Financial Operations 101 - cafebusinesscenter.ca.uky.edu

Financial Operations 101

Extension Financial OperationsChris Shotwell, Director Financial Operations

Tina Ward, College Business AnalystTy Back, Fiscal Compliance Officer

Jeremy Teal, Fiscal Compliance Officer

UNIVERSITY OF KENTUCKY

Topics

1. QuickBooks Online (QBO) Update2. Policy & Procedure Training

a. Cash Handlingb. Purchasing & Disbursementsc. Equipment Inventory

Extension Financial Operations


QBO Update

• Selection of QBO– 120 counties surveyed re: current system used– >90% already use Inuit product (Quicken or QuickBooks)– >65% already using QuickBooks desktop or online– Worked with outside CPA to consult on available options– Selected QBO because it is designed for small businesses and is

fairly easy to use



QBO Update

• Selection of QBO– Will allow us to standardize accounting processes in counties– Will allow us to better support the management of EDB funds– Will allow us to develop consistent reporting to all stakeholders– Will allow us to all talk the same language when it comes to

financial management



QBO Update

• Overview of QBO– Accountant view provided to EFO and DD’s

• For monitoring and support purposes

– Client view provided to appropriate county staff• Fiscal contact (manager, facilitator, coordinator)• Staff support• Outside bookkeeper (if required)• Standard chart of accounts to be used by all counties• Money in and money out recorded in QBO via standard processes• Reports regarding financial matters pre-defined and scheduled



QBO Update

• Overview of Training Agenda– Training provided by EFO and outside CPA firm– Navigation– Security & Backup– Master Data– Money In



QBO Update

• Overview of Training Agenda– Money Out– Reconciliation– Budgeting– Reports– Journal Entries



QBO Update

• Hands-on Practice Session– Add vendors– Add customers– Money In (Bank deposits)– Money Out (Bills, Checks & Expenses)– Reconciliation– Reports



QBO Update

• QBO Implementation Plan– Currently we have paused training

• QBO plan offerings are changing this week and we need to better understand the impact to ensure we have selected the appropriate plan

• Still working with D1 & D2 to clean up some remaining issues• Complexity in come counties using QBO has created the need for some

additional changes to accounts and classes

– Training will pick back up as soon as possible



Questions



Policy & Procedures – Cash Handling

• Cash Handling – General– UK Treasury Operations Manual (E-2-1)

http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-2-1.pdf

– Definitions• Cash: US coin and currency• Cash Equivalents: Checks drawn on US banks, ACH transactions, credit

card sales drafts, wire transfers and foreign funds





• Cash Handling – General– Extension policies and procedures will be written, or updated, to

cover: receiving, recording, safeguarding, depositing and reconciling all cash assets.

– According to UK policies, each cash handling unit of the University is to institute controls and procedures to ensure the physical security of cash, maximize the use of cash funds, and accurately record the receipt of cash to ensure the reliability of financial data.



Policy & Procedures – Cash Handling• Cash Handling – General

– Separation of duties: Perform functions of receiving cash, voiding transactions, balancing cash, preparing deposits, recording transactions, and reconciling so that no single person has control over the entire process.

– If staffing levels do not allow for proper separation of duties, unit will establish compensating controls to properly perform this function.

• Two individuals review and verify cash receipts, deposits and records• Management review of cash reports• Increased supervisory oversight of all cash handling functions




• Cash Handling - Receiving– Create a receipt and carbon form for all sales and give the payer a

copy of the receipt.• Use computerized point of sale system printed receipts or• Use preprinted and pre-numbered receipt forms that can be completed

manually.• Move to 3-part receipts, one for customer, one for deposits, and one to

remain in the receipt book.




• Cash Handling - Receiving– Receipt forms must include:

a) The amount of the payment;b) The mode of payment (e.g., cash or check);c) Name of person making payment;d) Purpose of payment;e) Date of payment;f) Sequential number;g) Account payment applied to, if applicable; andh) Signature of the employee receiving funds for written receipts.




• Cash Handling - Receiving– Count cash and balance to the totals of the cash receipts at the

end of each day and/or offsite event. Report any difference in the total of the actual receipts and the total of the receipt forms as a shortage or overage on the daily receipt log.

– Two employees must not work out of the same cash drawer or bag.– Restrictively endorse checks immediately upon receipt as follows:

• “For Deposit Only”



Policy & Procedures – Cash Handling• Receipts- Have a receipt book for each account.- Create a receipt (triplicate form) for all

funds received and handle copies as follows: one copy provided to payer (if present); one copy kept with deposit documentation, one copy kept in receipt book.

- Acceptable receipt forms include: computerized point of sale system printed receipts; and preprinted and pre-numbered receipt forms that can be completed manually.





• Receipts- Receipt forms must include:

1. The amount of the payment.2. The mode of payment (e.g.,

cash or check).3. Name of person making

payment.4. Purpose of payment.5. Date of payment.6. Sequential number.7. Account payment is applied

to, if applicable.8. Signature of employee

receiving funds for written receipts.

UNIVERSITY OF KENTUCKYUNIVERSITY OF KENTUCKYExtension Financial Operations

Policy & Procedures – Cash Handling• Daily Receipts Log/Deposits Log (Cash and

Checks)- Form should be dated and used for any Extension

account.- Record the name of payee and their receipt number.- All Cash and Checks (w/check number) should be

recorded in their respective column.- Each entry should be initialed by the person filling out

the form.- Cash and Checks should be totaled and a grand total

will be included for the sheet.- The total from previous sheet section should be used for

days when deposits will not all fit on one page.- Signatures are required for the preparer and the fiscal

contact.



• Cash Handling – Safeguarding– Limit access to cash and keep funds secure at all times.– Restrict access to areas where cash is counted or handled to

persons directly involved and restrict visibility by the public in areas where money is handled.

– Never leave cash unattended. If an employee leaves his or her workstation for any reason, regardless of how briefly, appropriately secure cash in a locked place.




• Cash Handling – Safeguarding– Keep working funds to a minimum at all times. All other cash must

be in a locked safekeeping device.– Keep all cash in a safekeeping device that cannot be easily

removed from the premises.– Keep safe doors closed during business hours when the safe is in

use, and locked when it is not in use. Keep safes locked at all other times.




• Cash Handling – Safeguarding– Give safe combinations/keys to a minimum number of employees

and only to those whose functions require access.– When staffing levels permit, to prevent access to secured cash

after normal business hours, no one employee should have access to both a key to a door to an office and the safe combination.

– Where staffing levels do not permit this preferred internal control measure, the supervisor must develop a plan and exercise control to maintain the proper level of security over cash.




• Cash Handling – Safeguarding– Two people must be present at all openings and closings of

safekeeping devices. The two people will initial a safe log that documents the safe’s opening and closing activity, as well as the contents of the safe at close and open.



Policy & Procedures – Cash Handling• Cash Handling – Safeguarding- Safekeeping Device Log:1. Log should be kept with the safekeeping

device to record all openings and closings.2. Log would be referenced in the case of a

discrepancy.3. Two people should be present each time

the safekeeping device is accessed.4. Log should be completed with the

following information at each opening: Date; Time; Initials for the two people present at opening; amount entered or removed; and purpose for entry.




• Cash Handling – Recording– Record all receipts of cash in accounting system as they are

received.– Receipts should be recorded by someone different than the person

who received the cash.– Receipts should be deposited by someone different than the

person who received the cash.



Policy & Procedures – Cash Handling• Cash Handling – Recording

– Accounting system deposit summary. – All transactions will be entered into

accounting system.– Once funds are ready for deposit, you

will enter them as a bank deposit in accounting system.

– All transactions in accounting system should match funds being deposited.

– Once entered the summary should be printed to accompany the deposit.

– Printout should be signed by fiscal contact.




• Cash Handling – Depositing– Order and use pre-printed deposit slips.– Prepare a separate deposit slip for each log or transmittal. Cash or

checks must be summarized on the deposit slip.




• Cash Handling – Depositing– Make all deposits as follows:

• daily, if cash receipts accumulate to $500, although more than one deposit a day is not required;

• each time during the week deposits accumulate to $500 if receipts are less than $500 per day;

• on the last working day of the week if cash is on hand; or• by the local bank’s cut off time on the last working day of the month if cash is on hand in

order to ensure that activity is included in the correct accounting period.




• Cash Handling – Depositing– Once the deposit is made the final file should include:1. Copy of the receipt for each transaction2. Copy of associated daily receipt log or logs3. Copy of deposit summary from QBO/accounting system4. Copy of deposit slip/transmittal form5. Receipt of deposit from the bank




• Cash Handling – Reconciling– Conduct periodic reviews of cash activities, including

reconciliations, to determine that all systems are functioning as intended and that all applicable policies and procedures are being followed.

– Reconciliation should be completed by someone other than person receiving and/or depositing cash (e.g. fiscal contact)



Policy & Procedures – Cash Handling• Cash Handling –

Reconciling- Each account should be

reconciled with a bank statement each month.

- EDB accounts will be reconciled in accounting system.

- Bank statement will provide all cleared transactions for the month.

- Statement will be matched against accounting system entries.



Policy & Procedures – Cash Handling• Cash Handling –

Reconciling Cont. - If a transaction has cleared

the bank, it will be marked.

- If the transaction is not on the statement, it will not be marked.

- Once the account is reconciled the difference would be $0.00

- If it is not $0.00, we would need to identify the discrepancy.

- Fiscal contact and bookkeeper should track outstanding checks.



Questions



• Purchasing & Disbursements– UK Purchasing Business Procedures (Section B)

http://www.uky.edu/ufs/bpm-structure/b-purchasing– UK Disbursement Business Procedures (Section E-7)


Policy & Procedures - Purchasing & Disbursements

http://www.uky.edu/ufs/bpm-structure/b-purchasing


• Purchasing & Disbursements– All Extension Offices are delegated procurement authority for

ordering goods and services. County Offices may use Price Contracts established by the Purchasing Division of the University of Kentucky and may order directly from these vendors.

– Prompt payment for purchases will ultimately result in better vendor relations, improved service and lower prices.




• Purchasing & Disbursements– Payment Vouchers must be properly documented, including a

detailed description of the activity/program purchase is for and detailed original receipts and/or invoices.

– Standard Voucher is now available on EFO website and will be mandatory July 1st.




• Purchasing & Disbursements– Bills should not be paid by Treasurer without a Payment Voucher and

a detailed receipt. • Employees must use Payment Voucher form or TRIP with detailed receipts

attached. • Even automatic bill payment bills need a Voucher.




• Purchasing & Disbursements– All requests for reimbursement must be submitted to the

appropriate Treasurer or through TRIP within 30 days after expense is incurred.

– Agents, assistants, office secretaries or other Extension employees should not sign checks or be authorized to sign checks.




Policy & Procedures -Purchasing & DisbursementsPayment/Reimbursement Voucher

• 2 Versions to choose from

• Electronic Version – to be completed online and printed

• Printed Version – to be completed by hand

• Both are the same

• 4 Sections to be completed

• Section 1 – Basic Purchase Info

• Who, What, When, Where and How

• Section 2 – Authorization and Approval

• Authorization from EDB (IF NEEDED)

• Approval Signatures

• Section 3 – Accounting Information

• Mainly for bookkeeping purposes

• To make sure that the items purchased are recorded in the correct GL/Line Items

• Section 4 – Line Items

• Reminder of GL/Line Items




1. Purchase Date: Enter the date of purchase.2. Purchaser Name: Enter the name of the individual who made the purchase.3. Vendor Name: Enter the name of the vendor where the purchase was made (e.g. Wal‐Mart, Lowe’s, etc.)4. Amount: Enter the amount of the purchase (total amount shown on receipt or invoice)5. Person Submitting Form: Enter the name of the individual who is submitting the form (in some cases this may be an agent completing the form on behalf of a volunteer).6. Paid By: Enter the source of funds covering the expense (EDB, 4‐H, etc.).7. Check Payable to: Enter the name of the individual or company to which this payment is due.8. Method of Payment: Select the box most pertinent to the nature of this purchase.9. Items Purchased: Enter a brief list of the items purchased (avoid using general terms such as supplies; and add specific detail, especially for higher end items or services)10. Business Purpose: Enter a brief description justifying the need for the purchase to explain how the goods/services will be used in Extension.


**Attach original itemized receipt/invoice**



Pre-Authorization Section -In certain circumstances, unbudgeted or emergencypurchases must be made. These purchases must be made according to existing Board/Council policies. Pre‐authorization should be documented for these situations via signature from the associated Board Chair or Treasurer.

Approval Signatures SectionPurchaser Signature: Signature of the individual who purchased the goods/services.Supervising Agent Signature: Signature of the supervising agent for purchases made by a program assistant (if applicable).Fiscal Contact (or Delegate) Signature: Signature of thefiscal contact for the office, or delegate inhis/her absence.




Accounting Information SectionThis sections provides detailed areas for items to be listed and coded to their specific G/L Account (Line Item); Class (i.e. EDB General) and the specific amount tied to individual item for receipts, bills, or invoices which must be split.

The Additional Info (serial#, model#, etc) box gives the option to record detail on higher cost items, especially those which should be inventoried or tracked. Examples could be IPad/tablets, GPS units, etc.




Line Items Section

Information provided on the right side is provided to aid in assigning the proper G/L Accounts for Accounting Purposes.

Fiscal Contact should review the payment voucher to ensure the proper G/L is selected.

Staff Assistant entering transaction into accounting system should also review to ensure the proper G/L is being used.



• Authorization of Purchases & Disbursements– The Fiscal Contact authorizing a purchase or expenditure is

responsible to assure funds are available for payment of all obligations made under this authority.

• Each Payment Voucher should be reviewed and signed by the Fiscal Contact before the check is written

• When reviewing the voucher,– Is the expenditure allowable & reasonable?– Is the expenditure coded to the correct line item?– Are there adequate funds budgeted to cover the expense?




• Authorization of Purchases & Disbursements– The fiscal contact is the responsible person for each budgeted

expenditure account and therefore must approve transaction documents.

– EFO is developing a standard delegation of authority matrix and related delegation form.




• Personal Service Contracts– For many county Extension offices, there are personal service needs such as

lawn care, cleaning, maintenance of equipment, etc. These services may be acquired on a contract basis if they are not provided by Extension staff.

– Personal service contracts for professional services must include use of their own equipment and materials (not those owned by the Extension District Board).

– Please note that if payment is over $600, an IRS Form 1099 must be given at the end of the calendar year.




• Personal Service Contracts– When a contract for personal services $20,000 or less is required, it is

recommended that the office informally solicit proposals, make a determination of the best qualified contractor and establish a PSC contract.

– When a contract for personal services greater than $20,000 is required, the office must conduct a formal bid process (KRS 424.260)

– County Fiscal Court purchasing policies may be more restrictive– Extension Employees are not to sign contracts on behalf of the Extension District

Board.– All contracts should be reviewed by the District Board and perhaps the County

Attorney before presented to the contractor.




• County Credit Cards– Actions by the District Board should be reflected in the minutes

before any credit/credit cards accounts are established. – Extension District Boards (EDBs) have the option to allow

credit/credit card accounts. – EDBs may impose spending limits.– Debit cards are not allowed.




• County Credit Cards– EDBs may choose to have one major credit card and/or individual store credit

cards and maintain card in office. • Either way the EDB EIN# should be used to obtain credit. • No UK Employee should have their credit/SS# tied to an EDB Credit Card

– Credit is to be issued in the name of the EDB.• Cards assigned to individuals should also include the employee name and EDB

name.• Tax exemption should be by the EDB’s number, NOT the University of Kentucky.




• County Credit Cards– Office Credit Cards must be kept in a locked location in the Extension Office

and checked out by the Extension Staff for purchases• One designated staff assistant/agent should be in charge to the office credit card

check out process. – Credit Cards assigned to individuals can be kept in the possession of the

individual and those individuals are responsible for any and all purchases.• If any employees individual county credit card limit is met during any given month,

then personal funds should be used and then eligible for reimbursement. • In this situation another employees EDB issued Individual Credit Card cannot be

used.




• County Credit Cards– All Credit Card purchases must be documented with a detailed receipt

attached to a payment voucher (see voucher above).– ABSOLUTELY NO PERSONAL PURCHASES!

• To do so is misappropriation of public funds and a basis for termination of employment.

– EDB Credit Cards are not to be used for subsistence on any trip.• Registration, airfare, hotel rooms, parking, etc. are acceptable purchases with EDB Credit

Cards if any Agent or Assistant is in official travel status.




• County Credit Cards– No comingling of purchases is allowed.– If purchases are made at the same time for two different accounts, or

programs, the charges should be made as if making two separate purchases.– EDB, Council and Grant Purchases should be made separately.– In the event of employee separation, all credit cards for that employee should

be cancelled immediately.– If any fraudulent activity is suspected by anyone concerning county office

expenditures, notify your District Director, and the EFO Team immediately.




Questions



Policy & Procedures – Equipment Inventory

• Equipment Inventory– UK Property Business Procedures (Section E-12)– Equipment Inventory Policy:






• Equipment Inventory Requirements– Office must:

• Maintain control of all items of furniture, equipment, vehicles and other moveable property regardless of cost.

• Use the proper general ledger account when purchasing equipment.• Control and record the location of property.• Report transfers of property between units.• Complete the annual physical inventory of property in the possession of, or

under the supervision of, the office by the assigned deadline.





• Verify the accuracy of the inventory records for equipment during the annual inventory process and throughout the year.

• Report surplus or obsolete property.• Report lost, stolen, and destroyed equipment items.• Maintain reasonable precautions in protecting all property (capital and

non-capital) regardless of value.





• Ensure any equipment kept offsite for an extended period of time is documented.

• Ensure that county owned equipment is not utilized for personal use or financial gain.

• Adhere to university inventory deadlines as appropriate for state owned property or federal excess property.




• Inventory lists found in county offices– County owned capital equipment– County owned minor equipment– State owned capital equipment (if applicable)– State owned minor equipment (if applicable)– Federal excess property (if applicable)– Each tracked separately and annually verified by fiscal contact




• Capital Equipment Definition– At UK, this would include:

• Items purchased that have a useful life of one year or more• Moveable equipment costing $5,000 or more• Buildings and building improvements costing $100,000 or more• Land at cost or fair market value if donated

– County capitalization thresholds may be more restrictive




• Minor Equipment Definition (recommended)– For county offices, this would include:

• Items purchased that are non-expendable & have a useful life of 2 years• Items that retain their identity as a separate and identifiable item• Items costing between $500 and $4,999• Items costing less than $500 that are considered “high risk” and/or

“sensitive” must be categorized as minor equipment (e.g. computers, tv’s, cameras, tablets, specialty tools, specialty equipment, etc)




• Annual Equipment Inventory Verification– In accordance with University policy and Commonwealth of

Kentucky regulations, all capital equipment must be physically counted annually.

– Each office is responsible for completing its inventory.– All pertinent inventory lists must be verified and documented.– EFO will be preparing a standardized process/procedure for

equipment inventories and verification of same.




• Equipment Inventory List Guidelines:– Equipment ID number (e.g. tag #)– Description– Serial number (if applicable)– Quantity– Acquisition Cost– Acquisition Date– Disposal Date– Location– Person responsible



Questions


Documents

Financial Operations 101 - cafebusinesscenter.ca.uky.edu