financial policies manual - literacy minnesota
TRANSCRIPT
Financial Policies
Manual
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M I N N E S O T A L I T E R A C Y C O U N C I L
Financial Policies Manual
May 4, 2017
Minnesota Literacy Council Main Office
700 Raymond Ave #180 St. Paul, MN 55114
Phone (651) 645-2277 • Fax (651) 645-2272 www.mnliteracy.org
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Table of Contents
General .................................................................................................................................. 9
1.0 PHILOSOPHY ........................................................................................................................................9
2.0 ROLES AND RESPONSIBILITIES ........................................................................................................9
Board of Directors .................................................................................................................................. 9
Executive Committee ............................................................................................................................. 9
Finance and Audit Committee ............................................................................................................... 9
Executive Director and Staff .................................................................................................................. 9
All Staff ................................................................................................................................................ 10
3.0 AUTHORIZATIONS ...........................................................................................................................10
Financial Policies and Procedures ........................................................................................................ 10
General Financial Management ........................................................................................................... 10
Executive Compensation ...................................................................................................................... 10
Bank Accounts/Loans .......................................................................................................................... 10
Contracts/Leases .................................................................................................................................. 10
Vendor Relations .................................................................................................................................. 10
Grant Proposals .................................................................................................................................... 11
Business Conduct ................................................................................................................ 11
4.0 ETHICAL BEHAVIOR .........................................................................................................................11
5.0 CONFLICT OF INTEREST ..................................................................................................................11
Persons Concerned ............................................................................................................................... 11
Areas in which Conflict may Arise ...................................................................................................... 11
Nature of Conflicting Interest .............................................................................................................. 12
Interpretation of this Policy .................................................................................................................. 12
Confidentiality ..................................................................................................................................... 12
Disclosure Policy and Procedure ......................................................................................................... 12
Review of the Policy ............................................................................................................................ 13
6.0 FRAUD ...............................................................................................................................................13
Definition ............................................................................................................................................. 13
Examples .............................................................................................................................................. 13
Reporting .............................................................................................................................................. 13
Investigation and Action ...................................................................................................................... 14
Non-Retaliation .................................................................................................................................... 14
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7.0 WHISTLEBLOWER POLICY ..............................................................................................................14
Reporting Responsibility ...................................................................................................................... 14
Non-Retaliation .................................................................................................................................... 14
Reporting Violations ............................................................................................................................ 14
Compliance Officer .............................................................................................................................. 15
Accounting and Auditing Matters ........................................................................................................ 15
Requirement of Good Faith .................................................................................................................. 15
Confidentiality ..................................................................................................................................... 15
Handling of Reported Violations ......................................................................................................... 15
8.0 COMPLIANCE WITH LAWS/REGULATIONS ..................................................................................15
9.0 EMPLOYEE USE OF AGENCY RESOURCES ............................................................................... 1615
10.0 LOANS AND PAYMENTS TO BOARD AND STAFF ......................................................................16
Risk Management ............................................................................................................... 16
11.0 RISK ASSESSMENT ........................................................................................................................16
12.0 DATA MANAGEMENT...................................................................................................................16
13.0 INSURANCE POLICIES ...................................................................................................................16
Financial Management System .......................................................................................... 17
14.0 GENERAL ACCOUNTING PRACTICES ..........................................................................................17
Regulations ........................................................................................................................................... 17
Accrual Accounting ............................................................................................................................. 17
Fund Accounting .................................................................................................................................. 17
Functional Expense Allocation ............................................................................................................ 17
Common Cost Allocation ..................................................................................................................... 17
Adequate Documentation ................................................................................................................. 1817
Fiscal Year ........................................................................................................................................... 18
15.0 SAFEGUARDS AND INTERNAL CONTROLS .................................................................................18
Cash Receipts ....................................................................................................................................... 18
Cash Disbursements ............................................................................................................................. 18
Bank Reconciliation ............................................................................................................................. 18
AmeriCorps Payroll – .......................................................................................................................... 18
Staff Payroll ......................................................................................................................................... 19
Equipment ............................................................................................................................................ 19
Professional Financial Service Providers ............................................................................................. 19
16.0 BUDGETING ...................................................................................................................................19
Identify New Program Strategies ......................................................................................................... 19
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Salaries and Benefits ............................................................................................................................ 19
Expenses and Revenues ................................................................................................................... 2019
Board Approval ................................................................................................................................ 2019
17.0 FINANCIAL REPORTING ................................................................................................................20
Standard Reports .................................................................................................................................. 20
Frequency ............................................................................................................................................. 20
Review and Distribution ...................................................................................................................... 20
Annual Financial Statements................................................................................................................ 20
18.0 GOVERNMENT REPORTING.........................................................................................................20
Form 990 Tax Return ........................................................................................................................... 20
Filing with the Attorney General ......................................................................................................... 20
Filing with the Secretary of State ..................................................................................................... 2120
Indirect Cost Rate Negotiation ......................................................................................................... 2120
Lobbyist Reports .............................................................................................................................. 2120
Public Access to Tax Returns .......................................................................................................... 2120
Revenue Policies ................................................................................................................ 21
19.0 REVENUE RECOGNITION .............................................................................................................21
20.0 UNRELATED BUSINESS INCOME .................................................................................................21
21.0 GIFT ACCEPTANCE POLICY ...........................................................................................................21
Acceptable Gifts ................................................................................................................................... 21
Restrictions on Gifts ......................................................................................................................... 2221
Use of Legal Counsel ........................................................................................................................... 22
Gifts Generally Accepted Without Review.......................................................................................... 22
Gifts Accepted Subject to Prior Review .............................................................................................. 22
22.0 FUNDRAISING INITIATIVES ..........................................................................................................23
23.0 NON-CASH (IN-KIND) CONTRIBUTIONS ....................................................................................23
In-kind Services ................................................................................................................................... 23
In-kind Supplies and Equipment ...................................................................................................... 2423
Documentation ................................................................................................................................. 2423
Expenditure Policies .......................................................................................................... 24
24.0 PURCHASING AND PROCUREMENT ...........................................................................................24
Purpose ................................................................................................................................................. 24
Compliance with Federal Requirements .............................................................................................. 24
Solicitation Process Requirements ....................................................................................................... 25
Solicitation Process .......................................................................................................................... 2625
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Verbal and Written Quotations ............................................................................................................ 26
Procurement Records ........................................................................................................................... 26
Rules of Conduct .................................................................................................................................. 26
Contracts .............................................................................................................................................. 27
25.0 CONSULTANTS (CONTRACTED SERVICES) ........................................................................................27
Contracts .............................................................................................................................................. 27
Performance Evaluation ....................................................................................................................... 27
26.0 MILEAGE REIMBURSEMENT ........................................................................................................ 2827
Introduction ...................................................................................................................................... 2827
Policy ............................................................................................................................................... 2827
Examples .............................................................................................................................................. 28
Unallowable Mileage Expenses ....................................................................................................... 2928
Procedure.......................................................................................................................................... 2928
27.0 TRAVEL ...........................................................................................................................................29
Definitions ........................................................................................................................................ 3029
Non-overnight Travel ....................................................................................................................... 3029
Overnight Travel .............................................................................................................................. 3029
Travel to Attend Conferences .............................................................................................................. 30
Reimbursable Expenses ....................................................................................................................... 30
Non-reimbursable Expenses................................................................................................................. 31
Advances .............................................................................................................................................. 31
Reimbursement Procedure ................................................................................................................... 31
Overnight Travel ................................................................................................................... 31
Advances .......................................................................................................................................... 3231
Special Situations ............................................................................................................................. 3231
Travel Time on Timesheets .................................................................................................................. 32
28.0 MEETINGS, TRAININGS, CONFERENCES AND OTHER EVENTS ...............................................32
Policy ................................................................................................................................................... 32
Meals and Snacks ............................................................................................................................. 3332
Presenters/Speakers .............................................................................................................................. 33
Space Rental ......................................................................................................................................... 33
Procedure.............................................................................................................................................. 33
Inter-Agency Attendees ................................................................................................................... 3433
29.0 CELL PHONE REIMBURSEMENT ............................................................................................. 3433
Purpose ............................................................................................................................................. 3433
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Policy ............................................................................................................................................... 3433
Eligible Staff ........................................................................................................................................ 34
Reimbursement Rates........................................................................................................................... 34
30.0 STAFF RECOGNITION ............................................................................................................... 3534
Individual/Department Recognition ................................................................................................. 3534
All-Staff Meetings/Events ................................................................................................................ 3534
31.0 VOLUNTEER RECOGNITION .........................................................................................................35
Allowable Volunteer Recognition........................................................................................................ 35
Unallowable Volunteer Recognition .................................................................................................... 35
Net Assets ....................................................................................................................... 3635
32.0 BOARD DESIGNATED FUNDS ................................................................................................. 3635
Cash Management .......................................................................................................... 3635
33.0 CASH ACCOUNTS ..................................................................................................................... 3635
34.0 BANK RECONCILIATIONS ........................................................................................................ 3635
35.0 CASH FLOW MANAGEMENT .......................................................................................................36
36.0 INVESTMENT POLICY ....................................................................................................................36
37.0 PETTY CASH .............................................................................................................................. 3837
38.0 LINE OF CREDIT ........................................................................................................................ 3837
39.0 WIRE TRANSFERS ..................................................................................................................... 3837
Annual Audit .................................................................................................................... 3837
40.0 ROLE OF THE INDEPENDENT AUDITOR ................................................................................ 3837
41.0 SELECTION OF THE INDEPENDENT AUDITOR ...........................................................................38
42.0 PREPARATION FOR THE AUDIT .............................................................................................. 3938
43.0 CONCLUSION AND APPROVAL OF THE AUDIT .................................................................... 3938
Fiscal Sponsorships........................................................................................................ 3938
44.0 APPROVAL OF A NEW FISCAL SPONSORSHIP ...........................................................................39
45.0 ON-GOING FISCAL ARRANGEMENTS .................................................................................... 4039
Grant and Contract Administration ............................................................................ 4039
46.0 PREPARATION AND REVIEW OF PROPOSALS ...................................................................... 4039
47.0 POST AWARD PROCEDURES .......................................................................................................40
48.0 COMPLIANCE WITH LAWS, REGULATIONS AND PROVISIONS .......................................... 4140
49.0 INVOICING AND FINANCIAL REPORTING ............................................................................. 4140
50.0 CASH DRAW-DOWNS .............................................................................................................. 4140
51.0 MATCHING REQUIREMENTS .......................................................................................................41
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52.0 SUB-AWARDS ................................................................................................................................41
53.0 MONITORING SUB-RECIPIENTS ............................................................................................. 4241
54.0 EQUIPMENT PURCHASED WITH FEDERAL FUNDS .............................................................. 4241
55.0 BUDGET AND PROGRAM REVISIONS .........................................................................................42
56.0 CLOSE OUT .....................................................................................................................................42
Records Retention ............................................................................................................. 42
57.0 RETENTION SCHEDULE............................................................................................................ 4342
58.0 FILING AND STORAGE ............................................................................................................. 4342
59.0 DOCUMENT DESTRUCTION .........................................................................................................43
Appendix A: Finance and Audit Committee Charter ...................................................... 4544
Appendix B: Annual Board Resolutions – January 23, 2017 ........................................... 4746
Appendix C: Conflict of Interest Disclosure Statement .................................................... 4948
Appendix D: Physical Document Retention Schedule ......................................................................... 5251
Corporate Records .............................................................................................................................. 5251
Building and Equipment Documents .................................................................................................. 5251
Accounting and Finance Related Documents ..................................................................................... 5251
Insurance Records ............................................................................................................................... 5352
Personnel Related Documents ............................................................................................................ 5352
Technology .......................................................................................................................................... 5352
Program Documents ........................................................................................................................... 5352
Financial Policies Manual Signature Page ........................................................................ 5453
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General
1.0 PHILOSOPHY
The purpose of financial management in the operation of all Minnesota Literacy Council (MLC) activities is to fulfill the agency’s mission in the most effective and efficient manner and to remain accountable to stakeholders including clients, partners, funders, employees and the community. In order to accomplish this, MLC strives to provide accurate and complete financial data for internal and external use and to safeguard its assets and resources.
2.0 ROLES AND RESPONSIBILITIES
Board of Directors – The Board of Directors is ultimately responsible for the fiscal management of the agency. Through the Finance and Audit Committee they formulate financial policies and review operations and activities to ensure compliance. The Board of Directors also sets compensation levels for the executive director and the finance managerassociate director with guidance from the Human Resources Committee.
Executive Committee – The Executive Committee reviews the performance of the executive director.
Finance and Audit Committee – The Finance and Audit Committee formulates financial policies and presents them to the Board of Directors for approval. The Finance and Audit Committee also reviews the financial operations and activities of the agency. See the charter in Appendix A.
The Finance Committee also serves as the Audit Committee. Responsibilities of the Audit Committee include hiring and setting compensation for auditing services and overseeing the auditor’s performance. The Audit Committee also reviews complaints concerning accounting and internal control practices.
Executive Director and Staff
Executive Director – The executive director has responsibility for all operations and activities, including financial management. The executive director can approve exceptions to these policies on a case-by-case basis.
Finance Manager – The finance manager is responsible to the executive director for all financial activities. Responsibilities of the finance manager include:
Managing all accounting transactions including receipts, disbursements, accounts receivable, accounts payable, payroll and general journal entries;
Properly accounting for permanently, temporarily restricted and unrestricted net assets;
Ensuring compliance with all financial rules and regulations and with specific grant requirements;
Preparing financial statements for both external and internal use;
Filing tax returns and other required documents;
Maintaining the Board Book which contains minutes and other documents.
Associate Director – The associate director is responsible for ensuring adherence to rules and regulations regarding hiring and managing staff.
Program Directors and Managers – Program directors and managers are responsible for compliance with program
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and funder requirements.
Accounting Assistant – The accounting assistant is responsible for the day to day financial operations of accounts payable, accounts receivable and payroll as directed by the finance manager.
All Staff – All staff are responsible for ensuring the financial integrity of the agency. Everyone must exercise
the same care in incurring business expenses that a prudent person would exercise in incurring personal expenses. All staff incurring expenses towards a grant must be familiar with the particular restrictions of the grant. Expenses must be reasonable, necessary and allowable under the terms of the grant.
3.0 AUTHORIZATIONS
Financial Policies and Procedures – The Board of Directors is responsible for creating and approving the financial policies of the agency. In practice, the Finance and Audit Committee creates the policies and submits them to the Board of Directors for approval.
The finance manager is responsible for creating the financial procedures of the agency.
General Financial Management – The Board of Directors has authorized the executive director to hire and supervise staff and independent contractors, pay bills and receive funds, and enter into any agreements necessary to operate the agency within the guidelines of the annual budget.
Executive Compensation – The HR Committee sets the process for determining the compensation of the executive director and associate director and makes a recommendation regarding this compensation to the Board of Directors each year. As part of this process, the HR Committee reviews comparabilitye data from other nonprofit agencies in Minnesota. The HR Committee provides all related documentation to the operations/HR director for the agency files.
Bank Accounts/Loans – The Board of Directors has the overall authority for cash management. In the Annual Board Resolutions (Appendix B) the board delegates this responsibility. Currently the executive director and the associate director are authorized to open deposit accounts, endorse checks and orders for the payment of funds, and to transfer funds on deposit with financial institutions in the name of Minnesota Literacy Council, Inc.
In addition, the executive director, along with the approval of the Board chair, may establish a line of credit on behalf of and in the name of the agency for purposes of resolving short-term cash flow issues. The executive director, with the approval of the Board chair or Finance and Audit Committee chair, may draw against the line of credit.
Contracts/Leases – The executive director is authorized to enter into contracts or leases for activities that have been approved by the board as part of the annual operating budget. The Finance and Audit Committee must review any recommendations for contracts or leases outside of these parameters. The Board of Directors must authorize these activities based on the recommendation of the Finance and Audit Committee.
Vendor Relations – The finance manager is authorized to enter into or terminate vendor relationships. Conflict of interest disclosure forms will be reviewed before giving business to a new vendor.
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Grant Proposals – The executive director is authorized to submit funding proposals to public and private entities and to accept grant awards from such entities.
Business Conduct
4.0 ETHICAL BEHAVIOR
It is the policy of Minnesota Literacy Council that its employees and board members uphold the highest standards of ethical, professional behavior. To that end employees and board members will dedicate themselves to carrying out the mission of this agency and will:
Recognize that the chief function of MLC at all times is to serve the best interests of its constituency;
Hold paramount the safety, health and welfare of MLC staff, clients and the public in the performance of professional duties;
Treat with respect and consideration all persons without regard to such considerations as race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, membership or activity in a local commission, disability, sexual orientation, age, or any other statutorily protected class;
Engage in carrying out MLC’s mission in a professional manner;
Collaborate with and support other professionals in carrying out MLC’s mission;
Accept as a personal duty the responsibility to keep up-to-date on emerging issues and to conduct themselves with professional competence, fairness, impartiality, efficiency and effectiveness;
Respect the structure and responsibilities of the Board of Directors, provide them with facts and advice as a basis for their making policy decisions, and uphold and implement policies adopted by the board;
Demonstrate the highest standards of personal integrity, truthfulness, honesty and fortitude in all activities in order to inspire confidence and trust in such activities;
Avoid any interest or activity that is in conflict with the conduct of their official duties;
Respect and protect privileged information to which they have access in the course of their official duties;
5.0 CONFLICT OF INTEREST
This policy is designed to help board members, officers and employees of Minnesota Literacy Council identify situations that present potential conflicts of interest and to provide such persons with a procedure which, if observed, will allow a transaction to be treated as valid and binding even though a board member, officer or employee has or may have a conflict of interest with respect to the transaction. This policy is intended to comply with the procedure prescribed in Minnesota Statutes, Section 317A.255, governing conflicts of interest for directors of nonprofit corporations. In the event there is an inconsistency between the requirements and procedures prescribed herein and those in section 317A.255, the statute shall control.
Persons Concerned – This statement is directed not only to board members and officers, but to all employees who can influence the actions of Minnesota Literacy Council. For example, this would include all who make purchasing decisions, all staff who might be described as “management personnel”, and anyone who has proprietary information concerning MLC.
Areas in which Conflict may Arise – Conflicts of interest may arise in the relations of board members,
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officers, and employees with any of the following third parties:
Persons and firms supplying goods and services to MLC;
Persons and firms from whom MLC leases property and equipment;
Persons and firms with whom MLC is dealing or planning to deal in connection with the gift, purchase or sale of real estate, securities, or other property;
Competing or affinity organizations;
Donors and others supporting MLC;
Agencies, organizations, and associations which affect the operations of MLC;
Family members, friends and volunteers.
Nature of Conflicting Interest – A conflicting interest may be defined as an interest, direct or indirect, with any persons or firms mentioned above. Such an interest may arise through:
Owning stock or holding debt or other proprietary interests in any third party dealing with MLC;
Holding office, serving on the board, participating in management or being otherwise employed (or formerly employed) with any third party dealing with MLC;
Receiving remuneration for services with respect to individual transactions involving MLC; Uusing MLC’s time, space, personnel, equipment, supplies or good will for other than MLC-approved activities, programs and purposes;
Receiving personal gifts or loans from third parties dealing or competing with MLC. Receipt of any gift is disapproved except gifts of a value less than $50 which could not be refused without discourtesy. No personal gift orf money should ever be accepted.
Interpretation of this Policy – The areas of conflicting interest and the relationships in those areas which may give rise to conflicts listed above are not exhaustive. Conflicts may arise in other areas or through other relationships. It is assumed that the board members, officers and employees will recognize such areas and relationships by analogy.
The fact that one of the interests described above exists does not necessarily mean that a conflict exists. It is also possible to have a conflict that is not material enough to be of practical importance or to have a conflict that, upon full disclosure of all relevant facts and circumstances, is not necessarily adverse to the interests of MLC.
However, it is the policy of the Board that any existence of any of the interests described above will be disclosed before any transaction is consummated. It will be the continuing responsibility of the Board, officers and employees to scrutinize their transactions and outside business interests and relationships for potential conflicts and to immediately make such disclosures.
Confidentiality – All Board members and employees will exercise care not to disclose confidential information or information that if disclosed might be adverse to the interests of MLC. Furthermore, Board members and employees will not disclose or use information relating to the business of MLC for the personal profit or advantage of themselves or a family member.
Disclosure Policy and Procedure – Transactions with parties with whom a conflicting interest exists may be
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undertaken only if all of the following are observed:
the conflicting interest is fully disclosed;
the person with the conflict of interest is excluded from the discussion and approval of such transaction;
a competitive bid or comparable valuation exists;
the Board or the finance manager has determined that the transaction is in the best interest of the agency.
Disclosure should be made to the finance manager (or to the executive director if the finance manager is the one with the conflict) who will bring the matter to the attention of the Finance and Audit Committee. Disclosure involving board members should be made to the Board chair (or to the Finance and Audit Committee chair if the Board chair is the one with the conflict) who shall bring these matters to the Finance and Audit Committee.
The Finance and Audit Committee will determine whether a conflict exists and in the case of an existing conflict, whether the contemplated transaction may be authorized as just, fair, and reasonable to MLC. The decision of the Finance and Audit Committee on these matters will rest in their sole discretion and their concern must be for the welfare of MLC and the advancement of its purpose.
Review of the Policy –
Each new Board member or employee is required to review a copy of this policy and to acknowledge this in writing;
Each Board member and management employee will annually complete a disclosure form (Appendix C) identifying any relationships, positions or circumstances in which the board member or employee is involved that he or she believes could contribute to a conflict of interest arising. Such relationships, positions or circumstances might include service as a director of or consultant to a nonprofit agency, or ownership of a business that might provide goods or services to MLC. Any such information will be treated as confidential and will generally be made available only to the Finance and Audit Committee, the executive and the finance manager, except to the extent additional disclosure is necessary in connection with the implementation of this policy;
This policy will be reviewed annually by the Board of Directors. Any changes to the policy will be communicated immediately to all board members and staff.
6.0 FRAUD
Minnesota Literacy Council will not tolerate any acts of fraud from Board or staff.
Definition – Fraud is defined as a willful or deliberate act with the intention of obtaining an unauthorized benefit, such as money or property, by deception or other unethical means.
Examples – Examples include, but are not limited to: embezzlement; misappropriation of goods, services or resources; diversion of assets; intentional false reporting to funders or grantors; conflict of interest situations that result in financial loss to the institution; and violation of MLC fiscal policies and procedures for personal gain.
Reporting – Employees have the responsibility to immediately report all suspected incidents of fraud to the
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executive director. If the complaint involves the executive director, the employee may go directly to the chair of the Executive Committee of the Board of Directors. It is not sufficient to report suspected fraud to any person other than one of these designated individuals. Board and committee members should also report instances of suspected fraud in the same manner.
Investigation and Action – All reports of fraudulent behavior will be thoroughly investigated as quickly as possible and appropriate action will be taken. The investigation may include, but will not be limited to, discussion with both parties and witnesses. Anyone found to have engaged in fraudulent behavior will be subject to disciplinary action up to and including immediate termination.
Non-Retaliation – MLC prohibits retaliation against anyone for having raised a complaint of fraud or for cooperating with an investigation of such a complaint. Any employee determined to have knowingly made false statements during the investigation will be subject to discipline up to and including termination.
7.0 WHISTLEBLOWER POLICY
Minnesota Literacy Council requires board members, committee members, employees and volunteers to observe high standards of business and personal ethics in the conduct of their duties and responsibilities and to comply with all applicable laws and regulatory requirements. Furthermore, MLC is committed to creating an atmosphere in which board and committee members, employees and volunteers feel safe in taking actions they believe to be ethical should they observe illegal or unethical activities in the workplace. In accordance with Minnesota law, MLC abides by the statute governing disclosure of information by employees, more commonly known as the “whistleblower” law.
Reporting Responsibility – It is the responsibility of all Board and committee members, officers, employees and volunteers to report legal and ethical violations or suspected violations.
Non-Retaliation – No Board or committee member, officer, employee or volunteer who in good faith reports a suspected violation shall suffer harassment, retaliation or adverse employment consequence. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment. This wWhistleblower Ppolicy is intended to encourage and enable employees and others to raise serious concerns within the agency prior to seeking resolution outside the agency.
Reporting Violations – MLC seeks to have an open door policy and encourages Board and committee members, officers, employees and volunteers to share their questions, concerns, suggestions or complaints with someone who can address them properly. Those with suspicions of fraud should follow the Fraud Policy outlined in section 6.0 of this manual.
Board or committee members should address their concerns to the Board chair. If the area of concern involves the Board chair, the Board or committee member should discuss the issue with the Finance and Audit Committee chair or any member of the Executive Committee of the Board of Directors.
Staff or volunteers should address their concerns to their supervisors. If the area of concern involves the supervisor, staff or volunteers should discuss the issue with the human resources associate director or with the executive
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director.
Supervisors, managers and board members who are told of suspected legal or ethical violations are required to report them to MLC’s Compliance Officer, who has specific and exclusive responsibility to investigate all reported violations.
Compliance Officer – The human resourcesassociate director will act as MLC’s Compliance Officer. The Compliance Officer is responsible for investigating and resolving all reported complaints and allegations concerning legal or ethical violations. If the HR associate director is involved in the complaint then the executive director or Board chair (or their designee) will take on this role.
Accounting and Auditing Matters – The Finance and Audit Committee of the Board of Directors will address all reported concerns or complaints regarding agency accounting practices, internal controls or auditing. The Compliance Officer will immediately notify the Finance and Audit Committee of any such complaint and work with the committee until the matter is resolved.
Requirement of Good Faith – Anyone filing a complaint concerning a violation or suspected violation must be acting in good faith and have reasonable grounds for believing the information disclosed indicates a legal or ethical violation. Any allegations that prove not to be substantiated and which prove to have been made maliciously or knowingly to be false will be viewed as a serious disciplinary offense.
Confidentiality – Violations or suspected violations may be submitted on a confidential basis by the complainant or may be submitted anonymously. Reports of violations or suspected violations will be kept confidential to the extent possible, consistent with the need to conduct an adequate investigation.
Handling of Reported Violations – The Compliance Officer will acknowledge receipt of the reported violation or suspected violation within five business days. All reports will be promptly investigated and appropriate corrective action will be taken if warranted by the investigation.
8.0 COMPLIANCE WITH LAWS/REGULATIONS
The Minnesota Literacy Council complies with the accounting regulations outlined in OMB Circulars A110 and A-122 along with any other requirements set forth by the various federal and state grants the agency receives.
AmeriCorps VISTA Member Assignment/Activities:
a. VISTAs, sponsor staff and sub recipient staff are prohibited from requesting or receiving compensation from the VISTA members or from the beneficiaries of the VISTA project,
b. VISTAs activities/duties and VISTA grant funds must not be used to assist, directly or indirectly, any labor or anti-labor organizing activity or related activity,
c. VISTAs, sponsor staff and sub recipient staff are prohibited from being placed/assigned or holding a supervisory position if they are related by blood, marriage, or adoption to sponsor or sub recipient staff, officers or members of the sponsor’s Board of Directors.
Comment [DC1]: This was added in 2016 following our compliance audit with CNCS
(Corporations for National and Community Service
– funder for AmeriCorps VISTA).
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9.0 EMPLOYEE USE OF AGENCY RESOURCES
Employees must reimburse MLC for any agency resources used for purposes other than MLC business.
Copies – use the “admin” copier code, calculate the amount due based on rates provided by accounting staff, pay the amount due to accounting staff;
Postage – use the “admin” postage code, calculate the amount due based on usage on the postage machine, pay the amount due to accounting staff;
Office Supplies – calculate the amount due based on recent invoices and pay that amount to the accounting staff;
Other – ask accounting staff to assist with the cost calculation.
The use of equipment or space for personal use must be authorized by a manager or director.
10.0 LOANS AND PAYMENTS TO BOARD AND STAFF
Minnesota Literacy Council does not make loans to board or staff. There is also no compensation paid to members of the Board of Directors for their services.
Payroll advances are discouraged but will be made if approved in writing by the executive director. Such advances must not exceed the amount of net wages due as of the date of the advance.
Risk Management
11.0 RISK ASSESSMENT
The Minnesota Literacy Council is committed to identifying and managing risk factors throughout the agency in order to provide good stewardship of its resources. A risk assessment analysis will be performed by the agency’s leadership team annually.
12.0 DATA MANAGEMENT
The technology administrator, the operations associate director and the finance manager are responsible for data management as it relates to financial information. Security measures include:
Nightly server backups with a copy taken off-site;
Understanding current security polices for third-party technology vendor;
Utilization of a cloud-based server with multiple back-ups in place (through vendor);
Locks on the accounting office door and on the fire-proof cabinet located in that office;
Accounting software access is limited to the finance manager and the aAccounting Aassistant;
Passwords on Excel documents containing sensitive information.
13.0 INSURANCE POLICIES
The associate directorfinance manager is responsible for ensuring that reasonable and adequate insurance coverage is maintained to protect the agency. Individuals covered by these policies will be notified that such coverage is
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in place. Current policies include:
Comprehensive/Commercial General Liability
Directors and Officers Liability/Employment Practices Liability
Workers Compensation
Property
Employee Theft
ERISA Bond
Financial Management System
14.0 GENERAL ACCOUNTING PRACTICES
Regulations – It is the intention of this agency that policies, procedures and practices comply with guidelines established by accounting professionals such as GAAP, and AICPA. These policies, procedures and practices will also comply with relevant regulations imposed by funders such as OMB Circulars A-110, A-122 and A-133 and regulations such as 45 CFR Part 74 and others.
Accrual Accounting – Accounting is done on a modified accrual basis: Expenses are recorded when invoices are received;
Cash receipts are recorded when deposited;
Grant revenues are recorded when notification is received unless otherwise instructed by the funder in writing (and includes date and grant amount);
Contract revenues are recorded when earned;
Outstanding accounts receivable are recorded at year-end; Ddepreciation and capitalization entries are done at year-endmonthly.
Fund Accounting – Grant codes are assigned to funding sources so revenues and expenditures related to these sources can be tracked and reported individually.
These grant codes are also used to segregate restricted and unrestricted transactions and to determine fund balances. Donor restricted and board designated funds are accounted for separately from general operating funds.
The Finance and Audit Committee reviews accumulated unrestricted net assets and recommends a board designation when appropriate.
Functional Expense Allocation – Department codes are used to segregate expenses into Program, Management & General and Fundraising categories. Any expenses that relate to more than one category are allocated at the time of the transaction based on the relative benefit to each category.
Common Cost Allocation – Costs that are common to all programs and departments and cannot be directly attributed to a particular program or department (such as rent, phone, insurance, office supplies) are allocated to programs and departments on a monthly basis based on staff time charged to the programs and departments.
Comment [DC2]: Does this accurately reflect our
current procedure?
Comment [EP3]: Yes
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Adequate Documentation – Transactions will not be entered into the accounting system unless adequate documentation exists to substantiate the transactions. Examples of adequate documentation include original, itemized receipts and vendor invoices with proper approvals.
In the event that documents need to be received on a timely basis from off-site locations, an e-mail from the person’s e-mail address that includes the identity of that person will be accepted as an original signature.
Fiscal Year – The fiscal year begins July 1st and ends June 30th.
15.0 SAFEGUARDS AND INTERNAL CONTROLS
Safeguards and internal controls have been built into the financial management system to reduce the risk of error and/or fraud.
Cash Receipts –
All checks are logged in and stamped “for deposit only” by the office manager as soon as they are received;
Checks for contributions or donations are logged into the fundraising software system which is reconciled to the accounting system;
Cash control procedures are in place for trainings and special events;
The accounting assistant prepares all deposits and cash receipt batches;
The finance manager reviews all batches (with the associated documentation) and then post them.
Cash Disbursements – All cash disbursement requests must be signed by a manager;
Reimbursement requests must also be signed by the employee and his or her manager;
Vendor invoices must be signed by the person approving the material or service and by the manager of the budget to be charged;
All cash disbursement requests are entered into the Accounts Payable module by the accounting assistant; the finance manager reviews the A/P batch (with the associated documentation) and posts the batch;
Check stock is kept in a cabinet in the accounting office (which is locked when not occupied); checks must be used in sequential order; handwritten checks are not allowed; checks cannot be pre-signed;
The accounting assistant prepares the checks and gives them (along with the associated documentation) to the executive director or associate director who; the executive director reviews the documentation and signs the checks.
Bank Reconciliation –
The executive director opens the bank statement and reviews the checks for proper signatures;
The accounting assistant reconciles the bank statement to the accounting system;
The finance manager and executive director review the bank reconciliation.
AmeriCorps Payroll –
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The accounting assistant prepares the payroll for all AmeriCorps members;
The appropriate program managers/coordinators provide the accounting assistant with rosters prior to each payroll;
The VISTA manager reviews the payroll before final processing.
Staff Payroll –
The accounting assistant prepares the payroll for all staff;
The HR director operations coordinator provides salary change forms (with proper authorization signatures) to the accounting assistant prior to each payroll;
The executive director reviews each payroll;
All staff prepare monthly biweekly timesheets which are due on the 5th business day of the following month.
Equipment – The accounting assistant is responsible for maintaining the Fixed Asset Inventory listing. This includes all purchases of equipment – not just equipment that is capitalized. A full physical inventory is done every two years.
Department managers are responsible for the security of the equipment in their areas. Laptops and other valuable equipment are secured in locked carts or cabinets whenever possible.
Prior to the transfer or disposal of equipment, staff must complete an Equipment Transfer Form, have it approved by a manager, and submit it to the accounting assistant.
Equipment purchases in excess of $5,000 are capitalized at year-end.
Professional Financial Service Providers – Services such as payroll, auditing, and administration of the 401k plan are reviewed annually.
16.0 BUDGETING
Identify New Program Strategies – In mid-March managers are given a Budget Assumptions Worksheet to help them plan strategically for the upcoming program year. The agency’s leadership team meets in early-April to discuss these worksheets and any high-level strategic changes that will be taking place in the coming year. These changes are then communicated to managers.
The finance manager meets individually with managers to discuss the budget implications of changes that might occur in their programs. Changes to staffing levels are also discussed at this time.
Managers meet with staff to prepare budgets and work plans in early April. Budget worksheets are submitted to the finance manager in late April.May, such that a final budget is available for review and recommendation at the June Finance and Audit Committee meeting.
Salaries and Benefits – The HR associate director performs the annual salary review based on market data (see separate procedure in the Human Resources Manual) and reviews it with the executive director, associate director and the finance manager. Proposed adjustments are incorporated into the salary budget.
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The HR associate director, the finance manager and the executive director review various benefits throughout the year. Actual benefit costs and proposed adjustments are incorporated into the benefits budget.
Expenses and Revenues – The finance manager prepares the budget for common costs (main office) and the aAdministration department. Department managers prepare budget worksheets for their departments. The executive director, finance manager, and development director prepare the revenue budget.
Board Approval – The finance manager completes the budget and presents it, along with a budget narrative, to the Finance and Audit Committee in mid-June. A presentation is made to the full board and approval sought at the June board meeting at the end of the month.
17.0 FINANCIAL REPORTING
Standard Reports – The finance manager prepares a Statement of Activities report (with a comparison to budget and explanation of significant variances) and a Statement of Financial Position report (with a comparison to the prior year). The finance manager also prepares budget-to-actual comparison reports by department and by major grant for managers to review.
Frequency – All standard reports are prepared at least quarterly and more frequently as needed.
Review and Distribution – The quarterly Statement of Activities and Statement of Financial Position are reviewed in detail by the Finance and Audit Committee. The Finance and Audit Committee chair then presents these reports to the board.
Review of the financials includes an analysis of the following:
Is the use of resources consistent with the mission and the budget;
Is the agency solvent;
Is cash adequate to meet obligations;
Are donor restrictions being observed?
Annual Financial Statements – Annual financial statements are prepared by the finance manager and audited by an outside agency CPA firm which has been approved by the Finance and Audit Committee.
18.0 GOVERNMENT REPORTING
Form 990 Tax Return This is prepared by the auditors but reviewed extensively by the Ffinance manager and approved by the Board of Directors. The return is due November 15th.
Sales Tax Return – This is prepared by the finance manager and submitted online by the accounting assistant according to applicable February deadlines. At this time all sales are restricted to 21 business days a year to avoid the need to collect and pay sales tax. See MN Statutes section 297A.70 subd 14.
Filing with the Attorney General – This is prepared by the auditors and submitted by the finance manager with authorization from the executive director and the Board Chair. It is due by January 15th.
Comment [DC4]: We should discuss this with
the finance committee.
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Filing with the Secretary of State – This is done online by the finance manager. Due December 31st.
Indirect Cost Rate Negotiation – This is prepared by the finance manager and submitted to the US Dept of Education by December 31st.
Lobbyist Reports – Lobbyist Disbursement reports and Lobbyist Principal reports are prepared and submitted by the finance manager with authorization from the executive director.
Public Access to Tax Returns – Tax returns are kept on file in the accounting office and are available online the Internet. The development director also has a copy. MLC will make these forms (with the exception of Schedule B – Schedule of Contributors) available on request. If a copy is requested, the staff copying rate will be charged.
Revenue Policies
19.0 REVENUE RECOGNITION
MLC adheres to FASB Statement 116 when determining how to recognize revenue.
Government grants – currently all government grants received by MLC are classified as exchange transactions and recognized when earned;
Training fees/VISTA cost share fees – classified as program service revenue and as such are deferred when received and recognized when earned;
MARCS/MABE software maintenance fees – classified as fee-for-service and recognized when received;
Membership dues – these are collected by two fiscally sponsored agencies – Literacy Action Network and Health Literacy Partnership. They are classified as contributions because although they are called membership dues the member does not receive a direct benefit. Membership dues are recognized when received.
20.0 UNRELATED BUSINESS INCOME
Currently the Minnesota Literacy Council does not have any income streams that are not related to its exempt-status mission.
The finance manager will work with the tax preparers to analyze new program income sources to determine if they would be subject to Unrelated Business Income Taxes (UBIT).
21.0 GIFT ACCEPTANCE POLICY
Minnesota Literacy Council solicits and accepts gifts for purposes that will help the agency further and fulfill its mission. The following policies and guidelines govern acceptance of gifts made to MLC for the benefit of any of its operations, programs or services. This policy does not address gifts given to individual employees – see the Rules of Conduct section under Purchasing and Procurement (pg 25).
Acceptable Gifts – When considering whether to accept gifts, MLC will consider the following factors:
Values – whether the acceptance of the gift compromises any of MLC’s core values;
Compatibility - whether there is compatibility between the intent of the donor and the agency’s
use of the gift;
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Public Relationships - whether acceptance of the gift will affect the reputation of MLC;
Primary Benefit - whether the primary benefit is to MLC versus the donor;
Consistency - whether acceptance of the gift is consistent with prior practice;
Form of Gift - whether the gift is offered in a form that MLC can use without incurring substantial expense or difficulty;
Effect on Future Giving – whether the gift will encourage or discourage future gifts.
Restrictions on Gifts – MLC will not accept gifts that:
Compromise MLC’s core values;
Would result in losing MLC’s status as an IRC § 501(c)(3) not-for-profit organization;
Are too difficult or too expensive to administer in relation to their value;
Would result in any unacceptable consequences for MLC;
Are for purposes outside MLC’s mission.
Decisions on the restrictive nature of a gift, and its acceptance or refusal, will be made by the Executive Committee of the Board of Directors, in consultation with the executive director.
Use of Legal Counsel – MLC urges all prospective donors to seek the assistance of personal legal and financial advisors in matters relating to their gifts, including the resulting tax and estate planning consequences.
MLC will seek the advice of legal counsel in matters relating to acceptance of gifts when appropriate.
Gifts Generally Accepted Without Review –
Cash - Cash gifts are acceptable in any form, including by check, money order, credit card, or online.
Marketable Securities - Marketable securities may be transferred electronically to an account maintained at one or more brokerage firms or delivered physically with the transferor's endorsement or signed stock power (with appropriate signature guarantees) attached. All marketable securities will be sold promptly upon receipt. In some cases marketable securities may be restricted, for example, by applicable securities laws or the terms of the proposed gift; in such instances the decision whether to accept the restricted securities shall be made by the Executive Committee of the Board of Directors.
Bequests and Beneficiary Designations under Revocable Trusts, Life Insurance Policies, Commercial Annuities and Retirement Plans - Donors are encouraged to make bequests to MLC
under their wills, and to name MLC as the beneficiary under trusts, life insurance policies, commercial annuities and retirement plans.
Program or Office Supplies – Items such as books and office supplies that are in good condition and can directly benefit MLC’s programs may be accepted with the approval of director-levelrelevant program staff.
Gifts Accepted Subject to Prior Review – Certain forms of gifts or donated properties may be subject to review by the Executive Committee of the Board of Directors prior to acceptance. Examples of gifts subject to prior review include, but are not limited to:
Tangible Personal Property - The Executive Committee shall review and determine whether to accept any gifts of tangible personal property in light of the following considerations: does the property
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further the agency’s mission? Is the property marketable? Are there any unacceptable restrictions imposed on the property? Are there any carrying costs for the property for which the agency may be responsible? Is the title/provenance of the property clear?
Life Insurance – MLC will accept gifts of life insurance where MLC is named as both beneficiary and irrevocable owner of the insurance policy. The donor must agree to pay, before due, any future premium payments owing on the policy.
Real Estate - All gifts of real estate are subject to review by the Executive Committee. Prior to acceptance of any gift of real estate MLC shall require an environmental review by a qualified environmental firm. Criteria for acceptance of gifts of real estate include: Is the property useful for the agency’s purposes? Is the property readily marketable? Are there covenants, conditions, restrictions, reservations, easements, encumbrances or other limitations associated with the property? Are there carrying costs (including insurance, property taxes, mortgages, notes, or the like) or maintenance expenses associated with the property? Does the environmental review or audit reflect that the property is damaged or otherwise requires remediation?
22.0 FUNDRAISING INITIATIVES
The development department must approve fundraising initiatives. In no case may an individual employee raise funds for donation without prior approaval of the development department. Funds may not be raised in support of an individual program participant, employee, volunteer or other individual associated with MLC. Neither should independent fundraising take place for the benefit of a specific MLC program or on behalf of the overall agency without first discussing such opportunities with development.
23.0 NON-CASH (IN-KIND) CONTRIBUTIONS
Donations of goods and services need to be properly acknowledged (for IRS purposes) and entered into the fundraising system. In some cases these need to be entered into the accounting system as well. Examples of such donations include marketing and advertising expertise, books, banners, and raffle and/or door prize items. Staff who receive offers of in-kind goods or services for the agency should be familiar with the Gift Acceptance
Policy (section 21.0 in this manual). An offer of in-kind goods or services in the Generally Accepted Without Review category can be accepted by staff. An offer of in-kind goods or services in the Subject to Prior Review category cannot be accepted until authorized by the executive director.
Staff should consult with the development department whenever possible before accepting an in-kind contribution to ensure that the proper information is gathered. If this is not feasible before accepting the in-kind contribution, then the development department should be notified at soon as possible after the fact.
In-kind Services – Volunteer services are generally not accepted by our current grantors for matching or in-kind purposes so they are not assessed a value and not entered into either the fundraising or the accounting system.
The in-kind services of paid professionals will be assessed a value and entered into the accounting system if they are necessary for running the programs of the agency and if the agency would have had to pay for these services if they had not been donated. Services of this type will be valued at the actual rate paid by the contributing agency or at a rate consistent with the local market for those services.
Formatted: Normal
Formatted: Character Style 13, Font: +Body(Calibri), 11.5 pt, Condensed by 0.05 pt
Formatted: Font: 11.5 pt, Character scale:100%, Condensed by 0.05 pt
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In-kind Supplies and Equipment – Donations of supplies, equipment and office space will be assessed a value and entered into the accounting system if they are necessary for running the programs of the agency and if the agency would have had to pay for these items if they had not been donated. The value assessed will be reasonable and will not exceed fair market value.
Documentation – In-kind contributions will not be entered into the accounting system without proper documentation. Proper documentation includes (but is not limited to) the following:
A description of services or materials provided;
The number of hours and rate per hour for services provided;
The valuation method for materials provided (ex. cost per sq/ft and number of square feet used);
Approval of the services by MLC staff (or the staff of MLC sub-recipients);
Certification of the in-kind contribution and valuation by the donor.
Certification by the donor that the source of the in-kind contribution is not federal (unless it has been approved by the grantor).
Expenditure Policies
24.0 PURCHASING AND PROCUREMENT
Purpose This policy establishes guidelines for the procurement of all services, supplies and equipment for the agency. All staff making purchasing decisions are responsible for adhering to this policy.
Compliance with Federal Requirements
Since many of our programs are funded with federal grants, MLC’s procurement policies need to conform to the regulations provided in OMB Circular A-122. In addition, all purchases with federal funds must comply with the procurement procedures set forth in the specific Title governing the award.
The most important requirement is that all costs must be reasonable, allocable and allowable.
Reasonable – a cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs.
o Is the purchase generally recognized as ordinary and necessary for the operation of the program – ex. books for students?
o Is the item or service purchased at “fair market value”? o Is this the minimum amount I need to spend to meet my needs? o If I were asked to defend this purchase, would I be comfortable?
Allocable – the cost is incurred specifically for the program or it can be allocated to the program based on the relative benefits received.
o Is this item or service going to be used only by my program? o If the item is going to be shared by other programs, is my program being charged its fair share for
the use of this item or service?
Allowable – costs must:
o be reasonable and allocable
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o conform to any limitations or exclusions set forth by these policies and by the grant/contract/award o be consistent with other activities of the agency o be adequately documented
Examples of questionable costs:
Alcoholic beverages prohibited – we need itemized receipts for all purchases to prove that alcohol is not included in the purchase
Employee morale – allowed if activities conform to the agency’s established practice for the improvement of employee morale and performance. All employees must be treated consistently.
Entertainment costs – including amusement, diversion, and social activities and any costs directly associated with such events (tickets, meals, lodging) are unallowable.
All procurement transactions will be conducted in a manner to provide open and free competition to the maximum extent possible. Positive efforts will be made to use local, minority owned and small businesses whenever practicable.
It is not necessary to purchase from the provider with the lowest cost. Other factors such as quality and durability should also be considered.
Approval Requirements
Unallowable costs Cannot use federal funds. Use of general operating funds requires approval from a director in advance.
Less than $250 No advance approval is required. Manager approval on invoice or packing slip.
$251 – $1,000 Purchase Order (PO) required with manager approval.
Exception: Managers with budget responsibility do not need PO’s if the purchase was in the board-approved budget. If the purchase was not in the budget, a PO must be signed by the Executive director.
Over $1,000 Purchase Order required with executive director approval.
Exception: The executive director does not need a PO if the purchase was in the board-approved budget or is a board-approved expense. If the purchase was not a board-approved expense, a PO must be signed by a member of the Finance and Audit Committee.
Solicitation Process Requirements Over $1,000 Contracts recommended for services.
Less than $2,500 No further requirements for supplies and/or equipment.
$2,500 - $4,999 Follow solicitation process; verbal quotation required.
Over $5,000 Follow solicitation process; written quotation required; accounting department will
perform a lease vs. buy analysis if appropriate.
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Requisitions must not be split into several smaller purchases to avoid these requirements.
Solicitation Process
At least three bids must be solicited to ensure open competition. Solicitation for goods or services will provide for all of the following:
A clear and accurate description of the technical requirements so as not to restrict competition; Requirements that the supplier must fulfill and all other requirements used to evaluate the proposals;
The range of acceptable characteristics or minimum acceptable standards;
When “brand name or equal” is included the specific features that suppliers are required to meet;
Acceptance of products dimensioned in the metric system of measurement when practical and feasible;
When practical and feasible preference is given to products and services that conserve natural resources, protect the environment and are energy efficient.
Verbal and Written Quotations When verbal and written quotations are required, the solicitation and selection of the vendor will be managed and approved by the appropriate program director or the executive director. Verbal and/or written quotations will be attached to the PO. Requests for bid (written or verbal) will contain accurate, clear specifications and should not contain features or language which unduly restrict competition. Vendors/contractors that develop or draft grant applications, contract specifications, statements of work, invitations for bids and/or requests for proposal are excluded from bidding on that particular procurement.
If requests for written quotations are returned producing only one potential vendor, the finance manager will determine and document:
If additional quotation requests should be sent to other potential vendors;
If procurement specifications should be relaxed or modified to increase the supply of vendors.
Once a vendor award is determined, re-orders can be placed for the items or services specified in the award for up to a calendar year without going through the selection process again.
The program director will be responsible for ensuring that the vendor/contractor chosen complies with the terms, conditions and specifications of the bid.
Procurement Records
All procurement records should be attached to the PO. Procurement records should include:
Documented cost analysis including price quotes;
Basis for contractor selection;
Justification for lack of competitive bids when not obtained;
Basis for award cost.
Rules of Conduct
The following rules govern the actions of staff when they are engaged in the award or administration of all contracts - federal and other.
Participation Prohibited - No employee, officer or agent of MLC shall participate in the selection, award or administration of a contract if a conflict of interest, real or apparent, would be involved.
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Conflict of Interest - A conflict would arise when any one or more of the following has a financial or other interest in excess of $50 in the firm selected for award of a contract:
An employee, officer or agent;
Any member of his or her immediate family;
His or her partner; An agency which employs or is about to employ anyone mentioned above.
Gratuities – Prohibited: Officers, employees or agents of MLC shall neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to sub-agreements except as set forth below.
Exception – this shall not apply where the gift is an unsolicited item whose fair market value is less than $50.
Penalties - Violators of the rules set forth herein shall be disciplined to the extent permitted by the state of Minnesota, local law or regulations.
Contracts Contracts are required for all services over $5,000 and for any specialized equipment (including construction) over $5,000. The finance manager will prepare all contracts with input from the appropriate program manager as to work plans and specifications.
Contract language will comply with the requirements set forth in OMB Circular A110 including Appendix A.
25.0 CONSULTANTS (CONTRACTED SERVICES)
The use of consultants will be limited to situations in which in-house capabilities to perform those services do not exist. The finance manager (with the assistance of the HR associate director if required) will review IRS guidelines to ensure that consultants are properly classified as independent contractors before any contracts are prepared.
Contracts Written contracts are recommended for all services over $1,000 and required for all services over $5,000. The finance manager will prepare or review all contracts with input from the appropriate program manager as to work plans and specifications. Contracts will contain the following:
Description of services
Payment terms and dates of service
Performance requirements if necessary
Source of funding and reference to regulations if applicable
Terms specifying conditions for assignment, amendment and termination.
The executive director is the only person authorized to sign contracts. Original signed contracts are kept in the accounting office.
Performance Evaluation The manager who is utilizing the services is responsible for performance evaluation. Manager approval is required on all invoices before they will be paid.
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26.0 MILEAGE REIMBURSEMENT
Introduction
At times employees may be required to use their personal car for business purposes. Reimbursement for the operating expenses of the car will be calculated by multiplying the number of miles traveled by the currently approved Standard Mileage Rate published by the IRS. Other expenses must be substantiated by receipts. The costs of commuting (travel between home and the work site) will not be reimbursed.
Policy All MLC employees who use their cars for business purposes must have current and adequate automobile/liability insurance coverage and a valid driver’s license. Employees must not transport volunteers or clients in their personal vehicles. If transportation of this type is necessary, a rented vehicle should be used. Employees who transport volunteers, learners, national service members or any other program participant must first complete the “Authorization to Transport” form and provide copies of a current, valid driver’s license and proof of insurance. The Operations Coordinator maintains these records with personnel files.
Mileage will be reimbursed for the round-trip distance between the employee’s work site and the location of the business function being attended. If employees depart from or return to their home instead of their work site, only the miles in excess of the normal daily commute can be claimed as an expense.
Mileage amounts must be verifiable through the use of commercially available websites (ex. Mapquest, Google Maps) using the “shortest route” option.
Other expenses such as parking will be reimbursed at the actual costs. Original, itemized receipts must be provided.
Employees must document their travel on the Mileage Reimbursement Form.
Examples
An employee travels from the main office to a meeting at Hubbs Center. The employee then stops for lunch on the way to another meeting at Rondo Library. Finally, the employee returns to the main office. The entire mileage for this trip can be reimbursed.
An employee travels from home to a conference and back to home again. The total trip (RT) was 65 miles. The employee’s normal commute (RT) is 10 miles. In this case 55 miles can be reimbursed.
An employee travels from the main office to attend meetings at several locations and then returns home. The normal commute is 5 miles one-way. Mileage reimbursement would be 25 miles which is calculated as follows:
Trip 1 – main office to location A 10 miles reimbursed
Trip 2 – location A to location B 15 miles reimbursed
Trip 3 – location B to home 2 miles not reimbursed
Allowable Mileage Expenses Examples of allowable business purposes include:
Meetings
Conferences/Presentations
Comment [DC5]: We should discuss liability and
current practice.
29
Travel between MLC sites
Site vis its
Work-related errands (post office, office supply store, etc)
Classes and workshops if job related and approved by the manager
Unallowable Mileage Expenses
Examples of unallowable business purposes include:
Commuting between home and the work site
Elective continuing education
Procedure
Timing In order to comply with IRS documentation requirements, a complete and accurate Mileage Reimbursement Form must be submitted at least quarterly but preferably monthly. Forms may be submitted on a semi-monthly basis if the accumulated mileage is greater than 150 miles.
Approval
Forms will be reviewed by the employee’s supervisor and submitted to the accounting assistant.
Documenting the Location Enter the location name in the “to” and “from” columns:
If the location is an MLC or SPCLC (St Paul Community Literacy Consortium) site, then no further information is necessary;
If the location is an infrequent destination then enter the address or street intersection and the city;
If the location is a frequent destination then enter the program name only and provide the address in the “additional information” section of the Mileage Reimbursement Form.
Documenting the Business Purpose Choose the purpose of the travel from the selections provided at the top of the form. Enter the corresponding number in the “B/P” column. If the purpose is “other”, provide more information in the “additional information” section of the form.
Additional Information
Keep in mind that these forms will be reviewed by outside auditors. If more clarification is required, enter the details in the “additional information” section of the form. This is especially important if the number of miles claimed does not match commercially available websites for calculating mileage. Examples of when this may occur include: travel to or from home to a meeting or conference; car pooling in which several stops are required before the final destination; getting lost.
27.0 TRAVEL
The Minnesota Literacy Council requires that all travel expenses be reasonable and necessary to fulfill the mission of the agency. In all cases, expenses that are unreasonably high will not be paid or reimbursed. Overnight travel must be approved prior to travel.
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Definitions
Travel status – more than 35 miles away from the normal work site for a business purpose or away from the normal work site for at least 5 hours for a business purpose. Per Diem Rates – standard rates for travel set by the federal government. Current rates can be found at http://www:gsa.gov
Event – the business purpose for travel (ex. conference, meeting, site visit)
Non-overnight Travel In most cases only transportation costs will be reimbursed. See the Mileage Reimbursement Procedure for details.
An employee in travel status over the lunch hour can be reimbursed for the cost of lunch.
Overnight Travel
Employees planning overnight travel for business purposes must complete the Travel Authorization Form and submit it for approval prior to travel.
In determining the reasonableness and necessity of travel expenses, the person authorizing the travel should consider the ways in which MLC will benefit from this travel and weigh those benefits against the anticipated costs. Less expensive alternatives such as telephone conference calls or local training opportunities should be considered whenever feasible.
Travel to Attend Conferences MLC will occasionally send staff to conferences to learn about best practices in various program areas. Employees who attend these conferences are expected to share this new knowledge with other staff or business partners in the same program areas. The authorizing manager should follow up after the conference to ensure this takes place.
Reimbursable Expenses General
Conference fees, transportation and lodging will be paid or reimbursed at the actual rates, although employees are encouraged to use the least expensive transportation and lodging options where appropriate, including sharing rooms whenever reasonable. Meals and incidentals will be paid or reimbursed at either the actual or
per-diem rate, whichever is less. Itemized receipts are required for all expenses – summarized credit card slips are not acceptable. Mileage will be reimbursed at the IRS rate.
Air Travel
Air travel reservations should be made as far in advance as possible to take advantage of reduced fares. Employees may retain for their personal use any frequent flyer miles that may be awarded as a result of business purpose travel.
If discounted airfare is purchased that requires a Saturday stay-over, lodging will be paid or reimbursed up to the cost differential of a non-Saturday-stay-over rate (this must be documented by the attendee and pre-approved).
Lodging The cost of single room accommodations will be reimbursed up to the per diem rate at that location. Exceptions
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must be pre-approved by the employee’s manager and documented on the Travel Authorization Form.
Employees will be reimbursed for lodging and meal expenses for the evening before the event and through the end of the event. Lodging and meals will not be paid the last night of the event unless there is a logistical reason that the employee cannot return home that day.
Meals
Meals are defined as follows:
Breakfast – in travel status overnight or leave home before 6:00am
Lunch – in travel status
Dinner – in travel status overnight or return home after 7:00pm
Employees in travel status may be reimbursed for the actual cost incurred for meals up to the per diem rates for
their location. In all cases original, itemized receipts must be submitted. Employees will not be reimbursed for the cost of alcoholic beverages.
Ground Transportation
Employees are expected to use the most economical ground transportation appropriate under the circumstances. Parking and toll expenses are reimbursable but valet services are not.
For trips greater than 150 miles, the employee can choose to rent a car if the cost is less than the mileage rate
or available air fare. If a rental car is necessary, both collision and personal liability insurances should be purchased.
Non-reimbursable Expenses Expenditures that are unnecessary or excessive will not be reimbursed. Examples include (but are not limited to): movies, alcohol, mini-bar items, travel insurance, airline tickets other than economy class, spa or exercise charges, entertainment, valet services, expenses for spouses, friends or relatives.
Advances
Employees have the option of being reimbursed for expenses or receiving an advance based on the appropriate per-diem rates. To receive an advance, employees should submit a check request along with a copy of the approved Travel Authorization Form to the accounting assistant.
Reimbursement Procedure
Non-overnight Travel Mileage reimbursement requests should be submitted on the Mileage Reimbursement Form. Parking expenses can be submitted on this form as well.
Meal reimbursement requests should be submitted on the Miscellaneous Expense Reimbursement form. The business purpose of the travel should be clearly described and itemized receipts should be attached.
Overnight Travel All expenditures (except mileage) for an overnight travel event should be documented on the Travel Reimbursement Form. The employee should attach original receipts and have their manager approve the expense before submitting it to accounting. Proper back-up documentation (meeting notices, workshop registrations, etc)
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should also be attached. The reimbursement request must be submitted within two weeks of the completion of the travel event.
Advances
Upon completion of the travel event, the Travel Reimbursement Form must be submitted within two weeks. If an employee does not provide documentation to reconcile the travel advance within two weeks of their return, the entire amount of the advance will be withheld from their next paycheck.
If the Travel Reimbursement Form shows the travel advance exceeded the actual costs, the employee will immediately refund the difference. If the form shows the travel expense is greater than the advance, an employee reimbursement will be processed.
Special Situations
At times staff are asked to bring a group of learners or AmeriCorps members to conferences. In these situations it might be possible to use a fixed per diem rate without receipts for meals. The finance manager must approve this in advance.
Travel Time on Timesheets
When employees travel for work purposes, some of their travel time may be counted as work time. Travel time that occurs during regular work hours should be counted as work hours. Travel time that occurs outside of regular work hours may be recorded as work time if the employee was working on MLC business during travel. If, however, the employee engaged in leisure activities during the travel time that occurred outside of work hours then that time would not be recorded as work. An exception is that employees who travel outside of regular work hours by driving a vehicle may record those hours as work time (since one cannot fully engage in leisure activities while driving a vehicle).
For example, an employee flies from Minneapolis to Phoenix via Houston. On the first leg of the flight, from approximately 3:00 – 6:00 p.m., the employee works on MLC business the entire flight; these are work hours. On the second leg of the flight, from 7:30 – 9:00 p.m., the employee works on MLC matters for 1/2 hour and then relaxes for the remainder of the trip. Even though this employee’s usual work day concludes at 5:00, she would record all three hours from the first leg plus 1/2 hour from the second leg for a total of 31/2 hours of work time (plus whatever other hours she had worked before boarding the first flight).
Travel time should be recorded in the employee’s regular line item on the timesheet.
28.0 MEETINGS, TRAININGS, CONFERENCES AND OTHER EVENTS
The purpose of this document is to provide guidelines for expenses associated with MLC-sponsored meetings, trainings, conferences and other events. Other events include such activities as volunteer recognition and end-of-term celebrations. These guidelines outline maximum expenditures. Staff should comply with additional limitations that may be imposed by particular budgets.
Policy The Minnesota Literacy Council requires that all meeting/event expenses be reasonable and necessary to fulfill the mission of the agency. In all cases, expenses that are unreasonably high will not be paid or reimbursed.
Expenditures for meetings/events must be pre-approved using the Meeting/Event Authorization Form. Regularly
Comment [DC6]: We now track hours assigned (per allocation), not actual hours worked. This no
longer seems relevant.
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scheduled meetings/events with expenses under $50/per mtg (such as ABE 12-hour trainings) can be documented and authorized on one form at the beginning of the fiscal year. One-time meetings/events with expenditures expected to be under a total of $25 do not need to be pre-approved.
Expenditures on the Meeting/Event Authorization Form will be divided into “allowable” and “unallowable” categories. Allowable expenses are those that follow grant guidelines and can be charged to the grant. Unallowable expenses are those that cannot be charged to grants but could still be eligible for
reimbursement. Reimbursement for unallowable costs must be approved by a director. See examples below.
Meals and Snacks
The suggested cost of each meal should not exceed $15/person and the cost of refreshments should not exceed $5/person.
Allowable: Generally for meetings/events that include non-staff Meals if the meeting/event is held over standard meal times and there is a business purpose for having
the meeting/event at that time; the meal must be of minor consequence to the meeting/event;
Snacks if the meeting/event is at least two hours;
Snacks for recognition/award ceremonies;
Meals for all-staff meetings/retreats.
Unallowable: Snacks or meals for program or department meetings at which the participants are exclusively MLC
staff (unless the meeting is planned to last 4 hours or more);
Presenters/Speakers
The cost for guest presenters/speakers should not exceed $540/day. Exceptions must be approved by the appropriate program director.
Space Rental
If MLC’s conference rooms cannot accommodate the number of participants or are otherwise not suitable for the event then space can be rented from another agency. The cost must be reasonable.
All rental contracts must be reviewed by the finance manager and signed by the executive director. The finance manager can make the necessary arrangements to comply with insurance requirements.
Procedure
Before the meeting/event takes place, the organizer must complete the Meeting/Event Authorization Form and have it approved by the budget manager. Agendas and any other information that documents business purpose must be attached. The form should then be turned in to the accounting department. The accounting assistant will assign a PO# and return a copy to the organizer. The original will be filed in the accounting office.
When invoices pertaining to the meeting/event are received, the organizer will review them, initial if approved, and write the PO# on the invoice. If there are disputed items on the invoice, the organizer will contact the service provider and solve the issue.
If the organizer incurred expenses personally then the organizer must fill out the Meeting/Event Reimbursement
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Form which is on the back of the Authorization Form to request reimbursement. Original, detailed receipts must be attached for all claimed expenses.
Inter-Agency Attendees MLC staff and current MLC-sponsored AmeriCorps members are encouraged to attend trainings, conferences and events that are presented by MLC staff when appropriate. If there is a fee for the event, the attendee should fill out an invoice form (available from the accounting department), have it approved by the budget manager, and submit it to accounting so the event fee can be charged to the appropriate grant.
29.0 CELL PHONE REIMBURSEMENT
Purpose
The purpose of this policy is to provide guidelines on the use of personal cell phones and Internet access for business purposes.
Policy Eligible staff (defined below) who travel out of the office on a regular and ongoing basis and whose jobs require access to phone or data for work can request to have cell phone and data charges reimbursed. The requests must be approved by a director.
Due to extensive IRS substantiation requirements, cell and Internet reimbursements will be treated as a taxable benefit to the employee and will be reflected as such through payroll.
Requests and authorization for reimbursement will be documented on Payroll Change Forms which are available from the HR department.
Rates and authorizations will be reviewed annually at the beginning of the fiscal year.
MLC will not be responsible for overage charges. It is the employee’s responsibility to maintain proper coverage to include both personal and business use.
Eligible Staff Home Literacy Coaches – for safety issues they are required to carry cell phones with them when visiting clients in
their homes. Eligible for reimbursement at the standard cell phone rate.
Metro area travel – staff who travel on a regular and ongoing basis primarily in the metro area. Eligible for
reimbursement at the standard cell phone rate.
Non-metro area travel – staff who travel outside of the metro area (including overnight travel) on a regular
and ongoing basis. Eligible for reimbursement at the premium cell phone rate. Also eligible for the Internet rate if required.
Work from home – staff who work from home for business purposes on a regular and ongoing basis. Eligible for
the Internet rate.
Reimbursement Rates
Standard Cell Phone - $38/month
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Premium Cell Phone - $50/month
Internet Rate - $25/month
30.0 STAFF RECOGNITION
In September 2004 the Minnesota Literacy Council initiated a staff recognition program. This program is meant to motivate and encourage staff – especially during stressful times in their work cycles.
Individual/Department Recognition Managers have discretion to use approximately $25/year for each staff towards some sort of recognition (tailored
to the preference of the staff member). This cannot be in the form of cash or cash equivalents (gift certificates).
Since recognition of this type is not evenly distributed (ex. one staff member receives more than another), these expenses will be considered discriminatory and therefore will be deemed “unallowable”. This means that unrestricted general operating funds will be used for this purpose.
All-Staff Meetings/Events
MLC has monthly all-staff meetings and occasional retreats to disseminate information, build camaraderie and encourage staff to share ideas across program areas. Lunch will be provided at these meetings as a form of staff appreciation.
In addition, MLC has two staff appreciation events – typically one in the winter and one in the summer. Food (limited to $15/person) will also be provided at these events.
Since recognition of this type is evenly distributed across all staff, these expenses are deemed to be “allowable”.
31.0 VOLUNTEER RECOGNITION
Community volunteers are an essential and valuable resource at MLC. They provide a variety of services to help fulfill the agency’s mission and goals. Recognition activities are an important way to retain good volunteers and help them feel appreciated for the work they do for their community.
MLC strives to recognize volunteers in a way that is meaningful for the volunteers and yet is not a drain on limited program resources.
Allowable Volunteer Recognition Recognition events – food must be a negligible part of the event and cannot exceed $15/person;
Thank you cards;
Supplies they can use while volunteering.
Unallowable Volunteer Recognition Gifts;
Meals or entertainment unless they are donated by another organization.
Staff responsible for volunteer supervision should determine the volunteer recognition activity that best suits the needs of their programs and falls within the above guidelines.
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Net Assets
32.0 BOARD DESIGNATED FUNDS
The Board of Directors has designated that a portion of Unrestricted Net Assets be set aside to be used for various purposes such as program initiatives, infrastructure, contingency planning and endowment. The Finance and Audit Committee will review this designation annually as part of the budget process and make recommendations for changes to the board prior to the beginning of each new fiscal year.
And bBequests received, unless otherwise directed by the board, will be added to Board-designated endowment.
Cash Management
33.0 CASH ACCOUNTS
MLC retains an interest-bearing checking and savings account for purposes of cash management. Currently the accounts are at Sunrise Bank. Authorized check signers are the executive director and a designated program the associate director.
34.0 BANK RECONCILIATIONS
Monthly bank statements are given (unopened) to the executive director who reviews check copies for proper signatures.
The accounting assistant prepares the bank reconciliation. The finance manager and the executive director both review the bank reconciliation.
35.0 CASH FLOW MANAGEMENT
Generally deposits are made into the savings account. The accounting assistant, with the approval of the executive director, transfers funds from savings to checking when appropriate. The finance manager is responsible for recommending transfers between savings and the investment accounts. However these transfers must be performed by the executive director or the program director who is the designated check-signerthe associate director (authorized check signers.
36.0 INVESTMENT POLICY
Objectives The primary objectives of the Minnesota Literacy Council’s investment activities shall be:
Safety – all investments shall be undertaken in a manner that seeks first to preserve capital and second to fulfill other investment objectives.
Liquidity – the agency’s investment portfolio will remain sufficiently liquid to enable MLC to match its investment maturities with anticipated cash requirements.
Return on Investment – the investment portfolio shall be designed with the goal of obtaining
Comment [DC7]: Need to clarify.
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the highest best available return without sacrificing the objectives previously mentioned. In seeking the appropriate rate(s) of return, particular consideration will be paid to safety and liquidity versus potential earnings, and requirements of senior staff to provide personal information for business purposes.
Any income derived from such investment will be used to support the general operations of the agency. Such investments are subject to any applicable laws and regulations and donor restrictions, if any.
Investment Authority The Finance and Audit Committee chair of the Board of Directors, together with the executive director, have the authority to invest cash on behalf of the agency, to execute and deliver such documents as necessary in connection therewith, and to delegate authority to any duly elected officer of the agency.
Securities Guidelines - Investment instruments are limited to the following:
United States Government Treasury and Agency Securities;
Certificates of Deposit at banks and savings and loan associations which are members of Federal Insurance programs;
Money market funds;
Bond mutual funds;
Demand deposit accounts.
Investment in the following instruments is prohibited:
Equity mutual funds;
Commodities or Bond Options;
Derivatives;
Partnerships;
Individual bonds or equities.
Endowment Currently MLC has an endowment fund with the St Paul Foundation. MLC has no control over this endowment, including how it is invested.
Monitoring On an annual basis, the finance manager will report on investment performance at a regularly scheduled meeting of the Finance and Audit Committee. The finance manager will present an investment report consisting of:
The total amount of cash currently invested, types of instruments and current percentage return rate.
Recommendations regarding the amount of cash available for investment.
Reporting The Finance and Audit Committee chair and the finance manager shall certify to the Board of Directors that current investments and investments made since the last certification comply with this policy. This certification will coincide with the review of the annual financial audit. The Finance and Audit Committee chair shall make the Board of Directors aware of real or potential conflicts of interest
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37.0 PETTY CASH
The accounting assistant is responsible for dispensing and reconciling the petty cash account. The finance manager reviews this reconciliation whenever replenishments are requested. The finance manager (with approval from the Finance and Audit Committee) is responsible for setting the balance of the petty cash account. Currently the balance is set at $130.
38.0 LINE OF CREDIT
The executive director, with the approval of the Board chair, may establish a line of credit on behalf of and in the name of the agency for purposes of resolving short-term cash flow issues.
The executive director, with the approval of the Board chair or Finance and Audit Committee chair, may draw against the line of credit.
Currently MLC has a $0 line of credit with Sunrise Bank. Should a line of credit be established the board will be
informed of the total amount and of any amounts drawn against it.
39.0 WIRE TRANSFERS
Wire transfers may be requested by the finance manager but must be performed by the executive director or the program director who is the designated check-signer.
Annual Audit
40.0 ROLE OF THE INDEPENDENT AUDITOR
An independent financial audit is carried out annually to review financial statements and to ensure that the proper policies and procedures are in place to comply with federal grant requirements. MLC contracts with an accredited accounting firm to perform both a standard financial audit and an A-133 (Single) audit.
41.0 SELECTION OF THE INDEPENDENT AUDITOR
The Finance and Audit Committee will review the work of the independent auditors on an annual basis. Criteria will include competency of the auditors, the level of support they provide to financial staff, and the demonstrated ability of the auditors to keep pace with current best practices and to communicate those to staff.
If a determination is made to consider new audit firms, the following process will take place:
Finance manager
Collect references for potential auditors;
Send out a Request for Proposal to at least four firms;
Interview respondents;
Evaluate the interviews and proposals and recommend at least two firms for further review;
Comment [DC8]: Do we have a number to insert
here?
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Finance and Audit Committee Establish selection criteria;
Interview the finalists;
Select an audit firm;
Recommend the proposed audit firm to the board for approval.
42.0 PREPARATION FOR THE AUDIT
The finance manager will conduct a planning meeting with the auditors in June. At that meeting the calendar will be determined and the audit process will be reviewed.
In order to reduce the cost of the audit, the finance manager is responsible for ensuring that all required audit schedules are prepared accurately and in a timely manner.
43.0 CONCLUSION AND APPROVAL OF THE AUDIT
After the conclusion of field work the finance manager and the executive director will hold an exit interview with the auditors to review audit findings.
The Finance and Audit Committee will review the draft audit report in detail, recommend changes and approve the final draft report.
The chair of the Finance and Audit Committee, along with the finance manager will present the audit report and any findings to the Board of Directors at the September meeting including a follow-up discussion with no staff present.
Fiscal Sponsorships
Fiscal sponsors are 501(c)(3) corporations that provide tax-exemption benefits to unincorporated groups whose missions are aligned with their own. The fiscal sponsor is legally responsible for the unincorporated group. For this reason, MLC will only enter into fiscal sponsorship relationships if there is a mission-driven reason to do so.
44.0 APPROVAL OF A NEW FISCAL SPONSORSHIP
Any requests for MLC to be a fiscal sponsor of an organization must be approved by the Finance and Audit Committee. The requesting organization must submit a proposal in writing. Criteria for the decision will include:
Program purpose – does it align with MLC’s mission;
Organizational status – MLC will only accept organizations that are unincorporated unless the change in status occurs while MLC is already a fiscal sponsor;
Objective – what is the benefit to both organizations and why should MLC take on the risk;
Stability of funding – MLC will not use its own funds to subsidize a fiscal sponsorship project;
Relationship – MLC will not take on a fiscal sponsorship unless the parties involved are known to MLC staff and have a good reputation in the field of literacy.
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Organizations that successfully complete the approval process will be required to sign a fiscal sponsorship agreement annually.
45.0 ON-GOING FISCAL ARRANGEMENTS
The roles and responsibilities of the fiscally sponsored organization include Program management;
Fundraising;
Marketing;
Budget management;
Compliance with MLC’s financial policies and procedures;
Compliance with IRS regulations pertaining to tax-exempt activities.
MLC will maintain books and financial records for the organization in accordance with generally accepted accounting principles. The organization’s revenue and expenses shall be separately classed in MLC’s accounting records but will be reported as MLC’s income and expense for purposes of tax and financial statement reporting.
The roles and responsibilities of MLC include:
Deposit receipts and provide donor acknowledgements if necessary;
Process payments as requested;
Provide financial statements.
Grant and Contract Administration
46.0 PREPARATION AND REVIEW OF PROPOSALS
Government grant proposals are prepared or approved by the appropriate program director. Foundation/Corporation grant proposals are prepared by the development director with assistance from program other staff. The finance manager prepares the budgets with input from program staff.
All grant and contract applications are approved by the executive development director before submission to the funding source.
47.0 POST AWARD PROCEDURES
Executive Director
Reviews and signs the contracts
Notifies appropriate directors
Finance Manager
Files original contracts/award letters
Reviews contracts for special requirements/regulations
Enters financial reporting dates on the accounting calendar
Recognizes grant revenue in the accounting system if appropriate
Assigns a new grant code if appropriate
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Development Department – non-government grants/contracts;
Enters the award in the development software;
Files copies of the contracts/award letters
Notes reporting requirements
Program Director
Reviews the contracts for special requirements/regulations
Designs data gathering systems for program evaluation
48.0 COMPLIANCE WITH LAWS, REGULATIONS AND PROVISIONS
Program directors are responsible for ensuring compliance with all program provisions, requirements and regulations. They are also responsible for delegating authority to program staff and ensuring that program staff are aware of all provisions, requirements and regulations (including which costs are allowable and which are not).
The finance manager is responsible for ensuring that procedures are in place to comply with all financial provisions, requirements and regulations and for oversight of financial transactions.
49.0 INVOICING AND FINANCIAL REPORTING
The finance manager is responsible for timely invoicing and financial reporting to grantors.
50.0 CASH DRAW-DOWNS
The finance manager is responsible for requesting Electronic Fund Transfers (EFT) if appropriate. Requests will be on a reimbursement basis only. In no case will funds be requested in advance unless allowed by the grantor.
51.0 MATCHING REQUIREMENTS
At times grantors require matching or in-kind contributions to supplement the grant they provide. Program directors are ultimately responsible for adhering to grantor requirements (including documentation) in these situations.
Program staff will conduct audits of the valuation methods provided by in-kind donations that are used to fulfill match requirements for their programs.
The finance manager is responsible for reporting in-kind match to grantors and entering it into the accounting system if appropriate. The finance manager will also review the valuation basis for reasonableness.
52.0 SUB-AWARDS
In some cases it may be determined that MLC does not have sufficient staffing resources and that a sub-award is necessary to meet program requirements. Due to the liability involved, the appropriate program director, the finance manager and the executive director will all be involved in the decision to create a sub-award. Approval from the grantor may also be required.
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Program Director Describe and justify the need for a sub-award;
Manage the RFP process for the sub-recipients;
Define responsibilities for the sub-recipients and for MLC and design a monitoring plan;
Assist with the sub-award contracts. Finance Manager
Create the sub-award contracts with input from the program director
Design a monitoring plan
Executive Director –
Review and sign the sub-award contracts
53.0 MONITORING SUB-RECIPIENTS
The appropriate program director will be responsible for designing a process to monitor the program activities of all sub-recipients. Program staff will make at least one monitoring site visit a year.
The finance manager will be responsible for designing a process to monitor the financial activities of all sub-recipients. The finance manager will make at least one desk review a year and will review the subrecipient’s financial and A-133 audits. An on-site review will occur at least every two years.
54.0 EQUIPMENT PURCHASED WITH FEDERAL FUNDS
Equipment purchased with federal funds will be identified as such on the fixed asset listing. Transfers or disposals of this equipment will not occur until grantor requirements are satisfied.
55.0 BUDGET AND PROGRAM REVISIONS
Program and financial staff will comply with grantor restrictions and regulations regarding budget and program revisions. Program and budget information will be reviewed on a regular basis by both program and financial staff to ensure compliance.
56.0 CLOSE OUT
Proper grant close-out procedures will be adhered to by both program and financial staff.
Records Retention
MLC strives to comply with all regulations regarding the retention of records and documents that pertain to the operations of the agency. This includes special requirements imposed by grantors and funders. MLC’s department directors are responsible for setting record retention/destruction procedures for their areas.
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57.0 RETENTION SCHEDULE
Most documentation relating to federal grants will be retained for seven years. If any litigation, claim, or audit is started before the expiration of the seven-year period, the records will be retained until all litigation, claims or audit findings involving the records have been resolved.
See Appendix D for the complete schedule.
This schedule is intended as a guideline and may not contain all the records MLC may be required to keep the future. Questions regarding the retention of documents not listed in this schedule should be directed to the appropriate department director or to the finance manager.
58.0 FILING AND STORAGE Accounting Records
Accounting and finance-related physical documents will be maintained in the accounting office or in on-site storage for a period of two years. After the two year period the records may be transferred to the off-site storage location. File boxes will be clearly marked to indicate contents and destruction date. After the destruction date documents will be destroyed. Documents with sensitive information – such as social security numbers and bank account information – will be shredded.
Human Resources Records Personnel-related physical documents will be maintained in the HR associate director’s office. This includes personnel files for current employees, accident claims and reports, and 401k records. Personnel files for terminated employees and some other benefits-related documents may be stored off-site if space limitations arise. Program Records Program-related physical documents will be maintained in the appropriate program manager’s office or in on-site storage for one year. After the one year period the records may be transferred to the off-site storage location. File boxes will be clearly marked to indicate contents and destruction date. After the destruction date documents will be destroyed. Documents with sensitive information – such as social security numbers and bank account information – will be shredded.
Electronic Documents and Records
Electronic documents will be retained as if they were paper documents. Therefore, any electronic files that fall into one of the document types in Appendix D will be maintained for the appropriate amount of time. If a user has sufficient reason to keep an e-mail message, the message should be printed in hard copy and kept in the appropriate file or moved to an “archive” computer file folder. Backup and recovery methods will be tested on a regular basis.
59.0 DOCUMENT DESTRUCTION
After the destruction date documents will be destroyed. Documents with sensitive information – such as social security numbers and bank account information – will be shredded.
If required, the executive director may issue a “legal hold” notice suspending the destruction of records due to
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pending, threatened, or otherwise reasonably foreseeable litigation, audits, government investigations, or similar proceedings. No records specified in any legal hold may be destroyed, even if the scheduled destruction date has passed, until the legal hold is withdrawn in writing by the executive director.
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Appendix A: Finance and Audit Committee Charter
Committee Chair:
Jim Afdahl
Date Last Modified:
01/17/17
Committee Members
Board:
Rudy Brynolfson A.C. Flynn Norberto Moran Nathan Raygor Susan Spray (volunteer - former board)
Meeting Schedule:
6 times / year typically on the Tuesday prior to board meetings, from 4:00 – 5:00
Staff:
Eric Nesheim Paul Kirst Debbie Cushman
Purpose The Finance and Audit Committee provides assistance to the Board of Directors in overseeing the financial strategies and policies, as well as reviewing, monitoring and reporting on the financial condition of the organization. The Finance and Audit Committee also serves as the Audit Committee. As part of its duties, the Committee shall conduct reviews, receive reports, and provide direction to literacy council management and to the Board of Directors concerning matters within its scope of responsibility. The scope includes, but is not limited to, budget plans and forecasts, cash and risk management, financial reports, audit reports and financial policies and procedures.
Committee Authority & Responsibilities The Committee shall report to the Board on all matters within its scope of responsibility and authority.
The scope of authority delegated herein to the Committee shall include the power to conduct such other activities as may be within the general scope of the Committee’s responsibilities and the power to delegate its authority to one or more members of the Committee as deemed appropriate.
In order to accomplish its objectives, in consultation with management, as the Committee deems necessary or appropriate, the Committee shall have the following specific responsibility and authority:
1. Develop and recommend to the Board of Directors financial policies, strategies and revisions, as needed.
2. Address all reported concerns or complaints regarding agency accounting practices, internal controls or auditing.
3. Review potential conflicts of interest and recommend resolution.
4. Hire and set the compensation for auditing services and oversee the auditor’s performance.
5. Review and approve the recommendations of literacy council management in the preparation of annual operating budgets, long range financial forecasts and cash flow projections. Present annual operating budgets and long range financial plans to the Board of Directors for approval.
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6. Monitor current financial operations by reviewing financial reports no less than quarterly for compliance with budget and fiscal policies; review staff recommendations for changes within the total approved budget; and report the financial condition of the organization to the Board of Directors. Provide feedback to literacy council management regarding the form, content and frequency of financial information in order to efficiently fulfill the Committee’s financial monitoring responsibilities.
7. Perform a year-end review of board-designated net assets and recommend changes when appropriate.
8. Review the findings of any financial audits of the organization and monitor progress of any required remediation actions. Report on audit findings to the Board of Directors.
9. Review, at least annually, levels and costs of insurance coverage.
10. Review and certify to the Board, at least annually, that current investments comply with the investment policy.
11. Review and approve any capital expenditures or material operating expenses that were not included in the previously approved annual operating budget.
12. Authorize all fiscal agency arrangements.
13. Review the agency’s risk management plan on an annual basis.
14. Engage, on an as needed basis, any volunteer advisor or consultant to assist with financial matters of the organization.
15. Maintain liaisons with other Board committees and their activities, as needed, to ensure proper financial oversight and to facilitate achievement of the literacy council’s annual and long range objectives.
Other Functions The Committee will review and reassess the adequacy of this charter annually and recommend any proposed changes to the Board for approval. The Committee also shall review its own performance on an annual basis.
Committee Membership The Committee shall consist of the Chair of the Finance & Audit Committee, Chair of the Board and at least two other members, none of whom shall be currently employed by the literacy council, and who are free of any relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment. In addition, the Committee shall include the literacy council’s executive director, associate director and the finance manager. The members of the Committee shall be appointed by the Board, and may be replaced by the Board.
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Appendix B: Annual Board Resolutions – January 23, 2017
Resolution #1 – Mission and Strategy The Board of Directors annually reviews MLC’s mission, strategic plan and annual work plan. Resolution #2 – Corporate Authority The Executive Director is empowered to assign and utilize resources; to enter into contracts between MLC and other entities; to submit funding proposals to public or private entities; to accept grants; to employ, promote, discipline, and discharge staff; to speak on behalf of MLC as an agent of the Board; and to organize and delegate as s/he deems appropriate. Resolution #3 – Operating Policies With respect to any area of MLC activity where the Board has rendered no policy guidance, the Executive Director is free to create any policy which is legal, ethical, consistent with best practices and in compliance with the spirit of other policies which have been stated. Finance policies must be reviewed by the Finance Committee. Resolution #4 – Annual Budget MLC will operate with an annually approved budget. Resolution #5 – Conflict of Interest The Board will abide by the conflict of interest policy and fill out the Conflict of Interest Disclosure Form annually. Resolution #6 – Audit Committee The Finance Committee will serve as the Audit Committee. Responsibilities of the Audit Committee include hiring, setting compensation, and overseeing the auditor’s activities. The Audit Committee also sets rules and processes for complaints concerning accounting and internal control practices. Resolution #7 – Executive Director and Associate Director Compensation The Executive Committee is responsible for setting annual performance goals for the Executive Director and for evaluating the ED’s performance against those goals. The Executive Committee is also responsible for setting the compensation levels (with input from the HR Committee) for both the Executive Director and the Associate Director. Resolution #8 – Board Assessment The Board annually assesses its effectiveness and capacity to govern. Resolution #9 – Non-cash Donations The Executive Director has the authority to sell any stocks or bonds donated to or earned by the Agency. The Executive Director, with the approval of the Finance Committee, has the authority to sell real estate or other property that might be donated.
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Proceeds from the sale must be remitted to the Minnesota Literacy Council, Inc. Resolution #10 – Check Signing The Executive Director and the Associate Director are authorized to open deposit accounts (with Board approval), endorse checks and orders for the payment of funds, and to transfer funds on deposit with financial institutions in the name of the Minnesota Literacy Council, Inc. Resolution #11 – Line of Credit The Executive Director, along with the approval of the Board Chair, may establish a line of credit on behalf of and in the name of the Agency for purposes of resolving short-term cash flow issues. The Executive Director, with the approval of the Board Chair or Finance and Audit Committee Chair, may draw against the line of credit. Resolution #12 – Fiscal Management MLC is committed to promoting fiscal stability and, as appropriate, to remedying any financial instability with an active plan. Fiscal management will be conducted in a manner that is consistent with the purposes of the Agency and in accordance with responsible business practices and legal requirements. Resolution #13 – Legal Requirements for Government Grants MLC will comply with the legal requirements and regulations of all governmental agencies under whose authority it operates as guided by professional and legal requirements. Resolution #14 – Expense Reimbursement Policy Board members may be reimbursed for out-of-pocket expenses as may be authorized by the Board. Members must comply with MLC’s expenditure policies as outlined in the Financial Policies Manual.
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Appendix C: Conflict of Interest Disclosure Statement
Preliminary note: In order to be more comprehensive, this statement of disclosure/questionnaire also requires you to provide information with respect to certain parties that are related to you. These persons are termed "affiliated persons" and include the following:
o your spouse, domestic partner, child, mother, father, brother or sister (including in-laws);
o any corporation or organization of which you are a board member, an officer, a partner, participate in management or are employed by, or are, directly or indirectly, a debt holder or the beneficial owner of any class of equity securities;
o any trust or other estate in which you have a substantial beneficial interest or as to which you serve as a trustee or in a similar capacity.
1. NAME OF EMPLOYEE OR BOARD MEMBER (Please print) 2. CAPACITY
☐ board of directors
☐ executive committee
☐ officer
☐ committee member
☐ staff (position):
3. Have you or any of your affiliated persons provided services or property to Minnesota Literacy Council in the past year?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
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4. Have you or any of your affiliated persons purchased services or property from Minnesota Literacy Council in the past year?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
5. Please indicate whether you or any of your affiliated persons had any direct or indirect interest in any business transaction(s) in the past year to which Minnesota Literacy Council was or is a party?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
6. Were you or any of your affiliated persons indebted to pay money to Minnesota Literacy Council at any time in the past year (other than travel advances or the like)?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
7. In the past year, did you or any of your affiliated persons receive, or become entitled to receive, directly or indirectly, any personal benefits from Minnesota Literacy Council or as a result of your relationship with MLC, that in the aggregate could be valued in excess of $1,000, that were not or will not be compensation directly related to your duties to MLC?
☐yes ☐no
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If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
8. Are you or any of your affiliated persons a party to or have an interest in any pending legal proceedings involving Minnesota Literacy Council?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
9. Are you aware of any other events, transactions, arrangements or other situations that have occurred or may occur in the future that you believe should be examined by Minnesota Literacy Council's Board of Directors in accordance with the terms and intent of MLC's conflict of interest policy?
☐yes ☐no
If yes, please describe the nature of the services or property and if an affiliated person is involved, the identity of the affiliated person and your relationship with that person:
I HERBY CONFIRM that I have read and understand Minnesota Literacy Council's conflict of interest policy and that my responses to the above questions are complete and correct to the best of my information and belief. I agree that if I become aware of any information that might indicate that this disclosure is inaccurate or that I have not complied with this policy, I will notify the Board Chair or Finance and Audit Committee chair immediately. If completing electronically, typing my name and date in the spaces below will serve as my electronic signature.
Signature
Date
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Appendix D: Physical Document Retention Schedule
Corporate Records
RETENTION PERIOD
Board and committee meeting agendas and minutes Permanent Bylaws and Articles of Incorporation Permanent
Conflict of Interest disclosure forms 4 years Corporate resolutions Permanent
Correspondence (legal) Permanent
IRS exemption determination and related documentation Permanent
Building and Equipment Documents Contracts, mortgages, notes and leases (expired) 7 years
Contracts, mortgages, notes and leases (still in effect) Permanent
Deeds, Mortgages, and bills of sale Permanent Equipment files and maintenance records 7 yrs after disposition
Property Appraisals by outside appraisers 7 years Property Records Permanent
Accounting and Finance Related Documents Accounts Payable records 7 years
Accounts Receivable records 7 years Audit Reports and Management Letters Permanent
Reconciled Bank Statements 3 years Cancelled Checks 3 years
Charitable Organization filings with the AG 7 years
Contracts and Agreements 7 yrs after obligations Correspondence (general) 2 years
Depreciation Schedules Permanent Employee Time Sheets 7 years
Financial Statements (audited) Permanent Garnishments (of employee wages) 7 years
Payroll Records 7 years
Petty Cash Records 3 years
Retirement and pension records Permanent
Tax Returns Permanent
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Insurance Records
RETENTION PERIOD
Accident reports/claims 7 years Claims (after settlement) 7 years
Policies Permanent
Safety (OSHA) reports 7 years
Workers Comp claims 7 yrs after settlement
Personnel Related Documents
Employee Orientation materials 7 years Employment applications and recruitment/selection materials 1 year
IRS form I-9 3 yrs or 1 yr after end
IRS form W-4 7 years
Personnel Files (terminated) 7 years Personnel Files (active) Permanent
Retirement Plan documents (including plan description) Permanent
Technology Software licenses and support agreements 7 yrs after obligations
Program Documents
ABE student enrollment records Permanent ABE student attendance records 5 years ABE volunteer records 3 years Grant-related reports 7 years
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Financial Policies Manual Signature Page
I acknowledge that I have received a copy of MLC’s Financial Policies Manual, dated 7/1/17, and that I have read and understand its provisions.
I understand that MLC reserves the right to change, suspend, or eliminate any or all matters contained in this manual and all other policies, rules, and procedures at any time, without prior notice and without my consent. I understand that MLC retains the sole discretion to interpret the provisions of this manual and to depart from those provisions or any other MLC policies, rules, or procedures if MLC determines such action is appropriate.
I understand that the provisions of this manual supersede the provisions of all other previous handbooks, manuals, policies, rules and procedures that address the subjects covered in this handbook or are inconsistent with this handbook.
Employee Name (please print)
Employee Signature
______/______/______ Date