statements shall be prepared on the accrual method of accounting. Preparing financial statements and communicating key financial information is a necessary and critical accounting function. Financial statements are management tools used in making decisions, in monitoring the achievement of financial objectives, and as a standard method for providing information to interested parties external to the organization. Financial statements may reflect year-to-year historical comparisons or current budget to actual comparisons. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, will require RTA to make estimates and assumptions about the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 21

24 FINANCIAL REPORTING AND MANAGEMENT (Continued) The basic financial statements of RTA that will be maintained on an organization-wide basis are: Statement of Net Position Statement of Revenue and Changes in Net Position Statement of Cash Flows Budget Vs. Actuals Monthly and annual financial statements and supporting schedules shall be reviewed and approved by the COO and outside accounting firm prior to being issued by Finance Department. BUDGETS Budgeting is an integral part of managing RTA and is concerned with meeting organizational goals and objectives. The budget is designed and prepared to direct the efficient and prudent use of RTA s financial and human resources. The budget is management s commitment to a plan for present and future organizational activities to ensure a going concern. It provides an opportunity to examine the composition and viability of the Authority s programs and activities simultaneously in light of available resources. 22

25 FINANCIAL REPORTING AND MANAGEMENT (Continued) PREPARATION AND ADOPTION RTA will prepare a budget annually. The Staff Accountant gathers proposed budget information and prepares the first draft of the budget. Budgets proposed and submitted by each department should be accompanied by a narrative explanation of the sources and uses of funds and explaining all material fluctuations in budgeted amounts from prior years. RTA staff presents draft budget outside accounting firm for their review for accuracy and completeness. After their review and approval the budget will be forwarded to the Finance and Budget Committee for their review and approval. Once approved, it will then be forwarded to the Board of Directors at an initial Budget Workshop. Members of the Board will be asked to review initial budget presentation and provide feedback. After adjustments for Board input, a final draft budget will be prepared and presented to the CEO/COO for discussion, revision, and initial approval. After their approval, the budget will be presented to RTA s Board for their final approval. 23

26 BUDGET MONITORING RTA will monitor its financial performance by comparing and analyzing actual results with budgeted results. This function shall be accomplished in conjunction with the monthly financial reporting process. On a monthly basis, financial reports comparing actual year-to-date revenues and expenses with budgeted year-to-date amounts shall be produced and presented to the Board. BUDGET MODIFICATION After the budget has been approved and adopted by the Board of Directors reclassification of budgeted expense amounts within account classifications may be made by CEO, with approval from the Authority Board. Reclassification and any budget modification resulting in an increase in budgeted expenses or decrease in budgeted revenues can be made only with approval of the Authority Board. 24

27 ANNEXURE A Regional Transit Authority of Southeast Michigan Procurement Policy Effective Date: November 19, 2014 Procurement Policy Background The Regional Transit Authority of Southeast Michigan ( RTA ) Procurement Policy ( Policy ), approved by the RTA Board ( Board ), establishes the broad procurement framework for the RTA. A prescriptive procedural manual will be developed consistent with the Policy that will guide RTA s day-to-day procurement operations. If the RTA applies for and receives State of Michigan or federal funds that require the RTA to comply with procurement or contracting requirements that are in conflict with the RTA Act, or the RTA s Procurement Policy or Procedures, the state or federal requirements shall take precedence. This Policy replaces RTA s existing Procurement and Contracting Ordinance adopted in April, 2013 and will only apply to contracts solicited after November 19, 2014 (the Effective Date ). Procurement Standards The Procurement Standards will be designed to set forth the standards for processing all contracts unless specifically designated otherwise. The standards will ensure that goods and services are obtained or disposed utilizing timely, efficient, and economical methods that adhere to the principles of good administrative practices and sound business judgment. A. RTA will maintain a contract administration system that ensures that Vendors (i.e., those providing goods and services) perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. B. RTA will comply with all applicable Federal and State of Michigan laws, rules and regulations, including, but not limited to, Federal Transit laws contained in 49 U.S.C. Chapter 53, Federal Transit Administration ( FTA ) regulations including FTA Circular F, Participation in Disadvantaged Enterprise in Department of Transportation Programs (49 CFR Part 26), other Federal laws, rules and regulations that contain requirements applicable to FTA recipients and the FTA assisted procurements, the Michigan Regional Transit Authority Act ( RTA Act ) (Act 387, Michigan Public Acts, 2012, MCL et seq.), and other State of Michigan laws, rules and regulations applicable to RTA procurements. 25

28 ANNEXURE A (Continued) Procurement Standards (Continued) C. Members of the Board and all RTA employees will comply with the RTA Conflict of Interest Policy as amended from time to time, and all statutory and regulatory requirements, including without limitation, the applicable U.S. Department of Transportation regulations, and FTA Circulars. Violators are subject to the penalties prescribed in the RTA Code of Conduct and Conflict of Interest Policy. Competitively Bid Procurements RTA will conduct all procurement transactions consistent with the above-stated procurement standards through the use of those competitive procurement procedures best suited to the particular procurement, except as otherwise specifically justified. Except as otherwise authorized or specifically justified, or required by federal or State of Michigan laws, rules or regulations, all Purchase Orders or contracts for the purchase of goods and services over $25,000 by or on behalf of the RTA will be let by free and open Competitive Bidding. The RTA may enter into a competitive purchasing agreement with the federal government, the State of Michigan, or other public entities for the purchase of necessary goods or services. A. Sealed Bids (Invitation for Bids IFB ) will be used if: 1. A complete, adequate, precise, and realistic specification or purchase description is available; 2. The award will be made on the basis of price and price-related factors; 3. It will not be necessary to conduct discussions with the responding Vendors about their Bids. 4. There is a reasonable expectation of receiving more than one sealed Bid; and 5. The procurement generally lends itself to a firm fixed price contract. RTA will ensure fair and unbiased evaluation of Bids. RTA s procedures will guarantee that only the lowest, responsive (including DBE compliant) and responsible Bidders are recommended for award of contracts. RTA is a public body as defined by Michigan s Freedom of Information Act (FOIA). Upon public opening, all IFB responses become public records subject to disclosure under FOIA. The time and place for public opening shall be set forth in the IFB. 26

29 ANNEXURE A (Continued) Competitively Bid Procurements (Continued) B. Negotiated procurements (Requests for Proposals RFP ) will be used if the nature of the procurement does not lend itself to sealed Bidding and RTA expects that more than one source will be willing and able to submit a proposal. RTA will ensure fair and unbiased evaluation of competing Proposals. 1. RFP s will incorporate a clear and accurate description of the technical requirements and a comprehensive scope of work for the goods or services to be procured. 2. RFP s will clearly state the evaluation factors, including: Cost or price, cost or pricerelated factors and non-cost or non-price related technical and business management factors that will be considered in making a Contractors election/recommendation. For all negotiated procurements, the following process will apply to ensure fair and consistent evaluation of all proposals. 1. RFP released with a date selected for a Pre-Bid meeting open to the public. The purpose of the Pre-Bid meeting is to clarify any concerns bidders may have with the solicitation documents, scope of work and other details of the requirement. 2. The list of vendors that were solicited for bid and/or that attended the Pre-Bid meeting will be posted to the RTA web site along with question and answers resulting from the meeting. 3. All non-cost information included in an RFP response shall be separated in the response from cost information. 4. All RFPs will be reviewed and ranked by a Selection Committee consisting of RTA staff, members of the board, a DBE compliance officer, and technical advisors as necessary. The selection committee will sign the RTA Code of Conduct and Conflict of Interest Policy to ensure no conflict of interest exists. a. The selection committee will make an appropriate recommendation to the appropriate RTA committee, for consideration. The RTA committees will make a recommendation to the RTA Board. b. The Board will take action to approve or reject the recommendation. 27

30 Competitively Bid Procurements (Continued) B. Negotiated procurements (Requests for Proposals RFP ) (Continued) 5. RTA is a public body as defined by Michigan's Freedom of Information Act (FOIA), where applicable. All non-cost information will be subject to disclosure under FOIA as of the RFP return deadline date. All cost information included in the RFP response will be subject to disclosure under FOIA at the time and place of public opening, if a public opening notice is included in the RFP. Until the deadline or public opening, proposals will be held in confidence and will not be revealed to or discussed with competitors or the public. Acceptable Non-Competitively Bid Procurements The RTA is not required to use competitive bidding when acquiring proprietary services, equipment, or information available from a single source, such as a software license agreement. Competitive bids are not required if any of the following apply: A. An emergency directly and immediately affecting service or public health, safety, or welfare requires the immediate procurement of supplies, materials, equipment, or services to mitigate an imminent threat to public health, safety, or welfare, as determined by the RTA. B. Procurement of goods or services is for emergency repair or construction caused by unforeseen circumstances when the repair or construction is necessary to protect life or property. C. Procurement of goods or services is in response to a declared state of emergency or state of disaster under the Michigan Emergency Management Act, 1976 PA 390, MCL to D. Procurement of goods or services is in response to a declared state of emergency under 1945 PA 302, MCL to E. Procurement of goods or services is in response to a declared state of energy emergency under 1982 PA 191, MCL to F. Procurement of goods or services is under a cooperative purchasing agreement with the federal government, the State of Michigan, or another public entity for the purchase of necessary goods and services at fair and reasonable prices using a competitive procurement method for RTA operations. 28

31 Acceptable Non-Competitively Bid Procurements (Continued) G. The value of the procurement is less than $25,000.00, and the Board has established policies or procedures to ensure that goods or services with a value of less than$25, are purchased by the Board at fair and reasonable prices, including a requirement that for purchases and sales of $25, or less, but over $5,000.00,written price quotations from at least three (3) qualified and responsible vendors shall be obtained or a memorandum shall be kept on file showing that fewer than three (3)qualified and responsible vendors exist in the market area within which it is practicable to obtain quotations. Procurement of goods or services with a value of less than$5, may be negotiated with or without using competitive bidding as authorized in a procurement policy adopted by the board. RTA ACT PROVISIONS (MCL (15)) A. The RTA may enter into lease purchases or installment purchases for periods not exceeding the useful life of the items purchased unless otherwise prohibited by law. B. In all purchases made by the RTA, if consistent with applicable federal and state law, preference shall be given first to products manufactured or services offered by firms based in the authority s public transit region, including, but not limited to, the cities and counties in a public transit region, and second to firms based in this state. C. The RTA shall actively solicit lists of potential bidders for authority contracts from each city and each county in a public transit region. Contracting with Disadvantaged Business Enterprise A. RTA will take all reasonable steps to ensure nondiscrimination in the award and administration of contracts. B. RTA will create a level playing field on which DBE s can compete fairly for contracts. C. RTA will ensure that the DBE program is narrowly tailored in accordance with applicable law and will ensure only firms that fully meet eligibility standards are permitted to participate as DBEs. D. RTA will help remove barriers so DBEs can fully participate in contracts. Procurement Authority Authority and responsibility to enter into contracts for RTA is vested in the Chief Executive Officer, the Chairman of the Board, or their designees as appropriately determined. The responsibilities described herein remain with the enumerated RTA job functions regardless of department. 29

32 Procurement Authority (Continued) Any procurement authority delegated to persons or departments will also vest in the Chief Executive Officer, the Chairman of the Board, and the Board. Contract Approval Requirements The following matrix specifies who may authorize and execute contracts: Board Action not Required for Items (A)-(F) A. The COO may authorize and execute contracts up to a maximum of $10,000. B. Except as provided for in D below, the CEO or designee may authorize and execute contracts up to a maximum of $50,000. C. The CEO or designee, with the approval of the Chairman or designee, may authorize and execute contracts in response to an Emergency or Public Exigency. D. The CEO or designee, or the Chairman or designee, may authorize and execute sole source contracts up to $100,000; contracts for professional services up to$200,000; and contracts competed by RFP up to $250,000. E. The CEO or designee, or the Chairman or designee, following consultation with General Counsel, may authorize all nondisclosure agreements. F. The CEO or designee, or the Chairman or designee, following consultation with General Counsel, may authorize and execute all contracts for professional consultant services donated to the RTA. Board Action Required for (G) G. Following Board Approval, the Chairman or designee may execute all disadvantageous contracts; sole source contracts over $100,000; professional services contracts over $250,000; contracts competed by RFP over $250,000;and contracts competed and not otherwise addressed in(d) or (G) over $250,000. Summary of Amount/ Type of Contract Up to $10,000 Up to $50,000 Contracts in response to an emergency or Public Exigency Sole Source Contracts up to $100,000 Professional Services contracts up to $250,000 Contracts Competed by RFP up to $250,000 Non-Disclosure Agreements Donated Professional Services Summary of Amount/ Type of Contract Disadvantageous Contracts Sole Source Contracts over a $100, 000 Professional Services contracts over $250,000 Contracts competed by RFP over $250,000 Contracts competed and not addressed in (D) or (G) over$250,000 30

33 Contract Approval Requirements (Continued) Reporting Reports of procurements not requiring Board consideration will be reported to the Board monthly. Severability If any provision of the Policy is held unconstitutional or otherwise invalid, the remaining parts thereof will remain in full force and effect. If any provision of the Policy or subsequent Procedures or application thereof conflicts with any State or Federal law, rule or regulation, said law, rule or regulation will control. 31

34 ANNEXURE B Regional Transit Authority of Southeast Michigan Board Member and Staff Expense Policy Approval Date: May 15, 2013 This policy sets forth the requirements for expense reimbursements for the Regional Transit Authority (the Authority ), in accordance with the Regional Transit Authority Act, Act 387, Public Acts of Michigan, 2012 (the RTA Act ). Pursuant to the RTA Act, Authority Board members may receive reimbursement for necessary travel and expenses consistent with the RTA Act and this Policy. Scheduled Categories of Expenses A. The following specific categories of duties and functions are approved as reimbursable expenses: 1. Travel. Travel to and from regular and special Authority Board meetings and Authority committee meetings, and in connection with Authority business authorized by the Authority Board. a. Mileage reimbursement. Authority Board members and staff shall be reimbursed for mileage based on current IRS reimbursement rates for travel authorized for reimbursement under this Policy. b. Parking. Parking fees associated with travel authorized for reimbursement under this Policy shall be reimbursed upon approval of receipt by the treasurer or the chairperson of the Authority or the designee of the treasurer or chairperson of the Authority. c. Public transportation expenses. Authority Board members and staff shall be reimbursed for expenses incurred in the use of public transit for travel authorized for reimbursement under this Policy. d. Air travel. Authority Board members and staff must obtain prior written approval from the treasurer or the chairperson of the Authority or the designee of the treasurer or chairperson of the Authority, for reimbursement for air travel expenses in connection with Authority business. Air travel shall be by coach, if available. The Authority encourages cost saving where possible to include advanced booking of flights, use of coupons or promotional offers. 32

35 ANNEXURE B (Continued) Scheduled Categories of Expenses (Continued) 2. Lodging, Food and Conferences. The Authority shall reimburse Authority Board members and staff for reasonable lodging, meal, conference and miscellaneous expenses related to Authority business, for amounts not to exceed the current maximum allowable amounts for State of Michigan employees. Authority Board members and staff must obtain prior written approval from the treasurer or the chairperson of the Authority or the designee of the treasurer or chairperson of the Authority, for reimbursement for lodging, meal, conference and miscellaneous expenses in connection with Authority business. a. Lodging reimbursement shall be made in connection with travel to an authorized business activity. Receipts for lodging expenses are required and must show the actual amount paid for lodging and the number of occupants in the room. b. When an Authority Board member or staff person shares hotel or other lodging expenses with non-authority persons, reimbursements shall not exceed the rate for single occupancy. c. Meal expenses shall be reimbursed upon approval of receipt by the treasurer or the chairperson of the Authority or the designee of the treasurer or chairperson of the Authority. d. Authority Board members and staff who are required to attend a meeting where meals have not been prepaid by the Authority shall be reimbursed for the cost of the meal. e. Staff who are required to attend a meeting at which no meal is served, provided the meeting is outside of normal working hours, may be allowed meal expenses and shall be reimbursed upon approval of receipt. f. Cost for alcoholic beverages shall not be included as part of the Authority Board member or staff person s meal expense. g. Costs of attending conferences or seminars related to Authority business shall be reimbursed upon approval of receipt of payment, and with approval for reimbursement by the treasurer or the chairperson of the Authority or the designee of the treasurer or chairperson of the Authority prior to incurring the expense. 33

36 ANNEXURE B (Continued) Scheduled Categories of Expenses (Continued) B. The following are personal expenses which shall not be eligible for reimbursement: 1. Movies, sporting events, or other forms of entertainment. 2. Costs of travel insurance. 3. Rental of autos, cameras or other equipment, unless approved by the chair of the Authority Board. 4. Alcoholic beverages. 5. Telephone expenses. Expense Reimbursement Procedure All travel, lodging, food, conference and other expenses identified in this Policy, associated with Authority business but not related to a regular, rescheduled or special Authority Board meeting or committee meeting, must be pre-approved for reimbursement by the treasurer or the chairperson of the Authority, or the designee of the treasurer or chairperson of the Authority prior to incurring the expense. To receive reimbursement for an expense incurred for an official duty or function identified in this Policy, an Authority Board member shall submit to the treasurer or the chairperson of the Authority, or the designee of the treasurer or chairperson of the Authority, supporting receipts or other evidence to verify each reimbursable expense occurred, by the date determined by the Treasurer by which all reimbursement requests shall be submitted prior to the end of each fiscal year for reimbursement in that fiscal year. Any expense not specifically identified in this Policy shall not be reimbursed unless a motion to approve the expense is adopted by a majority vote of the Executive Committee of the Authority Board at a regular, rescheduled or special meeting before the expense is incurred. Expenses shall be reimbursed only in accordance with the RTA Act and other applicable law. 34