Accounting policies and procedures manual doc

The resulting documentation can also serve as a useful training tool for staff. GFOA recommends that every government should document its financial and accounting policies and procedures.

Traditionally, such documentation has taken the form of a financial and accounting policies and procedures manual. The policies and procedures manual should be in a searchable, electronic format and available on the employee portal or intranet site. An appropriate level of management should openly promote accounting policies and procedures to emphasize their importance and authority. The documentation of financial and accounting policies and procedures should be evaluated annually and updated periodically, at least every three years, according to a predetermined schedule.

Changes in policies and procedures that occur between these periodic reviews should be updated in the documentation promptly as they occur. Upon receiving the bank statement from the Executive Director, the Accountant prepares the monthly bank reconciliation.

See Section 18 for the form used to prepare the bank reconciliation. The bank reconciliations will reconcile the bank balance to the general ledger balance.

A journal entry will need to be posted each month for items on the bank statements which are not already recorded in the general ledger. These reconciling items may include: interest earned, service charges, NSF checks, direct deposits and other debit or credit memos.

After the general ledger is reconciled to the bank statement, the monthly bank statement and cancelled checks and other forms and the actual reconciliation form are filed in the bank reconciliation file. The Executive Director approves the financial statements before being sent to the Board of Directors. The financial statements should be to the Executive Director at least two days prior to the mailing of Board packets in order to facilitate this review.

The cutoff for information in the monthly statements is two weeks after the month end. Upon completion of the monthly bank reconciliations, the Accountant will formulate the monthly journal entries. There are two types of monthly journal entries, those that remain consistent from month to month recurring and those that are specific to that month.

The recurring journal entries Section 18 are determined after the annual audit with the help of the CPA firm. These include depreciation and expensing of prepaid insurance. The Accountant will maintain a file for each month which includes workpapers which document the balance of each balance sheet account. The file will also include copies of the grant billings. All balance sheet accounts will be reconciled monthly to help ensure that accurate statements are provided to management and the Board.

Once the final general journal entries are posted, the monthly financial statement is printed along with a copy of the general ledger for that month as well as the general journal entries posted. The adjusted financial statements are to be delivered to the Board of Directors within three weeks after the end of the month. The Accountant prepares a budget to actual expense report for the Executive Director and the Board of Directors to be included with the monthly financial statements.

The year end financial statements will be delayed for additional procedures see Section 8. The Accountant is responsible for preparing for the annual financial audit and for working with the outside accountants to complete the audit. The financial statements should be to the Executive Director at least one week prior to the mailing of the Board packet in order to facilitate this review.

The Accountant will arrange to move all records from the year which is closing to storage. The cutoff for December financial statements is extended to four weeks after year end. Upon completion of the December financial statements, the preliminary year end report is run by the Accountant and given to the Executive Director for review. The Accountant calculates the recurring entries with the help of the CPA firm if needed for the new year.

The Accountant will contact the independent accountants as soon as the Executive Director signs the audit engagement letter to begin planning the scheduling and work needed to complete the audit. The Accountant will ensure that adequate space is provided for the independent accountants to work in our offices. This would include one or more large tables, space to keep our records provided to the independent accountants, light and electrical outlets.

The Accountant will work with the independent accountants to determine what confirmations will be required. This process will be completed as soon after year end as possible.

The Accountant will oversee typing the confirmations. The Executive Director will sign the confirmations. The Accountant will mail the confirmations to the independent auditors. The Accountant will be responsible for preparing as many of the schedules which the auditors will use as possible. The completed monthly reconciliations for December will partially fulfill this requirement.

The Accountant will be available at all times throughout the audit to facilitate the work of the independent accountants. The Executive Director will schedule some time to meet with the independent accountants as needed during the audit. The Office Assistant will also be available for any work which the Accountant may delegate to them. The Accountant and Executive Director will plan a meeting with the independent accountants at the end of the audit to discuss any issues raised, review the audit journal entries, evaluate the audit process and plan improvements for the following year.

Client X is required to follow various guidelines for allocating costs which benefit more than one program or grant. A cost allocation plan will be adopted each year which satisfies the requirements of all grants for that year. This cost allocation plan will need to be modified any time a new program is started or at the end or beginning of any fiscal year grants. Due to the frequent modifications to the cost allocation plan, it will be maintained outside of this accounting procedures manual see Exhibit A.

Cash not needed for immediate working capital will be transferred to interest bearing investments, unless the funds are designated for a particular account. Client X will maintain collateralization of the total at any one bank in excess of the FDIC coverage. If this is not deemed to be practical or cost effective, a second bank will be used.

The Board of Directors must approve any investments beyond the options listed below. Client X will maintain a money market account at the same bank where the checking account is maintained. Certificates of deposit may also be used to invest excess cash. The Executive Director will initiate the transfer of funds or setting up new certificates of deposit based on the projected cash flow requirements and budgets of Client X.

The Accountant will prepare the projected cash flow requirements as requested by the Executive Director. The operating reserve fund and any cash designated by the Board will be maintained in a money market account or certificate of deposit. The Board will specify the investment method for the operating reserve and for each designated fund, so that the timeline of the investment will match the timeline of the reserve or designation.

Board approval is required for incurring any debt of Client X other than operating trade payables and budgeted payroll payables. The Executive Director will be authorized to negotiate such debt as needed by the Board of Directors.

Any loan covenants and restrictions will be reported to the Board when the debt is authorized. The Accountant will periodically review these covenants and report to the Executive Director if there are any violations or potential violations of the covenants.

The Executive Director and Board President or Treasurer will sign any debt agreements after receiving full Board approval. The Accountant will reconcile the general ledger debt balances to statements or amortization schedules each month. In addition, accrued interest will be recorded in the general ledger as needed.

Client X will build and maintain an operating reserve to assist in maintaining financial stability. The target for the operating reserve will be six months of general operating expenses. This will be a cash reserve held separately from other funds of Client X. The reserve may be invested consistent with the investment policy of Client X. Any income of the reserve fund will stay in the reserve fund. The Board of Directors may designate portions of the net assets of Client X for specific purposes.

During the annual budget preparation, the Board will review the operating reserve and set a target for funds to be set aside that year. The Executive Director will establish and maintain the operating reserve bank account as directed by the Board. Designation of net assets will be made by resolution of the Board. A purpose and timeline must be specified for each designated fund.

The designation may also specify whether a separate cash fund is to be used. The review of internal controls and the annual audit are two of the most important procedures the Board has for fulfilling its fiduciary responsibilities to Client X. Internal controls pertaining to the accounting records are established by the Executive Director and Board Treasurer in consultation with the Accountant. The Board of Directors selects the public accounting firm which will perform the year end financial audit.

The financial audit report is presented to the Board of Directors who has the authority to approve the audit. Whenever there is a change in administrative personnel or a change in the operating structure of the organization, the Treasurer and Executive Director will meet to determine that the internal control system continues to meet the needs of Client X.

If appropriate, the changes will be reflected in this accounting procedures manual. The key features of the internal control system are that the Accountant and program person B, who maintains the property management software, are not involved in handling checks and cash received, signing checks, transferring money or establishing cash accounts or investments and do not receive the unopened bank statement.

The other aspect of this is that the Accountant reviews the transactions of the other employees and is responsible for noting any problems to the Executive Director or directly to the Board Treasurer or President. The Board of Directors will approve, as part of the budget process, the public accounting firm to perform the annual audit. The Board Treasurer will attend the audit exit conference at the conclusion of the audit. The public accounting firm will present the audit to the Board each year.

The Board will review and approve the financial audit. The Accountant and Executive Director will be responsible for scheduling the audit, preparing the information needed by the auditors and answering questions during the audit.

In order to continue receiving government grants and restricted donations, Client X must have systems in place to ensure compliance with the restrictions imposed by those grants and restricted donations. The Accountant is designated as Client X 's compliance officer and will be responsible for overseeing the compliance with all applicable grant restrictions.

The Executive Director will be responsible for communicating the nature of all donor restrictions to the Accountant.

This information will used to ensure that the General Ledger restricted donations account will reflect the restricted donations and the spending of those restricted amounts, as appropriate. A compliance committee will be chaired by the Accountant and consist of the Executive Director and primary program personnel.

The Accountant will be responsible for discussing new compliance requirements in the grants which fund the programs with the committee. The Accountant will be responsible for preparing a report documenting how WH, is ensuring compliance with grant rules in each grant program. The Accountant will also produce a similar report for overall compliance procedures of the agency. These reports, plus any correspondence with granting agencies regarding compliance issues, will be kept in a central compliance file.

The compliance committee will also oversee the maintenance of grant files. The grant files will contain the final signed copy of the grant, any addenda, and correspondence.

The Executive Director will maintain a record of all restricted donations in the donor database so that periodic reports of the year's cumulative restricted donations can be produced. When a restriction has been satisfied, that will be noted in the database. If appropriate, the Executive Director will be responsible for communicating the satisfaction of the restriction to the donor.

The Executive Director will forward copies of each month's new and outstanding restricted donations to the Accountant. The Accountant will create a journal entry each month to ensure that the restricted donations are correctly presented in the financial statements. The Board of Directors is responsible for guiding the budget process and for approval of the annual budget. The Executive Director and Accountant will be responsible for preparing the proposed budget.

The budgeting process will begin in September for the following fiscal year. This will allow for eight months of results to be used in planning the budget. All budget documents will be submitted to the Accountant by September 30 for consolidation into an overall agency budget. The Executive Director and Accountant will then review this to determine if there are any obvious areas which may need to be reworked.

The collated budget will be submitted to the Finance Committee by October 15 for review and feedback. Any further revisions will be made and the budget presented to the Board by November Executive Director -- Program revenues and expenses, fundraising revenues and expenses, donations revenue, operations expenses, and capital budget. Accountant -- Accounting expenses, investment income, projected balance sheet. After completion and approval of the budget by the Board of Directors, the budget will not be modified for subsequent activities.

The accounting computer and software will have access controlled by passwords. The Executive Director will control the master password. The Accountant will be given a complete system password and will control which other personnel will be given passwords. The accounting computer will be backed up regularly.

The Accountant is responsible for carrying out this backup. The Accountant is responsible for maintaining the disaster recovery plan for the accounting software and for periodically testing the plan. The Accountant will maintain a record of all authorized users and the level of password access each user has.

Passwords will be changed once each year in June. The back up procedures are designed to maintain records of various periods until that period is closed. An annual tape backup will be maintained of the accounting data prior to the close.

This tape will be maintained until the subsequent year accounting data is backed up and closed. A monthly tape backup will be maintained of the accounting data for each month until that month is again backed up the subsequent year. A weekly tape backup will be maintained of the accounting data for each week, as of Friday evening until that week is backed up the subsequent month.

A daily tape backup will be maintained of the accounting data for each day that work is performed until that day is backed up the following week. A copy of all tapes will be kept in a fireproof tape safe in the office.

A copy of the annual and monthly tapes will be taken home by the Accountant for storage. The Executive Director and the Accountant will have keys to the fireproof safe.

The Accountant will ensure that the appropriate backups are made at the end of each day. In the event of the serious damage to the offices of Client X arrangements have been made to process certain accounting records at the offices of ABC Nonprofit located across town. Since the disasters we are anticipating would be localized in nature, such as fire or tornado damage, we have not set up recovery plans with other agencies in another part of the State.

This policy discusses and offers guidelines on operating expenses and credits, and includes tables that list General Ledger account code ranges for recording expenses. This policy defines and classifies types of expenses and expense credits at the Company. Expenses are the costs used to produce revenue. They are outflows of cash or charges. For financial reporting purposes, expenses include all costs paid to external parties.

Division of Duties. All procedures and expenditures shall be conducted and approved in accordance with the company written Delegation of Authority, Accounts Payable and Purchasing Policies and Procedures.

The purpose of this document is to describe how you buy goods, services, and assets at our organization. Purchasing means the act of buying or obtaining goods, services, or assets on behalf of the company for a price or its equivalent. All purchasing must comply with the following policies and procedures:. All real estate leases and transactions must comply with the procurement procedures regardless of amount and without exception.

The company uses p-cards to increase purchasing efficiency and reduce accounting costs. Company P-Card Employees are authorized to use their p-cards according to the p-card policies and procedures. P-Card purchasing and receiving activities should not be separated but should be independently verified by use of a log.

Pricing - get the full content when you license and download the templates Accounts Payable is the process of keeping track of Company financial obligations. It involves the issuance of purchase orders, acceptance of invoices from vendors, recording the invoices in the computer system, and payment to vendors.