SAN FRANCISCO COURT APPOINTED SPECIAL ADVOCATE PROGRAM FINANCIAL PROCEDURES MANUAL Table of Contents GENERAL ACCOUNTING POLICY AND PROCEDURES... 3 OVERALL ACCOUNTING SYSTEM DESIGN... 3 CONTROL OBJECTIVE... 3 MAJOR CONTROLS... 3 MAJOR CONTROLS... 4 PROCEDURES... 4 GENERAL LEDGER CLOSE-OUT... 5 MAJOR CONTROLS... 5 CASH MANAGEMENT PROCEDURES... 5 CASH RECEIPTS... 5 MAJOR CONTROLS... 5 PROCEDURES... 6 CASH DISBURSEMENTS... 6 PROCEDURES... 7 IMPREST AND PETTY CASH FUNDS... 7 MAJOR CONTROLS... 7 PROCEDURES... 7 PREPAID ITEMS... 7 MAJOR CONTROLS... 8 ACCOUNTS RECIEVABLE PROCEDURES... 9 REVENUE RECOGNION AND INVOICING... 9 MAJOR CONTROLS... 9 FINANCIAL PROCEDURES MANUAL 1
PROCEDURES... 9 BILLING... 9 CONTROL OBJECTIVE... 9 MAJOR CONTROLS... 9 PROCEDURES... 10 ACCOUNTS RECIEVABLE... 10 MAJOR CONTROLS... 10 PROCEDURES... 10 COMPLIANCE REVIEWS... 10 CONTRIBUTIONS... 11 MAJOR CONTROLS... 11 PROCEDURES... 11 GENERAL... 11 CONTRIBUTIONS OF SECURITIES... 11 CONTRIBUTIONS OF REAL ESTATE... 12 PROMISES TO GIVE... 12 RECORD KEEPING FOR CONTRIBUTION... 12 OTHER REVENUES... 12 CONTROL OBJECTIVES... 12 MAJOR CONTROLS... 12 ADDENDUM Recommended Filing System FINANCIAL PROCEDURES MANUAL 2
GENERAL ACCOUNTING POLICY AND PROCEDURES In this section, procedures are described for the overall accounting system design, General Ledger activity and General Ledger closeout. OVERALL ACCOUNTING SYSTEM DESIGN TO DEVELOP A CODING STRUCTURE THAT SUPPORTS FINANCIAL REPORTING AND DECISION-MAKING. A. Executive Director and Accounting Staff Involved in Design and maintained of the Chart of Accounts/Coding Structure To support decision-making, Executive Director, along with the Board of Directors, will be involved at the outset in setting the chart of accounts/coding structure, and will periodically review it to make improvements. B. Establishment of Control Accounts In order to perform reconciliations, subsidiary account detail will be aggregated to General Ledger control accounts. FINANCIAL PROCEDURES MANUAL 3
GENERAL LEDGER ACTIVTY To ensure that all General Ledger entries are current, accurate and complete. A. Timeliness of Entries All entries will be made soon after the underlying accounting event to ensure the financial records and reporting are current. B. Authorization of Transactions and Entries Each transaction and entry will be authorized in writing by the official designated in the current signature authority s policy. C. Adequate Support Documentation All entries will be supported by adequate documentation that clearly shows the justification and authorization for the transaction. D. 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. E. Board of Director Reviews Monthly activity will be checked against the approved budget at regular intervals during board meetings dealing with accounting activity. 1. Financial data on source documentation will be re-transcribed to original documents (e.g., voucher, check, request, etc.) of San Francisco Court Appointed Special Advocate Program before entering into the accounting system. 2. Each entry in the accounting system will be reviewed and approved by Executive Director. 3. 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. 4. 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. 5. All entries in the books of original entry (e.g., General Journal, Payroll Register, Cash Receipts Journal and Cash Disbursements Journal) will be made soon after the accounting event from authorized forms prepared by qualified accounting personnel. FINANCIAL PROCEDURES MANUAL 4
6. On an automated basis, the books of original entry will be posted to the computer program on command. 7. All General Journal entries will be supported by General Journal vouchers that have supporting documentation attached and are approved by the Executive Director. 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, financial reports of all General Ledger accounts will be prepared by Administrative Assistant or Executive Director. 2. Soon after the fiscal year end, all temporary income and expense accounts will be closed and the fiscal year s financial reports will be prepared by the Executive Director. CASH MANAGEMENT PROCEDURES In this section, procedures are described for cash receipts and cash disbursements. CASH RECEIPTS To record cash receipts completely and accurately and to prevent the diversion of cash assets. A. Cash Budgets San Francisco Court Appointed Special Advocate Program will annually prepare and monthly update a cash budget for operations, cash flow and financial condition which will be reviewed by the Board of Directors. B. Cash Receipts Policies San Francisco Court Appointed Special Advocate Program prepares daily deposits as needed to assure prompt posting of cash receipts. FINANCIAL PROCEDURES MANUAL 5
C. Internal Accounting Controls (i) (ii) Listing receipts and credits compared to accounts receivable and bank deposits General Ledger control accounts reconciled with Accounts Receivable Subsidiary Ledger 1. Mail will be opened and a detailed listing of cash and checks received for deposit will be prepared. 2. All checks will be endorsed for deposit only immediately by Office Manager 3. Cash receipts will be posted to the General Ledger Program on a weekly basis. 4. All check receipts will be deposited intact daily by Office Manager. 5. Cash receipts will be compared to deposit slips and bank statements by the Accountant or Executive Director. 6. Undeposited cash receipts will be maintained in a locked cabinet until presented to the bank for deposit. CASH DISBURSEMENTS To disburse cash for authorized purposes and record cash disbursements completely and accurately. A. Bank Accounts The Board of Directors is responsible for authorizing all bank accounts and check signers. Separate accounts will be maintained for any restricted funds if required by the funding source. Financial institutions where programs accounts are maintained are notified on an annual basis of any changes in check signers, following the transition of officers or changes in staff members who have check-signing responsibilities. B. Cash Disbursement Policies Check preparation and signature will be delayed until the due date, consistent with available discounts C. Internal Accounting Controls (i) (ii) (iii) (iv) (v) (vi) (vii) Prenumbered checks are used, always in sequence. Use of special check protective paper of check imprint. Maximum dollar limits set for each check payment, with two signatures required for amounts over $1000. Checks are made payable to specific payees, based upon supporting documentation, and never to cash or bearer. Blank check stock will be kept in a locked cabinet and only persons authorized to prepare checks may have access to them. Match disbursement records against invoice documents prior to authorizing payment. Bank statements reconciled to cash accounts and any outstanding checks evaluated by Accountant. FINANCIAL PROCEDURES MANUAL 6
(viii) (ix) (x) Supporting documentation cancelled or marked to prevent resubmission for payment. Detailed comparison of actual vs. budgeted disbursements is made monthly. Bank reconciliations are performed by Accountant. 1. When the transaction is complete and payment is due, a check is to be attached to all supporting documentation, vendor invoice, payroll record, petty cash voucher, and tax return loan repayment schedule or remittance advice. 2. A prenumberd check will be prepared. 3. The Executive 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. All supporting documents will be canceled by the signatory. 6. All checks and bank transfers will be entered into the general ledger program. 7. Bank statements will be given unopened to the board treasurer directly from the bank for his review and approval. 8. Bank reconciliations and proposed adjustments will be reviewed and approved by the Executive Director or treasurer of the board. IMPREST AND PETTY CASH FUNDS To control the use of imprest and petty cash funds for valid transactions. San Francisco Court Appointed Special Advocate Program 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: Office manager will control a limited amount of funds in a locked drawer. Petty cash expenditures will be approved by the Executive Director or the Program Director prior to expenditure. Cash will be disbursed, the item purchased, and a receipt with any change will be returned to the Office manager. Office Manager will reconcile the petty cash fund on a monthly basis and the reconciliation will be approved by the ED. Internal Accounting Controls (i) Segregate custodial and record keeping duties 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. PREPAID ITEMS To ensure proper accounting for prepaid expenses. FINANCIAL PROCEDURES MANUAL 7
Major controls A. Internal Accounting Controls (i) Preparation and updating of an amortization schedule to reflect the incurring of expenses for prepaid items. (ii) Detailed prepaid expenses reconciled with the General Ledger control account. 1. All vendor invoices will be reviewed by the Executive Director to identify all required prepayments. FINANCIAL PROCEDURES MANUAL 8
ACCOUNTS RECIEVABLE PROCEDURES In this section, the procedures are described that cover revenue recognition and invoicing, billing, accounts receivable and other revenues. REVENUE RECOGNION AND INVOICING To ensure 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 San Francisco Court Appointed Special Advocate Program will use the contract billing form from the contracting agency as frequently as the contract allows. C. Internal Accounting Controls (i) Monitoring of agency invoices periodically and resolution of agency-noted differences by employees with responsibilities independent of invoicing. BILLING 1. The Accountant preparing the billing will verify the invoices arithmetic extensions. 2. The invoice will be entered and copied. 3. Periodically, the contract folder will be reviewed for the numerical sequence of invoices. 4. On receipt of payment, the cash receipts will be posted to the General Ledger control account. 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 FINANCIAL PROCEDURES MANUAL 9
(i) (ii) All invoices reconciled with the project cost summaries 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. Each invoice will be approved by the Executive Director before submission. 5. Invoices will be mailed to the customer. 6. 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 receivable balances. A. Separation of Duties Where possible, the responsibility for posting sales invoices will be kept separate from those with responsibilities for cash functions. The General Ledger control account will be posted by those with responsibilities independent of accounts receivable and cash receipts. B. Periodic Reconciliation of Billings to Receipts San Francisco Court Appointed Special Advocate Program will periodically reconcile the billings to the cash receipts on contracts. 1. Payments, allowances, credits and other adjustments will be posted to the general ledger 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. FINANCIAL PROCEDURES MANUAL 10
CONTRIBUTIONS To ensure San Francisco Court Appointed Special Advocate Program 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 San Francisco Court Appointed Special Advocate Program will comply with the filing and reporting requirements in each state it solicits contributions. D. Annual Audit of Contributions 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 San Francisco Court Appointed Special Advocate Program. General 1. San Francisco Court Appointed Special Advocate Program will register annually in each state it solicits contributions. 2. Annually, San Francisco Court Appointed Special Advocate Program will file an annual return with each state in which it is authorized to solicit contributions as will as the IRS Form 990 with the Internal Revenue Service. Contributions of Securities 1. For the transfer of securities certificates or their ownership to San Francisco Court Appointed Special Advocate Program, 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. 4. Securities will be sold immediately and the cash deposited in the money market account. FINANCIAL PROCEDURES MANUAL 11
Contributions of Personal Property 1. Personal Property may be accepted when it can be readily sold or used on 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, San Francisco Court Appointed Special Advocate Program will complete IRS for 8282, Donee Information Return to Report the Sale, Exchange or Other Disposition of Charitable Deduction Property and submit it to IRS. Contributions of Real Estate 1. Real estate in the form of a residence, business, commercial building, undeveloped land, etc., may be accepted provided an environmental and toxic waste review has been conducted and 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 acceptance, a contribution acknowledgement form will be prepared and mailed to the donor. Accounting for Contribution Revenue Contributions received for restricted purposes will be entered in a separate donor restricted fund by the 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. FINANCIAL PROCEDURES MANUAL 12