Financial Policies and Procedures Manual for the Texas Center for Local Food
Introduction
The board and staff of the Texas Center for Local Food (TCLF) are committed to ensuring the sound management of organizational assets in the interest of achieving the organization’s mission. For purposes of this document, the Texas Center for Local Food (TCLF) are referred to as the “Organization”.
The policies and procedures contained herein are intended to:
- Protect the assets of the Organization.
- Put in place basic accounting, billing, and cash control policies and procedures.
- Ensure the maintenance of accurate records of the organization’s financial activities.
- Create a framework for operating standards and behavioral expectations.
- Ensure compliance with all federal and state procedures and reporting requirements including 2 CFR §200.3xx.
The President working with the Treasurer and Executive Director is responsible for administering these polices and ensuring compliance. The Board of Directors may make changes to these policies at any time. A full review of the policies should be conducted every two years. Every member of the organization’s team is expected to be familiar with and in compliance with these policies.
These accounting policies and procedures are intended be consistent with Generally Accepted Accounting Principles (GAAP). If this manual conflicts with specific federal or State regulation or with other organizational policies that have been adopted or updated more recently, the regulations or more recent board policy shall prevail.
Approved: May 19, 2019 by Board of Directors Updated:
Ethics
The Organization is committed to responsible stewardship of organizational resources. The organization will spend a reasonable percentage of its budget on programs in pursuance of its mission and on administrative expenses to ensure effective accounting systems, internal controls, fundraising, competent staff, and other expenditures critical to professional management and organizational sustainability. The organization will not accumulate excessive operating funds but will maintain a responsible level of reserves to enable our organization to respond to philanthropic trends and opportunities to better serve the organization’s mission.
Members of the board and staff of the Organization are committed to the following ethical practices:
- Acting in the best interest of the organization rather than on the basis of personal interests or the interests of third parties.
- Practicing sound financial management and compliance with legal and regulatory requirements.
- Employing financial systems to ensure that accurate financial records are kept and that financial resources are used to further the organization’s mission and charitable purposes.
- Creating and maintaining financial reports on a timely basis that accurately portray financial status and activities, provide timely internal financial statements, and explain any material variation between actual and budgeted revenues andexpenses.
- Providing employees and others with a confidential means to report suspected financial impropriety or misuse of itsresources.
- Having written financial policies governing use of its assets, internal control procedures, and purchasing practices.
- Complying with laws and regulations related to fund raising, licensing, financial accountability, human resources, lobbying, and political advocacy, and taxation.
- Respecting the interests and intentions of its donors, volunteers, and the general public and managing them with the highest level of professionalism and integrity.
- Using solicitation and promotional materials that are accurate and truthful and identify the organization, its mission, and its intended use of solicited funds accurately.
- Ensuring that contributions are used in accordance with donors’ intentions and obtaining explicit consent before altering the intended use of a restricted gift.
Financial Records and Reports
The Organization will employ a regular process for assessing the status of organizational finances and assets. The Board of Directors will ensure that timely and accurate financial information is available, understood, and used to guide decision-making.
- The fiscal year for the organization will be January 1 – December 31.
- The financial records will be maintained using the cash basis of accounting.
- The Treasurer or Executive Director or bookkeeper will reconcile the bank statement with bookkeeping records at least quarterly. The Treasurer or Executive Director will also review an original copy of the bank statement.
- The Treasurer and Executive Director will prepare the following quarterly financial reports for review by the Board: Balance Sheet, Income Statement, Budget-to-Actual comparison, and Cash Flow Report.
- The Executive Director will make an annual presentation on finances during the first quarter of every fiscal year.
- The Board of Directors will review the Form 990 annually.
- At least every three years, an independent CPA will conduct an audit or review.
Segregation of Duties
The Organization is committed to sound internal controls that ensure segregation of duties to create accountability and prevent misuse of organizational assets. The Organization is a small and is expecting to grow significantly. These internal controls reflect the current small size while maximizing the effectiveness of internal controls with a small group of people, and allowing for effective ongoing controls as the organization grows.
- There will be separation of financial duties and responsibilities so that no person has sole control over cash receipts, payroll, bank reconciliations, accounts payable or other financial functions.
- Due to the Organization’s small size, the check signer will often be the Treasurer, who also approves expenditures and may record bookkeeping entries, or prepare checks for signing.
- The Treasurer and President will be authorized to sign all checks.
- The Executive Director will approve expenditures, record bookkeeping entries, and review bank statements. The Executive Director will be authorized to sign checks and authorize expenditures subject to the limitations of this Financial Policies and Procedures document.
- The Executive Director will have signature authority of up to $5,000 for the Organization bank accounts. Amounts over $5,000 require the approval of a Board member; approval may be verbal or written and must be documented.
- Any expenditure or commitment of funds from the Organization bank account must have the prior approval of the Executive Director.
- Bank statements and bookkeeping files will be reviewed monthly by at least one person in addition to the person performing the reconciliation.
- In a small organization, it is not always feasible for bank deposits to be made by someone other than the person recordingreceipts and so this is not required. However, the monthly review of bookkeeping files and bank statements by someone other than the person recording the information will ensure that sufficient controls are in place.
- No checks or payments should be signed or solely authorized by the person to whom they are issued.
Safeguarding Assets
The following policies and procedures will ensure the security of organizational resources:
- The Treasurer shall have primary responsibility for ensuring that proper financial management procedures are maintained and that the policies of the board are carried out.
- The Board of Directors will provide fiscal oversight in the safeguarding of the organizational assets and shall have primary responsibilities for ensuring that all internal and external financial reports fairly present its financial condition.
- A proper filing system will be maintained for all financial records.
- Checks, credit and debit cards will be stored under lock and key when not in use.
- Actual income and expenditures will be compared to the budget on a quarterly basis.
- All funds will be kept at University Credit Union, Austin, Texas or Frontier Bank, Elgin, Texas.
- No bank account should contain more than the FDIC insured amount.
- Bank statements will reconciled on a monthly basis by the Executive Director or Treasurer or bookkeeper/accountant.
- The Board of Directors shall approve any new signers for each bank account and any new and necessary bank accounts.
- The Treasurer is responsible for promptly notifying financial institutions of any changes to authorized signers on organizational accounts.
- Documents on all fixed assets will be kept in a locked file.
- Appropriate insurance for all assets will be maintained.
Funds Received / Receipts Polices
The following policies govern how funds received by the organization will be processed:
- All checks are endorsed with “For deposit only” immediately upon receipt.
- All cash receipts are recorded on pre-numbered receipts or a log book.
- The Organization member management system will record all receipts in the donor database.
- The Executive Director and Treasurer will verify that online receipts are being transferred to the bank account on a regular schedule.
- Cash will be managed in a way that its receipt is tracked and the associated deposit matched to the cash log.
Procedures
- All checks and cash receipts received through the mail or in person are restrictively endorsed immediately by the Treasurer or Executive Director and recorded in the bookkeeping system, listing the date received, payor, check #, and amount received, as well as other pertinent information about the funds.
- Cash and checks will be deposited promptly and stored safely until deposit.
- The Treasurer or Executive Director shall prepare the bank deposit and either make the deposit or forward the entire package to the bookkeeper. Every effort will be made to ensure that cash deposits are verified by an authorized person different from the person preparing the cash deposit.
- For funds received online via ACH or by credit card, the Treasurer or Executive Director or bookkeeper will post the deposit to the bookkeeping system promptly.
- The Treasurer or Executive Director or bookkeeper shall code all funds received according to the chart of accounts and ensure that all deposits are properly entered into the bookkeeping system.
- The Treasurer or Executive Director or bookkeeper will review the bookkeeping account monthly and in this way, they will check each other’s work and provide for internal control.
Accounts Payable and Fund Disbursement Policies
The following policies and procedures govern how funds disbursed by the organization will be approved and processed:
- The Treasurer or President will approve expenditures within the parameters set by the annual operating budget as approved by the board, with the exception of their personal expense reimbursement items, which must be approved by another person having check signing authority. Another board member may approve expenditures in rare instances when neither authorized person is available.
- The Treasurer and President and Executive Director have authority over the Organization bank account. Each has single signature authority up to and including $5,000. Checks above $5,000 require a second signature or approval of another Board member. Approval must be documented.
- All payments must be accompanied by an invoice, receipt, or other documentation that validates the payee, amount, date, items purchased, and purpose of the purchase.
- All disbursements, except petty cash, are made by check or credit card and are accompanied by substantiating documentation. Credit card statements will be reconciled to substantiating documentation monthly.
- All checks are pre-numbered and accounted for monthly.
- Blank checks are stored in a locked container.
- When a check is issued, the signer is responsible for marking “PAID” on the substantiating documentation.
- Blank checks may never be signed in advance.
- Electronic banking allows wire transfers, electronic transfers, stop payments on checks, and account balance inquiries be initiated and completed via computer or telephone. Wire transfers, electronic transfers, and stop payments cannot be set up and approved by the same person. The Treasurer may approve a transaction that is to be completed by thebookkeeper/accountant.
Procedures
- All invoices received are marked with the date received by the Treasurer, President or Executive Director and placed in the accounts payable file.
- The Treasurer or Executive Director approves all invoices and expenditures.
- Due to the small staff size of the organization, the Treasurer and Executive Director will prepare checks written on the accounts to which they are authorized.
- At least monthly, the Treasurer and the Executive Director will review the bank account and bookkeeping records ensuring that each expenditure makes sense and has acceptable substantiating documentation.
- The Treasurer and Executive Director will immediately record all disbursements in the bookkeeping system.
- Copies or all paid invoices and all receipts for debit/credit card transactions will be maintained in a file that can be accessed by the board.
- The bookkeeper/accountant reconciles the bookkeeping system to the bank statement on a monthly basis.
Petty Cash Fund
The organization will not maintain a petty cash fund. Any expenditure that requires petty cash must be made independently, with prior approval, and then a reimbursement request submitted.
Payroll
The following procedures govern payroll:
- Employees will enter their time into the time keeping system.
- The Executive Director will review all time sheets and grant approval to bookkeeper to run payroll.
- The bookkeeper will send payroll amounts to the Executive Director or designee who will then write and disburse payroll checks.
- An employee may not sign their own payroll check.
Purchasing
The following policies govern how purchasing decisions will be made:
- Only the President, Treasurer, or Executive Director is authorized to make purchasing decisions for regular supplies and large equipment, including furniture, computers, and software.
- When Federal or State funds are being spent, all applicable procurement rules and guidelines must be followed.
- Purchasing decisions using grant funds or otherwise restricted funds must be verified in advance as allowable costs and approved by the grant project manager.
- Bids should be sought for goods and services exceeding $5,000.
- Some form of cost or value analysis shall be made in connection with every procurement action.
- Price should be one of the factors in the evaluation of responses, but the organization is not required to take the lowest price if other factors are important to the decision. Environmental and sustainability factors should also be considered as should USA made.
- Food purchases should use locally grown and made products to the maximum extent possible.
Organizational Credit Cards
The Organization authorizes credit and debit cards for the purpose of facilitating online and business purchases, including business travel that is not easily handled through normal disbursement processing. The use of organizational credit and debit cards creates the opportunity for expenditures to be made without prior approval. The following policies govern how these transactions will be handled:
- Due to the potential for theft, misuse, and auditing problems, use of credit cards is monitored carefully. Only the Treasurer and Executive Director may be issued an organizational credit or debit card. A debit card will be issued to the Executive Director for the Organization’s bank accounts.
- Other board members or staff may request that purchases be made for business purposes on their behalf using one of thesecards.
- In every instance of credit card usage, the individual using the card will be held personally responsible in the event that the charge is deemed personal or unauthorized.
- All credit card purchases must be reconciled and attached to supporting documentation on a monthly basis.
- The Treasurer or Executive Director will both review all credit card purchases monthly and must approve all payments.
- The Treasurer, Executive Director, or bookkeeper/accountant will enter all credit card transactions into the accounting software monthly.
- Misuse of credit cards or failure to follow these procedures will lead to restrictions or loss of credit card privileges.
- The Treasurer and Executive Director must be notified immediately if a card is lost or stolen.
Vendor and Contractual Agreements and Leases
The following policies govern how decisions to enter into agreements with vendors or contractors or leases will be conducted:
- Only the President or Executive Director may sign a contractual or vendor agreement.
- Only the President may sign a lease.
- The Treasurer and Executive Director will maintain a secure file of all vendor, contract, and lease agreements according to the document retention policy.
- All vendors must submit an IRS Form W-9 Request for Tax Payer Identification and Certification or equivalent prior to payment.
- A determination is made by the bookkeeper/accountant on the need to file an annual IRS Form 1099-Misc. on payments made to vendors.
- Contracts will be monitored for performance and conformance regularly and always prior to paying any invoice from the contractor.
Gift Acceptance Policy
The following policies govern how nonstandard gifts will be handled:
- The Organization solicits and accepts gifts that are consistent with its mission.
- Donations will generally be accepted from individuals, partnerships, corporations, foundations, government agencies, or other entities, without limitations.
- In the course of its regular fundraising activities, the Organization will accept donations of cash, marketable securities, bequests, life insurance policies, commercial annuities, retirement funds, and in-kind services.
- Certain types of gifts must be reviewed prior to acceptance due to the special liabilities they may pose. Examples of gifts that may be subject to review include gifts of real property, gifts of personal property, and gifts of securities.
- • All decisions to solicit and/or accept potentially controversial gifts will be made by the Board of Directors. The primary consideration will be the impact of the gift on the organization.
- The Organization will not accept gifts that (a) would result in violating its corporate charter, (b) would result in losing its status as an IRS § 501(c)(3) not-for-profit organization, (c) are too difficult or too expensive to administer in relation to their value, (d) would result in any unacceptable consequences, or (e) are for purposes outside the Organization’s mission.
Security and Computer Controls
The following policies govern the security procedures that will be taken to ensure the safety of physical and electronic records:
- Only the Treasurer and Executive Director will have access to the passwords required make changes to all Organization bank accounts, online purchasing accounts including those that maintain credit card information, payroll systems, bookkeeping systems, and government system accounts.
- Access codes will be stored in a safe location.
- All passwords will be changed regularly.
- Any password lost or stolen or suspected as such will be changed immediately and reported to the President and Treasurer and Executive Director.
- Access to computer or on-line systems for accounting, personnel, payroll, and online and phone banking is controlled by the President and/or Executive Director. Within each system, access permission is set to allow the appropriate level of access depending on staff positions and job duties.
- The bookkeeper (or online system) will perform a backup of electronic records at least weekly to assure that data is secure and will not be lost in the event of a computer failure.
- All confidential and financial information will be kept in secure files, including personnel files, financial records, invoices or expenses to be paid, cash or gifts to be deposited, fixed asset listings, and petty cash funds.
External Audit
- The Organization will have an audit or review prepared by an external CPA firm at least every three years.
- The selected auditing firm will not be used for other services except tax form preparation.
- Every three years, a Request for Proposal will be sent to audit firms qualified to provide the type of audit that meets the Organization and/or funder need.
- The Board of Directors will select the audit firm and award the audit contract.
- The audit is reviewed in detail by the Treasurer, but presented to the board by the auditor, and accepted (or rejected) by the Board of Directors based upon recommendation by the Treasurer.
IRS Form 990 Preparation
- A CPA firm or individual will prepare the organization’s annual Form 990.
- The Treasurer and Executive Director will oversee preparation of the form.
- The board will review and approve the form before submission to the IRS.
Risk Management
- The Organization will insure those risks which the board deems appropriate using an insurance professional who is knowledgeable about the market, understands or is willing to learn about the Organization’s operations, is an assertive advocate for the Organization’s interests, and is organized and responsive to the Organization’s needs.
- The board will approve purchase of insurance and will review insurance requirements as needed.
APPENDIX A
Employee Expense Reimbursement Policies
Travel Reimbursement Policy
Employees are encouraged to track their un-reimbursed employee business expenses in the event they may be itemized on individual tax returns [See: http://www.irs.gov/pub/irs-pdf/p463.pdf and http://www.irs.gov/taxtopics/tc511.html].
Mileage
The Organization, as funds permit, will reimburse mileage at the Federal mileage rate. Employees should make an effort to carpool with other employees, volunteers, or allies whenever practicable to minimize mileage expenses. Mileage is reimbursed for legitimate business-related travel by personal vehicle, excluding travel between home and office.
Local transportation
When traveling, employees should attempt to take a local bus or use a ride sharing service. Taking a taxi or renting a car should be done only when other solutions are not practical. Parking fees and toll fees are reimbursable. Traffic or parking fines are not reimbursable.
Airfare
Employees should generally seek the lowest cost airfare that reasonably allows them to reach their destination efficiently. This doesn’t mean employees should arrive exhausted because they chose a cheap flight with lots of stops. Find a reasonable schedule keeping the goal of your trip in mind. If you prefer to drive, you will be reimbursed for the lesser of the mileage cost and plane fare, taking into account other costs related to mode of travel such as ground transportation and parking.
Overnight Accommodations
When paid accommodations have been approved in advance, employees should generally select a low or average cost hotel.
Meals
While travelling, as funds permit, the Organization will reimburse employees for meals according to the following schedule:
- Breakfast $10
- Lunch $20
- Dinner $40
These are total amounts including tax and tips. Try to eat locally grown food. Partial days will be reimbursement according to your schedule.
No receipts are required and exceptions require the approval of the Treasurer or Executive Director.
Employees are not to pay for meals for volunteers or donors, except when unavoidable or with prior approval of employee supervisor or other authorized person.
Any deviations from this policy require approval by supervisor prior to reimbursement.
APPENDIX B
Other Expense Reimbursement Policy
Mobile Phone
- Full-time employees who require their mobile phone for business may be reimbursed for personal mobile phone use at the rate of $50/month.
- Part-time employees working 20 hours per week or more who require their mobile phone for business may be reimbursed for personal mobile phone use at the rate of $25/month, or an amount appropriate to the hours they work.
Receipts and Documentation
- All expenses submitted for reimbursement must be documented showing date, purpose, amount, and to whom expense was paid.
- Original receipts must be in the form of paper or PDF document.
- No reimbursement for expenses will be issued without a receipt.
Pre-Approval
- All expenses to be reimbursed, including business travel require pre-approval of your supervisor.
Approved by Board of Directors on May 19, 2019
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