Model Policies and Procedures for Not–for–Profit Organizations

<p>List of Forms xvii</p>
<p>About the Author xxi</p>
<p>Preface xxiii</p>
<p>Section 1 Internal Financial Statement Formats 1</p>
<p>Statement of Financial Position 2</p>
<p>Consolidated Statement of Unrestricted Activities 4</p>
<p>Statement of Unrestricted Activities by Function 5</p>
<p>Statement of Temporarily Restricted Activities 6</p>
<p>Statement of Permanently Restricted Activities 6</p>
<p>Statement of Changes in Net Assets 6</p>
<p>Section 2 Chart of Accounts 7</p>
<p>Chart of Accounts Issuance Form 8</p>
<p>Assets 9</p>
<p>Clearing Accounts 12</p>
<p>Liabilities 13</p>
<p>Net Assets 14</p>
<p>Revenues 15</p>
<p>Expenses 18</p>
<p>Functions 22</p>
<p>Section 3 The Policies and Procedures Manual 23</p>
<p>Important Note: The sample policies and procedures found in Section 3 (Parts 1 through 6) are also available in MS Word format on a Web site designed for this book:</p>
<p>Part 1 Accounting and Financial Policies 25</p>
<p>Accounting and Financial Interns 25</p>
<p>Accounting Computer File Back–Up Procedure 26</p>
<p>Accounting Information Releases 28</p>
<p>Accounting Method 28</p>
<p>Accounts Payable Accruals 29</p>
<p>Accounts Receivable Write–Off Procedures and Authority (Bad Debts Procedures) 29</p>
<p>Amortization 31</p>
<p>Annual Leave Accrual 32</p>
<p>Board–Designated Funds 32</p>
<p>Budget 33</p>
<p>Budget and Finance Committee 33</p>
<p>Cancellation of Purchase Order 34</p>
<p>Capitalization Cutoff Points 36</p>
<p>Chart of Accounts 36</p>
<p>Check Imprinter Machine 38</p>
<p>Check Preparation and Mailing 38</p>
<p>Clearing Accounts 38</p>
<p>Collection Procedures 39</p>
<p>Contributions 41</p>
<p>CPA Firms: Audited Financial Statements 41</p>
<p>CPA Firms: The Engagement Letter 44</p>
<p>CPA Firms: The Management Letter 44</p>
<p>CPA Firms: Selection of Firm 47</p>
<p>CPA Firms: Use of Other Firms 47</p>
<p>Credit Card Receipts 48</p>
<p>Date and Time Received Stamp 48</p>
<p>Deferred Revenues 49</p>
<p>Deposit of Receipts 49</p>
<p>Depreciation 50</p>
<p>Discounts Lost 50</p>
<p>Discounts on Accounts Receivable 51</p>
<p>Donated Property 51</p>
<p>Endowment Funds 53</p>
<p>Expense Reimbursements Chief Staff Executive 53</p>
<p>Finance Department Employee Orientation 54</p>
<p>Financial Statement Preparation and Distribution 54</p>
<p>Grants and Contracts 55</p>
<p>Holding Funds for Other Organizations 55</p>
<p>Inventory: Give–Aways 55</p>
<p>Inventory: Receiving 57</p>
<p>Inventory Valuations 57</p>
<p>Inventory: Write–Off 58</p>
<p>Investment Policy 60</p>
<p>IRS Forms: Form 990–T 62</p>
<p>IRS Forms: Form 1099 62</p>
<p>Journal Entries 64</p>
<p>Leasehold Improvements 66</p>
<p>Leases 66</p>
<p>Loans/Lines of Credit 67</p>
<p>Lobbying Expenditures 67</p>
<p>Long–Term Debt 67</p>
<p>Monthly Budget Meetings 68</p>
<p>Nondeductibility of Dues 68</p>
<p>Nondistribution of Earnings 69</p>
<p>Nonsuffi cient Funds Checks 69</p>
<p>Occupancy Expenses 71</p>
<p>Optional Proxy Tax 71</p>
<p>Overhead Allocation 72</p>
<p>PAID Stamp 72</p>
<p>Payment Terms 73</p>
<p>Permanently Restricted Net Assets 75</p>
<p>Permanent Travel Advances 75</p>
<p>Petty Cash Fund Disbursements 77</p>
<p>Photocopying Expenses 80</p>
<p>Postage Log 82</p>
<p>Prepaid Expenses 84</p>
<p>Purchase Orders 84</p>
<p>Quid Pro Quo Contributions 87</p>
<p>Records Retention 87</p>
<p>Refunds 93</p>
<p>Reimbursement of Board/Committee Expenses 93</p>
<p>Rent 94</p>
<p>Repairs and Improvements 94</p>
<p>Reserves 95</p>
<p>Return Policy 95</p>
<p>Salaries and Fringe Benefits Accruals 95</p>
<p>Sales Tax Collection 96</p>
<p>Sales Tax Exemption Certificate 96<br /><br />Serial Numbers (Fixed Assets) 96</p>
<p>Spousal Travel 97</p>
<p>Telephone Expenses 97</p>
<p>Temporarily Restricted Net Assets 100</p>
<p>Travel Advances 100</p>
<p>Travel Expenses 102</p>
<p>Unrelated Business Income Tax (UBIT) 107</p>
<p>Unrestricted Net Assets 107</p>
<p>Voided Checks 108</p>
<p>Write–Off of Old Checks 110</p>
<p>Part 2 Office Administration Policies 113</p>
<p>Absenteeism and Tardiness 113</p>
<p>Affinity Programs 113</p>
<p>Age Discrimination in Employee Act (ADEA) 114</p>
<p>Alcohol and Controlled Substances 114</p>
<p>Amendments to Policies and Procedures 115</p>
<p>Americans with Disabilities Act 115</p>
<p>Anniversary Date 116</p>
<p>Annual Leave Payments 116</p>
<p>Antitrust 116</p>
<p>Antivirus 117</p>
<p>Aptitude/Ability Tests 117</p>
<p>At–Will Employment 117</p>
<p>Background Checks Prospective Employees 118</p>
<p>Ballots 120</p>
<p>Bartering Prohibited 120</p>
<p>Bereavement (Funeral) Leave 120</p>
<p>Bid Requirements 121</p>
<p>Binding Arbitration 123</p>
<p>Board of Director Fiduciary Responsibilities 124</p>
<p>Bulletin Boards 126</p>
<p>Business Cards 126</p>
<p>By–Laws 126</p>
<p>Certificate of Authority 126</p>
<p>Committee Meeting Attendance 128</p>
<p>Committee Meeting Attendance by Members 128</p>
<p>Computer Passwords 128</p>
<p>Conditions of Employment Agreement 129</p>
<p>Confidentiality of Information 132</p>
<p>Consolidated Omnibus Budget Reconciliation Act (COBRA) 135</p>
<p>Consumer Protection Act 135</p>
<p>Contract Signing Authority 135</p>
<p>Correspondence 136</p>
<p>Credit Rating Release 138</p>
<p>Data Processing Manual 138</p>
<p>Disciplinary Action 138</p>
<p>Discrimination 139</p>
<p>Diversity 139</p>
<p>Document Shredding 140</p>
<p>Document Sign–Out Form 140</p>
<p>Dress Code 142</p>
<p>E–Mail and Internet 142</p>
<p>Emergency Contact Form 145</p>
<p>Employee Retirement Income Security Act (ERISA) 147</p>
<p>Equal Opportunity Employer 147</p>
<p>Equal Pay Act 147</p>
<p>Evaluations (Staff) 148</p>
<p>Executive Sessions 148</p>
<p>Exit Interview 148</p>
<p>Facilities 149</p>
<p>Fair Labor Standards Act (FLSA) 149</p>
<p>Family and Medical Leave Act (FMLA) 151</p>
<p>Fax Machine 151</p>
<p>Federal Identification Number 152</p>
<p>Fire Protection 152</p>
<p>Form I–9/Immigration Reform and Control Act (IRCA) 152</p>
<p>Forms Manual/Retired Forms Manual 153</p>
<p>Form W–4 154</p>
<p>Fringe Benefits 154</p>
<p>Fringe Benefits Day 155</p>
<p>Garnishments 155</p>
<p>Grievances and Complaints 155</p>
<p>Hold Harmless Agreements 156</p>
<p>Holidays 158</p>
<p>Hours of Operation 158</p>
<p>Inclement Weather 158</p>
<p>Independent Contractor Files 159</p>
<p>Independent Contractors 159</p>
<p>Injuries/Worker s Compensation 163</p>
<p>Job Descriptions 165</p>
<p>Jury Duty 165</p>
<p>Key Employee Insurance 165</p>
<p>Key Employees 166</p>
<p>Leave without Pay 168</p>
<p>Leaving the Office 168</p>
<p>Legal Audit 168</p>
<p>Legal Counsel Attendance at Board Meetings 169</p>
<p>Legal Protection for Board and Staff 170</p>
<p>Libel/Slander 172</p>
<p>Lines of Credit 172</p>
<p>Loans Employees 174</p>
<p>Lobbying Activities/Omnibus Budget Reconciliation Act (OBRA) 174</p>
<p>Lobbying Disclosure Act (LDA) 174</p>
<p>Logo 175</p>
<p>Mailing List Sales 175</p>
<p>Management Day 176</p>
<p>Mandatory Vacations/Leave 178</p>
<p>Maternity Leave 178</p>
<p>Military Obligations 178</p>
<p>Minutes of Board and Committees 179</p>
<p>Music 179</p>
<p>Music Licensing 179</p>
<p>Nepotism 180</p>
<p>Nicknames 180</p>
<p>Noncompete Agreements 180</p>
<p>Occupational Safety and Health Act (OSHA) 183</p>
<p>Office Decor 183</p>
<p>Office Equipment 183</p>
<p>Office Supplies 185</p>
<p>Open Board of Directors Meetings (Sunshine Laws) 185</p>
<p>Outside Employment 185</p>
<p>Ownership of Records 186</p>
<p>Paternity Leave 186</p>
<p>Permissions/Waivers 186</p>
<p>Personal Leave 188</p>
<p>Personnel Records 188</p>
<p>Plagiarism 188</p>
<p>Policy Amendment, Deletion, or Additions 190</p>
<p>Political Action Committees (PACs) 192</p>
<p>Political Education Funds 192</p>
<p>Postal Permit 193</p>
<p>Press Releases/Media Contacts 193</p>
<p>Protection of Member/Contributor/Customer/Employee Confidential Information 195</p>
<p>Quarterly Staff Meetings 195</p>
<p>Reasonable Accommodation 196</p>
<p>Reference Letters 196</p>
<p>References (Former and Current Employees) 196</p>
<p>Registered Agent 197</p>
<p>Reinstatement of Benefits 197</p>
<p>Remote Access to Computer Network 197</p>
<p>Resignation 199</p>
<p>Rest Periods 199</p>
<p>Safe and Safe Combination 199</p>
<p>Safe Deposit Box 202</p>
<p>Safety Committee 205</p>
<p>Sexual Harassment 207</p>
<p>Smoking 207</p>
<p>Software Licenses (Anti–Piracy) 207</p>
<p>Staff Conduct 208</p>
<p>Staff Contact by Board Members 208</p>
<p>Staff Training 208</p>
<p>Statutory (Legally Mandated) Employee Benefits 209</p>
<p>Suggestions 209</p>
<p>Taking Work Home 211</p>
<p>Tellers Committee 213</p>
<p>Temporary Employment Agencies 213</p>
<p>Time Off to Vote 215</p>
<p>Time Sheets 215</p>
<p>Trademark 217</p>
<p>Unemployment Compensation 217</p>
<p>Uniformed Services Employment and Reemployment Rights Act (USERRA) 217</p>
<p>Use of Premises 218</p>
<p>Utilization of Office Equipment 221</p>
<p>Vacancies 223</p>
<p>Voice Mail 223</p>
<p>Worker s Compensation Insurance 223</p>
<p>Weapons 224</p>
<p>Wrongful Dismissal (Avoidance) 224</p>
<p>Year–End Manual 224</p>
<p>Part 3 Internal Control and Risk Reduction Policies 227</p>
<p>Acronyms 227</p>
<p>Approved Vendor Listing 229</p>
<p>Automobile Insurance 231</p>
<p>Bank Account Reconciliations 231</p>
<p>Bank Statement Mailings 232</p>
<p>Bonding Eligibility 233</p>
<p>Business Interruption Insurance 233</p>
<p>Cash Register Issues 233</p>
<p>Cash Transactions 234</p>
<p>Certificate of Insurance 235</p>
<p>Changeover Audit 235</p>
<p>Check 21 Issues 235</p>
<p>Check Disbursements 236</p>
<p>Check and Wire Transfer Signatures 239</p>
<p>Check Signers 239</p>
<p>Check Stock 240</p>
<p>Check Supply 241</p>
<p>Control Over Checks and Cash 241</p>
<p>Convention Cancellation Insurance 242</p>
<p>Credit Cards 242</p>
<p>Credit Card Statements 246</p>
<p>Deposit Security and Restrictive Endorsements 246</p>
<p>Direct Deposit 247</p>
<p>Documenting a Fraud Action Plan 248</p>
<p>Employee Credit Cards (Elimination) 251</p>
<p>Errors and Omissions Insurance 251</p>
<p>Fidelity Bond (Employee Dishonesty Insurance) 252</p>
<p>General Liability Insurance 252</p>
<p>Ghost Employees 252</p>
<p>Ghost Vendors 254</p>
<p>Gifts 256</p>
<p>Insurance 259</p>
<p>Insurance Committees 259</p>
<p>Inventory Issues 260</p>
<p>Kiting 261</p>
<p>Lockbox 262</p>
<p>Malpractice Insurance 264</p>
<p>Manual Checks 264</p>
<p>Officers and Directors Liability Insurance 264</p>
<p>Payroll Processing 265</p>
<p>Payroll Tax Issues 265</p>
<p>Positive Pay 266</p>
<p>Professional Liability Insurance 266<br /><br />Property Insurance 267</p>
<p>Segregation of Duties 267</p>
<p>Statement of Auditing Standard No. 99 (SAS99) 267</p>
<p>Two Signature Checks 268</p>
<p>Umbrella Insurance 268</p>
<p>Unannounced Bank Statement Reconciliation 268</p>
<p>Window of Opportunity for Embezzlement 269</p>
<p>Wire Transfers 273</p>
<p>Part 4 Disclosure of Information Policies 275</p>
<p>Disclosure of Information 275</p>
<p>Disclosure of Records, General Public, Requests Made in Person 279</p>
<p>Disclosure of Records, General Public, Requests Made in Writing 279</p>
<p>Disclosure of Records, Members or Contributors, Requests Made in Writing 280</p>
<p>Disclosure of Records, Members or Contributors, Requests Made in Person 280</p>
<p>Board of Directors Examination of Records 280</p>
<p>Form 990–T 281</p>
<p>Part 5 The Sarbanes–Oxley Act of 2002 283</p>
<p>The Sarbanes–Oxley Act of 2002 283</p>
<p>Code of Ethics for Financial Management 284</p>
<p>Rotation of the Independent CPA Firm Partner 286</p>
<p>Whistle–Blower Protection 286</p>
<p>Internal Audit Committee 287</p>
<p>Certification of Financial Statements 288</p>
<p>Conflict of Interest Form 290</p>
<p>Summary 292</p>
<p>Part 6 State Issues 293</p>
<p>State Issues 293</p>
<p>Access to Accounting Records 293</p>
<p>Committee Meeting Attendance 293</p>
<p>Disclosure of Forms Filed with State 294</p>
<p>Executive Sessions 294</p>
<p>Loans 294</p>
<p>Minutes 294</p>
<p>Open Meetings 294</p>
<p>Posting Meetings 294</p>
<p>Registration as Fundraiser 295</p>
<p>Registered Agent 295</p>
<p>Personnel Files 295</p>
<p>Glossary of Accounting and Financial Terminology 297</p>
<p>Index 303</p>