Financial
Policies
Table of Contents
I. Non-Profit Status Page 3
II. By-Laws and Code of Business Ethics and Conduct Page 3
III. Fraud and Whistleblower Provisions Page 3
A. Definitions
B. Reporting Violations
C. Whistleblower Protection
IV. Budgeting Page 5
A. Fiscal Year
B. Budget Preparation and Approval
V. Roles Page 5
A. Treasurer
B. Finance and Budget Committee
C. Executive Committee
D. Board of Directors
E. Chair of the Board of Directors
F. Internal Audit Committee
G. Executive Director
H. Fiscal Operations Manager
VI. Financial Provisions Page 6
A. Form 990 Review Process
B. Process for Determining Compensation
C. Cash Management
D. Accounting System and Records
E. Financial Monitoring
F. Grants and Other Financial Assistance Programs
G. Equipment and Fixed Assets
H. Purchasing
I. Payroll and Payroll Taxes
VII. Internal Controls Page 11
A. General Standards
B. Specific Standards
Appendix: Internal Audit Committee Instructions Page 13
I. NON-PROFIT STATUS
(Name of Corporation), Inc. is organized under Ohio Revised Code Section 1702 as a non-profit organization. It is exempt from federal income taxes under Section 501 (c) (3) of the Internal Revenue Code. In addition, the organization has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509 (a) of the Code.
The Board and employees of the organization shall take the appropriate steps necessary to maintain the organization’s non-profit status under Ohio law and the Internal Revenue Code.
II. BYLAWS and CODE OF BUSINESS ETHICS AND CONDUCT
(Name of Corporation) is governed by By-Laws which supersede all other policy documents. The following financial policies supplement the By-Laws but do not in any way supplant them. Similarly, the Code of Business Ethics and Policy has been adopted by the Board of Directors and supersedes these Financial Policies.
III. FRAUD POLICY
(Name of Corporation) requires all board members and employees to observe the highest standards of business and personal ethics in the conduct of their duties and responsibilities. As representatives of the organization, employees must practice honesty and integrity in fulfilling responsibilities and comply with all applicable laws and regulations.
A. Definition: Fraud is defined as the intentional misuse of an organization’s resources for the benefit or detriment of the organization. Examples of fraud include, but are not limited to:
v Misstating the organization’s financial statements;
v Reporting and being reimbursed for travel and other reimbursable expenses in excess of actual costs;
v Receiving payments from vendors for steering the organization’s business to the vendors;
v Stealing receipts or payments and covering up the theft by adjusting the accounts, and;
v Paying vendors twice for goods and services without receiving credit for the duplicate payment.
B. Reporting Violations: Any employee, board member, or volunteer who suspects an instance of fraud shall report their suspicion to the Executive Director, or if this is inappropriate, to the Board Chair. The Executive Director shall report all such instances to the Board.
All instances of suspected fraud will be fully investigated. The Executive Director, in consultation with the Board Chair, will decide who shall conduct the investigation. When grants are involved, the grantor will be consulted. Employees should not conduct their own investigations of suspected fraud.
The results of internal investigations of instances of suspected fraud shall be reviewed by outside legal counsel, and, if appropriate, reported to grantors and to other appropriate authorities.
The Executive Director, if appropriate, or the Board Chair shall report losses to the bonding company and will file the documents necessary for recovery of losses.
C. Whistleblower Protection
The whistleblower policy is intended to encourage and enable employees and others to raise serious concerns within the organization prior to seeking resolution outside (Name of Corporation).
v No Retaliation: No employee who in good faith reports a violation shall suffer harassment or retaliation, nor will s/he suffer an adverse employment consequence. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment.
v Accounting and Auditing Matters: Each year, when an internal audit committee is appointed by the Board Chair, the committee shall be made knowledgeable about any reports of suspected fraud received by the Executive Director or Board Chair. The Internal Audit Committee shall address all reported concerns and complaints regarding the organization’s accounting practices, internal controls, and auditing.
v Acting in Good Faith: Anyone filing a complaint concerning a violation or suspected violation must be acting in good faith and have reasonable grounds for believing that the information disclosed indicates a violation of the code. Any allegations that prove to be false or unsubstantiated, and which prove to have been made maliciously or knowingly, will be viewed as a serious offense requiring disciplinary action.
v Confidentiality: Violations or suspected violations may be submitted on a confidential basis by the complainant or may be submitted anonymously. Reports of violations or suspected violations will be kept confidential to the extent possible, consistent with the need to conduct an adequate investigation.
IV. BUDGETING
A. Fiscal Year: The (Name of Corporation) fiscal year shall be from January 1st to December 31st each year.
B. Budget Preparation and Approval: Prior to the beginning of each fiscal year, the Finance Committee, Treasurer, the Executive Director and the Fiscal Operations Manager shall prepare an annual budget of projected income and expenses for the review and approval of the Executive Committee and Board of Directors in accordance with the By-Laws. This annual budget shall be used for preparing the budgets for grant and contract proposals. The periodic financial reports prepared for the Board will include a comparison with the budget. The Executive Committee must approve significant deviations from the budget.
V. ROLES
A. Treasurer
The Treasurer chairs the Finance Committee and carries out the duties outlined in the By-Laws and in these policies. The Treasurer shall work with the Executive Director and the Fiscal Operations Manager to ensure that the financial resources of the organization are used legally, efficiently, and in accordance with all grant or contract agreements.
B. Finance and Budget Committee
The Finance Committee oversees the financial functions of (Name of Corporation). The Committee shall work closely with the Treasurer, the Executive Director and the Fiscal Operations Manager to prepare an annual budget and revise as needed for full Board approval. The Committee, along with the Executive Director and the Fiscal Operations Manager, will provide all documents and records necessary for the Internal Audit Committee to perform its annual audit. The Committee is charged with creating and revising financial policies and procedures as needed for approval by the Executive Committee.
C. Executive Committee
The Executive Committee will approve the financial policies and procedures and any revisions presented by the Finance Committee. The Executive Committee will also approve the purchase of any budgeted items or services exceeding available cash limits, and will review and approve any amendments to the budget or expenditures other than what are approved in the annual budget.
D. Board of Directors
The Board of Directors is responsible for the financial health of the organization. The full Board of Directors shall annually approve the individuals authorized to sign checks. The annual budget and any revisions must be approved by the Board. The Board defines and oversees the work of the Executive Director.
E. Chair of the Board of Directors
Annually, the Chairman selects three (3) persons to serve on the Internal Audit Committee. The Chair may receive reports of suspected fraud and shall work with the Internal Audit Committee and Executive Director to investigate all such reports.
F. Internal Audit Committee
The Internal Audit Committee annually performs an audit using guidelines designed by a CPA. The Committee renders a report to the full Board of Directors. The Internal Audit Committee shall receive notification of any reports of suspected fraud received by the Board Chair or the Executive Director.
G. Executive Director
The Executive Director is the Chief Executive Officer of the organization and carries out the operations of the organization in a manner that is effective and efficient and within the confines of the annual budget. The Executive Director completes the tasks outlined in these policies, or oversees the work of a designated staff member who carries them out.
H. Fiscal Operations Manager
The Fiscal Operations Manager is responsible for the daily fiscal duties of the organization. The Fiscal Operations Manager works closely with the Treasurer to ensure that proper accounting records are kept and financial documents are retained for audit and statutory purposes.
VI. FINANCIAL PROVISIONS
A. Form 990 Review Process
The Treasurer shall complete annually the Form 990 or cause the Form 990 to be completed on behalf of (Name of Corporation) by a qualified professional. Copies of the unsigned draft will be provided to the Board of Directors, as well as the Executive Director and the Fiscal Operations Manager. Once all necessary changes are made and the Executive Director is in agreement with the Treasurer on the finished Form 990, the Executive Director shall sign, date, and submit it by the filing deadline. A copy of the approved Form 990 will be provided to any member of the public who requests one.
B. Process For Determining Compensation
The compensation of the Executive Director and all employees shall be fixed by the Board of Directors following appropriate review by the Human Resources and Finance Committees. The compensation amount will be properly allotted in the annual budget process and in any budget revisions adopted throughout the year.
C. Cash Management
v Income: (Name of Corporation) receives income from donations, grants, fundraising activities and program fees. All employees handling cash will be bonded or adequately insured. All receipts of income will be deposited at least weekly.
v Handling Mail: Only those employees who are covered by bonding or employee theft insurance are authorized to sort and open any mail addressed only to the organization. Someone other than the person responsible for making deposits will open the mail and records any funds received into a receipt book.
v Disbursements: All disbursements, except petty cash, will be paid by check. All invoices require proper approval before being paid. Invoices shall be paid within 30 days whenever possible. Contractors and vendors will sometimes be paid after 30 days when their costs are reimbursable under a grant agreement.
v Bank Accounts: Funds for (Name of Corporation) will be held in insured Bank Accounts: an operational Checking Account and an interest-bearing Money Market Savings Account. The bulk of the funds will be kept in the Money Market Savings Account and transferred to the operational Checking Account as needed. Excess unrestricted funds may be kept in a Certificate of Deposit as appropriate given the organization’s cash flow needs.
v Debt: The Board of Directors must approve all borrowing including any line of credit and the use of credit cards. At least two of the authorized signers listed below shall sign any agreements to borrow money.
v Check Writing and Signing: The Board of Directors shall annually approve those authorized to sign checks, which will include the Executive Director, the Fiscal Operations Manager and members of the Executive Committee. Two (2) authorized signatures are required on all checks; one must be that of an approved member of the Executive Committee.
Signors may not sign checks which are payable to themselves, or blank checks. Checks should be filled in completely (with payee, amount in words and figures, and date) before checks are signed. Checks may not be made out to “Cash” or “Bearer.”
v Petty Cash: Petty cash limits are established by the Board of Directors. Receipts, or other accepted forms as established by the Board, are required for all disbursements. Only one staff member shall have access to the Petty Cash Fund.
D. Accounting System and Records
(Name of Corporation) will maintain an accounting system able to provide financial information by program, activity, and funding source. Such information is necessary to demonstrate that internal control objectives are being met and that costs charged to grants and contracts are appropriate.
(Name of Corporation), Inc. maintains its accounting records on an accrual basis. Receivables are recognized when revenues are earned, and payables are recognized when obligations are incurred. Donations are recognized when an unconditional promise to receive cash or other assets is received by the organization.
The Fiscal Operations Manager shall maintain proper accounting records in an appropriate financial software package. Printed records will also be maintained.
All income/expenditure information will be recorded by the Fiscal Operations Manager. All corrections and adjustments will be clearly noted in a written Journal giving reasons for them, with supporting documentation where available. All financial documents will be retained for audit and statutory purposes. The Fiscal Operations Manager shall file all records in a manner that makes it easy to retrieve documents as required in the daily management of (Name of Corporation) and as required by auditors, grantors, and others who may examine the records of the organization.
Financial records will be maintained for at least seven years from the date of filing the annual IRS Form 990. Financial records and program records for grants will be maintained for at least three years from the filing date of the final program and financial reports. Grant files will be retained for longer periods if required by the grants agreements. The destruction of the records, whether scheduled or accidental, shall be reported to the Board.
The Board of Directors assigns a member of the Staff to be the Administrator of the accounting software. The Administrator assigns passwords to restrict access to the accounting software to users as established by the Board of Directors. The Administrator will back up the accounting software daily. At least once a month and at the end of the fiscal year, the Administrator will make a back-up of the accounting software to be stored off premises.
E. Financial Monitoring
v Monthly Reports. The Treasurer will submit financial reports at each monthly Board or Executive Committee meeting. These will include reports of income and expenses against the approved budget. The Executive Director, the Fiscal Operations Manager and the Finance Committee are responsible for reviewing these reports before each meeting. The Treasurer will also report the current balance of all depository accounts held by (Name of Corporation).
v Account Reconciliations. Bank statements will be delivered unopened to the Treasurer for review. All bank accounts will be reconciled by someone other than the staff person responsible for cash receipts and disbursements.