FINANCIAL CONTROLS GENERAL LEDGER ACTIVTY CALIFORNIA CASA ASSOCIATION

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1 GENERAL LEDGER ACTIVTY CALIFORNIA CASA ASSOCIATION To ensure that all General Ledger entries are current, accurate and complete. 1. Timeliness of Entries All entries will be made soon after the underlying accounting event to ensure the that financial records and reporting are current. 2. Authorization of Transactions and Entries The official designated in the current signature authorities policy will authorize each transaction and entry in writing. 3. Adequate Support Documentation All entries will be supported by adequate documentation that clearly shows the justification and authorization for the transaction. 4. Complete Audit Trails A complete audit trail will be maintained by the use of reference codes from source documentation to the books of original entry, General Ledger and finally to periodic reporting. 5. Board of Director Reviews Monthly activity will be checked against the approved budget at regular intervals during board meetings dealing with accounting activity. A. Financial data on source documentation will be transcribed to re- original documents (e.g., voucher, check, request, etc.) of CalCASA Association before entering into the accounting system. B. Each Entry in the accounting system will be reviewed and approved by Executive DirectorCEO. C. When initializing an entry, provision will be made for using recurring General Journal entries for such transactions as recording depreciation, amortizations and accruals of interest expense on bonds or notes. D. Non-recurring entries such as for correcting entries, recording accruals and recording non-cash transactions, will be prepared as circumstances warrant and on a monthly basis. E. All entries in the books of original entry (e.g., general General Journal, Payroll Register, Cash Receipts Journal and Cash Disbursements Journal) will be made soon after the accounting event, form from authorized forms prepared by qualified accounting personnel.

2 F. On an automated basis, the books of original entry will be posted to the computer program on command. G. General Journal vouchers that have supporting documentation attached and have been approved by the Executive DirectorCEO will support all General Journal entries. GENERAL LEDGER CLOSE-OUT To ensure the accuracy of financial records and reports. A. Financial Reports Monthly, financial reports will be prepared to ensure the accuracy of the General Ledger account balances PROCEDURES 1. Soon after the end of each month, Administrative Assistantthe Administrative & Financial Manager or Executive DirectorCEO will prepare financial reports of all General Ledger accounts. 2. Soon after the fiscal year end, all temporary income and expense accounts will be closed and the Executive DirectorCEO will prepare the fiscal year s financial reports. CASH MANAGEMENT PROCEDURES In this section, procedures are described for cash receipts &, cash disbursements. CASH RECEIPTS To record cash receipts completely and accurately, and to prevent the diversion of cash assets. A. Cash Budgets CalCASA Association will annually prepare and monthly update a cash budget for operations, cash flow and financial condition. B. Cash Receipts Policies CalCASA Association prepares daily deposits, as needed, to assure prompt posting of cash receipts.

3 C. Internal Accounting Controls (i) Listing receipts and credits compared to accounts receivable and bank deposits (ii) General Ledger control accounts reconciled with Accounts Receivable Subsidiary Ledger Mail will be opened and a detailed listing of cash and checks received for deposit will be prepared. 1. All Checks will be indorsed immediately by the Administrative & Financial Manager.Clerical Assistant 2. Cash Receipts will be posted to the General Ledger Program on a weekly basis. 3. All check receipts will be deposited intact daily by the Administrative & Financial ManagerClerical Assistant. 4. The Accountant or Executive DirectorCEO will compare cash receipts to deposit slips and bank statements. CASH DISBURSEMENTS To disburse cash for authorized purposes and record cash disbursements completely and accurately. A. Cash disbursement Policies Check preparation and signature will be delayed until the due date, consistent with available discounts B. Internal Accounting Controls (i) Prenumbered checks (ii) Use of special check protective paper of check imprint (ii)(iii) Persons serving in the following roles will be authorized to sign checks on behalf of California CASA - the CEO, the Associate & Legal Director, the Board President or the Board Treasurer. (iii)(iv) Checks up to $52,000 require one signature of Executive Directoreither the CEO, the Associate & Legal Director, the Board President or the Board Treasurer. or Executive Board member. Checks from $52,001 to $10,000 and over require two signatures. Checks $10,001 and above require two signatures and one must be either the Board President or the Board Treasurer. Reoccurring checks such as payroll and rent require no need for double signature. (iv)(v) Match disbursement records against invoice documents. (v)(vi) Bank Statements reconciled to cash accounts and any outstanding checks evaluated by Accountant. (vi)(vii) Supporting documentation cancelled or marked to prevent resubmission for payment.

4 (vii)(viii) Detailed comparison of actual vs. budgeted disbursements. (viii)(ix) Bank reconciliation are performed to Accountantby the Administrative & Financial Manager. 1. When the transaction is complete and payment is due, a check is to be written, attaching all supporting documentation, vendor invoice, payroll record, petty cash voucher, tax return loan repayment schedule or remittance advice. 2. A prenumberd check will be prepared. 3. The Executive DirectorCEO, Associate & Legal Director or Board Member will sign checks after examining the supporting documentation. 4. After having been signed, checks will be mailed directly to the payee. 5. The signatory will cancel all supporting documents. 6. All checks and bank transfers will be entered into the general General Lledger program. 7. Bank statements will be reconciled soon after the receipt by the Administrative & Financial Managerthe Administrative Assistant or the Executive DirectorCEO on a rotating basis. 8. Bank reconciliation and proposed adjustments will be reviewed and approved by the Executive DirectorCEO or treasurer of the board. IMPREST AND PETTY CASH FUNDS CalCASA Association currently does not have a Petty Cash set up except for events. Should a regular fund be approved and put in place, the following will apply. To control the use of imprest and petty cash funds for valid transactions. Internal Accounting Controls (i) Segregate custodial and record keeping duties PREPAID ITEMS 1. The fund custodian will maintain a log of all disbursements made from the imprest or petty cash fund. 2. Funds disbursements will be entered into the General Ledger when the fund is replenished. To ensure proper accounting for prepaid expenses.

5 Major controls A. Internal Accounting Controls (i) (ii) Preparation and updating of an amortization schedule to reflect the incurring of expenses for prepaid items. Detailed prepaid expenses reconciled with the General Ledger control account. 1. All vendor invoices will be reviewed by the Executive DirectorCEO to identify all required prepayments. ACCOUNTS RECEIVABLE PROCEDURES In this section, the procedures are described that cover revenue recognition and invoicing, billing, accounts receivable and other revenues. REVENUE RECONCILE AND INVOICING To ensure that services rendered are accurately recorded on a timely basis. A. Invoicing Policy Invoices will be prepared at the time of rendering the service or monthly as per contract. B. Use of Contract Billing Forms CalCASA Association will use the contract billing form from the contracting agency as frequently as the contract allows. C. Internal Accounting Controls Monitoring of agency invoices periodically and resolution of agency-noted differences by employees with responsibilities independent of invoicing. 1. The Administrative & Financial ManagerAccountant preparing the billing will verify the invoice s arithmetic extensions. 2. The invoice will be entered and copied.

6 3. Periodically, the contract folder will be reviewed for the numerical sequence of invoices. On receipt of payment, the cash receipts will be posted to the General Ledger control account. BILLING To ensure that contract billings are adequately supported and reflect the requirement of contractual terms and conditions. To ensure that unbilled items are identified and properly classified. A. Internal Review Supporting documentation for a sampling of invoices is reviewed during the independent audit. B. Internal Accounting Controls (i) All invoices reconciled with the project cost summaries (ii) Separation of duties between the preparation of the invoice and its review and approval 1. On a monthly basis, project cost entries will be reviewed and recorded manually on the contract billing form. 2. Any fee retentions will be withheld and recorded manually as an unbilled receivable. 3. All invoices will be reviewed for accuracy and completeness. 4. The assigned Executive DirectorCEO before submission will approve each invoice. 5. Invoices will be mailed to the customer All invoices receivable will be reviewed periodically for follow-up if outstanding more than 45 days. 7. A sampling of invoices will be periodically traced to the underlying source documents (i.e., time sheets, purchase orders, etc.) by the outside auditor during the annual audit. ACCOUNTS RECIEVABLE To ensure the accuracy, completeness and timeliness of customers' receivable balances.

7 A. Separation of Duties Where possible, the responsibility for posting sales invoices will be kept separate from those with responsibilities for cash functions. Those with responsibilities will post the General Ledger control account independent of accounts receivable and cash receipts. B. Periodic Reconciliation of Billings to Receipts CalCASA Association will periodically reconcile the billings to the cash receipts on contracts. 1. Payments, allowances, credits and other adjustments will be posted to the general General Lledger upon receipt. 2. The billings will be reconciled to the cash received for billing errors. Compliance Reviews 1. Policies and procedures for compliance with applicable Federal regulations will be periodically reviewed and updated. CONTRIBUTIONS To ensure CalCASA Association complies with state rules on soliciting contributions and to properly account for contributions received. A. Separate Fund for Restricted Contributions Contributions received for restricted purposes will be accounted for in separate funds. B. Accounting Reports to Donors Regular accounting reports will be sent to donors summarizing the receipt, use, management, and disposition of all contributions. C. State Filing and Reporting CalCASA Association will comply with the filing and reporting requirements in each state it solicits contributions. D. Annual Audit of Contributions

8 A qualified public accounting firm will conduct an audit of all contributions received and held in accordance with SFAS No.116, as part of the overall audit of CalCASA Association. Revenue Recognition Below are procedures for revenue recognition based on California CASA s sources of funding. Formatted: No underline Conditional Government Contract These are awards based on the performance of particular services for a government agency such as the Judicial Council. Because these awards are conditioned on the fulfillment of the services described in the contract, the revenue is recognized only as it is earned. In practice, this means that revenue will be recognized as invoices are submitted to the funding agency. Formatted: No underline Private Foundation Grants Foundation grants are generally awarded and paid before the period of work related to the grant has expired. Grants that are awarded as general support will be fully recognized as unrestricted revenue as of the award date. For general support grants that are awarded before payment is received, an invoice will be entered as a receivable as of the award date. Multi-year and program-restricted grants will be fully recognized as temporarily restricted revenue when awarded. For grants that are awarded before payment is received, an invoice will be entered as a receivable as of the award date. As time or program restrictions expire, journal entries will be made to release the funds from restriction and reclassify them as unrestricted. Please note that these entries will offset each other in consolidated Statements of Activity. Event Income In general, event income such as sponsorships and ticket sales will be recognized as cash is received. There may be exceptions if a written sponsorship pledge has been received. In that case, an invoice will be entered as a receivable as of the date of the pledge. Individual Donations In general, individual donations will be recognized as cash is received. There may be exceptions if a written donor pledge has been received. In that case, an invoice will be entered as a receivable as of the date of the pledge. General 1. CalCASA Association will register annually in each state it solicits contributions. 2. Annually, CalCASA Association will file an annual return with each state in which it is authorized to solicit contributions, as will well as the IRS Form 990 with the Internal Revenue Service.

9 Contributions of Securities 1. For the transfer of securities certificates or their ownership to CalCASA Association, the certificates will be delivered by certified or registered mail, or by hand. 2. A stock power form signed by the donor and naming the organization as transferee, will be prepared and formally executed. 3. A prenumbered contribution acknowledgement form will be prepared and sent to the donor. Contributions of Personal Property 1. Personal Property may be accepted when it can be readily sold or used on in connection with the mission of the organization. 2. A contribution acknowledgement form will be prepared when a gift of personal property is accepted. 3. For personal property received and sold within two years of its receipt, CalCASA Association will complete IRS form 8282, Donor Information Return to Report the Sale, Exchange or Other Disposition of Charitable Deduction Property and submit it to IRS. Formatted: Font: Italic Contributions of Real Estate 1. Real estate, in the form of a residence, business, commercial building, undeveloped land, etc., may be accepted provided that an environmental and toxic waste review has been conducted and that the property can be sold or used in the mission of the organization. The donor will provide a certified appraisal performed within 60 days of the contribution. 2. Upon acceptance, a contribution acknowledgement form will be and sent to the donor. Promises to Give 1. In order to recognized unconditional promises to give as income, the contribution will be acknowledged by the signature of a written pledge, tape recording, written register or other means that permits subsequent verification and is legally enforceable 2. Conditional promises to give will be recognized as a contribution at the time the condition is substantially met. 3. Upon Acceptanceacceptance, A a contribution acknowledgement form will be prepared and mailed to the donor. Accounting for Contribution Revenue

10 1. Contributions received for restricted purposes will be entered in a separate donor restricted fund by the Administrative & Financial Manager.Accounting Department Record Keeping for Contribution The contribution acknowledgement form will be entered into the information in the agency's donor file. OTHER REVENUES s To ensure that other revenues are accurately and completely recorded on a current basis. A. Preparation and Analysis of Other Revenue Schedule For rental transactions, royalties and deferred income, a schedule will be prepared to reflect when income is earned vs. when cash or other assets are received. 1. Checks Recommended Filing System Check stock should be voucher style with two stubs per check. One stub should be attached to the invoice or check request The other should be filed (bound) with other stubs in check number order Cancelled checks should be kept in check umber order in a box designed for that purpose. Voided checks should be mutilated and filed with cancelled checks. 2. Invoices A file drawer should be established for the current fiscal year's invoices. One file folder should be created for each repeat vendor (the name of the vendor on the file should be the same as the name of the payee on the checks). In addition, a miscellaneous folder should be created for each letter of the alphabet (" A-Misc., B- Misc., etc). Either the folders or the labels should have a distinct color each year (i.e., FYE 6/30/99- Blue; FYE 6/30/2000- yellow, etc.)

11 When paid, the invoice should be marked "Paid" with the payment date and check number. Account coding should have been written on the invoice at the time of approval for payment. Paid invoiced invoices and the attached stubs should be filed in the appropriate folder. Invoices in the file should be ordered with the earliest at the bottom and the most recent on top. At the end of the year, a separate drawer should be set up for the next year's invoices. Prior year's files should be placed in a storage box still in folders and set aside in an accessible place until the audit is complete. This box should be kept accessible for reference for the subsequent year and then placed in more permanent storage. 3. Cash Receipts. Copies of checks received should be stapled or otherwise attached to a copy of the relevant deposit slip and to a listing of the receipts indicating account coding for each receipt. The deposit slip should list each check. The total of the check's copies should be reconciled to the amount deposited. It is not necessary to make copies of currency, but a receipt should evidence any currency received. The total of the receipts should be reconciled to the total cash deposited. 4. Government Contracts and Grants A folder should be created for each contract. Three part folders would permit organization by name of the documentation. These folders should be filed together. The folder should contain (bound down). 1. Applications 2. The complete contract with all attachments 3. Any subsequent amendments or modifications 4. Correspondence relating to contract terms A separate folder should be created for cost and program reports. One folder should be created for each contract. A third folder (for each contract) should be created to store invoices submitted under each contract. Each invoice should be accompanied by documentation supporting amounts billed. Documentation would include relevant period or, if not separable, detail of the accounts with items charged highlighted: payroll records etc.

12 5. Foundation Grants Each major grant should have a folder containing the grant request, grant documents, copies of checks received, copies of any correspondence and reports. Grants with significant reporting requirements should be organized in the manner of government grants. 6. Permanent Files A separate drawer should be set aside for permanent, corporate flies containing such items as: 1. Application for exemption 2. IRS and FTB exemption letter 3. Articles of incorporation 4. By-laws 5. Leases 6. Corporate fillings with the IRS, FTB, Attorney General (Forms 990, 199, CT-2, etc.) and correspondence with these agencies. 7. Minutes of Board of Director's meetings 8. Board resolutions Each of these should be kept in a separate, labeled folder.