PUBLIC POLICY CHARTER SCHOOL – FY 2017-18
PUBLIC POLICY CHARTER SCHOOL
FISCAL and Operating
POLICIES & pROCEDURES
2017-2018
1701 BROWNING BLVD.
Los Angele, CA. 90062
Phone: (323) 205-7920
Fax: (323) 544 – 6441
100INTERNAL CONTROL POLICIES
101Introduction
Internal control policies provide Public Policy Charter School with the foundation to properly safeguard its assets, implement management’s internal policies, provide compliance with state and federal laws and regulations and produce timely and accurate financial information. Additionally, as a publicly supported entity, Public Policy Charter School has additional responsibilities to ensure the public’s confidence and the integrity of the school’s activities.
102 Compliance With Laws
Public Policy Charter School will follow all the relevant laws and regulations that govern the Charter School. Additionally, any Federal Government laws and regulations that relate to grant funding will be adopted as the grant funding is received. The following are specific policies of Public Policy Charter School:
A.Political Contributions
No funds or assets of Public Policy Charter Schoolwill be contributed to any political party or organization or to any individual who either holds public office or is a candidate for public office. The direct or indirect use of any funds or other assets of Public Policy Charter School for political contributions in any form, whether in cash or other property, services, or the use of facilities, is strictly prohibited. Public Policy Charter Schoolalso will not be involved with any committee or other organization that raises funds for political purposes.
Following are examples of prohibited activities
1.Contributions by an employee that are reimbursed through expense accounts or in other ways.
2.Purchase by the organization of tickets for political fundraising events.
3.Contributions in kind, such as lending employees to political parties or using the School assets in political campaigns.
B.Record Keeping
To provide an accurate and auditable record of all financial transactions, the School’s books, records, and accounts are maintained in conformity with generally accepted accounting principles as applicable to Charter Schools.
Further, the School specifically requires that:
1.No funds or accounts may be established or maintained for purposes that are not fully and accurately described within the books and records of Public Policy Charter School.
2.Receipts and disbursements must be fully and accurately described in the books and records.
3.No false entries may be made on the books or records nor any false or misleading reports issued.
4.Payments may be made only to the contracting party and only for the actual services rendered or products delivered. No false or fictitious invoices may be paid.
200Organizational Conflict Of Interest Or Self-Dealing (Related Parties)
Public Policy Charter School will not be operated for the benefit of an affiliated or unaffiliated organization or an individual in his or her own private capacity or individuals related to the Charter School or members of its management, unless the private benefit is considered merely incidental. This private benefit preclusion will extend to:
A.Sale or exchange, or leasing, of property between the agency and an affiliated or unaffiliated organization or a private or related individual.
B.Lending of money or other extension of credit between an agency and an affiliated or unaffiliated organization or a private or related individual.
C.Furnishing of goods, services or facilities between the agency and an affiliated or unaffiliated organization or a private or related individual.
D.Payment of compensation, unless authorized by the Board of Trustees or its governing body, by the School to an affiliated or unaffiliated organization or a private or related individual.
E.Transfer to, use by, or for the benefit of a private or related individual of the income or assets of the School.
201Organizational Conflict Of Interest Or Self-Dealing (Related Parties) - continued
Thus, Public Policy Charter School will be guided by the principle of arms-length standards with all affiliated or unaffiliated organizations or with a private or related individual(s).
Related party transactions shall include transactions between a school and members of the board, management, contracted management organization, employees, related individuals and affiliated companies. Related individuals within the scope of this definition include spouses, parents, children, spouses of children, grandchildren, siblings, father in law, mother in law, sister in law and brother in law of a board member or school employee.
202Board Of Trustees Authorities
The Board of Trustees shall have the sole authority to approve and will incorporate into its own minutes such matters as (i) change of the School’s name, with LAUSD pre-approval (ii) adoption of the annual operating and capital budgets, (iii) selection or termination of key employees (iv) key employees salary and salary changes, (v) incurrence of debt, mortgages or other encumbrances and their covenants and restrictions, within the terms of the charter (vi) investment policies, (vii) depository and investment banks, (viii) purchase or sale of property (ix) opening up or closing checking or savings accounts, and (x) selection of the Charter School’s certified public accountants and (xi) other activities associated with the operations of the Charter School.
The Board of Trustees will meet monthly or as specified in the school’s bylaws to ensure that its fiduciary duty is maintained. The Board will review the following: prior meeting minutes, financial statements, business items, and educational items.
203Signature Authorities
To properly segregate duties within the Charter School, the Executive Director, Board Treasurer and one other Board Member will be the only individuals with signatory authority. The Executive Director is responsible for authorizing all cash transactions of $10,000 or less. Any check over $10,000 will have two signatures, the Executive Director’s and the Board Treasurer’s or Board Chair’s. If the check is written to the Executive Director, the signatories will be the Board Treasurer and the Board Chair.
204Government Access to Records
The Executive Director, or contracted business back office services provider will provide access to the organization's records to the LAUSD Charter Division and provide supporting records, as requested, in a timely manner.
205Security of Financial Data
A. The system's accounting data must be backed up daily by the business back office services provider to ensure the recoverability of financial information in case of hardware failure.
C.All other financial data, unused checks and unclaimed checks will be secured by the Executive Director, or the business back office services provider from unauthorized access.
206 Security of School Documents
Originals of the following corporate documents are maintained and their presence is verified on a periodic basis:
- Charter and all related amendments
- Minutes of the Board of Trustees
- Banking agreements
- Leases
- Insurance policies
- Vendor invoices
- Grant and contract agreements
- Fixed asset inventory list
207Use of School Assets
No employee may use any of the School property, equipment, material or supplies for personal use without the prior approval of the Executive Director.
208Use Of School Credit Cards and Debits Card
- The Board of Directors has not authorized any credit cards for school use and the school does not possess any credit cards. The following policy has been established in the event the Board authorizes a school credit card. Charter School credit cards should only be issued with the formal approval of the Board of Trustee and with proper justification. The cost/benefit to the Charter School should be fully reviewed to ensure that no other method is appropriate. If credit cards are issued they should be assigned to certain Charter School employees and should be used only for school-related expenditures. All charges must be supported by invoices or travel reports to be eligible for payment by the Charter School.
- The school uses the debit card for purchases when payment via invoice is not possible (Amazon.com, Costco etc.). Receipts are gathered by the Office Manager and sent to the back –office provider for reconciliation.
C.Monthly debit or credit card statements are reconciled to invoices or receipts.
300FINANCIAL MANAGEMENT POLICIES
301Basis Of Accounting
The Charter School will maintain their accounting records and related financial reports on a cash basis of accounting during the year and full accrual at fiscal year-end.
Basis of Accounting refers to the timing of when transactions and events are recognized in the accounting records and reported in the financial statements.
Modified Accrual Basis: Revenues are recognized in the period when they become available and measurable, and expenditures are recognized when a liability is incurred, regardless of when the receipt or payment of cash takes place. An exception is un-matured interest on general long-term debt, which is recorded when it is due.
Full Accrual Basis: Transactions and events are recognized when they occur irrespective of when cash is paid or received. Revenues reflect the amounts that came due during the year, whether collected or not. Expenses reflect the amount of goods and services consumed during the year, whether or not they are paid for in that period. The costs of assets are deferred and recognized when the assets are used to provide service.
302Accounting Policies
The accounting policies and financial reporting adopted are consistent with Generally Accepted Accounting Principles (GAAP) and the Financial Accounting Standards Board (FASB). The term generally accepted accounting principles refer to the standards, rules, and procedures that serve as the norm for the fair presentation of financial statements.
The Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting that governs the preparation of financial reports by nongovernmental entities.The mission of the FASB is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports.
Conformity with GAAP is essential for consistency and comparability in financial reporting.
303Basis of Presentation
The accounts of Public Policy Charter School are organized on a basis of the School Account Code Structure or SACS. The operations of the fund are accounted for by providing a separate set of self-balancing accounts, which comprise its assets, liabilities, net assets, revenues and expenditures. Public Policy Charter School uses Checking Accounts at Wells Fargo bank and Pacific Western Bank. The Wells Fargo Bank is primarily used for non-salary expenses and the PWB account is used primarily for Personnel expenses. In addition, all activities relating to Student Activities should be separately identified and recorded as a transaction within one of these accounts.
304Revenues
Revenues are recognized in the period when they become available and measurable.
305Expenditures
Expenditures are recognized when a liability is incurred, regardless of when the receipt or payment of cash takes place. An exception is un-matured interest on general long-term debt, which is recorded when it is due.
306Incurred Costs
For the purpose of invoicing funding sources for allowable costs under cost reimbursement contracts, the term "costs incurred" is defined as follows:Costs related to items or services incurred directly for the contract and received at the time of the request for reimbursement and is not specifically disallowed by the funding source.
307Cash Management
A.The School maintains cash accounts at the following banks:
- Pacific Western Bank and Wells Fargo Bank.
B.A schedule of aged accounts and grants receivable is prepared monthly and reviewed by the Executive Director for collection. Appropriate collection procedures are initiated, if necessary.
308Grants Receivable Aging Criteria
Accounts receivable outstanding is aged on a thirty, sixty, ninety, and over-ninety day basis.
309Grant/Contract Invoicing
A.All invoices are submitted to the funding sources by dates specified in the grant or contract agreement.
B.The invoicing format is that specified by the funding source.
310Budgets
A.The Charter School prepares an annual operating budget of revenues and expenses, a cash flow projection, and a capital budget (when applicable). These budgets and projections are reviewed and approved by the Board of Trustees, at the annual meeting and modified, as necessary.
B.Financial statements displaying budget vs. actual results are prepared by the back office services provider and reviewed by the Executive Director and presented to the Board of Trustees at each board meeting or next board meeting. Board members also have access to real-time fiscal information (Check Register, Actual to Budget detail, General Ledger, Balance Sheet etc.) via an On-line portal called Charter Vision.
311Insurance And Bonding
A.The School maintains minimum levels of coverage, as deemed appropriate by the Board of Trustees, for the follow policies:
1.General liability
2.Business & personal property (including auto/bus)
3.Computer equipment
4.Workers' compensation
- Personal injury liability
- Directors and Officers (D&O)
- The School requires proof of adequate insurance coverage from all prospective contractors, as deemed applicable by the Board of Trustees.
312 Record Retention And Disposal
- Records are maintained for the following indicated minimum periods:
- Books, records, documents and other supporting evidence including paid, cancelled or voided checks, accounts payable records, vendors' invoices, payroll sheets and registers of salaries and wages, tax withholding statements, employees’ timesheets and other public documents are retained for seven years after the original entry date.
- All records not supporting government grants or otherwise covered by rules of the Internal Revenue Service are retained for three years from the end of the fiscal year in which the records were originally prepared.
- All financial records are maintained in chronological order, organized by fiscal year.
- In connection with the disposal of any records, a memorandum of record disposal is prepared by the Executive Director listing the record or the class of records disposed. The Board of Trustees certifies this memorandum of records disposal.
313Financial Reporting
The back office services provider maintains supporting records in sufficient detail to prepare the School's financial reports, including:
A.Annually:
1.Financial statements for audit
2.Annual budget
B.Monthly:
- Trial balance
- Internally generated budget vs. actual financial statements
- Billing invoices to funding sources
- Updating the cash flow projection
C.Periodically:
1.IRS Forms 941 and payroll tax returns and comparable state taxing authority returns
2.Other reports upon request
314Audit
The Board of Trustees arranges annually for a qualified certified public accounting firm to conduct an audit of the Charter School’s financial statements in accordance with Government Auditing Standards and the Governmental Accounting Standards Board.
The audit reports will be submitted to the granting agency, (starting 2002) California Department of Education, (starting 2003) CountySuperintendent of Schools, and State Controller's Office by December 15 of each year. (Education Code 47605(m))
315 Board Treasurer
The Board treasurer will nominate the independent auditor who will be approved by the Board. The Executive Director and Board of Directors receive the Audit Report and the Management Letter. The Treasurer will review the scope and results of the Audit. The Treasurer also receives notice of any consequential irregularities and management letter comments that the auditor noted during the engagement. The Treasurer or Auditor will present the Audit Report and Management letter to the board of directors. The Treasurer will develop a Corrective Action plan to address all relevant weaknesses if any noted by the Auditor. The Treasurer will also review all financial information of the Charter School and provide recommendations to the Board of Trustees.
400POLICIES RELATED TO ASSETS, LIABILITIES AND Fund equity
401ASSETS
402Bank Accounts
A.Bank accounts for the indicated purpose and limitation(s) have been authorized by the Board of Trustees of the School at the indicated Federal Deposit Insurance Corporation (FDIC)-insured banks: Wells Fargo Bank and Pacific Western Bank.
403Petty Cash Payments
A.The school will have Petty Cash of no more than $200 in cash held at the school.The $200 was initially established by issuing a check to the Executive Director, which was cashed.
B.The cash is reconciled and initialedmonthly or whenever money is deposited in Bank account.
404LIABILITIES and Fund equity
405Accounts Payable
Only valid accounts payable transactions based on documented vendor invoices, receiving report or other approved documentation are recorded as accounts payable.
406Accounts Payable Payment Policy
Vendors and suppliers are paid as their payment terms require, taking advantage of any discounts offered. If cash flow problems exist, payments are made on a greatest dependency/greatest need basis.
407Accrued Liabilities
Salaries, wages earned, and payroll taxes, together with professional fees, rent, and insurance costs incurred, but unpaid, are reflected as a liability when entitlement to payment occurs.
408Liability For Compensated Absences
A.Compensated absences arise from employees' absences from employment due to vacation leave.When the Charter School expects to pay an employee for such compensated absences, a liability for the estimated probable future payments is accrued if all of the following conditions are met:
1.The employee's right to receive the compensation for the future absences is vested or accumulates.
2.The amount of compensation is reasonably estimable.
B.Compensated absences not required to be paid upon employee termination are only recorded when paid.
409Debt
A.When applicable, short-term debt consists of financing expected to be paid within one year of the date of the annual audited financial statements. Long-term debt consists of financing that is not expected to be repaid within one year and is recorded as such.
B.Loan agreements approved by the Board of Trustees should be in writing and should specify all applicable terms, including the purpose of the loan, the interest rate, and the repayment schedule.
500Revenue
501Revenue Recognition
The School records revenue on the accrual basis of accounting, consistent with generally accepted accounting principles applicable to special purpose governmental units.