FRIENDS OF THE NORTH CASTLE PUBLIC LIBRARY, INC.
FINANCIAL HANDBOOK
Revised December 26, 2008 by:
Ronald Aaronson
Revised February 11, 2008 by:
Ronald Aaronson, Richard Baum, Judy Moniz, Webb Moniz, Sean Ryan and Barbara Vircillo
Approved February 13, 2008 by:
The Board of Directors of the Friends of the North Castle Public Library, Inc.
FINANCIAL HANDBOOK
OBJECTIVES
COMMITTEES AND ACTIVITIES
LIBRARY SUPPORT COMMITTEE
Responsibilities of the Library Support Committee
Meetings
FINANCE COMMITTEE
Responsibilities of the Finance Committee
Who Serves on the Finance Committee?
Meetings
AUDIT COMMITTEE
Audit Committee vs. Finance Committee
Responsibilities of the Audit Committee
Who Serves on the Audit Committee?
Meetings
BUDGETS
INCOME/EXPENSE FORM PROCESSING SYSTEM
REVENUES
Deposits of Checks
Cash Collections
EXPENSES
GOVERNMENTAL REPORTING
POLICIES
Internal Financial Control Policy
Purpose
Background
Internal Controls for the Friends’ Financial Accounts
Separation of Duties/Division of Responsibilities
Records Retention Policy
Purpose
Records Retention Requirements
Legal Documents
Financial Documents
Storage
Record Destruction
Code of Ethics Policy
Purpose
Code of Ethics Policy
Accountability
Professional Excellence
Equal Opportunity
Collaboration and Cooperation
PROCESSES AND PROCEDURES
Cash Collection Procedure
Cash Collection Procedure for Events Other Than The Art Show and The Armonk Players
At the Event
Assistant Treasurer Responsibility
Instructions for Volunteers Involved in Cash Collection
Cash Collection Procedure for the Armonk Outdoor Art Show
At the Event
Cash Collection Procedure for the Armonk Players......
Fixed Assets/Inventory Management Process
Purpose
Fixed Asset/Inventory Management Procedure
JOB DESCRIPTIONS
Treasurer
Duties
Tasks
Qualifications
Assistant Treasurer
Duties
Tasks
Qualifications
Budget Coordinator
Duties
Tasks
Qualifications
Exhibit 1 – Library Support Request Format
Exhibit 2 – Cash Receipt Form
Exhibit 3 – Income/Expense Report Form
FINANCIAL HANDBOOK
OBJECTIVES
The purpose of this Financial Handbook document is to describe the financial processes that the Friends of the North Castle Public Library, Inc. (“the Friends”) use to plan programs and activities for the year and provide funding therefore, to outline the annual budget process, and to establish financial and management controls in accordance with Board of Directors’ fiduciary responsibilities. A summary of these responsibilities can be found on the NYS Attorney General’s website at:
This handbook is a work in progress and will be periodically updated to reflect changes in existing financial processes, the introduction of new financial processes or other changes deemed necessary by the Board of the Friends. This document is not a comprehensive statement of Friends’ accounting and operational policies and procedures.
This document should help:
-New Friends’ volunteers to take on responsibilities in the Friends financial area with minimal training and minimize risk to the Friends from loss of key skills.
-Ensure that necessary controls are in place to protect Friends’ assets.
-Enable Board members to better fulfill their fiduciary responsibilities.
COMMITTEES AND ACTIVITIES
The Friends conducts a number of activities encompassing specific programs or projects that generate revenues and/or incur expenses. Each of these activities is administered by all-volunteer committees designated by the Friends’ Board of Directors. The current activities to which this Handbook applies are Library Support, Art Show, Membership, Armonk Players, Whippoorwill Hall Programs and Operations/Finance. In addition there are an Audit Committee and a Finance Committee whose responsibilities are further described below. New committees may be created as new activities are developed. The Board of Directors has the responsibility of reviewing and approving all activities carried out by each committee.
Each committee will have a designated Budget Coordinator whose responsibilities are:
- Provide estimated revenues and expenses for each activity.
- Prepare and submit annual budgets for review by the Board of Directors.
- Manage planned and unplanned expenses.
- Ensure accurate revenue and expense reporting.
- Approve expenditures made by committee members as described below.
A detailed job description of the Budget Coordinator is provided in the Budget Coordinator section of this document.
The Friends’ general corporate administration, investment management and accounting functions are carried out by its officers as appropriate and reported on its financial statements and otherwise as the Operations/Finance activity.
The procedures described within this document shall be applicable to all committees unless otherwise noted.
LIBRARY SUPPORT COMMITTEE
The core mission of the Friends of the North Castle Public Library, Inc. is to encourage community support to further the quality of services and programs offered by the library, including its presentations in Whippoorwill Hall, and to enhance the library’s value to the community. The Library Support Committee provides leadership to the Friends’ organization in fulfilling this mission.
The Friends’ Board appoints the members of its Library Support Committee and they work with the designated representatives of the Library’s Board of Trustees and the Library Director in determining the needs of the Library and making funding recommendations to the Friends’ Board of Directors. It has been the Friends’ policy only to fund enhancements to the library, its services and programs and not to fund routine Library operating expenses.
The Friends’ Board of Directors determines its financial commitment to these activities on an annual basis (or more frequently if required) taking into account the Friends’ available resources and other commitments.
Responsibilities of the Library Support Committee
- Develop and maintain a Friends’ strategy for fulfilling our mission of encouraging community support and participation in furthering the quality of services offered by the North Castle Public Library (in both Armonk and North White Plains).
- Work with the Library Trustees and the Library Director to identify opportunities for the Friends to be involved in enhancing library facilities and services.
- Develop and manage the Friends’ budget for Library Support. This should include development of a list of potential projects that can be evaluated on no less than a yearly basis for inclusion in the Friends’ annual budget and considered for acceptance or rejection on a line item basis. A suggested format for that list is attached as Exhibit 1. This process should be carried out in time to be considered for inclusion in the Friends’ annual budget (typically by November 15 of each year). It is encouraged that this process be expanded to include more regular assessment (quarterly) of opportunities for Friends’ support and leadership of more regular discussion (quarterly) with the Friends’ Board.
- Periodically, work with the Library’s Director and Program Director to gain their view of the success of Friends’ funded programs.
- Work with the Friends’ public relations team to ensure that the Friends obtains appropriate recognition for its contributions.
Meetings
Members of the Friends’ Library Support Committee should meet with each other and with their counterparts on the Library’s Board of Trustees, at least four times annually and as many other times as the committee deems necessary.
FINANCE COMMITTEE
The Finance Committee oversees the financial operation of the Friends by periodically (no less than quarterly) reviewing the Friends’ investment portfolio and the financial performance of the Friends versus budget. It will provide the Treasurer and Assistant Treasurer help and guidance in their fiduciary responsibilities.
Responsibilities of the Finance Committee
- Ensures that an annual budget is developed.
- Reviews the processes for preparation and delivery of financial statements to the members of the Board or Directors, and ensures that the financial information provided to Board members affords them an adequate basis to fulfill their fiduciary responsibilities.
- Periodically (at least quarterly) reviews the financial performance of the Friends and makes recommendations for action by the treasury/operations function.
- Works with the Treasurer to develop the investment strategy of the Friends and periodically (at least quarterly) the performance of the Friends’ assets.
Who Serves on the Finance Committee?
The Board of Directors appoints the Finance Committee and has the authority to remove members at any time. The Finance Committee should be led by the Treasurer. Although not all Finance Committee members need be members of the Board of Directors, a majority of the Finance Committee members should be members of the Board of Directors. The committee should consist of at least three members of the Board of Directors and should have access to financial expertise whether in the form of a single individual serving on the committee, or collectively among committee members. Consideration should be given to individuals with knowledge in finance, and all members should be financially literate.
Meetings
The Finance Committee should meet at least four times annually and as many times as the committee deems necessary.
AUDIT COMMITTEE
The Audit Committee will provide a link between the Board of the Friends and the independent auditor and will serve a role in helping the Board fulfill its fiduciary duty to oversee the organization’s finances.
Audit Committee vs. Finance Committee
The Treasurer, Assistant Treasurer and the Finance Committee ensure that an annual budget and financial statements are prepared and oversees the administration, collection and disbursement of the financial resources of the Friends. They also provide guidance to the Board with respect to making significant financial decisions. The Audit Committee has oversight for ensuring that reports are received, monitored and disseminated appropriately and that things are done according to policy and with adequate controls. The Audit Committee ensures that independent oversight occurs.
Responsibilities of the Audit Committee
- Working with the Treasurer, the Audit Committee oversees the independent audit function:
- Recommends to the Board the appointment of the independent auditor.
- Reviews the proposed scope of the annual audit.
- Reviews and approves the independent auditors’ management report/letter on the organization’s financial statement at the conclusion of the audit as well as the Treasurer’s response thereto.
- Ensures that the actions recommended by the independent auditor are properly acted upon by the Treasurer and the Board of the Friends.
- Establishes policies and practices to prevent financial fraud and maintains an ongoing understanding of the internal control environment.
- Identifies and analyzes relevant risks and exposures, both internal and external, and reviews the processes in place to minimize these risks.
- Evaluates recommendations from the independent auditor and determines whether they have been properly addressed by the treasury/operations team.
- Ensures controls are in place to provide reasonable assurance that
- Assets are safeguarded.
- Transactions are authorized and properly recorded.
- Organization is in compliance with applicable laws and regulations.
- Performs various tests to ensure that the controls and procedures are followed.
- Investigates any and all complaints with respect to the financial management and ensures fixes are implemented for any problems or reviews justification for why corrections are not necessary.
- Reviews the Friends’ code of conduct/ethics policy to ensure that it is adequate and up to date.
Who Serves on the Audit Committee?
The Board of Directors appoints the Audit Committee and has the authority to remove members at any time. Although not all Audit Committee members need be members of the Board of Directors, a majority of the Audit Committee members should be members of the Board of Directors. The committee should consist of at least three members of the Board of Directors and should have access to financial expertise whether in the form of a single individual serving on the committee, or collectively among committee members. Consideration should be given to individuals with knowledge in finance and all members should be financially literate.
Meetings
The Audit Committee should meet at least two times annually and as many times as the committee deems necessary. The committee is required to have at least one meeting annually with the outside auditing firm.
BUDGETS
Each activity’s Budget Coordinator working with his committee will prepare an annual budget in support of the committee’s activities. The budget submittal/review/approval process will consist of a number of events according to the following timetable:
- Budget submitted to the Treasurer by each committee’s Budget Coordinator by November 1 (but in no event, later than November 15).
- Review of the proposed budget by the Executive Committee in November.
- Consolidated budget discussion held at the November or December Board meeting.
- Budget approval by the Board at that meeting, or in January if delay is unavoidable.
- Mid-year budget/planning status review.
INCOME/EXPENSE FORM PROCESSING SYSTEM
The Friends are instituting a new, web-based system for creating electronic income and expense forms that will phase out the paper-based Income/Expense Report Form, which may still be found at The advantages of the new system, the Income/Expense Form Processing System, will be:
- Reduced paper usage.
- Reduced account number coding errors.
- Automatic vendor name and address lookup and retention.
- Up-to-the-minute tallies of budgeted vs. actual amounts for all accounts.
- Ability to retrieve and review forms “instantaneously”.
- Reduced visits and/or mailings to the Assistant Treasurer.
A user manual for this system may be found at Form Processing System User Manual.pdf. Individuals responsible for creating income/expense reports are encouraged to read the manual and request a user id.
REVENUES
It is important to be able to assign revenues to the proper activity and revenue category. The Income/Expense Form Processing System or the paper-based Income/Expense Report Form (see Exhibit 3) is used for reporting revenues. The Treasurer will have assigned revenue budget line numbers to be used for income reporting. If a new activity, undertaking or expenditure makes a new account necessary, this can be easily accommodated by describing it in your committee’s budget submission. The individual filling out the form must designate the appropriate committee/project code and budget line number when reporting revenues.
Deposits of Checks
The activities that currently have regular and substantial check deposits are Membership and the Art Show for Art after Dark tickets, artists’ application and booth fees, corporate sponsorships and directory advertising. All deposits are to be made by a person designated by the responsible committee. Deposit slips and endorsement stamps are available from the Assistant Treasurer. The person will create an income report using the Income/Expense Form Processing System, ideally having scanned the deposit slip and any related documents. If a scanner is not available, then the supporting documentation will have to be submitted to the Assistant Treasurer. If the person is unable to use the Income/Expense Form Processing System, then the paper-based Income/Expense Report Form will be filled out and submitted along with the deposit slip to the Assistant Treasurer, who will create the electronic form.
Cash Collections
Cash is collected at events held at Whippoorwill Hall as well as the Art Show. For events where the Friends is responsible for the collection and the anticipated revenue might exceed $250 in cash, two people must be present to collect and count it. Both persons are responsible for signing and submitting the Cash Receipt Form (see Exhibit 2) to the Assistant Treasurer. The process for cash collections is described in the section entitled Cash Collection Procedure for the Armonk Players and Similar Events. The Art Show has in place special procedures for the collections of cash on the days of the Show. These procedures are described Cash Collection Procedure for the Armonk Outdoor Art Show.
EXPENSES
An individual incurring an expense will report it on the Income/Expense Form Processing System or use the paper-based Income/Expense Report Form. This will ensure that:
- Invoices or reimbursements will be made on a timely manner.
- Expenses can be more accurately charged against the correct activity and expense category, i.e. on the line in which it was budgeted, to facilitate budget/actual comparisons.
- Unauthorized expenditures will be kept to a minimum and an effort made to eliminate these.
The Treasurer has assigned a unique expense budget line number for each distinct category of expense to be tracked. New expense budget codes can be introduced by the Treasurer as required. Where fine-grained reporting detail is not required, the Treasurer in consultation with that activity’s Budget Coordinator may elect to assign a single project code, which will cover all of that activity’s programs and functions.
The responsible committee head must approve all expenses before they are incurred. If the expense would result in exceeding budget for some budget line, the committee head has been delegated authority by the Board to approve expenses up to $1,000 if the overall expense can be contained within the total budget of that activity/committee.
The individual filling out an expense report must identify the activity and expense budget code against which the expense is to be charged. It should be noted that if a new activity, undertaking or expenditure makes a new expense budget code necessary; this can be easily accommodated by contacting the Treasurer.
The individual filling out the expense report must either check a box to indicate that the expense has received the necessary approval or be able to provide an adequate explanation as to why such approval is not required.
If the Income/Expense Form Processing System was used to prepare the report and all supporting documentation has been scanned, then nothing further need be done by the submitter. If a scanner was not available than the supporting documentation will have to be submitted to the Assistant Treasurer for processing. Users of the paper-based Income/Expense Report Form will have to submit both the form and accompanying documentation to the Assistant Treasurer, who will create the electronic form.