Financial Policies and Procedures

POLICY STATEMENT:

Central Missouri Foster Care and Adoption Association is committed to the highest ethical standards in all business transactions while serving the organization’s mission and adhering to donor and granting restrictions. CMFCAA will strive for transparency in all transactions. The Financial Policy is to outline compliance, general accounting practices, and responsibilities. The Financial Procedures outline operational duties arecarried out primarily by CMFCAA Staff and Treasurer.

  1. GENERAL CONSIDERATIONS
  1. All records pertainingto the fiscal operations of CMFCAA are open to the public, with the exception of corporate and individual donations which are considered confidential.
  1. Financial Policies and Procedures shall be reviewed annually by the Board of Directors’ Executive Committee. They will then be updated as deemed necessary. Amendments to this document must be approved by the Board.
  1. Exceptions to these policies regarding program services may be made by the President/CEO with the consent of the Board Treasurer and reported to the Board of Directors at its next regular meeting.
  1. GENERAL FISCAL STRUCTURE
  1. CMFCAA operates on a calendar year for account purposes and follows generally accepted accounting principles (GAAP[JS1]).
  1. An annual audit of the organization’s records will be conducted by an independent, certified public accounting firm in accordance with GAAP[JS2].
  1. CMFCAA accounting uses the cash method and is intended to accurately allocate revenues and expenses to the following functional areas:
  2. Programs and Mission related services
  3. Fundraising
  4. Operations and/or Administration
  1. FUNDS MANAGEMENT
  1. The Board of Directors will approve all financial and investment relationships (i.e. banks, deposit corporations, investment counselors, etc.) and will, from time-to-time as appropriate, review those relationships.
  1. The Treasurer is an elected position of the Board of Directors.
  1. The Treasurer is an officer of the Executive Committee. The term of the Treasurer is one year. However, officers may serve three (3) consecutive terms [in that elected position].
  2. The Treasurer shall oversee the Financial Procedures of the President/CEO, Operations Director, and staff and volunteers.
  3. The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the organization. The record of accounts shall at all reasonable times be open to inspection by any Director.
  4. The Treasurer shall chair the annual Budget committee procedures.
  1. President/CEO
  1. As Chief Executive Officer, the President/CEO will manage the programs and activities of CMFCAA in such a way as to accomplish the programmatic and financial goals of CMFCAA.
  2. The President/CEO will ensure that financial records are maintained in a secure manner that allow for timely retrieval of accurate information and sound management of CMFCAA’s financial affairs.
  3. The President/CEO will participate in the annual Budget committee procedures.
  1. Operations Director
  1. The Operations Director is responsible for the practical implementation of the Financial Procedures in order to accomplish the programmatic and financial goals of CMFCAA.
  2. The Operations Director will accurately maintain financial records for, revenues, expenses, and bank statement reconciliations of the organization with oversight from the President/CEO and Treasurer.
  3. The Operations Director will provide programmatic and organizational updates to the Treasurer on a monthly basis.
  4. The Operations Director will provide programmatic and organizational updates to the Budget Committee annually.
  5. The Operations Director is not permitted to be a check signor.
  1. OPERATING BUDGET
  1. The purpose of the operating budget is to provide accurate information and realistic performance measures for the sound financial management of CMFCAA. Employees, as assigned, will review the operational goals for the upcoming year, assess the current year’s performance, and report financial projections based on performance goals and accountability to the President/CEO, Operations Director, and Treasurer.
  1. The President/CEO, Operations Director, and Treasurer then develops a projected budget for review, consideration, and recommendations of the Budget Committee of the Board of Directors. The Budget Committee will consist of members of the Board of Directors, the President/CEO, and the Operations Director.
  1. An annual operating budget will be approved by the Board of Directors in December prior to the start of each calendar year.
  1. Financial reports will be prepared and reviewed by the Board of Directors on a monthly basis.
  1. Expenditures within the approved budget will not require further Board approval. In addition, overages and underage in specific categories of expense are expected and will be monitored in order to facilitate future planning.
  2. Board approval will be required prior to any change in total budgeted expenditures above 15% of budget.
  1. CMFCAA budget will be a balanced budget.
  1. NON-OPERATING FUNDS
  1. The Board shall have the power to establish restricted funds in order to provide for future program development or to meet specific needs.
  1. The Board will maintain a restricted reserve funds with the goal of three months of operating expenses. The operating reserve will be reviewed annually.
  1. Chart of Accounts

It is the policy of CMFCAA to maintain a chart of accounts. The chart of accounts will be reviewed and updated by the Operations Director as needed. Any changes in chart of accounts beyond reasonable updates (i.e. program name changes) will be subject to approval of the Treasurer.

  1. CHECK AUTHORIZATION, SIGNATURES, AND EXPENDITURES
  1. Blank checks will be safeguarded under lock and key.
  1. Check signatorieswill be the President/CEO and the Executive Committee[JS3] members of the Board of Directors. This shall be reviewed and updated annually.
  1. The President/CEO or Operations Director will have the authority to approve payment for all normal operating expenses when specifically included in approved budget.
  1. All invoices are to be reviewed by the President/CEO, Operations Director, or Treasurer.
  1. No personal cash or pay advance is permitted.
  1. All expenditures over $1,000.00 will require two approved signatures.
  1. It is the policy of CMFCAA that the Administrative Assistant or Operations Director will interchangeably perform the following duties, with no one position performing all duties singularly. The following procedures will be followed for expenditure management:
  1. The Administrative Assistant will open mail and sort invoices.
  2. Invoices will be marked with the appropriate program expense if not an operational expense[JS4].
  3. The President/CEO, Operations Director, or Treasurer will review invoices.
  4. Administrative Assistant will prepare check payments for invoices on a weekly basis.
  5. President/CEO or authorized signor will sign prepared checks. Signor will compare the amount of the check to the amount of the invoice upon signature[JS5].
  6. President/CEO may approve auto-pay for monthly expenses (i.e. contracted services such a phone/internet, equipment, or software lease, etc.).
  1. Bank reconciliations are prepared by the Operations Director on a monthly basis. Reconciliation reports are reviewed by the President/CEO and the Treasurer on a monthly basis.
  1. Bank reconciliations andaccount statements are reviewed by the President/CEO and the Treasurer on a monthly basis. President/CEO or Treasurer compares the reconciled cash balance to the cash balance in the general ledger software.

I.Expenditures are reconciled to the bank account statement by the Operations Director on a monthly basis. Reconciliation reports are reviewed by the President/CEO and the Treasurer on a monthly basis.

  1. CREDIT CARD PURCHASE AUTHORIZATION
  1. Employees who are required to make scheduled or emergency purchases, travel, or pay for programmatic expenses may be issued a CMFCAA credit card. CMFCAA will limit this to Supervisors of designated programs or operations.
  1. Employees will submit the original receipt of credit card purchase to the Operations Director on a monthly basis. Employees will also maintain a copy of the credit card charges for their records.
  1. All reasonable efforts must be made by employee to secure a replacement receipt in the event of loss of credit card receipt. Employees may be asked to reimburse CMFCAA for any missing receipts. The need for reimbursement will be decided by the President/CEO or Treasurer.
  1. The Operations Director will provide each employee with the appropriate section of the credit card invoice and ask the employee to reconcile credit card expenses with the statement. The employee may submit receipts at this time.
  1. Credit card statements must be paid off entirely at the end of each month in order to keep down the amount ofavoid interests and fees. Exceptions must be approved by the President/CEO or Treasurer.
  1. Credit card statements are reviewed by the President/CEO and the Treasurer on a monthly basis.
  1. Expenditures are reconciled to the credit card statement by the Operations Director on a monthly basis. Reconciliation reports are reviewed by the President/CEO and the Treasurer on a monthly basis.
  1. INCOMING CHECKS, CASH, CREDIT DONATIONS
  1. It is the policy of CMFCAA that the Administrative Assistant or Operations Director and a third employee will interchangeably perform the following duties, with no one position performing all duties singularly. The following procedures will be followed for revenue management[JS6]:
  1. A staff person who is not the The Administrative Assistant or the Operations Manager (employee #1) will open mail, sort, and endorse all checks with endorsement stamp for deposit only, and make a log of receipts.
  2. The Administrative Assistant (employee #2) will record checks and cash onprepare numbered the deposit slips.
  3. The Administrative Assistant (employee #2) will make copies of all checks to include with the deposit slip.
  4. Deposit and check copies will be verified by President/CEO or another staff member (employee #1[JS7]).
  5. Administrative Assistant (employee #2) will record contributions into CMFCAA donor database (i.e. Salsa CRM/Donor Pro) and weekly deposit log (excel spreadsheet).
  6. Operations Director (employee #3) will record deposit contributions into CMFCAA financial database (i.e. Quickbooks).
  7. Administrative Assistant will issue thank you acknowledgments to donors/grantors prior to deposit being taken to bank.
  8. Administrative Assistant (employee #2) or another staff member will take deposit to the bank.
  9. When returning from the bank, the staff member who made the deposit will give the bank receipt to theOperations Directorindividual who created the original deposit log to verify the deposit total on the log against the validated deposit slip. Deposit documents are then forwarded to the Operations Director to be filed.to record in the weekly deposit log.
  10. Deposits will be made on a weekly basis. Deposits will be safeguarded under lock and key until taken to bank[JS8].
  1. It is the policy of CMFCAA that the Administrative Assistant or Operations Director will interchangeably perform the following duties, with no one position performing all duties singularly. The following procedures will be followed for revenue management:
  1. The Administrative Assistant will process credit cards through the contracted CMFCAA merchant services account. This may be done manually or through an software scheduled processing.
  2. Administrative Assistant will record contributions into CMFCAA donor database (i.e. Salsa CRM/Donor Pro).
  3. Operations Director will record deposit contributions into CMFCAA financial database (i.e. Quickbooks).
  4. Administrative Assistant will issue thank you acknowledgments to donors/grantors within 10 days of new donation and annually for scheduled donations receipts.
  1. TRAVEL
  1. Employee travel reports, including all original credit card and cash receipts, must be submitted to the Operations Director within 10 business days after returning from a business trip. Each expense itemized on the form must be accompanied by a receipt. Exceptions will be made for amounts under $5 such as tips and other gratuities. When possible, gratuities should be itemized on receipts.
  1. Airline travel, hotel, and car rental should be obtained at the lower of internet specials, coach fares, or other reduced fares.
  1. When renting a car, employees are instructed to accept the rental company’s basic level collision insurance coverage and charge the entire rental cost to their CMFCAA credit card.
  1. The use of personal cars will be reimbursed at the allowable rate per mile established by the IRS (in 2017, $0.54 per mile[JS9]). If the anticipated cost of mileage exceeds the total cost of air/ground transportation, the least expensive mode of travel shall prevail. Exceptions must be preapproved by the President/CEO and/or Treasurer.
  1. Mealcosts should be kept to a minimum and are limited to the per diem rate established by the IRS (in 2017, $58 per day[JS10]).
  1. Employees may receive a cash advance for expenses. Within 10 business days of the employee’s return, the employee must submit a travel report that accounts for the cash advance as well as for all other expenses. If the entire cash advance is not spent, the remaining cash must be returned to the Operations Director.
  1. CMFCAA will not pay for or reimburse for the cost of alcoholic beverages.
  1. Employees may not use their CMFCAA credit card for personal use.
  1. All travel reports are reviewed by the Operations Director and/or the President/CEO.
  1. PETTY CASH FUND DISBURSEMENTS
  1. CMFCAA maintains a petty cash fund of $250.
  1. Petty cash is the responsibility of the Operations Director and is kept under lock and key at all times.
  1. Disbursement from petty cash may only be made with a documented receipt.
  1. The petty cash fund will be replenished as needed. The petty cash fund reimbursement check may be made out to the Operations Director or CMFCAA employee with the designation of petty cash marked in the memo of the check.
  1. Petty cash is reviewed by President/CEO or Treasurer on a monthly basis.
  1. PAYROLL
  1. Payroll is paid out twice monthly (the 15th and the 30th[JS11] of each month). All employees are paid using electronic deposit.
  1. The President/CEO conducts annual performance reviews for all employees. The President/CEO has the authority to recommend pay increases at the time of the annual review or upon the beginning of the annual operational budget implementation.
  1. The President/CEO is reviewed annually by the Executive Committee and Board with direction coming from the Board Chair. The Board Chair has the authority to recommend a pay increase at the time of the annual review or upon the beginning of the annual operational budget implementation.
  1. The President/CEO will approve the payroll process. The computation of taxes and payroll deposit are completed throughSeaver and Forck[JS12], CPAs of Jefferson City.
  1. CASH AND CASH EQUIVALENTS
  1. CMFCAA will maintain a non-interest-bearing cash account as long as the anticipated user fees associated with the account are within a reasonable amount as determined by amounts charged by competitors.
  1. If the FDIC insured level is exceeded in the non-interest-bearing account, the Board may consider investment in additional non-interest-bearing accounts.
  1. CMFCAA may maintain budgeted reserves in an interest-bearing cash account as long as the anticipated user fees associated with the account are within a reasonable amount as determined by amounts charged by competitors.
  1. CMFCAA may maintain as many case investment accounts (i.e. money market, savings, etc.) as deemed necessary and appropriate by the Board of Directors. If one cash investment account is used to maintain the funds of more than one restricted fund, the interest of the account must be distributed to each of the funds.
  1. If CMFCAA receives a gift of stock or personal property, the gift must be sold immediately and the funds deposited into the appropriate investment account.
  1. Restricted gifts will be used to pay only expenses as designated in the donor’s or grantor’s guidelines. The only party with the authority to change the use of restricted gifts is the donor or grantor.
  1. ANNUAL AUDIT

A. CMFCAA will contract with an independent certified auditing firm to conduct an annual financial audit.

  1. Every three years, CMFCAA will solicit a competitive bid from eligible CPA firms. The Executive Committee will review the bids and make the recommendation of approved auditing services.
  1. The independent auditing firm will prepare the 990 and audit report. Both will be presented to the Board of Directors for approval.
  1. MAINTENANCE OF RECORDS
  1. CMFCAA maintains a records and retention policy as recommended by the IRS.
  1. All documentation for cash receipts and disbursement is maintained for a minimum of seven years.
  1. Records related to federal awards, must be maintained for a minimum of seven years from the submission of final reports.
  1. Records related to all other grants are maintained for a minimum of seven years or as required by the grantor.
  1. All records related to fundraising are maintained in the CMFCAA donor database for a minimum of seven years.
  1. No original records are to be taken off premise. In addition, all copies taken off the premise must first be approved by the President/CEO.

First Draft Prepared January 2018

[JS1]Can we say we follow GAAP if we have cash basis statements? We should check with the auditors.

[JS2]Again, GAAP might not be the correct reference here.

[JS3]Are all Executive Committee members check signors? Need they be? How many people is that?

[JS4]Should it be stated who is responsible for marking up/approving invoices? And how approval is to be documented?

[JS5]Who mails checks?

[JS6]The changes suggested below are in an effort to segregate duties to the greatest extent possible. Of course staffing limitations and prudence must dictate how much segregation is reasonable, and the Board/CEO must choose how much risk they are willing to accept.

[JS7]Not sure this step is entirely necessary, if all other steps are performed.

[JS8]Who has the keys?

[JS9]Should we put in 2018 amount?

[JS10]Should we put in the 2018 amount?

[JS11]Should this be “last day of the month”?

[JS12]Not sure we should specify an accounting firm by name here.