Transcription

Belmont Charter SchoolACCOUNTINGPOLICIES AND PROCEDURESManualInternal Financial ControlsPage 1 of 21

Table of ContentsI. Introduction . 3II. Division of Responsibilities . 4Board of Trustees . 4Chief Administrative Officer (School Leader) . 4Outside Business Manager . 4Bookkeeper (School Personnel) . 5III. Chart of Accounts and General Ledger . 6IV. Cash Receipts. 7V. Inter-Account Bank Transfers . 8VI. Cash Disbursements & Expense Allocations . 9VII. Credit Card Policy and Charges . 11VIII. Accruals . 12IX. Bank Account Reconciliations . 13X. Petty Cash Fund. 14XI. Property and Equipment . 15XII. Personnel Records . 16XIII. Payroll Processing . 17XIV. End of Month and Fiscal Year-End Close . 18XV. Financial Reports . 19XVI. Fidelity Insurance Coverage . 20XVII. Fiscal Policy Statements . 21Page 2 of 21

I. IntroductionThe purpose of this manual is to describe all accounting policies and procedures currently in use at theBelmont Charter School and to ensure that the financial statements conform to generally acceptedaccounting principles; assets are safeguarded; guidelines of grantors and donors are complied with; andfinances are managed with accuracy, efficiency, and transparency.All Organization’s staff with a role in the management of fiscal and accounting operations are expected tocomply with the policies and procedures in this manual.These policies will be reviewed annually and revised as needed by the staff and approved by the CAO (ChiefAdministrative Officer/School Leader) and the Board of Trustees.Page 3 of 21

II. Division of ResponsibilitiesThe following is a list of personnel who have fiscal and accounting responsibilities:Board of Trustees1.Reviews and approves the annual budget2. Reviews annual and periodic financial statements and information3. Reviews CAO (School Leader)'s performance annually and establishes the salary4. Two members of the school will be appointed by the board to be authorized signers on the bankaccounts5.Reviews and approves all contracts over 5,0006. Reviews and approves all non-budgeted expenditures over 2,5007.Reviews and advises staff on internal controls and accounting policies and procedures8. Determines whether the organization should have an audit and, if so, chooses and contracts withthe auditorChief Administrative Officer (School Leader)1.Reviews and approves all financial reports including cash flow projections2. Sees that an appropriate budget is developed annually3. Reviews and signs all issued checks and/or approves check signing procedures4. Reviews and approves all contracts under 5,0005.Reviews and approves all grant submissions6. Approves inter-account bank transfers7.Is on-site signatory for all bank accounts8. Opens all bank statements, reviews for any irregularities, and reviews completed monthly bankreconciliations9. Oversees the adherence to all internal controls10. Approves all program expenditures11. Monitors program budgets12. Monitors grant reporting and appropriate release of temporarily restricted fundsOutside Business Manager1.Reviews all payrolls and is responsible for all personnel files2. Reviews and manages cash flow3. Reviews all reimbursements and fund requests4. Processes all inter-account bank transfers5.Assists CAO (School Leader) with the development of annual and program budgets6. Reviews all incoming and outgoing invoicesPage 4 of 21

7.Monitors and manages all expenses to ensure most effective use of assets8. Oversees expense allocations9. Monitors and makes recommendations for asset retirement and replacement10. Reviews, revises, and maintains internal accounting controls and procedures11. Reviews all financial reports12. Overall responsibility for data entry into accounting system and integrity of accounting system data13. Processes invoices and prepares checks for signature14. Maintains general ledger15. Prepares monthly and year-end financial reports16. Reconciles all bank accounts17. Manages Accounts ReceivableBookkeeper (School Personnel)1.Manage all petty cash funds2. Receives and opens all incoming accounting department mail except bank statements3. Initiates donor thank you letter acknowledgements4. Makes bank deposits5.Processes invoices and prepares checks for signature6. Mails vendor checksPage 5 of 21

III. Chart of Accounts and General LedgerBelmont Charter School has designated a Chart of Accounts specific to its operational needs and the needsof its financial statements as required by the Pennsylvania Department of Education. The Chart of Accountsis structured so that financial statements can be shown by natural classification (expense type) as well as byfunctional classification. The Outside Business Manager is responsible for maintaining the Chart ofAccounts and revising as necessary.The general ledger is automated and maintained using the accounting software of the Outside BusinessManager. All input and balancing is the responsibility of the Outside Business Manager with final approvalby the School’s CAO (School Leader).The Outside Business Manager reviews the general ledger on a periodic basis for any unusual transactions.Page 6 of 21

IV. Cash ReceiptsCash receipts generally arise from:1.Contracts and Grants2. Student Funding3. Direct donor contributions4. Fundraising activitiesThe principal steps in the cash receipts process are:The Receptionist receives incoming mail and forwards it unopened to the Administrative Assistant. TheAdministrative Assistant opens, date stamps, and distributes the mail. The Administrative Assistant entersall checks into a log, stamps all checks “for deposit only,” and makes two (2) copies of each check. Thechecks are kept in a locked cabinet until handed to the Bookkeeper for processing and deposit.Weekly (or more often if necessary), the Bookkeeper the deposit and takes it to the bank for deposit. A copyof the deposit slip is attached to the deposit. The deposits are put in a file to attach to the bank statement.The deposit log book is returned to the Administrative Assistant.All cash received will be counted, verified, and signed off by Bookkeeper and another available staffmember. The cash will immediately be posted using the appropriate allocation. A receipt will be given to thepaying party and a copy kept for internal purposes. The cash will be kept in a locked, secure location anddeposited within 24 business hours.Page 7 of 21

V. Inter-Account Bank TransfersThe Outside Business Manager monitors the balances in the bank accounts to determine when there is ashortage or excess in the checking account. The Outside Business Manager recommends to the CAO (SchoolLeader) when a transfer should be made to maximize the potential for earning interest. The OutsideBusiness Manager is directed in writing when to make a transfer and in what amount.Page 8 of 21

VI. Cash Disbursements & Expense AllocationsCash disbursements are generally made for:1.Payments to vendors for goods and services2. Payroll3. Taxes/license fees4. Staff training and development5.Memberships and subscriptions6. Meeting expenses7.Employee reimbursementsChecks are processed weekly. Invoices submitted to the Bookeeper by Wednesday will be processed andpaid by Wednesday of the following week. Checks can be prepared manually within one day, but this shouldbe limited to emergency situations.Requests for cash disbursements are submitted to Accounting in three ways:1.Original invoice2. Purchase request (submitted on approved form)3. Employee expense report or reimbursement requestAll invoices must have the account code written on them and approved by the CAO prior to being submittedto accounting.Every employee reimbursement or purchase request must be documented on the approved form with travelauthorization, receipts, nature of business, program allocation, and funding source (if applicable) beforeapproving for reimbursement as follows:Lodging - an itemized receipt from the hotel detailing all charges, the person(s) for whom the lodging wasprovided, and the specific business purpose.Meals and Entertainment - a receipt must be provided showing the cost of food, beverage, andgratuities, including the names of every person for whom food or beverage was provided, and the specificbusiness purpose.Other Expenditures - a receipt from the vendor detailing all goods or services purchased (including theclass of service for transportation) and the specific business purpose.The Outside Business Manager with the Bookkeeper review all requests for payment and:1.Verifies expenditure and amount2. Approves for payment if in accordance with budget3. Provides or verifies appropriate allocation information4. Provides date of payment taking into account cash flow projections5.Submits to the CAO (School Leader)/Board for approval6. Immediately enters them into the Accounts Payable modulePage 9 of 21

7.Submits checks, with attached backup documentation, to CAO (School Leader) for approval andsignature. All checks require a second signature from the Outside Business Manager; Stampsinvoice “paid”8. Mails checks and appropriate backup documentation9. Files all backup documentation in the appropriate file10. Runs an accounts payable aging at the middle and end of each month and submits to the CAO(School Leader) to assure timely payment of all invoicesExpense AllocationsMost non-salary expenses that benefit more than one cost center (administration, fundraising, andprogram) are spread across centers using a shared cost method. Under this method, the number of full-timeequivalents (FTEs) within a department are divided by the total number of FTEs at the organization todetermine the percentage of shared costs they should bear. This is done on a monthly basis by the OutsideBusiness Manager.Page 10 of 21

VII. Credit Card Policy and ChargesAll staff members who are authorized to carry an organization credit card will be held personallyresponsible in the event that any charge is deemed personal or unauthorized. Unauthorized use of the creditcard includes: personal expenditures of any kind; expenditures which have not been properly authorized;meals, entertainment, gifts, or other expenditures which are prohibited by budgets, laws, and regulations,and the entities from which the School receives funds.The receipts for all credit card charges will be given to the Outside Business Manager within two (2) weeksof the purchase along with proper documentation. The Outside Business Manager will verify all credit cardcharges with the monthly statements. A record of all charges will be given to the Bookkeeper with applicableallocation information for posting. A copy of all charges will be attached to the monthly credit cardstatement when submitted to the CAO (School Leader) for approval and signing.The CAO (School Leader)'s credit card usage will be provided to the Board Chair and the Board Treasurer.Page 11 of 21

VIII. AccrualsTo ensure a timely close of the General Ledger, The School may book accrual entries. Some accruals will bemade as recurring entries.Page 12 of 21

IX. Bank Account Reconciliations1.All bank statements are given unopened to the CAO (School Leader). The CAO (School Leader)reviews the statements for unusual balances and/or transactions.2. The CAO (School Leader) gives the statements to the Outside Business Manager for timelyreconciliation as follows: a comparison of dates and amounts of deposits as shown in the accountingsystem and on the statement, a comparison of inter-account transfers, an investigation of anyrejected items, a comparison of cleared checks with the accounting record including amount, payee,and sequential check numbers.3. The Outside Business Manager will verify that voided checks, if returned, are appropriately defacedand filed.4. The Outside Business Manager will investigate any checks that are outstanding over six months.5.The Outside Business Manager will attach the completed bank reconciliation to the applicable bankstatement, along with all documentation.Page 13 of 21

X. Petty Cash FundPetty cash funds are maintained by the organization. The funds are to be used for miscellaneous orunexpected purchases and the same approval procedures apply as mentioned in the cash disbursementsection.1.The petty cash fund will not exceed 1500.2. The Bookkeeper oversees the petty cash fund.3. All disbursements made from petty cash are acknowledged in writing by the receiving party.4. All money returned to the petty cash fund is counted and verified by the Bookkeeper and anotherstaff member. Receipts for items purchased with petty cash must be included with the return andshould include appropriate account allocations as well as supervisor approval.5.The Outside Business Manager and the Bookkeeper together will periodically count the cash in thepetty cash fund.6. No checks will be cashed by the petty cash fund.Page 14 of 21

XI. Property and EquipmentProperty and equipment includes items such as:1.2.3.4.Office furniture and equipmentComputer hardwareComputer softwareLeasehold improvementsIt is the organization’s policy to capitalize all items which have a unit cost greater than two thousand fivehundred dollars ( 2,500). Items purchased with a value or cost less than two thousand five hundred dollars( 2,500) will be expensed in the period purchased.The depreciation period for capitalized assets is as follows:Computer HardwareOffice EquipmentOffice FurnitureComputer SoftwareLeasehold improvements1.36 months60 months60 months36 monthsLength of leaseA Fixed Asset Log is maintained by the Outside Business Manager including date of purchase, assetdescription, purchase/donation information, cost/fair market value, donor/funding source,identification number, life of asset.2. The Log will be reviewed by the Outside Business Manager.3. Annually, a physical inspection and inventory will be taken of all fixed assets and reconciled to thegeneral ledger balances.4. The Outside Business Manager shall be informed in writing of any change in status or condition ofany property or equipment.5.Depreciation is recorded at least annually. Depreciation is computed using the straight-line methodover the estimated useful lives of the related assets. Any impaired assets discovered during theinventory will be written down to their actual value.Page 15 of 21

XII. Personnel Records1.All personnel files contain the following documents: an application and/or resume, date ofemployment, position and pay rate, authorization of payroll deductions, W-4 withholdingauthorization, termination data where applicable, a signed confidentiality agreement, a signedacknowledgement of receipt of Employee Handbook, an emergency contact form, and other formsas deemed appropriate by the Outside Business Manager.2. All employees will fill out an I-9 form and submit the allowable forms of identification to theHuman Resources Manager.3. The completed I-9 forms will be kept in a secure location separate from the personnel files.4. All employees must have a child abuse clearance certificate on file.5.All employees must have a criminal background (Pre 2008 hiring date) or an FBI background check(Post 2008) on file.6. All teachers must provide a copy of their teacher’s certificate.7.All personnel files are to be kept in a secure, locked file cabinet and accessed only by authorizedpersonnel.Page 16 of 21

XIII. Payroll Processing1.Timesheets are to be prepared by all staff on the approved form and submitted on the Tuesday priorto the pay check week. If the reporting date for the weeks falls on a holiday, the timesheets are tobe submitted the day prior to the weekend or holiday. Exceptions to the submittal date may occurand will be communicated accordingly.2. Timesheets are to be kept on a daily basis and completed in ink – unless prepared electronically.3. Any corrections to timesheets are to be made by making a single line through the error and writingin the correction. Correction fluid and/or tape are not allowable.4. Timesheets are to be signed and dated by the employee and the employee’s supervisor forsubmission to the HR Manager.5.Any changes to the standing information of the payroll register from the prior period includingaddition of new employees, deletion of employees, or changes in base pay rate must beaccompanied by an Employment Information Form and signed by the CAO (School Leader) beforethe change can be made.6. The Bookkeeper will process payroll in a timely manner and record vacation time, holiday hours,sick time, and any other information deemed necessary to properly reflect time worked.7.Manual Paychecks will be distributed by the HR Manager on the Thursday or Friday of the payweek. If the pay date falls on a weekend or holiday the paychecks will be distributed the day before.8. If the employee requests that his/her check be turned over to a third party, the request must bemade in writing prior to distribution.9. Employees may choose direct deposit to a designated bank account. Their paycheck is depositeddirectly into the designated account on the payroll date. The employee will receive a verificationstub.10. The Outside Business Manager will review payroll expenditures and allocations monthly.11. All quarterly federal and state payroll reports will be prepared and filed appropriately.12. All W-2 statements are issued to employees prior to January 31 st of the following year for the priorcalendar year.Page 17 of 21

XIV. End of Month and Fiscal Year-End Close1.The Outside Business Manager will review and sign off on all month and year-end journal entries.They will be printed and filed for audit trail purposes.2. At the end of each month and fiscal year end, the Outside Business Manager will review all balancesheet accounts including verification of the following balances: cash accounts match the bankreconciliations, fixed assets accounts reflect all purchases, write-downs and retirements, accountsreceivable and payable accounts match outstanding amounts due and owed.3. The income and expense accounts review will include reconciliation to amounts received andexpended and verification that payroll expenses match the payroll reports including federal andstate payroll tax filings.4. Once the final monthly and fiscal year-end financial statements are run, reviewed, and approved bythe Outside Business Manager and CAO (School Leader), no more entries or adjustments will bemade into that month or year’s ledgers.5.At the end of the fiscal year, the Outside Business Manager will prepare the annual Return forOrganization Exempt from Income Tax (IRS Form 990). The return will be presented to the CAO(School Leader), the Board Finance Committee, and the Board Chair for their review and approval.The Outside Business Manager will then file the return with the Internal Revenue Service by theannual deadline.6. All other appropriate government filings including those required by the state tax board andattorney general’s office will be completed and filed with the appropriate agency.Page 18 of 21

XV. Financial ReportsThe Outside Business Manager will prepare the monthly and annual financial reports for distribution to theCAO (School Leader) and Board of Trustees. The reports will include: balance sheet, statement of incomeand expenses, budget versus actual report for each program which has an established budget, a budgetversus actual report for the organization, accounts receivable aging, accounts payable register and aging,cash flow projection, and any other requested reports.Periodic and annual financial reports will be submitted to the Finance Committee and Board of Trustees forreview and approval.Any employee who handles cash (either its receipt or disbursement) or who holds a position of financialtrust must have fidelity bond insurance coverage. The adequacy of such coverage shall be subject to boardreview with the School’s insurance agent on an annual basis at a minimum.Annually, an Independent Auditors conduct an audit in accordance with auditing standards generallyaccepted in the USA and the standards applicable to financial audits contained in Government AuditingStandards issued by the Comptroller General of the United States. An Independent Auditor’s Report of theFinancial Statements for the current Fiscal Year are issued after completion of the Audit to the Board ofTrustees.Page 19 of 21

XVI. Fidelity Insurance CoverageAny employee who handles cash (either its receipt or disbursement) or who holds a position of financialtrust must have fidelity bond insurance coverage. The adequacy of such coverage shall be subject to boardreview with the School’s insurance agent on an annual basis at a minimum.Page 20 of 21

XVII. Fiscal Policy Statements1.All cash accounts (except petty cash) owned by the School will be held in financial institutionswhich are insured by the FDIC. No bank account will carry a balance over the FDIC insuredamount.2. All capital expenditures which exceed two thousand five hundred dollars ( 2,500) will becapitalized.3. Employee or public personal checks will not be cashed through the petty cash fund.4. Salary advances will be made under extreme emergencies only. The amount will be limited to 1 biweekly paycheck and repayment terms will be no longer than the remaining of the school year (June30th).5.No travel cash advances will be made except under special conditions and pre-approved by the CAO(School Leader).6. Reimbursements will be paid upon complete expense reporting and approval using the officialSchool’s form. Reimbursements to the CAO (School Leader) will be authorized by the Board Chair.7.Any donated item with a value exceeding 500 will be recorded and a letter acknowledging thedonation will be sent to the donor within two weeks of the receipt of the donation.8. The CAO (School Leader) and one designated Board member are the signatories on School’s bankaccounts. Checks over 2,500 require approval from the Board of Trustees if not budgeted.9. Bank statements will be reconciled monthly. All bank statements will be given unopened to the CAO(School Leader) for review.10. Correction fluid and/or tape will never be used in any accounting documents.11. Accounting and personnel records will be kept in locked file cabinets in the finance office and onlyparties with financial and/or HR responsibility will have access to the keys.Page 21 of 21

Belmont Charter School has designated a Chart of Accounts specific to its operational needs and the needs of its financial statements as required by the Pennsylvania Department of Education. The Chart of Accounts is structured so that financial statements can be shown by natural classificatio