Finance
Financial Policies and Procedures
The document provides an overview of the fiscal policies and procedures for CENTER FOR FAMILY SERVICES, which shall be referred to as “CFS or “Agency” herein after. CENTER FOR FAMILY SERVICES is incorporated in the state of New Jersey and is exempt from Federal Income taxes under IRS Section 501 (c) (3) as a not for profit corporation. The mission of CENTER FOR FAMILY SERVICES is as follows:
“The Mission of Center For Family Services is to support and empower individuals, families, and communities to achieve a better life through vision, hope, and strength.”
This manual presents the CFS Financial policies, procedures, operations and accounting policies and procedures, for staff in the Finance Office as well as direct service and supervisory staff, and other administrative staff. This manual also documents some of the internal financial controls.
Governance
Board of Trustees, Finance Committee, Audit and Audit Committee
CFS receives funding from multiple sources. In the event that a funding source has requirements more stringent or in variance with CFS, CFS will adhere to the requirements of the funding source and CFS general best practices.
CFS is governed by a voluntary Board of Trustees comprised of community representatives. The Board is responsible for general oversight of CFS and its resources, including its financial resources. CFS Board of Trustees has a Finance Committee , including members with auditing, banking and other financial expertise, which meets on a regular basis to review periodic financial and budgetary reports, and give direction to the CEO and Director of Finance. The Board establishes various policies, including fiscal policies. The Board hires the President / CEO for the overall administration of agency business. The President / CEO presents fiscal policies to the Finance Committee for review, and recommendation to the Board for approval. Implementation of Board policies is the responsibility of the CEO and Director of Finance. The CEO involves the Director of Finance in the development of the fiscal policies to be recommended to the Board. Auditor recommendations are also addressed.
The CFS Board of Trustees Audit Committee oversees financial reporting, internal controls and the annual audit processes. One Finance Committee Member chairs the Audit Committee, but other members are not members of the Finance Committee. The Audit Committee selects the external auditor to perform a single audit. Single audit includes assessing the grantee agency’s written procurement procedures (including the approvals required, competition process, documentation records required, etc.), and may include reviewing a sample of actual purchases made during the audit year. Ensuring that all records have been documented will be necessary since auditors conduct audits in a different manner. The Audit committee reviews the annual audit and makes recommendations to the full Board
The Director of Finance works with other Program Directors and staff to ensure all staff follow CFS fiscal policies and procedures.
This Fiscal Manual outlines Board policies, administrative policies and procedures. The Board may modify Board policies. The CEO may modify administrative policies and procedures, or make exceptions, when deemed to be in the best interest of CFS.
Staffing
Job Descriptions Job descriptions outline the various duties and responsibilities for the position described. As much as is feasible, duties and responsibilities will be separated so that no one employee has sole control over cash receipts, disbursement, payroll, reconciliation of bank accounts or any other material duty performed by the fiscal department on a day to day basis. Job descriptions are maintained and revised periodically as needed.
Finance Department Overview
The Finance Department consists of several staff members that manage, process, and report financial information for CFS. These positions include the following:
- Associate Vice President of Finance
- Grants Director
- Business Manager
- Payroll Manager
- Staff Accountant
- Accounts Payable Supervisor
- Accounts Payable Clerk (3)
- Accounts Receivable Clerk
- Accounting Clerk
Other officers and employees of CFS who have financial responsibilities are as follows:
- Board Officers
- Full Board of Trusties
- President / CEO
- Assistant to the President / CEO
- Vice Presidents
- Program Directors
Other staff may handle petty cash, submit program advances or check requests, or may collect client and program fees, or contributions to CFS.
Responsibilities The primary responsibilities of the fiscal department consist of:
- General ledger maintenance
- Cash management
- Asset management
- Cash receipts
- Accounts payable
- Payroll and benefits processing
- Preparation of Fiscal reports
- Financial statement processing
- Bank reconciliation
- Compliance with government reporting requirements
- Handle annual audit process & other periodic audit
- Preparation and Modification of agency and contract budgeting process
Ethical Behavior CFS has a Code of Ethics for staff and a Code of Ethics for the Board of Trustees. All staff receive orientation is ethical behavior and expectations of ethical conduct at CFS. Unethical actions, or the appearance of unethical actions, are unacceptable under any conditions. Any employee determined to be in violation of the Code of Ethics, or any CFS policy, is subject to discipline up to and including termination. Each staff is responsible for applying common sense in business decisions where specific rules do not provide all the answers. If a staff person has any doubt about the appropriate course of action, they must consult with their supervisor, program director, or Vice President for direction.
As a general guideline, in determining compliance with this standard in specific situations, staff should ask themselves the following questions.
- Is my action legal?
- Is my action ethical?
- Does my action comply with CFS policy?
- Am I sure my action does not appear inappropriate?
- Am I sure that I would not be embarrassed or compromised if my action became known within the Agency or publicly?
- Am I sure that my action meets my personal code of ethics and behavior?
- Would I feel comfortable defending my actions for media?
- Would a reasonable person make the same decision under similar circumstances?
Each staff person MUST be able to answer, “yes” to all these questions, and confer with their supervisor, before taking any action. All employees must carefully weigh all courses of actions suggested in ethical, as well as economic terms and base their final decisions on the guidelines provided by this policy. If an employee feels this policy is not clear in a certain area, the employee should seek clarification from their immediate supervisor.
Governing Regulations The CFS receives revenue from many different funding sources. Each grantor requires recipients of their funding to comply with the regulations they have adopted. These regulations are typically spelled out in the grant award or funding contract. Each program director or their designee is responsible for ensuring that items they approve , or the request for payment of goods and services to be paid for with funding from their programs, are necessary, reasonable and allowable according to the regulations for the funding source being charged.
Conflicts of Interest Employees have an obligation to conduct business within guidelines that prohibit actual or potential conflicts of interest. This policy establishes only the framework within which CFS conducts business. These guidelines provide general direction so that employees can seek further clarification on issues related to the subject of acceptable standards of operation. In the event that a potential conflict of interest arises, the employee should contact, discuss and get approval from their supervisor, VP, or the CEO, for more information and direction about conflicts of interest. An actual or potential conflict of interest occurs when an employee, Board member, contracted personnel or sub-governing body at the program level is in an opportunity to influence a decision that may result in a personal gain for that employee or for a relative as a result of CFS business dealings.
No “presumption of guilt” is created by the mere existence of a relationship with outside firms.
However, if an employee has any influence on transactions involving purchases, contracts, or leases, it is imperative that he or she disclose to the CEO of CFS as soon as possible the existence of any actual or potential conflict of interest so that safeguards can be established to protect all parties. Personal gain may result not only in cases where an employee or relative has a significant ownership in a firm with which the CFS does business, but also when an employee or relative receives any kickback, bribe substantial gift, or special consideration as a result of any transaction or business dealings involving CFS .
Examples of conflicts of interest include, but are not limited to, situations in which a director, officer, member of governing body or employee:
- Negotiates or approves a new contract, purchase, sale or lease on behalf of agency and has a direct or indirect interest in or receives personal benefit from, the entity or individual providing the goods or services;
- Employs or approves the employment of, or supervises a person who is an immediate family member of the director or employee;
- Sells products or provides services in competition with the organizations;
- Uses the Organization’s facilities, assets, employees or other resources for personal gain, except the use of agency equipment such as copiers, , fax machines, computer, printers and cell phones as long as the employee reimburses agency for any personal use as stated later in this policy;
- Receives a gift from the vendor, more than $25 in retail value if the director, officer or member of governing body or employee is responsible for initiating or approving purchases from that vendor.
Fraud Any knowledge or credible suspicion of any instances of fraud, theft, or the improper use of agency property or equipment should be reported immediately to the CEO, VP or Director of Finance. Instances of fraud include, but are limited to the following:
- Theft, embezzlement, or any other misappropriation of assets. This includes assets of or intended for the Agency, as well as those of our clients, subcontractors, vendors, contractors, suppliers and others with whom the Agency has a business relationship.
- Intentional misstatements in the Agency’s records, including intentional misstatements of accounting records or financial statements.
- Authorizing or receiving payment from goods not received or services not performed.
- Authorizing or receiving payment for hours not worked.
- Forgery or alteration of document, including but not limited to checks, time sheets, contracts, purchase orders or any other Agency document.
Any person having knowledge of any of these situations should immediately contact his/her Program Director, VP, or CEO. CFS also has a confidential email reporting (whistle-blower) system. The phone numbers of any of these persons can be supplied by the Assistant to the President and CEO by calling 856-964-1990.
Employee Theft Insurance Protection CFS carries employee theft insurance protection. All official forms pertaining to financial operations are to be typed, computer generated or completed in ink. All certifying signatures are to be signed in ink as well. The financial records of CFS including bank statements are located at the administrative headquarters at 584 Benson Street, Camden, NJ. To protect the sensitive data contained in these documents, CFS does not allow this information to be removed from this location.
General Accounting
General Ledger and Chart of Accounts:
The general ledger is the collection and recording of all asset, liability, and revenue & expense activities. The general ledger is an accounting module to accumulate all financial transactions. General ledger accounts are used to accumulate transactions and the impact of each of these transactions on each asset, liability, net assets, revenue and gain or loss account.
The chart of accounts is comprised of six types of accounts:
- Assets
- Liabilities
- Fund Balance/Net Assets
- Revenues
- Expenses
- Gains and Losses
Each program is given abbreviated names and specific umbrella codes in the chart of accounts to track the revenue or funding source and expense by program. Within the umbrella code, sub-codes are set up by the funding source and / or program service acronym to track revenue and expense by the contract. The revenue and expenses are categorized by the suitable group to track the performance against the budget and produce expenditure report as per contract specifications. The Finance Director or a designee monitors, controls and maintains the chart of accounts and general ledger on a daily basis. Any additions or deletions of accounts should be approved by the Finance Director, who ensures the chart of accounts is consistent with the structure needed for producing reports for the Agency and meets the needs of each program at the funding source level.
Fiscal Year CFS operates on a fiscal year from July 1st through June 30th. CFS maintains its books on an accrual basis. Changes to the agency’s fiscal year and / or accounting basis must be approved by the CFS Board of Trustees.
Journal Entries All general ledger entries must be supported by backup documents with explanations suitable for the recording journal entries. All journal entries must be approved by the Finance Director or a designee.
Petty Cash To meet day to day petty cash expenses, agency allows setting up petty cash account at the program level. The petty cash request is authorized by the VP in charge of the program and approved by the finance director. The range of the amount of the request for petty cash varies from program to program based on budget size, location and nature of service rendered by the program. Petty cash funds must be kept in a locked file cabinet or safe with only designated employees having access and being responsible for the funds. Random checks are made periodically to assure internal controls are kept and maintained on the petty cash funds.
The amount of petty cash fund is limited to $500. A petty cash fund is used to make small purchases of goods and services and for emergencies. The use of petty cash fund for the residential programs includes payment for special activities for clients. Receipts for all purchases must be kept and submitted to the fiscal office every calendar month in order to replenish the funds. The funds will be reimbursed in accordance with the accounts payable process. The accounts payable check will be made payable to the “employee” authorized to having access to the funds.
Cash Receipts (including checks and direct deposits) The handling and receiving of cash will be conducted in the manner described. The following section pertains to funds received in the fiscal Office. Funds received at the county level are to be handled as described in “Other Cash Receipts”. All checks received through mail are opened and recorded by the Accounts Receivable Clerk. The Accounts Receivable Clerk assigns program and account codes, and processes receipts through the financial system. All receipts are computer generated and sequentially number. A copy of the receipt is filed numerically in the Finance Department on a calendar month basis as a backup to the bank statement for reconciliation purposes. Cash and checks collected and received are processed for bank deposits each Monday, Wednesday, Friday, and last working day of month by the Accounts Receivable Clerk. Copies of all checks are made for documentation. Cash and checks are maintained in a safe located in the Finance Department until such time deposits are made. Before the cash or check receipt is recorded in the books, the grant director reviews and approves deposit. Once the deposit is made, the amount is verified against the computer generated receipt journal, and the bank deposit receipt is attached to all supporting documentation for that deposit. Accounts Receivable Clerk records in the agency books all federal and state contacts, as well as various funding sources that transmit funds through automatic electronic deposit to the Agency’s bank account. Remittance notices are delivered to the Accounts Receivable Clerk for entry into the accounting system as noted above.
Other Cash Receipts Client fees collected by the program are deposited by designated staff every other day of the week into the Agency’s designated bank accounts. Original bank deposit slip along with back up documents are mailed to the Finance Department through inter-office mail. The Accounts Receivable Clerk then records deposit and attach document to the deposit slip. Other funds received through donations, special events such as fund raisers, etc. are forwarded immediately to the Accounts Receivable Clerk for entry into the accounting system as noted above.
Credit Card Use Only the President /CEO, Vice Presidents and selected program directors are authorized for the use of agency credit cards for the benefit of agency and / or program in performing job duties where it is deemed necessary to use the credit card in conducting agency business. Each program director is responsible for proper purchasing procedures when using the cards. Use of credit card can only be for agency business, NO exceptions. The Finance Department receives monthly statements for each card. The credit card statement is forwarded to the users to attach supporting receipts and any required paperwork for all purchases. Currently, the agency credit cards include Bank Visa, Sam’s Club, Lowes, Staples.
Credit Card Policy and Procedures
Purpose:
Provide Management and approved supervisors with Credit Cards to facilitate purchases of goods/services needed for agency and/or program use.
Administrative Policy:
- Card holders must attach to copy of statement for all purchases made. Receipts should be accompanied by the completed “Receipt Summary Form”. (See attached form)
- Copy of credit card statement along with attached receipts for the previous month must be delivered to Finance office no later than the 7th of the next month (ex. October receipts of purchases are due no later than November 7th.) Note: If the 7th of the month falls on the weekend, the receipts are due after the weekend.
- Card holder should refrain from making purchases for products or services outside of his or her respective program(s). If card holder is in charge of more than 1 program, and an expense charged on the card belongs to more than 1 program, the program name must be identified with amount. Otherwise, expenses will be charged to the program, by default, based on card holders / Supervisor’s primary program.
- Purchases for CFS programs and HS program must be made on respective cards as identified with CFS logo for CFS program and NO logo for HS program respectively. Card holder who is issued CFS card only may purchase goods and services for HS program but must identify as purchase for HS program.
- Card holders should refrain from making any Gift card, Bank card, or Store card purchases on grant funded program(s). Other than grant funded program(s), purchases and distributions of such cards must be accompanied with the Receipt of Goods and Services form signed by the purchaser and attached to the copy of statement as part of back-up to the receipt. A signature of the recipient(s) is expected when deemed appropriate.
- When purchase is made for client use, a completed Receipt of Goods and Services form, signed by the client must be attached to copy of credit card statement. All items must be listed and authorized by appropriate authority. Include notes, if any, to draw finance department attention to assist in determining the allocation or nature of expenses at the grant level by the program.
- Dining expenses must include the names and relationship to the agency, of all who dined and the purpose of the meeting.
- Meetings & Conferences including Training expenses incurred out of state or more than 50 miles from the primary place of card holder work location must be listed on a form “Travel Itinerary Form” and attach to the copy of credit card statement. (See attached form).
Procedures:
- Card holders will be given a copy of their respective credit card statement at the beginning of each month.
- Card holders will attach receipts for each prior month transaction and return to the finance office by the 7th of the month.
- Card holder will write an explanation directly on copy of the statement to include: specific program/grant to be charged; if subject to reimbursement; any 3rd party involvement; date and location; nature of expenses etc., to assist finance in categorizing the expenses by correct expense line item.
- The Travel Itinerary form must be filled out completely when the first Meeting & Conferences or Training expense is incurred.
- First expenses usually occur in the form of a check request for registration fee or making advances reservations, for transportation, including loading using a credit card.
- The Brochure, invitation, or agenda must be attached to the Travel Itinerary form or sent via email.
- Copies of Head Start credit card statements are included with the monthly Financial Statements and presented monthly to the Head Start Policy Council for review and approval, and for review and approval of the CFS Board of Trustees.
End of Credit Card Policy
Draw Down From Payment Management At month end, financial reports are prepared for each program operated by CFS. These reports determine the monthly and year to date expenditures. Once the monthly reimbursement is determined, invoices are prepared to draw down budgeted and / or authorized funds. For programs whose funding is requested from the US Federal Payment Management System (PMS), the appropriate finance personnel enter the reimbursement request in the PMS website to draw down funds based on expense report. Payment when received is appropriately recorded in the books.
Procurement/Purchase Orders The Agency has Procurement Procedures that must be adhered to by all employees. There are three specific thresholds to be considered for purchasing:
- Purchases under $5,000: No purchase order is required for purchase of goods and service for value under $5,000. However, the program director making the purchase request must contact VP in charge for approval and authorization to be in compliance with contract guidelines. An approved purchase request through the check request supported by the appropriate estimates and/or quotes must be submitted to the finance office for check processing and record keeping.
- Purchases of over $5,000 but less than $100,000: Before making purchases of goods and/or services worth over $5,000, informal bids are required depending upon funding source requirements. The program director or the authorized person in charge of bidding process will follow Agency and / or funder guidelines. Before making purchases, the authorized person must contact Finance Department to obtain approval for type of purchase approved by the contract budget and for amount allowed. (Refer to Procurement Regulations). Once all the procurement procedures are properly followed, reviewed and met, the authorized person will seek CEO or VP’s approval before delivering appropriate documentation to Accounts Payable Clerks for payment processing.
- Purchases over $100,000 and above: Formal sealed bids are required from individual and / or business contractors. Authorized person must contact person in charge of approving Purchases and finance office for approval of budgeted amount and fulfillment of contract guidelines, if any. (Refer to Procurement Regulations). Once all procedures are thoroughly followed, reviewed and met, the Purchasing/Property Manager will deliver appropriate documentation to the CEO for final authorization to make purchases as requested. Any additions or deletions to this list must be authorized by a Program Director and VP.
See attached Head Start Procurement Policies and procedure in Addendum 1.
Accounts Payable Check Process The Accounts Payable Supervisor or a designee will be responsible for all blank checks, which will be kept under lock and key. The Accounts Payable Clerks will be responsible for printing and releasing checks for all approved invoices. Accounts payable checks are printed and released each week. The turnaround time for processing a check request is usually 3 -5 business days unless there is a special emergency request. The Accounts Payable person reviews all payable requests to ensure approval; accuracy and make sure that all required supporting documents are attached. Accounts Payable person assigns program and expense account code(s). Accounts Payable person enters data in the books. The Accounts Payable Supervisor prints check payable register to review the accuracy of data entry. The payable register is reviewed by the finance director before selection of check payment. Selected invoices are processed for payment and checks are printed. A computer generated check is attached to authorized invoices and / or check request voucher for signature. Two (2) signatures of the authorized signors is obtained before checks are delivered or mailed to the vendors. Copy of check stub is attached to the original invoice and filed in alphabetical order for easy access.
Bank Reconciliation Bank statements are provided monthly from the financial institutions with whom CFS conducts business. The reconciliation of the operating and other accounts is performed by the Finance Director or designated person. Finance Director reviews the bank reconciliation monthly to determine if any checks are outstanding over 90 days. An effort will be made to contact the payee to see if the check has been received. Before any outstanding checks are voided, the bank will be contacted to see if it has been cashed. If not, a stop payment will be issued for that check, it will be voided, and a new one will be issued if needed.
Payroll
All actions involving payroll such as a change of pay, position, location, percentage allocation by program, or change in scheduled work hours must be reported on a Payroll Status Change Form (PSCF). The form must be approved by the Program Director and VP or CEO. The original change form is filed in the employee’s personnel file with Human Resource Department and a copy is forwarded to Finance for update of payroll records. The PSCF and other payroll information are due to Finance one (1) week before the payroll submission date.
The HR Employee Administrative / Benefit Clerk in HR Department is responsible for seeing that the employee completes all relevant tax forms such as the W-4, I-9, Insurance Forms, Employment Contact information, etc. Payroll is processed bi-weekly.
Time Sheets Timesheets must be submitted by each employee with original signature of employee and approval of director. In order to get paid, the employee is responsible for completing and signing their own time sheet and obtaining approval from their supervisor. The employee also reports leave information on their timesheet. The supervisor is responsible for ensuring timesheets are accurate and all leave has been reported correctly. The supervisor is also responsible for accuracy of time calculated. After July 1, 2013, timesheets will be generated through the on-line ADP website, by the employee, and electronically approved by supervisors.
The Payroll Clerk re-checks all timesheets for accuracy and makes any necessary changes to the timesheet in ink. Summarized time data is then entered in to 3rd party payroll processing company software for generating pay checks. After July 1, 2013, data will be entered as described above.
The paycheck are delivered to the program location for handout to employees on the pay day due date. Payroll register and reports are delivered to the agency for recording payroll data in agency book. All ledgers are filed in the appropriate binders by pay date. Payroll binders are maintained in the payroll manger office to maintain confidentiality. Timesheets are filed alphabetically and maintained in the finance department. After July 1, 2013, timesheets are available only electronically. To ensure legitimate payment to the newly hired employee, finance office must receive Payroll Status Change Form for newly hired employee from HR department.
For termination of employee, a Payroll Status Change Form must be signed and submitted by employee’s supervisor to include Program Director and VP approval.
Correction of Payroll Errors In a situation where employee is under paid, Finance will review the case and determine impact of financial stress on employee before manual check is processed. In a situation where employee is overpaid, the employee will be notified of the overpayment with request to pay back overpaid amount before the payroll is processed through 3rd party payroll processor which is Monday of week of the next pay check is due. If an employee fails to pay back the over-payment, the over payment will be deducted from the employee’s next pay check.
Leave Employee may earn vacation, sick and personal leave, as per Agency approved leave policy in effect, based on each employee’s scheduled work time (See CFS Personnel Handbook for detail.) Every time payroll check is processed, the 3rd party payroll processing company software automatically calculates leave time earned, leave used, and balance available for future use. This information is presented on the employee’s pay stub. Agency does not allow employee to “borrow” leave. An employee who wants to take more leave than accrued must get prior approval from the VP and / or CEO. Employee who falls short of accrued leave balance in one category is automatically adjusted in another leave category, if enough balance is available to offset the shortage. Any further shortage must be authorized by the VP and President and CEO of the agency. (Sick time can only be used is employee is sick.)
Overtime CFS complies with US Department of Labor regulations for the payment of overtime for non-exempt employees. CFS work week is the seven day period from 12:01 a.m. Saturday till 12:00 p.m. the following Friday. Overtime is only applicable if the total time for the entire week is greater than 40 hours of actual work during one (1) week. An employee who works overtime must be pre-approved by Program Director.
Double Time Agency offers double time when employee is requested by the program director to work on an agency approved holiday.
Payroll Taxes and Other Deductions A third party payroll processor is responsible for making payroll taxes for the Agency. The payroll taxes are paid by ACH payment from the payroll account. All other payroll related deductions are paid through the accounts payable process.
Direct Deposit Agency offers direct deposit of payroll checks. Employees willing to avail the offer must fill out direct deposit form and submit an original voided check for checking account and bank authorization form for savings or credit union account in including money market account for direct deposit.
Travel Reimbursement Employees are reimbursed for the use of a personal vehicle while on Agency business at a rate up to that is determined by management. The management reviews the rate from time to time as per contract and/or IRS guidelines to determine the rate. Employees are notified by memo or e-mail of any rate changes approved by the management. To be reimbursed, employees must submit the request on the approved travel reimbursement form. The form must be filled out every calendar month. The form must be pre-approved by the immediate program supervisor before it is submitted to the finance office for reimbursement. The form must be due in finance office by 10th of each month. The reimbursement check is processed once a month and is handed out along with the last paycheck due each month.
The employee is reimbursed for out-of-the-area, overnight, or out-of-state travel. The travel must be pre-approved by the Program Director, VP and/or the CEO before travel is arranged. Out-of-State travel is reimbursed based on the agency or contract guidelines. All travel expenses are reported on the Agency’s Travel Claim form. This form requires the signature of the employee as well as their supervisor. All approved travel claims will be processed for payment in accordance with the accounts payable process. Employees may request a travel advance for expenses related to approved overnight or out-of –state travel. The travel advance should be based on the employee’s reasonable travel plans. An “actual” travel claim must be completed and submitted to the finance office within a week returning from travel along with reporting of actual business related expenses and providing all required and relevant receipts. If money is owed back to the Agency, the employee must settle with cash deposit to the finance department of the Agency. If money is owed to the employee, they will be reimbursed in accordance with the accounts payable process.
Budgeting
Budgets are prepared for each contract/program operated by the Agency as well as for the entire agency. The contract budgets as well as agency budget are prepared by the finance director with the help of program director(s) and VP in charge of the program and the CEO. Other senior staff may also be designated to help prepare budgets. At times, some of the locally operated program small size budgets shall be prepared by the Program Director responsible for overseeing the operation of the programs. Any budgets relating to the administrative department or the Agency as a whole are prepared by the Finance Director. All contract and program budgets must be submitted to the CEO. Sometimes Board approval is also required. The Finance Director meets periodically with Program Directors to discuss their current budget, including budget modifications, year to date expenditures, obligated funds, cash flow, and any concerns in the spending patterns. It is the responsibility of the Program Directors to manage expenditures and help Finance Director in revision of budgets accordingly.
15% Administrative Cost Limitation The Head Start program is subject to a 15% administrative cost limitation. The components that make up the administrative cost total are the Head Start administrative costs plus indirect costs allocated to the Head Start Program. The total of these two figures cannot exceed 15% of the total Head Start funding including the Non-Federal Match. A spreadsheet documenting this calculation can be found as part of the backup information filed with the quarterly and final SF269 report for the Head Start program.
Cost Allocation Plan (See Addendum)
Indirect Cost Allocation CFS’ Indirect Cost Allocation Plan is very simply and straightforward. Administrative cost will be equitably distributed among direct agency activities (programs and services) by dividing the total administrative cost by the total direct program expenses. The indirect cost allocation rate thus determined will be charged against total expenses.
Indirect Cost Rate Proposal CFS submits an Indirect Cost Rate proposal to the US Department of Health and Human Services Division of Cost Allocation since it operates a direct federally funded Head Start Program. This proposal includes the proposed method of allocating the Agency’s general administrative costs to the Head Start Program. The proposal is amended based on the timeframe outlined in the rate agreement. The Agency’s direct program salaries and wages plus in-kind wages are used as a base in computing the indirect cost rate. The Agency is assigned a provisional indirect cost rate that is not finalized until after the audit is complete each year. The quarterly and Final SF269 reports that are sent to the Head Start regional office require us to disclose the approved provisional indirect cost rate and the total indirect cost allocated to the Head Start program.
Financial Reporting/Invoicing
Financial reports and invoices are prepared on a monthly basis. Once all financial activity for a month is balanced and posted to general ledger, each program general ledger, specified by program code, is printed and used to prepare monthly/year- to-date financial reports and invoices for each contract. Financial reports are also prepared for each of the locally operated programs. All required reports and invoices are prepared manually due to the “program specific” formats and timelines. Quarterly financial reports are also required by various contracts operating within the Agency. The State of New Jersey, Department of Human Services (DHS), Division of Child Protection & Permanency (DCP&P / formerly DYFS) serves as the Agency’s cognizant agency. The Finance Director is responsible for ensuring all financial reports and invoices are accurate and submitted on a timely basis. Copies of all reports, invoices, and related documentation will be kept on file in the finance department. Copies will also be given to the Program Directors and VPs on request. The Finance and Program Director are responsible for reviewing the financial reports periodically to ensure spending is consistent and the Agency is at no risk of deficit spending within the programs. Reports will be submitted to governing bodies for approval.
Accounting records are maintained and reported separately as required by funding source regulations.
Financial Planning and Investment Policy
Board Approved: March 27, 2002
Goals:
- To create a sound financial structure to meet the short and long term financial needs of CFS for stability and future growth.
- Increase financial reserves through discretionary dollars and fundraising and maximize interest on reserve funds, while minimizing risk.
- When feasible, invest in real estate to house program operations while building equity for the organization.
- Set aside depreciation funds on an annual basis into a reserve account for future capital needs.
Objectives:
- Create an unrestricted reserve fund to meet the operating cash flow needs by setting aside funds on a regular basis into money market (MM) fund or short-term CD account.
Research the current interest rate situation and compare with the historical interest payment trend over a year and invest into liquid MM a/c with reputed financial institution up to $100,000 per a/c to benefit the cost free SPIC insurance offered by them.
Accounts to be opened for:
- Operating Cash Reserve a/c (MM or CD),
- Assets (Depreciation) Reserve a/c, and
- Friends of the Family a/c for Donations
- With changing economy, mortgage interest rates and investments opportunities need to be monitored suitable to the needs of CFS by reducing financial expenses by utilizing the reserve fund either to buy new assets, pay off balloon amount (partial or in full) to build up equity in the properties owned by CFS.
- Consider increasing financial income by investing money beyond MM a/c for steady flow of income and investment growth into either short-term (1-5 years) or long-term (5-10 years) government bonds or preferred stock of high rated quality corporation in various sectors.
- Maintain Reserve Account (Board Restricted) in high yielding income account.
End of Investment Policy
Mortgages, Loans, and Line of Credit
Any loan, mortgage, refinance or amount borrowed from the line of credit obtained by the Agency must be approved by the Board of Trusties. The Agency does not make loans of any kind to its employees.
Equipment
Fax Machines/Copy Machines Included in the indirect cost when multiple programs are involved outside the central office a cost pool charge is allocated to each program.
Postage Meter Most of the Agency’s postage is handled through the use of a postage meter. A report is generated through the usage of the meter and is submitted to Finance at the end of each month for allocation of cost to the program(s).
Telephones Agency prohibits use of agency phone for personal long distance telephone calls. Any personal long distance calls should be billed to the employees’ personal phone card or their home phone. Employees at locations that have a long distance code assigned to them should enter this code when making long distance calls relating to Agency business. The Agency receives monthly billing that allows us to review detailed information about each call made from an Agency phone. Telephone bills are analyzed monthly in an effort to detect any inappropriate use. The identified employee is responsible to reimburse agency all the cost for personal usage.
Cell Phones With exception, Agency allows personal use of Agency cellular phones by some programs and / or individuals within the Agency. It is advised to check with the program director to determine the adherence to the policy of the agency at the program level. If personal use of agency cell phones creates additional charges, employees will be responsible to reimburse full cost of personal use of agency cell phone.
Miscellaneous
Leases All leases must be approved and signed by the CEO, VP, or designee. Originals of leases are kept in the contracts and lease file, which is to be maintained in the Purchasing Property Managers Office. Copies of lease agreements are forwarded to Finance for monthly payment until lease is fully executed or terminated.
Insurance CFS maintains commercial insurance including general and professional liability, property, auto, directors and officers, volunteer and student accident insurance. The general liability includes protection against employee theft. CFS has an umbrella policy which provides insurance limits above those on the standard commercial policy.
CFS maintains mandated workers compensation and unemployment compensation.
CFS provides medical, vision, dental insurance coverage on a cost sharing basis for full-time employees. CFS provides life and long-term disability insurance for employees. Employees may buy additional life insurance. Employees may participate in Flexible Spending Accounts for medical and child care expenses.
The cost and coverage is reviewed on a yearly basis. Increases in the premiums are compared to the increase in market rates to determine if it is in the best interest of the Agency to re-bid coverage.
In- Kind In-kind contributions are received from time to time. Contributions could be in the form of donated goods or services. The value of in-kind contributions is calculated and tracked variously depending on the program or department generating and receiving the goods and services. Examples of goods include items received for the Holiday Gift Drive and Operation Backpack. Services could include the value of the time contributed by volunteers or student interns.
Head Start: Head Start has specific requirements for generating and tracking in-kind contributions. The Program Director is responsible for generating the in-kind required for their program. The Finance Department currently receives in-kind reports monthly from the Head Start Program as accumulated. The Finance Department enters this information into the Agency’s tracking system and generates a report monthly submitted with the monthly budget report. See Appendix C for details. where is this?
Retirement Fund Accounts and Audit The CEO and designated VP are custodian of retirement fund accounts of the agency. The custodians rely on the advice of the Board approved authorized retirement fund and benefit broker(s) services. The Agency’s retirement plan 401(k) is managed by The Standard. 403(b) is managed by Mutual of America. 457b is managed by The Standard. Retirement fund accounts are audited annually by the board approved outside independent auditors.
Property Federal Regulation defines major equipment as all items purchased or donated with a unit cost of $75,000 or more. Major equipment for Agency purposes shall be defined as all items purchased or donated with a unit cost of $5,000 or more and having a useful life expectancy of one year or more. For items purchased with grant funds from the State of New Jersey, major equipment is defined as all items purchased or donated with a unit cost of $5,000 or more having a useful life expectancy of one year or more. Major equipment items should be included on the Agency equipment depreciation list prepared by the auditing firm each year.
Sensitive Minor Equipment Sensitive minor equipment shall be defined as items which although expended, as supplies may be highly personally desirable and may be easily removed from the premises. This includes items such as camera, portable tape recorders, DVD player/recorders, televisions, calculators, computer components and software, etc. Refer to the end of this section for a complete list of items considered to be sensitive minor equipment; these items are not listed in the asset accounts of the Agency since these items are expended.
Inventory Both major and sensitive equipment items are tagged with inventory identification numbers. Tags are permanent, not easily changed, defaced, nor removed. The inventory data base includes the following: (a) a description of the item; (b) manufacturer’s serial number or other ID number if applicable; (c) acquisition date and cost; (d) fund source with applicable funding program number (e) location within the Agency’s operation where the equipment is utilized; (f) the condition of the equipment at the time of the inventory; (g) disposition information if the property has been disposed of. The inventory database also includes the purchase order number and the vendor the item was purchased from.
A physical inventory of the equipment items is taken at least once every two to three years. The Purchasing Property Manager will supply each Program Director or their designee with an inventory printout to be used in checking off the inventory items for their program. The person conducting the inventory should sign and date the inventory printout in the appropriate place. It is the responsibility of each Program Director and the Purchasing Property Manager to see that their program’s inventory is completed bi-yearly.
Head Start Inventory: Head Start program director may order an outside agency to perform an inventory the years the agency does not conduct their scheduled equipment inventory. All documentation will be forwarded to the Head Start Director upon completion.
Theft or Loss of Inventory: A written incident report will be completed. Written notification is given to the appropriate Program Director and the Purchasing Property Manager for any equipment that is discovered to be lost or stolen during the inventory process, or at any time during the year. Any theft or vandalism of major equipment (that starts an insurance claim) requires the Agency to contact the Police Department in their area concerning the loss or damage. Depending upon the initial cost of the sensitive minor equipment the President/CEO or VP may or may not request a Police Department investigation. This investigation and any related paperwork must be forwarded to the President/CEO or VP. The President/CEO or VP shall also be immediately notified, preferably in writing of all cases of loss, damage or destruction of Agency property or equipment.
Disposition of Property Disposition of property that is no longer fit for use or no longer needed, will be subject to the disposition regulation of the funding source that initially paid for the equipment. No property can be disposed of without written approval from the Program Director to the VP or President/CEO.
Federal Funds: Equipment with a per unit fair market value of less than $5,000 and with no further useful value may be retained, sold or otherwise disposed of with approval of management and / or Federal Government. Equipment with a fair market value of more that $5,000 requires Federal approval for disposition.
State Funds: For major equipment items, items that initially cost $5,000 or more then the proper State Department shall be contacted regarding the specific disposition request. For items costing less than $5,000 then it would be up the Agency to handle the disposition of them.
Other Funds: Equipment purchased with any other funds may be disposed of as the Agency wishes or in accordance with any particular restrictions the funding source place upon the equipment.
Assignment of Inventory ID Number All requests for the purchase of major equipment and/or sensitive minor equipment shall be identified on the Purchase Requisition Request form by placing a check mark in the inventory column. Provided the request is approved, the inventory number will be assigned when the transaction is complete. The authorized person and or professional consultant will enter the Inventory ID number along with the other inventory control data in the inventory control log. The actual inventory sticker will then be given to the Program Director, their designee or the person who requested the item. The designee of the Program Director will have the responsibility for properly affixing the inventory sticker to the item and then notifying the authorized inventory in charge person that the inventory sticker has been placed on the item. Once an item is received, inventories add form must be completed and forwarded to the authorized inventory in charge person. The Purchasing Property Manager shall maintain the inventory database. An inventory report may be requested from the authorized inventory in charge person.
Sensitive Minor Equipment Listing Only sensitive minor equipment costing over $1,000 will be tracked on the inventory. Items costing less than $100 will not be tracked. For a complete list of items considered to be sensitive minor equipment, see the Fiscal Policies.
Records Retention Financial records, supporting documents, statistical record and all other records pertinent to an award shall be retained for a period of seven years from the end of the agency’s fiscal year. There may be exceptions including the following:
(1) If litigation, claim, financial management review, or audit is started before the expiration of the seven year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved and final action taken.
(2) Records of real property and equipment acquired with Federal funds shall be retained for three years after final disposition.
Forms Most commonly used forms are available to staff on the Staff section of the CFS Website: www.centerffs.org. Staff should regularly check the website to ensure that they are using the most current version of any form.
Information Bid Form Instructions
Step #1 Obtain an Informal Bid Form for all purchases of $1,000 and up to $4, 999.99
· Item description and quantity to be bid: Should be a description of item(s) or service(s) that are included in this bid and the quantity needed.
· Vendors contacted: A minimum of three bids is required for purchases over $1,000 to $4,999.99. If a program does decide to purchase from state or federal contracts, program must include contract number. State and federal contracts still require a purchase order and proper documentation over $5,000. If the item is on state or federal contract but program does not want to purchase it, program may use the contract price as one of the three bids. In some cases, three bids are not possible. If program cannot get at least three competitive bids, program must have documentation that proves that program made an effort to obtain two-three competitive bids. Please double check all vendor records to make sure that all of the information is complete and correct. Bid will be awarded to the vendor with the lowest cost unless specific valid justifications are determined and properly documented to bid out a contract otherwise. Any award to other then the lower bidder must make an entry into the justification for bypassing bid procedures section and attach a letter explaining the circumstances.
· Justification for bypassing bid procedures: This should only be used in case of special circumstances.
The Department Director and VP must approve bypassing the procedures prior to the purchase only with approval of President/CEO. Requester must state in writing the circumstances and the necessity to purchase without properly bidding the item or selecting a vendor other than the lowest cost. Poor or inadequate planning does not justify bypassing the correct procedures. Program Director or VP may attach an additional sheet if necessary. After program Director or VP has completed the above information, give the bid form to your department director for approval. The director will place the vendor number of the bid recipient in the space provided, signed for approval to purchase and list the programs and amounts or percentages to be charged for that purchase.
Step #2: After the information is completed in the area that says “ABOVE INFORMATION MUST BE COMPLETED BEFORE PURCHASE IS MADE”, the bid form is then taken to the Finance Department. The Finance Department will review accuracy of cost of bid. The accurately priced bid form then will be forwarded to the accounts payable department for processing approved bid. A purchase order is prepared and issued with a copy to the program director to place an order with the vendor or supplier. The bid form will remain in the purchasing department to be filed and held until the items are delivered and the invoices received.
Step #3 When the item(s) are delivered and the invoice is received, the invoice is taken to the purchasing department. If only a packing list is received, it must go to the purchasing department also. The purchasing department will contact someone about the receipt of the item(s) and forward all paperwork to accounts payable. (The correct charges must be listed on the invoice.)
No purchase orders are to be issued until all procedures are followed and all approval signatures are obtained.
Head Start Procurement Policy and Procedures
- INTRODUCTION:
The procurement framework discussed in this document details the process of purchasing the necessary goods and services that Center for Family Services (CFS) Head Start requires for its operations.
CFS Head Start follows in accordance with the regulations outlined in 45 CFR 74.40 (Procurement Standards) and 45 CFR 92.36 (Procurement), in developing this framework. Where they exist, our procurement procedures follow the federal guidelines or general industry best practices. In the special case of construction projects, the grantee’s guidelines apply, taking account those regulations contained in the Davis-Bacon Act.
- PROCUREMENT POLICY:
It is the policy of CFS Head Start to utilize its financial resources to procure goods and service that are deemed allowable and allocable in a manner that promotes economic efficiency.
- PROCUREMENT PROCEDURES:
CFS Head Start’s procurement procedures prohibit the purchasing of unnecessary items with federal funds. Unnecessary items are defined as those goods and services that are not relevant to the work of the agency.
The CFS Head Start Director, and/or the CEO, or his/her designee determines the needs for product and has ensured the costs for services and/or goods are not being duplicated, have been determined to be allowable, allocable and economical.
Procurement Code of Ethics CFS Head Start maintains a strict code of conduct governing the performance of all employees, agents and Board members engaged in the procurement process. According to this code, none of the parties identified above is allowed to be involved in the administration of a contract supported by Federal (or stated) funds if a conflict of interest, real or apparent, would be involved. Such a conflict arises when the employee, agent or board member or any member of his/her family, his/her partner, or an organization which employs, or is about to employ, any of the above, has a financial or other interest in the company (or related to any consultant) selected agency.
The code of conduct for procurement further stipulates that, under no circumstances will employees solicit or accept gratuities, favors or anything of monetary value from vendors, potential vendors or contractors, or parties to sub-agreements. To the extent permitted by State or local law or regulations, such standards or conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the agency or by contractors or their agents.
Complaints will be regulated using the protest procurement procedure and their state and local authorities before seeking Federal agency. Reviews by the Federal Agency will be limited to:
- Violations of the Federal law or regulations; and
- Violations of CFS’s failure to review a complaint or protest.
All purchases over $5,000 require Head Start director and/or CEO approval. The following procedures apply for all goods, professional services and fees, including but not limited to: auditors, attorneys, architects, engineers, etc.
Small Purchase Procurement Procedure For those small items with a list price of less than $5,000 no formal competitive bidding process is required. The procedure adopted is the same for goods and consultant services having a value in this range. The procurement procedure is as follows:
a. Cost comparisons are made utilizing a variety of media, including the internet, telephone request for quotations, referrals from other agencies and vendors. CFS can’t make a purchase until multiple agencies are considered.
b. Cost analysis and records should be maintained for all purchases that are above the small purchase threshold. Records should include:
1. Identification of vendor chosen;
2. Basis for contractor selection: Prices and comparisons;
3. Justification for lack of competitor;
4. Basis for cost and price; provide narrative for selection made
Selection is based on price, quality of product/service, after sales support (where applicable), accessibility, track record of the vendor and whether the company is a small business, minority or women’s business enterprise.
Any contract in excess of $2,000 for construction, alteration, and/or repair of facilities must comply with the federal Davis-Bacon Act. See attachment
Documentation should include procedures to ensure settlement and satisfaction of all contractual disputes.
Large Purchase Procurement Procedure The CFS Head Start Director, and/or the CEO, or his/her designee determines the needs for product and has ensured the costs for services and/or goods are not being duplicated, have been determined to be allowable, allocable and economical.
For those goods or services with a price over $100,000 a formal competitive bidding process is required. The procurement process is as follows:
a. The CFS Head Start Director, and/or CEO, or his/her determines the needs of the product
b. The invitation of bids will be publicly advertised (e.g., newspaper, phone calls, internet)
c. Bids are accepted until a specified deadline and then bidding is closed.
d. Bids should clearly state services/requirements that are needed to be filled in order for the bidder to properly respond
e. Clear description of requirements, materials and/or services should be listed
Selection is based on price, quality of product/service, after sales support (where applicable), accessibility, track record of the vendor and whether the company is a small business, minority or women’s business enterprise.
Documented files and records should be maintained for all purchases that are above the small purchase threshold. Records should include:
Cost analysis and records should be maintained for all purchases that are above the small purchase threshold. Records should include:
a. Identification of vendor chosen
b. Basis for contractor selection: Prices and comparisons
c. Justification for lack of competitor
d. Basis for cost and price; provide narrative for selection made
CFS must determine the best candidate from which to purchase items. Documentation of each quote and the rationale for the selection must be maintained with procurement/contract files. Once this is complete a written notice will be written determining the approved bidder and reason for the selection. Documentation should include procedures to ensure settlement and satisfaction of all contractual disputes.
Annual Contracts: CFS HS will follow annual procurement process for those goods/services including but not limited to: food, bulk classroom items, office supplies, paper products, cleaning supplies. Once a vendor has been selected this vendor is used all year.
Records and Audits: CFS will contract with an external auditor to perform a single audit. Single audit includes assessing the grantee agency’s written procurement procedures (including the approvals required, competition process, documentation records required, etc.), and may include reviewing a sample of actual purchases made during the audit year. Ensuring that all records have been documented will be necessary since auditors conduct audits in a different manner.
Procedure for selecting an outside auditor: Define the specific expectations that are required of the CFS Audit, how will they be evaluated, timeline expectations etc. Free and open competition is required when selecting an auditing service.
Once proposal period has ended a selection must be made that is uniform and demonstrates that that the standards are being met and satisfied. Experience and qualifications of the organizations must be sufficient. Once proposals have been evaluated consider price.
Clear documentation must be maintained to show selection process and reasons for choice.
Construction and Major Renovations: CFS Head Start must present a written application to HHS official when plans for construction or major renovations are being completed.
CFS may not advertise for bids or award a contract for any part of construction or major renovation funded by grant funds until the grantee has submitted to the responsible HHS official.
A written certification by a licensed engineer or architect as to technical appropriateness of the proposed construction or renovation and the conformity of the project as shown in the final working drawings and specifications with Head Start programmatic requirements, and a written estimate of the costs of the project by a licensed architect or engineer.
The written plans must include:
a. Legal description of the site and its intended use of the location, services being provided, transportation being provided, other child care or early education collaboration, and all other programs/services;
b. Plans of the structure of the site: number of rooms, lot size, type of structure, playground and or parking lots
c. Written estimate on the proposed renovation/construction. Estimate must be prepared by an architect or engineer (selecting an architect see attachment)
d. Assurance that the new construction complies with local codes and regulations
e. Proposal for length of project, construction to occupancy
Selecting an Architect:
The architect and/or project manager plays a key role in documenting the reasons for awarding a contract to the lowest best bidder rather than the lowest bidder. The architect is important in the entire bidding process. In most cases, the architect and/or the project manager work with the agency's administration in the following:
a. Administrator Director or his/her designee determines the needs for the work
b. Architect will fulfill the requirements excepted of the contract, including, cost efficiency and time frame
c. Provides proper references and is certified and insured.
Davis Bacon Act
SUBJECT: The Davis-Bacon Act and Head Start Programs
A new provision in Section 644(g)(3) of the Head Start Act signed into law by the President on May 18, 1994 requires that all contracts entered into by any Head Start program, on or after October 1, 1994, which are in excess of $2,000 and are for the construction, renovation or repair of buildings used by Head Start programs, are subject to the requirements of the Davis-Bacon Act.
The Davis-Bacon Act requires that any contractor hired to construct, renovate or repair a Head Start facility (if the contract exceeds $2,000) must pay the laborers and mechanics engaged in the construction, renovation or repair prevailing rate wages. These prevailing rate wages are determined by the Department of Labor for each county in the country and are updated, as necessary. The Davis-Bacon Act also includes provisions about fringe benefits to be paid to laborers and mechanics, limitations on wage withholding, and payroll and record keeping requirements.
Cost Allocation Plan Board Approved: July 1, 2010
Purpose / General Statement
The purpose of this cost allocation plan is to summarize the methods and procedures that this organization will use to allocate costs to various programs, grants, contracts and agreements.
OMB Circular A-122, “Cost Principles for Non-Profit Organizations,” establishes the principles for determining costs of grants, contracts and other agreements with the Federal Government. Center For Family Services, Inc. called herein after as CFS. Cost Allocation Plan is based on the Direct Allocation method described in OMB Circular A-122. The Direct Allocation Method treats all costs as direct costs except general administration and general expenses.
Direct costs are those that can be identified specifically with a particular final cost objective. Indirect costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective.
Only costs that are allowable, in accordance with the cost principles, will be allocated to benefiting programs by CFS.
General Approach
The general approach of CFS in allocating costs to particular grants and contracts is as follows:
- All allowable direct identifiable costs are charged directly to programs, grants, event etc.
- Allowable direct identifiable costs incurred for more than one program are prorated individually as direct costs using a base most appropriate to the particular cost being prorated.
- All other allowable general and administrative costs (costs that benefit all programs and cannot be identified to a specific program) are allocated to programs, grants, etc. using a base that results in an equitable distribution.
Beginning July 01, 2010, the following information summarizes the procedures that are used by CFS:
- Salaries & Wages for personal service – The compensation is allocated based on timesheet showing time distribution of regular hours worked including Holiday, Sick and Vacation time by each employee for each program or grant. The compensation cost that benefit directly to the program is allocated 100% to that program or grant. The compensation cost that benefit multiple programs or grants is allocated based on approved budgeted allocated compensation among the programs benefited up to total annual compensation. CFS will routinely check allocations and adjust when appropriate. CFS will regularly review staff charges across cost centers to ensure proper allocation. If necessary a time study may be done.
Fringe Benefits: FICA, SUI, UC, Worker’s Compensation, Health, Dental, Life & Vision Insurance, Payroll Administrative Cost, Retirement Benefit etc. are allocated in the same manner as compensation allocated by employee.
- Travel Costs: Allocated based on purpose of travel. All travel costs (local and out-of-town) are charged directly to the program for which the travel is pre-approved and incurred as budgeted. Travel costs that benefit directly to its program is charged 100% to that program. Travel cost that benefit more than 1 program is charged as per base that results in equitable allocation and / or budgeted.
- Professional Services Costs (Consultants, Accounting and Auditing Services, Contractors and Professional Service Providers): - Allocated to the program benefiting from the service. All professional service costs are charged directly to the program for which the service is incurred. Costs that benefit multiple programs are allocated to those programs based on approved budgeted amount and / or in the equitable ratio of benefit to each program’s expenses to the total of such expenses.
- Office Expense and Supplies (including office equipment and postage): Allocated based on usage. Expenses used for a specific program will be charged directly to that program. Postage expenses are charged directly to programs to the extent possible. Costs that benefit multiple programs are allocated to those programs based on program’s approved budgeted amount and / or in the equitable ratio of benefit to each program’s expenses to the total of such expenses.
- Equipment: CFS depreciates equipment when the initial acquisition cost exceeds $5,000 per individual item. Items below $5,000 are charged as an expense in the year it is bought. Unless allowed under approved budget by the contracting agency, the cost of equipment purchased is recovered through depreciation. Depreciation costs for equipment used solely by one program is charged 100% directly to the program using the equipment. In case, multiple programs benefits from its use than, an allocation of depreciation costs is based on either pre-approved budgeted dollar amount or percentage of ratio of equitable benefit to multiple programs.
- Supplies: Art, Medical, Household, Program, etc. - Expenses are charged 100% directly to programs that benefit from the service. Expenses that benefit multiple programs are allocated based on either pre-approved budgeted dollar amount or % of ratio of equitable benefit to multiple programs.
- Business Insurance: General & Professional Liability, Property, etc. – Under the general liability and umbrella policy of agency covering all program and events it operates, the business insurance cost is allocated based on the % of space used by each program at various individual location throughout the agency that benefit to the program. The automobile insurance is allocated directly to various programs based on its direct use by those programs except for general use of vehicle for agency’s all maintenance purpose which is allocated to all programs based on the ratio of total operating cost of program to agency operating cost during the fiscal year. Professional Liability Insurance is allocated.
- Telephone/Communications: Land lines, Pagers, Beepers & Cell phones – Telephone cost is charged to programs if easily identifiable office telephones. Internet cost is allocated to programs based on telephone number assigned to each building location in association with % of space used by the program at the location.
- Facilities Cost: Mortgage Interest, Property Tax, Repairs & Maintenance, Materials and Supplies, Utilities - Allocated based upon percentage of square footage used by the program. Facilities costs related to general and administrative activities are allocated to program based on the ratio of each program’s total expenses to agency’s total expenses.
- Staff Trainings / Conferences / Seminars / Dues & Subscriptions etc.: Allocated to the program benefiting from the training, conferences or seminars. Costs that benefit multiple more than one program will be allocated to those programs based on the ratio of either attendance of personnel from those programs and / or based on benefit received by each program on an equitable basis.
- Other Costs (including advertisements, bank fees, licenses, miscellaneous, etc.) - Allocated to the program benefiting from the particular costs. Costs that benefit all programs will be allocated based on the ratio of each program’s expenses to agency’s total expenses.
- Unallowable Costs: Costs that are unallowable in accordance with OMB Circular A-122, including alcoholic beverages, bad debts, advertising (other than help-wanted ads), contributions, entertainment, fines and penalties. Lobbying and fundraising costs are unallowable, however, are identified and recorded as a separate line item expenses as per its nature of activity and off set against revenue, if any, from the same nature of activity in a separate program outside general and administrative expenses of the agency.
- General and Administrative Costs (Indirect): All indirect costs are equally charged across programs based on the percentage of the total expenses of the program compared to the total agency budget.
Council on Accreditation Financial Management Standards
Introduction
Sound financial management begins with an organization’s commitment to providing high quality services relative to its mission or purpose. Leadership creates a culture of honesty and ethics in all areas of organizational practice, including the management of the organization’s finances and the manner in which it conducts financial affairs. Accountability is established through clearly defined lines of authority and responsibility, and personnel receive a clear message from the top that internal control responsibilities are to be taken seriously. Additionally, the attention and commitment of the governing body and its audit committee to their fiduciary responsibilities are essential to ensuring that the organization’s financial practices enable it to achieve operational effectiveness and efficiency, accurate and reliable financial reporting, and compliance with applicable laws and regulations.
FIN 1: Governing Body Financial Responsibilities
CFS Board of Trustees:
a. approves the annual budget and any revisions to the budget;
b. reviews fiscal summaries at least quarterly to evaluate expenditures against revenues;
c. ensures that budget-to-actual variance analyses are performed after year end numbers are finalized;
d. reviews fiscal policy and the recommendations of the organization’s auditors; and
e. annually evaluates the executive director’s management of the organization’s fiscal affairs.
FIN 2: Internal Control Environment
CFS establishes an internal control system that includes mechanisms for:
a. review by the governing body’s audit committee, as applicable;
b. management review by more than one individual;
c. assurance that management directives are carried out;
d. prevention of error, mismanagement, or fraud;
e. safeguarding and verification of assets; and
f. segregation of duties to the extent possible.
FIN 3: Financial Risk Assessment
The governing body and management evaluate the organization’s financial capacities, risks, and resources needed to provide services.
FIN 4: Stable Predictable Revenue
CFS pursues stable, predictable sources of revenue through diversification and balance of funding streams consistent with CFS’ mission and programs.
FIN 5: Financial Planning
Planning for the current fiscal cycle is organization-wide and involves key stakeholders.
FIN 5.01 An annual budget serves as a plan for managing CFS’ financial resources.
FIN 5.02 The budget planning process includes participation of management, the governing body, and other relevant organization participants and is base on:
a. direct and indirect operating expenditures;
b. contractual requirements;
c. performance improvement data;
d. changing costs and conditions; and
e. anticipated revenue for the program year.
FIN 5.03 The President / CEO reports to the Board of Trustees on CFS’ finances including:
a. current financial status and any anticipated problems; and
b. financial planning and funding alternatives.
FIN 5.04 Financial information is routinely analyzed and the information includes:
a. monthly analysis of financial performance against budget projection with budget-to-actual variance analyses performed on interim financial statements of activities;
b. service revenues and actual service delivery costs; and
c. an annual inventory of significant assets, including securities.
FIN 5.05 CFS conducts a cost analysis of its various services and can identify:
a. the fixed and variable costs of each unit of service at each program and service delivery site;
b. the average costs or charges of treatment for identified groups of consumers; and
c. the contribution of services to the overall revenue base.
FIN 5.6 The cost analysis is conducted at intervals established by CFS and the information is used to:
a. analyze operational effectiveness and efficiency;
b. monitor trends, current experiences, and changes in costs;
c. budget for the current fiscal cycle.
FIN 6: Financial Accountability
CFS is accountable for the management of its finances to its Board of Trustees, the community, and applicable regulatory bodies.
FIN 6.01 Upon request CFS provides an annual report of fiscal, statistical, and services data that includes summary information regarding its financial position.
FIN 6.02 The non-profit organization with annual revenues at, or in excess of $500,000, undergoes an audit of its financial statements within 180 days of the end of the fiscal year by an independent, certified public accountant approved by the Board of Trustees.
FIN 6.03 NA
FIN 6.04 The Board of Trustees has an independent audit committee that:
a. selects an independent auditor;
b. meets with the auditor to review the findings of the audit, accompanying financial information, and any accompanying management letter;
c. formally accepts the auditor’s report within 180 days of the close of the fiscal year;
d. reports the findings and makes recommendations at the next official meeting of the Board of Trustees;
e. works in partnership with the President / CEO to promptly act on recommendations in the management letter, if any; and
f. does not include organization staff.
FIN 6.05 The organization that undergoes a review of financial statements meets with the reviewing CPA to discuss findings and the management letter, as applicable, and promptly acts on recommendations.
FIN 6.06 The President / CEO and financial officers certify in writing that financial statements are accurate and fairly represent the financial condition and operations of CFS. (Review IRS Form 990 before it is submitted to ensure that it is accurate, complete and filed on time)
FIN 7: Financial Management System
Positive financial outcomes are achieved through a financial management system that receives, disburses, and accounts for funds consistent with sound financial practices.
FIN 7.01 Annual financial statements are prepared in accordance with Generally Accepted Accounting Principles.
FIN 7.02 CFS’ financial reporting system is capable of providing information that:
a. is useful in making business and economic decisions;
b. is understandable and will aid in predicting future cash flows; and
c. includes data about CFS’ economic resources, claims to those resources (obligations), and the effects of transactions, events, and circumstances that changes resources and claims to resources.
FIN 7.03 Accounting practices and procedures include:
a. prompt, accurate, and complete recording of revenues and expenses;
b. an inclusive and descriptive chart of accounts;
c. information on all funds, including source information and pertinent regulations;
d. timely payment of financial obligations;
e. policies for recognizing revenues and expenses; and
f. disbursement and receipt of monies.
FIN 7.04 CFS seeks to conserve its fiscal resources by:
a. taking advantage of tax exemptions, where applicable;
b. maintaining sound practices regarding purchasing and inventory control;
c. coordinating the purchase of goods and services among internal divisions; and
d. using competitive bidding, when applicable, according to governing body policy and law or regulation.
FIN 7.05 Accounting records are kept up-to-date and balanced on a monthly basis, as demonstrated by:
a. reconciliation of the bank statement and subsidiary records to the general ledger;
b. up-to-date posting of cash receipts and disbursements;
c. monthly updating of the general ledger; and
d. review of the bank reconciliation by at least two personnel, one of whom is not involved in maintaining the accounting records.
FIN 7.06 CFS uses the accrual method of accounting, at least at the end of the year.
FIN 7.07 Oversight and management of CFS’ accounting system require:
a. a fiscal officer of business manager who is responsible for maintaining the financial accounts has prior accounting and bookkeeping experience, and / or an accounting degree, CPA credential, or other recognized accounting / financial certification, as appropriate to the size and complexity of the organization;
b. all personnel who use the system to receive initial and ongoing training on its use;
c. a proper audit trail; and
d. secure access, controlled by user IDs, passwords and permissible logon times.
FIN 7.08 Where applicable, CFS makes timely payments to, or provides proof of exemption from, the following taxing authorities:
a. the IRS;
b. state and local employment tax bodies;
c. FICA; and
d. property tax assessors.
FIN 7.09 If CFS assumes fiduciary responsibility for client funds, or disburses client or non-fee-for-serviced funds to service recipients:
a. segregates client funds; and
b. complies with applicable legislative, regulatory, judicial, and governmental requirements.
FIN 7.10 If CFS provides services as a vendor, it establishes safeguards against over- and under-billing that include:
a. an accurate account of units of service provided;
b. timely submission of invoices and requires documents; and
c. compliance with applicable regulations.
FIN 7.11 The organization determines the basis for any denial of coverage or payment under insurance or contractual arrangements and follows up with timely appeals and communication with the service recipient, as applicable.
FIN 7.12 NA
FIN 7.13 NA
FIN 8: Payroll
Payroll practices comply with federal and state wage and hour laws.
FIN 8.01 Payroll practices include:
a. review and approval of payroll expenditures;
b. documentation of changes in time and overtime records;
c. authorization of payment for new hires and severance for terminations;
d. oversight for mandatory deductions and pay rates; and
e. separation of payroll funds.
FIN 8.01 CFS assures annual reconciliation of gross pay, FICA withheld, and employer FICA with Federal Forms W-2.
Cash Reserve Fund Policy Board Approved 2014, June 18, 2014
Purpose:
The purpose of the reserve funds policy for CENTER FOR FAMILY SERVICES is to ensure the stability of the mission, programs, employment, and ongoing operations of the organization and to provide a source of internal funds for organizational priorities such as building repair and improvement, program opportunity, capacity building, and ongoing day to day operation.
The reserves fund policy will be implemented in concert with the other governance and financial polices of CENTER FOR FAMILY SERVICES and is intended to support the goals and strategies contained in these related policies and in strategic and operational plans.
Definitions and Goals
Operating Reserve Fund (Unrestricted):
The operating reserve fund is intended to provide an internal source of funds for situations such as a sudden increase in expenses, one-time unbudgeted expenses, unanticipated loss in funding, or uninsured losses including setting aside temporary advance payment of funds by the funder. Funds for operating reserves are not intended to replace permanent loss of funds or eliminate an ongoing budget gap. It is the intention of CENTER FOR FAMILY SERVICES for operating reserves funds to be used and replenished within a reasonably short period of time. The operating reserve fund is defined as unrestricted reserve fund set aside by action of the Board of Trustees at the request of President/CEO. The minimum amount to be designated as operating reserve fund will be established in an amount sufficient to maintain ongoing operations and programs excluding temporary advance payment of fund by the funder measured for a set period of time, measured in months. The operating reserve fund serves a dynamic role and will be reviewed and adjusted in response to both internal and external changes.
The target minimum operating reserve fund is equal to three months of average operating costs amounting to approximately $6 million at present time. The calculation of average monthly operating costs includes all recurring, predictable expenses such as salaries and benefits, occupancy, office, travel, program, and ongoing professional and program services. Depreciation, in-kind, and other non-cash expenses are not included in the calculation.
The amount of the operating reserve fund minimum target will be calculated each year after approval of the annual budget, reported to the Finance Committee/Board of Trustees, and included in the regular financial reports.
Building and Capital Asset Reserve Fund (Unrestricted):
The Building and Capital Asset Reserve fund is intended to provide a ready source of funds for acquisition of property, leaseholds purchases, furniture & fixtures, and equipment necessary including major self-funded capital improvements for the effective operation of the organization and programs.
The target amount of the Building and Capital Asset Reserve fund will be determined by the Finance Committee of the Board of Trustees and President/CEO of Center for Family Services, Inc. The target amount of such reserve fund will be $500,000 at present time. The initial amount is set aside at $50,000 plus a regular monthly installment of $5,000 in such designated account. The amount shall be reviewed and determined based on agency’s most recent year end operational performances.
Opportunity Reserve Fund (Unrestricted):
The opportunity reserve fund is intended to provide funds to meet special targets of opportunity or need that further overall mission of organization which may or may not have specific expectation of incremental or longterm increased income. The opportunity reserve is also intended as a source of internal funds for organizational capacity building such as staff development, research and development, or investment in infrastructure that will build long-term capacity.
The target amount of the opportunity reserve will be determined by the Finance Committee of the Board of Trustees and President/CEO as and when such opportunity exists from time to time. The target amount of such reserve fund will be $500,000 at present time. The initial deposit of $25,000 is to be set aside plus a regular monthly installment of $5,000 in such designated account. The amount shall be reviewed and determined based on agency’s upcoming opportunity needs.
Accounting for Reserve Funds:
The reserve funds will be recorded in the agency’s financial records as reserve fund by title along with account number XXXX1234 and account balance. The reserve fund will be funded and available in cash or cash equivalent funds. Each reserve fund will be titled and maintained in a segregated bank account or investment fund, in accordance with investment policies.
Funding of Reserves:
The operating reserve fund will be funded out of surplus from year end performance of all program operation including advance payment received from the funders. The Board of Trustees may from time to time direct that a specific source of revenue be set aside for operating reserves. Examples could include one-time gifts or bequests, special grants, or special appeals.
The Building and Capital Assets Reserve shall be funded by setting aside funds received from any capital campaigns or similar appeals or setting aside the equivalent amount of cash equal to at least 25% of depreciation in the annual budget or other calculations.
The opportunity reserve fund will be funded with occasional special designations made by the Board of Trustees at the request of President/CEO.
Use of Reserves Funds:
Use of the operating reserves requires three steps:
1. Identification of Appropriate Use of Reserve Funds
The President/CEO and staff will identify the need for access reserve funds and confirm that the use is consistent with the purpose of the reserves as described in this Policy. This step requires analysis of the reason for the shortfall, the availability of any other sources of funds before using reserves, and evaluation of the time period that the funds will be needed and replenished.
2. Authority to Use Reserves
The President/CEO will have authority to use, move funds or withdraw funds once Board of Trustees approves to pay for program opportunity, capital improvement and / or acquisition of property etc. excluding advance payment of funds against contract. The President/CEO will authorize person in charge of handling day to day finance of agency to withdraw, move or use necessary funds when such need arises.
Relationship to Other Policies:
CENTER FOR FAMILY SERVICES shall maintain the following board-approved policies, which may contain provisions that affect the creation, sufficiency, and management of the reserve funds.
- Fiscal Policy
- Contingency or Disaster Preparedness Plan
- Investment Policy
Review of Reserve Fund Policy:
This Policy will be reviewed every other year, at minimum, by the Finance Committee. Changes to the Policy will be recommended by the Finance Committee to the Board of Trustees.
Effective Date: July 01, 2014
File: Cash Reserve Policy 2014.docx
