TEAMMATES MENTORING PROGRAM

ACCOUNTING POLICY

July 2013

TABLE OF CONTENTS

I. Cash Management

  1. Checking/Savings accounts
  2. School Activity Account
  3. Liquid Funds
  4. Monthly Reconciliation

II. Investment Management

  1. Excess Operating Funds
  2. Scholarship and Endowment Funds
  3. TeamMates Foundation

III. Accounting Policy

  1. Other Assets
  1. Revenue

Campaign Pledges and Cash Receipts

Receivables collection

In kind donations

Cash Donations

  1. Expenses and disbursements

Purchasing

Receiving

Invoice Approval/Payment Request

Check Request Forms

Accounts Payable

Payroll

Sales and Use Tax

  1. Financial Reporting

Internal Financial Reporting

Budgets

External Financial Reporting

  1. Other Accounting Related Issues

Records Retention

Procedures Manual

System Back-up

IV. Appendix

  1. Record Retention
  2. Accounting System
  3. Chart of Accounts
  4. Opening a Bank Account
  5. Donation Form
  6. Check Request Form
  7. Monthly Activity Report
  8. Budget Detail

INTRODUCTION

The main purpose of the Accounting Policy is to ensure that TeamMates accounting is complete, accurate and that procedures comply with all regulatory requirements. In addition, it is necessary to follow this policy to have the ability of having complete consolidated financial statements for the entire TeamMates Program including all chapters and the Central Office. This is essential to obtain funding for the program from a variety of sources (including the Federal Government). Virtually all grants require this information. This also allows the organization to have an independent audit completed for TeamMates. Many potential donors require such an audit. Adherence to the Accounting Policy will also allow for proper reporting to the TeamMates Board of Directors as well as to each chapter in the TeamMates Program.

Thesoftware system used for accounting for TeamMates is provided by Blackbaud, Inc. It is comprised of two parts – the Financial Edge and the Raiser’s Edge. The Financial Edge includes the general ledger and accounts payable. The Raiser’s Edge is utilized to gather donations and subsequently posts the revenue information to the general ledger system. The primary purpose of the Raiser’s Edge is to track information related to the fundraising efforts for TeamMates. The software system runs on a file server located at the Central Office in Lincoln. It is to provide accounting for the Central Office and all TeamMates chapters.

CASH MANAGEMENT

Checking/SavingsAccounts

Each chapter will have a single primary account for deposits and expenditures which may be a checking or savings account. That account may be maintained at a Union Bank& Trust location for simplicity purposes or a local bank of the chapter’s choice. The signing authority for the account will be with the TeamMates Executive Director in the Central Office and no less than two chapter representatives including the Treasurer and Coordinator. At the direction of the chapter Treasurer, the Central Office will make any and all payments authorized by the chapter. The original bank statement with images of the transactions will be mailed or emailed directly from the bank to the Central Office. The chapter Treasurer can request that a duplicate statement be mailed or emailed to their representative. The account should be set up with a month end closing statement cycle. The local chapter account will maintain a balance less than $10,000 if the primary account is a non-interest bearing account. Funds in excess of $10,000 in a non-interest bearing account will be invested in a fund approved by the TeamMates CFO. Chapters choosing to invest funds in an endowment account will invest such funds in the TeamMates Foundation. Funds maintained with outside foundations are not allowed. Please refer to the “TeamMates Foundation” section on page 5 for additional details. The TeamMates CFO is responsible for reconciling each primary account. The chapter Treasurer is responsible for ensuring that all money moved into or out of the account is valid, accurate, and appropriate. When a chapter opens their primary account it will forward the signature cards to the Central Office so that the Executive Director may be added as a signer. Transfers will be authorized by the Executive Director only to reimburse the Central Office account for invoices paid on the chapter’s behalf (see the Expenses and Disbursements section for further discussion of payment of invoices).

If there are dollars donated that are restricted as to use, a separate accounting will be used by the Accounting Department to track balances of restricted funds. This procedure will be accomplished by using the Projects and Grant feature of the accounting system.

School Activity Fund - School activity accounts are not allowed.

Monthly Bank Reconciliation

Each chapter is required to complete the Monthly Chapter Activity excel spreadsheet to list the monthly deposits and disbursements. This should be completed and emailed to the TeamMates CFO by the first business day of the month in order to assist with the reconciliation process. A copy of the template will be provided to each chapter’s Treasurer and will be available on the TeamMates website.

Liquid Operating Funds

Each chapter (and the Central Office) is required to keep liquid funds. Liquid funds are described as funds necessary for operating the TeamMates program for a six-month period of time. Liquid funds should be kept in the chapter’s primary account. If a chapter’s liquid funds are in excess of $10,000, a portion of the liquid funds may be kept in an interest bearing account such as a savings account or money market account. The Executive Director is required to be an authorized signer on these accounts for auditing purposes. These interest statements must be sent to the central office.

TeamMates Mentoring Program operates under one tax ID number. Therefore, funds in any one financial institution, program wide, may not exceed the FDIC insured limits at the institution.

INVESTMENTS POLICY

The investments of TeamMates are made with the primary intent of safeguarding TeamMates assets. The rate of return on the investment is important but secondary to the preservation and liquidity of the funds.

Excess Operating Funds

Excess funds are described as those funds that are dollars above and beyond the liquid funds. Excess funds may be kept in a Certificate of Deposit at a federally insured bank of the chapter’s choice. The Executive Director is required to be an authorized signer on all CDs for auditing purposes. Notification of interest statements should be sent to the Central office with duplicate statements sent to the chapter to insure accurate accounting of the investments.

Scholarship and Endowment Funds

Investments in savings accounts, money market funds, and CDs may be designated as scholarship or endowment funds. These investments will be coded as such in the general ledger and will be reflected on the chapter’s balance sheet. If these funds were donor designated restricted, these funds will be coded as temporarily restricted or permanently restricted in the Blackbaud software program. If they are designated by the local board for scholarship or endowment, they will be recognized as such on the ledger but will not be coded as restricted.

TeamMates Foundation

The TeamMates Foundation maintains an investment account with TD Ameritrade. This account is managed by Westwood Management Corporation. All available funds in the account will be invested in accordance with the TeamMates Foundation Investment Policy unless otherwise instructed by the TeamMates CFO. Individual chapters may send excess funds to the Central office where it will be documented and deposited into the TD Ameritrade account. These deposits will be coded as foundation funds in the general ledger system by the Central office in order to track the various chapters’ interest in the investment account. Withdrawal of funds by chapters must be done in accordance with the TeamMates Foundation Investment & Spending Policy.

The TeamMates Central office will have access any time of day to bank statements for the brokerage account via their online access. Reports will be able to be downloaded to ensure cash inflows and outflows can be tied back to the correct chapters. This will insure that proper investment tracking and interest allocation will be made to the appropriate chapters. Reporting to each chapter will have to be done manually by the Central office.

ACCOUNTING POLICY
OTHER ASSETS

Purchase of an asset in excess of $1,500requires that a receipt be sent to the TeamMates CFO. The asset will be capitalized and depreciated over the estimated useful life of the assets. The useful life of the assets capitalized will be determined according to the fixed asset depreciation schedule at the time of acquisition.

TeamMates may from time to time acquire donations of stocks or other sorts of property. Those assets will be carried on the balance sheet at their fair market value at the time of donation. Any gain or loss realized subsequently on that investment would be reflected on the income statement upon disposal of the donation. All non-standard gifts must be immediately liquidated.

REVENUE

Income sources will be recognized as revenue in the year received or pledged. Multiple year commitments will be booked to pledges receivable. Commitments will be traced on Raiser’s Edge. All donations will be recorded as unrestricted, temporarily restricted or permanently restricted based upon their project code.

Services or items donated to TeamMates that would typically need to be purchased, will be recognized as in-kind donations. This could include services provided by lawyers, donation of building space, donation of printing costs, supplies, etc. In these cases an offsetting expense will also be reported. When the cost of the donation is not apparent, TeamMates will work with the donor to determine the fair market value of the donation. Volunteer time of TeamMates mentors or Board members will not be considered gifts in-kind.

Gifts in kind should be reported to the Central Office using the Gifts in Kind Donation Form. The donations will be recorded as revenue and as a corresponding expense. Therefore, the net effect on the bottom line is zero. However, it is important to record these gifts because it is required for proper accounting by FASB.

Donations received by any chapter must be deposited into their primary account. The chapter’s Treasurer must report all donations to the Central Office Administrative Assistant for recording in Raiser’s Edge. Information must include the name of the donor, donation amount and address of the donor. This includes all types of gifts including gifts in-kind, donations of stocks or properties, etc. Donations should be deposited within three weeks of receipt. The Administrative Assistant is responsible for receiving the donations and entering them properly into the Raiser’s Edge system. Note: the donation information should also be included in the Monthly Activity Report that is sent to the TeamMates CFO who will post it to the appropriate general ledger accounts.

Cash Donations

All cash donations must be counted and reconciled independently by two people before deposit. As with any donation, the name and address of the donor must be captured for tax acknowledgement.

EXPENSES AND DISBURSEMENTS

Expenses are incurred and booked when the disbursement is made. An exception to this would be in the case of purchase of a fixed asset such as a computer. In this case, the asset would be capitalized and the expense would appear as monthly depreciation entries over the useful life of the computer.

All expenses will be recorded as program expenses, administrative expenses or fundraising expenses for compliance with FASB.

Purchasing

Each chapter is responsible for purchasing items needed for operation of their program. Each chapter will designate a person responsible for approving all purchases. The Executive Director will be responsible for approval of all Central Office expenses.

Receiving

The person making the purchase is responsible for making sure that the items purchased are actually received. That person is also responsible for ensuring the accuracy of the invoice received for the purchase. Checks written directly by the chapter for purchases over $250 require two signatures from authorized signers on the account.

Invoice Approval and Payment Requests

As you receive an invoice to be paid, you may write a check from your chapter account or send it to the Central Office to be paid. If you pay it from your chapter account, be sure to enter the transaction information on your Monthly Chapter Activity Report. If you wish to have it paid from the Central Office, simply put these items on the invoice: account number to code, your initials giving the approval to pay, and date it. The appropriate account number can be found in the Chart of Accounts attached to the Accounting Policy. Forward the approved invoice to the Central Office for payment. If there is no invoice available from the vendor/payee, please complete the Check Request Form. The checks issued by the Central Office may be sent directly to the payee or forwarded to the chapter for subsequent disbursement. Invoices will typically be paid each Friday. At month end, one check will be written from the chapters account to reimburse the Central Office for all invoices paid that month on the chapter’s behalf. If the chapter has a Union Bank account, the money will be transferred to The Central Office’s checking account. Reports showing all transactions, the check number, and amount will be emailed to each chapter at month end.

Expense Requests Forms

All reimbursement requests should include a receipt. However, for some expenses there may not be an actual receipt. In this event, the Check Request Form should be completed and forwarded. The form should be completely filled out and any appropriate description added.

Accounts Payable

The Administrative Assistant maintains the accounts payable system. A vendor record is set up for each vendor that TeamMates does business with regularly. This software system is used to process all expenses and payments made by TeamMates with the exception of petty cash and payroll. If payments are made to an individual for payment on a contractor type basis, the individual’s record will be coded for a 1099 and the tax id number will be obtained.

Expenses are recorded in the accounts payable system such that they report in the appropriate chapter’s account on the general ledger. The TeamMates Executive Director will complete a review of all expenses prior to check issuance.

Checks will be printed with two stubs. One copy of the stub will accompany the check issued to the vendor with a description of the payment. The second stub will be filed with a copy of the invoice or check request form. These will be filed with the paid invoice by vendor.

Payroll

Paychex will process all payroll checks for the Central office as well as all the required government reporting, i.e. 941,941N,UC-11T. Paychecks are deposited in the employee’s designated bank account on the 15th and 30th of each month. Year-end W-2s will be completed and mailed out by Paychex.

Local leadership at the chapter level must be paid through a separate paying agent such as the local school. They will be required to sign a paying agent agreement. The paying agent will be reimbursed by TeamMates with funds from the local chapter. Personnel at the chapter level should not exceed 35 hours per week in order to maintain compliance with the TeamMates worker’s compensation policy. If a separate paying agent is not possible, payroll may be run through a local accounting firm. Under no circumstances will compensation be paiddirectly from the local chapter to an employee.

Under IRS regulation § 1.6041-2(a)(1), payments of wages not subject to income tax

withholding must be reported on Form W-2 if the total of those payments is $600 ormore in a calendar year.

Sales and Use Tax

It shall be the policy of TeamMates to pay sales tax on all taxable purchases and pay a use tax if a sales tax was not charged on the purchase. A use tax will be based upon point of delivery of the purchase. Purchases made through a school account must have sales tax added. Sales and Use tax will be reported monthly on Nebraska Department of Revenue Form 10 by the CFO. In all cases, the local TeamMates chapter is responsible for the amount of sales or use tax that is due.

In the event that items are purchased for fundraising, raffle, and auction purposes, the following procedure will be implemented

Sales tax should be collected on the total retail sale, even if sales tax was already paid when the item was purchased. If you paid sales tax on an item for resale instead of using an exempt certificate, a credit for the sales tax paid can be taken on the sales tax return covering the period the sale was made.

To purchase items for re-sale tax-free, you must complete Form 13, Nebraska Resale or Exempt Sale Certificate, and provide this form to the vendor.

Fundraisers

When a donation results in admission to an event, this becomes a taxable transaction. The amount received that represents the fair market value of the admission is the retail sale amount, and you must indicate on the ticket or a receipt the amount on which sales tax has been calculated.