Greater Lawrence Community Action Council, Inc. “GLCAC ...The Greater Lawrence Community Action Council, Inc. (GLCAC) is a private non-profit agency incorporated under the statutes

Greater Lawrence Community

Action Council, Inc. “GLCAC”

Accounting and Financial Policies

and Procedures Manual

Revised October, 2013

Last updated October, 2013 Page 2

TABLE OF CONTENT

Page Number

Introduction 10

GENERAL POLICIES

Organizational Structure

The role of the Board of Directors ……………………………………………… 10

Committee Structure …………………………………………………………… 11

Finance Committee Responsibilities …………………………………………… 11

Audit Committee Responsibilities …………………………………………….. 11

The Roles of the Executive Director and Staff ………………………………… 12

Accounting and Finance Department Overview

Organization …………………………………………………………………... 12

Responsibilities ………………………………………………………………… 13

Standards for Financial Management System …………………………………. 13

Business Conduct Practice of Ethical Behavior …………………………………………………… 14

Compliance with Laws, Regulations, and Organizations Policies …………….. 15

Fraud, Waste and Abuse Policy Policy Statement ……………………………………………………………….. 16

Purpose .……………………………………………………………………….. 16

Definitions ..…………………………………………………………………. 16

When to Report Fraud, Waste or Abuse ..………………………………………. 17

How to Report Fraud, Waste or Abuse .………………………………………… 17

Information Necessary for Reporting ………………………………………….. 17

Investigations …………………………………………………………………… 17

Maintaining Confidentiality ……………………………………………………. 18

Protection Against Reprisal …………………………………………………….. 18

Corrective Actions ……………………………………………………………… 18

Protection of Records – Federal Matters ………………………………………… 18

Internal Control System Policy ……………………………………………………………………………. 19

Internal Audit Function …………………………………………………………. 19

Security Accounting Department ………………………………………………………… 19

Access to Electronically Stored Accounting Data ……………………………… 20


Storage of Back-Up Files ……………………………………………………….. 20

Storage of Sensitive Data ……………………………………………………….. 20

Destruction of Client Information ………………………………………………. 21

Accounting System Overview

Methodology …………………………………………………………………. 21

General Ledger ... ……………………………………………………………….. 21

General Journal …………………………………………………………………. 22

Accounts Receivable Journal …………………………………………………… 22

Cash Receipts Journal …………………………………………………………... 22

Accounts Payable Purchase Journal …………………………………………….. 22

Cash Disbursement Journal ……………………………………………………... 22

Chart of Accounts ……………………………………………………………… 23

Distribution of Chart of Accounts ………………………………………………. 23

Control of Chart of Accounts …………………………………………………… 23

Accounts Definitions ……………………………………………………………. 23

Changes to the Chart of Accounts ………………………………………………. 25

Fiscal Year of GLCAC, Inc …………………………………………………….. 25

Accounting Estimates ……………………………………………………………. 25

Journal Entries …………………………………………………………………… 25

POLICIES ASSOCIATED WITH REVENUES AND CASH RECEIPTS

Revenue

Revenue Recognition Policies ………………………………………………….. 26

Definitions ……………………………………………………………………… 27

Administration of Government Awards

Definitions ……………………………………………………………………… 27

Preparation and Review of Proposals ………………………………………….. 28

Post-Award Procedures ………………………………………………………… 28

Compliance with Laws, Regulations and Provisions of Awards …………….. 29

Close Out of Federal Awards …………………………………………………... 30

Cost Sharing and Matching (In-kind)

Overview ……………………………………………………………………….. 30

Volunteer Time and Services ………………………………………………… 31

Reporting Volunteer Hours …………………………………………………….. 31

Donated Supplies ……………………………………………………………….. 31

Billing/ Invoicing Procedures

Overview ………………………………………………………………………. 32

Responsibility for Billing and Collection ……………………………………... 32

Billing and Financial Reporting ……………………………………………….. 32


Accounts Receivable Entry Policies …………………………………………… 33

Classification of Income and Net Assets ……………………………………….. 34

Cash Receipts Overview ………………………………………………………………………. 34

Corporate Cash Receipts Procedures ………………………………………….. 34

Timeliness of Bank Deposits …………………………………………………… 36

Reconciliation of Deposits …………………………………………………….. 36

Petty Cash ……………………………………………………………………… 36

Replenishment of Petty Cash Funds ……………………………………………. 36

Grants Receivable Management

Procedure to Record Grants Receivable ……………………………………….. 37

Accounts Receivable Management Monitoring and Reconciliations ……………………………………………….. 37

Credits and Other Adjustments to Accounts Receivable ……………………… 37

Accounts Receivable Write-Off Authorization Procedures ……………………. 37

POLICIES ASSOCIATED WITH EXPENDITURES AND DISBURSEMENTS

Guidelines and Overview Purpose …………………………………………………………………………. 38

Responsibility for Purchasing …………………………………………………. 39

Ethical Conduct ………………………………………………………………... 39

Procurement Procedures Procurement Guidelines ………………………………………………………… 40

Use of Purchase Orders ………………………………………………………… 41

Authorizations and Purchase Limits ……………………………………………. 41

Invoices ………………………………………………………………………… 42

Aggregated Cost Procurement Guidelines Policy …………………………………………………………………………… 42

Goods and Services under $5,000 in the Aggregate ………………………….. 42

Goods and Services over $5,001but less than $25,000 in the Aggregate .……. 42

Consumable Items under $5,000 …………………………………………….. 42

Consumable Items over $5,001 but less than $25,000 in the Aggregate ……. 43

Capital Property between $5,001 and $25,000 .……………………………... 43

Capital Property over $25,001 …… …………………………………….… 43

Summary ………………………………………………………………………. 44

Procurement Consulting/Contractor Agreements Policy …………………………………………………………………………... 45


Contracts ……………………………………………………………………….. 45

Procurement – Small Purchase Method Policy …………………………………………………………………………… 46

Procedure to Process Small Purchases …………………………………………. 47

Supply/Services Request Form Approval Process ……………………………. 47

Procurement – Cost Quote Method Procedure ………………………………………………………………………. 49

Receipt and Acceptance of Goods Procedure ………………………………………………………………………. 50

Procurement Property and Equipment Definitions ……………………………………………………………………... 51

Acquisition Cost ……………………………………………………………….. 51

Title …………………………………………………………………………….. 51

Use of Property ………………………………………………………………… 51

Disposition of Property ………………………………………………………… 52

Record Keeping – Property Ledger ……………………………………………. 52

Physical Inventory ……………………………………………………………... 52

Property Control ……………………………………………………………….. 53

Procurement Process for Sealed Bid, Competitive Proposal or Non-competitive Proposal

Methods Determining the Selection Method …………………………………………… 53

Preparation of Bid/Proposal Package …………………………………………... 54

Solicitation of Bids/Proposals …………………………………………………. 55

Bidder’s Conference …………………………………………………………… 55

Receipts of Bids/Proposals …………………………………………………….. 55

Bid/ Proposal Opening …………………………………………………………. 56

Bid/ Proposal Evaluation ………………………………………………………. 56

Debriefing Conference …………………………………………………………. 57

Protest Procedures ………………………………………………………………. 58

Records Management ………………………………………………………….. 58

Bid Proposal File ……………………………………………………………….. 58

Contractor Files ………………………………………………………………… 59

Protest Files ……………………………………………………………………. 59

Affirmative Consideration of Minority, Small Business & Women Owned

Businesses Policy ………………………………………………………………………….. 59

Charging of Costs to Federal Awards Overview ………………………………………………………………………. 60

Segregating Unallowable from Allowable Costs ……………………………… 60


Criteria for Allowability ……………………………………………………….. 61

Direct Costs …………………………………………………………………… 62

Indirect and Joint Costs ……………………………………………………….. 62

Indirect Cost Rate Proposal …………………………………………………… 63

Cost Allocation Plan …………………………………………………………… 63

General Approach …………………………………………………………….. 63

Specific Elements of Cost …………………………………………………….. 64

Accounts Payable Management Overview ………………………………………………………………………. 66

Recording of Accounts Payable ……………………………………………….. 67

Accounts Payable Cut-Off …………………………………………………….. 67

Establishment of Control Devices …………………………………………….. 67

Vendor Setup/ Change ………………………………………………………… 67

Change, Request, Approval, and Input Process ………………………………. 67

Accounts Payable – Receipt of Goods Ordered ……………………………….. 69

Accounts Payable – Processing ………………………………………………… 69

Preparation of a Voucher Package ……………………………………………….. 69

Processing of Voucher Packages ………………………………………………. 70

Processing Payment Discounts ………………………………………………… 70

Processing Employee Expense Reports ……………………………………….. 70

Cash Disbursements Policy ………………………………………………………………………….. 71

Check Preparation Guidelines …………………………………………………. 71

Voided checks and Stop Payment Process …………………………………….. 73

Credit Card Policy

Authorization …………………………………………………………………... 74

Maintenance & Care of Credit Cards …………………………………………… 74

Conditions of Use ………………………………………………………………. 74

Credit Card User’s Responsibility ……………………………………………… 74

Records Management …………………………………………………………… 75

Food Policy

Purpose …………………………………………………………………………. 75

Allowable Food Costs ………………………………………………………….. 76

Requirements …………………………………………………………………… 76

Unallowable Food Costs ……………………………………………………….. 76

Payroll and Related Policies

Payroll Processing Policy ……………………………………………………… 77

Payroll Administration ………………………………………………………… 77

Personnel Time Sheets ….……………………………………………………. 77

Payroll Taxes ………………………………………………………………….. 78


Time Sheet Preparation, Approval, and Processing ........……………………….. 78

Compliance with OMB A-122 ………………………………………………… 78

Process to Prepare the Payroll Journal Entry ………………………………….. 80

Travel and Other Out of Pocket Expenses Policy ………………………………………………………………………….. 81

Reasonableness of Travel Costs ………………………………………………. 81

Special Rules Pertaining to Air Travel ……………………………………….. 82

Reporting Expenses …………………………………………………………… 82

Local (in State) Travel ..………………………………………………………. 84

Out-of-Area (Out of State) Travel – Prior Approval …………………………. 85

Request of Per Diem Advance ………………………………………………… 86

Accounts Payable Process for Expense Reports ………………………………. 86

Training and Workshops Requests ……………………………………………. 87

Tuition Reimbursement Policy and Process …………………………………... 88

Eligibility ………………………………………………………………………. 88

Cost Sharing ………………………………………………………………….. 89

POLICIES PERTAINING TO SPECIFIC ASSETS ACCOUNTS

Cash and Cash management – Cash Accounts Operating Account ……………………………………………………………… 90

Payroll Account ………………………………………………………………… 90

LLC Account …………………………………………………………………… 91

Authorized Signers …………………………………………………………….. 91

Bank Reconciliations …………………………………………………………... 91

Cash Flow Management ……………………………………………………….. 92

Stale Checks ……………………………………………………………………. 92

Petty Cash ……………………………………………………………………… 92

Line of Credit ………………………………………………………………….. 92

Prepaid Expenses Accounting Treatment …………………………………………………………. 93

Procedures ……………………………………………………………………… 93

Property and Equipment

Capitalization Policy …………………………………………………………… 93

Contributed Assets …………………………………………………………….. 94

Equipment and Furniture Purchased with Federal Funds (A-110-34) ………… 94

Establishment and Maintenance of a Fixed Asset Listing ……………………. 95

Receipt of Newly Purchase Equipment and Furniture ……………………….. 95

Depreciation and Useful Lives ……………………………………………….. 95

Changes in Estimated Useful Lives …………………………………………… 96

Repairs of Property and Equipment …………………………………………… 96


Dispositions of Property and Equipment ……………………………………… 97

Write-Offs of Property and Equipment ……………………………………….. 97

POLICIES PERTAINING TO LIABILITY AND NET ASSETS ACCOUNTS

Accrued Liabilities Identification of Liabilities …………………………………………………….. 97

Accrued Leave …………………………………………………………………. 98

Notes Payable ………………………………………………………………….. 98

Recordkeeping …………………………………………………………………. 98

Accounting and Classification …………………………………………………. 98

Net Assets Classification of Net Assets ……………………………………………………. 99

Reclassifications from Restricted to Unrestricted Net Assets …………………. 99

Reclassification from Unrestricted to Restricted Net Assets ………………….. 100

Disclosures …………………………………………………………………….. 100

POLICIES ASSOCIATED WITH FINANCIAL AND TAX REPORTING

Financial Statements

Standard Financial Statements of the Organization …………………………… 100

Frequency of Preparation ……………………………………………………… 101

Review and Distribution ……………………………………………………….. 101

Budget Variance Analysis and Projections …………………………………….. 102

Annual Financial Statements …………………………………………………… 102

Trend Analysis …………………………………………………………………. 102

Government Returns Overview ……………………………………………………………………….. 103

Filling of Returns ………………………………………………………………. 103

Public Access to Information Returns …………………………………………. 104

FINANCIAL MANAGEMENT POLICIES

Budgeting Overview ……………………………………………………………………….. 105

Preparation and Adoption ………………………………………………………. 105

Monitoring and Performance …………………………………………………… 106

Budget and Program Revisions ………………………………………………… 106

Budget Modifications ………………………………………………………….. 107


Annual Audit

Role of the Independent Auditor ………………………………………………. 107

How Often to Review the Selection of the Auditor …………………………… 107

Selecting an Auditor …………………………………………………………… 108

Preparation for the Annual Audit ……………………………………………… 109

Concluding the Audit ………………………………………………………….. 109

Internal Audit

Overview and Process …………….…………………………………………… 111

Internal Audit Testing Summary ……………………………………………… 112

Insurance Overview ……………………………………………………………………… 113

Coverage Guidelines ………………………………………………………….. 113

Record Retention

Policy …………………………………………………………………………… 114

EXHIBITS

Exhibit #1 - Accounts Payable Chart ………………………………………………… 117

Exhibit #2 - Decision Analysis for Purchases Procedure ………………………………. 118

Exhibit #3 - Investment Policies ……………………………………………………….. 119

Exhibit #4 - Leases ……………………………………………………………………… 122

Exhibit #5 - Vending Machine …………………………………………………………. 125


Introduction

The Greater Lawrence Community Action Council, Inc. (GLCAC) is a private non-profit agency

incorporated under the statutes of the Commonwealth of Massachusetts on January 4, 1966. The

GLCAC is the anti-poverty agency for the communities of Lawrence, Methuen, Andover and

North Andover. It serves as the sponsor for programs dealing with employment and training,

education, welfare, consumer affairs, fuel assistance, weatherization, child services, recreation

and many other social services.

Mission Statement: Empowering the people of Greater Lawrence to achieve self-sufficiency.

The primary objective of this Accounting and Financial Policies and Procedures Manual is to

ensure the accurate and timely recording of all transactions in accordance with generally

accepted accounting principles (GAAP). Included in this objective is the assurance that all

program funds are expended and accounted for in a manner consistent with all grant

agreements and particularly in accordance with OMB A-110 and OMB A-122. The system of

internal controls also incorporates procedures to minimize the organization’s exposure to

waste, fraud, and abuse and to detect them should they occur.

GENERAL POLICIES

Organizational Structure

The Role of the Board of Directors

Greater Lawrence Community Action Council, Inc. is governed by its Board of Directors, which

is responsible for the oversight of the Organization by:

1. Planning for the future

2. Establishing broad policies, including financial and personnel policies and procedures

3. Approving grant applications when necessary

4. Reviewing and approving the annual audit

5. Reviewing financial information

6. Identifying and proactively dealing with emerging issues

7. Interpreting the Organization’s mission to the public

8. Soliciting prospective contributors

9. Hiring, evaluating, and working with the Executive Director

10. Establishing and maintaining programs and systems designed to assure compliance

with terms of contracts and grants

11. Authorizing establishment of all bank accounts and check signers.


The Executive Director shall be responsible for the day-to-day oversight and management of

GLCAC, Inc.

Committee Structure

The Board of Directors shall form committees in order to assist the board in fulfilling its

responsibilities. These committees are responsible for the review of particular programs and

providing recommendations to the full board. Standing board-level committees of GLCAC

consist of the following:

1. Executive Committee

2. Finance Committee

3. Audit Committee

4. Governance Committee

5. Planning and Evaluation Committee

6. Personnel committee

Finance Committee Responsibilities

The finance committee shall be composed of at least three (3) members, each of whom shall

have the requisite expertise and experience to perform the finance committee’s functions. The

Finance Committee is responsible for direction and oversight regarding the overall financial

management of GLCAC. Functions of the Finance Committee include:

1. Overseeing the preparation of the annual budget and financial statements

2. Overseeing the administration, collection, and disbursement of the financial resources of

the Corporation

3. Advising the Board with respect to significant financial decisions

4. Performing other duties as the Board may specify from time to time

The review of the Organization’s financial statements shall not be limited to the Finance

Committee, but shall involve the entire Board of Directors.

Audit Committee Responsibilities

The audit committee shall be composed of at least three (3) members a majority of whom shall

be directors and all of whom shall be financially literate. None of the audit committee members

may be employees of the Corporation or have a material financial interest in any entity doing

significant business with the Corporation. Subject to the supervision of the Board, the audit

committee shall be responsible for making recommendations to the Board regarding:

1. The Corporation’s corporate compliance policies

2. The selection, retention and termination of the independent auditor

3. The compensation of the auditor


4. Measures to ensure that the Corporation’s internal controls are documented by the

Corporation’s management and evaluated as part of the audit

5. The process by which the audit committee shall review the audit and the management

letter, if any, with the auditor and work with the auditors and the Corporation’s

management to resolve or recommend resolution to the Board of any issues of concern

arising from the audit or the management letter

6. Measures to ensure that any non-audit services provided by the auditing firm to the

Corporation meet legal requirements.

Prior to the Board’s consideration of an action on the independent auditor’s report, the audit

committee shall report to the Board on the results of the audit.

The Roles of the Executive Director and Staff

The Board of Directors hires the Executive Director, who reports directly to the board. The

Executive Director is responsible for hiring and evaluating executive staff and Division and

Program Directors for each of the Organization’s divisions. Each Program Director reports to the

Executive Director or his/her designee.

Division/Program Directors are responsible for hiring employees to work in that division with

approval from the Executive Director. All employees within a division shall report directly to

that division/department’s Director or Program Director, who shall be responsible for managing

and evaluating all employees within the division or department.

Accounting and Finance Department Overview

Organization

The accounting department consists of 9 staff who manage and process financial information for

GLCAC. The following positions comprise the accounting department:

Chief Financial Officer (CFO)

Controller

Payroll Administrator

Grant Manager (2)

Grant Manager/ Accounts Receivable Clerk

Senior Account Payable Bookkeeper

Accounts Payable Assistant

Finance Office Assistant

Other officers and employees of GLCAC who have financial responsibilities are as follows:


Executive Director (CEO)

Chief Operating Officer (COO)

Program Directors

Human Resources Department

Treasurer – Board level

Finance Committee – Board level

Audit Committee – Board level

Executive Committee – Board level

Full Board of Directors

Responsibilities

The primary responsibilities of the accounting department consist of:

General ledger

Budgeting

Cash and investment management

Asset management

Grants and contracts administration

Purchasing

Accounts receivable and billing

Cash receipts

Accounts payable

Cash disbursements

Payroll and financial management of benefits

Financial statement processing

External reporting of financial information

Bank reconciliation

Reconciliation of subsidiary ledgers

Compliance with government reporting requirements

Annual audit

Leases

Insurance

Risk assessment

Standards for Financial Management Systems

In accordance with OMB Circular A-110 (or 45 CFR Part 74), Uniform Administrative

Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and

Other Non-Profit Organizations, GLCAC maintains a financial management system that

provides for the following. Specific procedures to carry out these standards are detailed in the

appropriate sections of this manual.


1. Accurate, current, and complete disclosure of the financial results of each Federally-

sponsored project or program in accordance with the reporting requirements of A-110

and/or the award.

2. Records that identify adequately the source and application of funds for Federally-

sponsored activities. These records shall contain information pertaining to Federal

awards, authorizations, obligations, unobligated balances, assets, outlays, income, and

interest.

3. Effective control over and accountability for all funds, property, and other assets.

GLCAC shall adequately safeguard all such assets and assure they are used solely for

authorized purposes.

4. Comparison of outlays with budget amounts for each award. Whenever possible,

financial information shall be related to performance and unit cost data.

5. Written procedures to minimize the time elapsing between the transfer of funds to

GLCAC from the U.S. Treasury and the issuance or redemption of checks, warrants, or

payments by other means for program purposes by the recipient.

6. Written procedures for determining the reasonableness, allocability and allowability of

costs in accordance with the provisions of the applicable Federal cost principles (OMB

Circular A-122) and the terms and conditions of the award.

7. Accounting records including cost accounting records that are supported by source

documentation.

Business Conduct

Practice of Ethical Behavior

Unethical actions, or the appearance of unethical actions, are unacceptable under any conditions.

The policies and reputation of GLCAC depend to a very large extent on the following

considerations.

Each employee must apply her/his own sense of personal ethics, which should extend beyond

compliance with applicable laws and regulations in business situations, to govern behavior where

no existing regulation provides a guideline. Each employee is responsible for applying common

sense in business decisions where specific rules do not provide all the answers.

In determining compliance with this standard in specific situations, employees should ask

themselves the following questions:


1. Is my action legal?

2. Is my action ethical?

3. Does my action comply with GLCAC policy?

4. Am I sure my action does not appear inappropriate?

5. Am I sure that I would not be embarrassed or compromised if my action became known

within the Organization or publicly?

6. Am I sure that my action meets my personal code of ethics and behavior?

7. Would I feel comfortable defending my actions on the 6 o’clock news?

Each employee should be able to answer "yes" to all of these questions before taking action.

Each director, manager and supervisor is responsible for the ethical business behavior of her/his

subordinates. Directors, managers and supervisors must carefully weigh all courses of action

suggested in ethical, as well as economic terms, and base their final decisions on the guidelines

provided by this policy, as well as their personal sense of right and wrong.

Compliance with Laws, Regulations, and Organization Policies

Greater Lawrence Community Action Council, Inc. does not tolerate:

The willful violation or circumvention of any Federal, state, or local law by an employee

during the course of that person's employment;

The disregard or circumvention of GLCAC policy or engagement in unscrupulous

dealings.

Employees should not attempt to accomplish by indirect means, through agents or

intermediaries, that which is directly forbidden.

The performance of all levels of employees will be measured against implementation of the

provisions of these standards.


Fraud, Waste and Abuse Policy

Policy Statement

The Greater Lawrence Community Action Council, Inc. is committed to the responsible

stewardship of its resources and maintaining a comprehensive plan for detecting, preventing and

correcting fraud, waste and abuse. The GLCAC encourages any individual who is aware of, or

suspects acts of fraud, waste or abuse of GLCAC resources in any program, by any provider or

with any entity that GLCAC contracts with, to report such acts to the GLCAC Compliance

Officer. GLCAC does not tolerate fraudulent or other dishonest behavior and will take

appropriate investigative and corrective action upon receiving such reports.

Purpose

To explain the procedure for GLCAC staff, corporate officers, Board of Directors, senior

management, program directors, contractors, clients and related entities who wish to report

alleged acts of fraud, waste and abuse of GLCAC resources and to describe GLCAC’s procedure

for responding to such reports.

Definitions

Fraud: Fraud is an act that is committed knowingly, willfully, recklessly or intentionally. Fraud

may include, but is not limited to, the following:

Theft or misappropriation of funds, supplies, property or other resources,

Forgery or alteration of documents (whether financial or operational),

Unauthorized alteration of manipulation of computer files,

Falsification of reports to management or external agencies, and

Authorization or receipt of compensation for hours not worked or unfulfilled contract

requirements.

Waste: Waste is the intentional or unintentional, thoughtless or careless expenditure,

consumption, mismanagement, use, or squandering of resources to the detriment or potential

detriment of GLCAC but without an intent to deceive or misrepresent. Waste also includes

incurring unnecessary costs as a result of inefficient or ineffective practices, systems or controls.

Abuse: Abuse describes incidents or practices that either directly or indirectly results in

unnecessary costs that are wasteful to the GLCAC although it is not an intentional

misrepresentation. Abuse can occur in financial or non-financial settings. Abuse can be a

questionable practice which is inconsistent with accepted business policies and practices.


When to Report Fraud Waste or Abuse

GLCAC’s Program directors or staff with a reasonable basis for believing fraud or other

wrongful acts have occurred are responsible for reporting such incidents to the GLCAC

Compliance Officer. Other interested parties, clients or entities that GLCAC contracts with are

encouraged to report alleged acts of fraud, waste or abuse to the Commonwealth of

Massachusetts Inspector General by calling 1-800 322-1323.

It is not necessary to have proof of wrongdoing at the time of reporting dishonest or suspicious

activity; however, anyone reporting such activity must have reasonable grounds for doing so. If

wrongdoing is suspected, it should be reported immediately, without waiting to gather more

information. Investigations should only be conducted by the GLCAC’s Compliance Officer or at

the Compliance Officer’s direction.

How to Report Fraud, Waste or Abuse

Two options are available to GLCAC staff for reporting alleged fraud, waste or abuse. Concerns

may be reported as follows:

To the GLCAC’s Compliance Officer at 978 620-4706, and/or

To a supervisor of program director.

Supervisors or program directors who receive reports of alleged fraud from any person, should,

immediately contact the GLCAC’s Compliance Officer at 978 620-4706.

Do not confront or terminate the employment of a suspected employee or accept the resignation

of an employee who is suspected of or who admits to fraudulent or other gross misconduct.

Information Necessary for Reporting

The description of the alleged event or policy violation.

The date and location of the event or violation.

The identity of persons involved in alleged event or violations.

The names of any witnesses to events of violations

The name and method to contact the person reporting the event or violation to obtain

more details.

Investigations

Compliance investigations have the objectives of determining the facts, maintaining

confidentiality, determining responsibility and recommending corrective actions. The GLCAC’s

Compliance Officer will determine the best way to gather the information necessary to meet

these objectives. Investigations shall be completed by the Compliance Officer and completed

expeditiously, in a thorough manner and in accordance with established procedures. Prompt

follow-up investigation will be undertaken in response to GLCAC’s Compliance hotline


inquiries within two (2) weeks receiving the complaint. It is the duty of all individuals to

cooperate fully with those performing an investigation pursuant to this policy. For any

investigation GLCAC staff and/or any other parties with relevant information to an investigation

shall cooperate to work to ensure honest, effective and efficient working relationships with

GLCAC’s funding sources, regulatory agencies and law enforcement.

The Audit Committee of the Board of the Board of Directors shall address all reported concerns

or complaints regarding corporate accounting practices, internal controls or auditing. The

Compliance Officer shall immediately notify the Audit Committee of any such complaint and

work with the Committee until the matter is resolved.

Maintaining Confidentiality

Reasonable precautions will be taken to maintain the confidentiality of anyone who reports

violations of the law or of any GLCAC Inc. policy, even if no violations are later found.

Confidentiality will be afforded to both the person making the report as well as to the person

about whom the report is made. Anyone involved in conducting the investigation or in the

reporting of alleged violations must comply with confidentiality requirements. The GLCAC Inc.

Compliance Officer will maintain confidentiality to the fullest extent possible.

Protection against Reprisal

No reprisal will be taken against any staff member for making a good faith report of a violation.

Any instances of reprisal shall be reported to Human Resources for investigation. Employees and

subcontractors as whistleblowers are protected from retaliation under 31 U.S.C. 3730(h) foe

False Claim Act complaints.

Corrective Actions

Timely corrective actions will be taken as appropriate for misconduct or fraud, waste and abuse

discovered by or reported to the GLCAC. Documentation of corrective actions will be

maintained by the GLCAC’s Compliance Officer as appropriate and may include ramifications

should GLCAC and its staff fail to satisfactorily implement the corrective actions. Corrective

actions will be designed to correct the underlying problem that resulted in violation and prevent

future misconduct. The corrective action plan will be structured with timeframes so as to not

allow continued misconduct. The elements of the corrective action plan are to be detailed in a

written agreement that includes consequences should the violator fail to satisfactorily implement

the corrective action.

Protection of Records – Federal Matters

Greater Lawrence Community Action Council, Inc. prohibits the knowing destruction, alteration,

mutilation, or concealment of any record (including electronic records such as e-mails, electronic

files, etc.), document, or tangible object with the intent to obstruct or influence the investigation


or proper administration of any matter within the jurisdiction of any department or agency of the

United States government, or in relation to or contemplation of any such matter or case.

Violations of this policy will be considered violations of the Organization’s Code of Ethics and

subject to the investigative, reporting, and disclosure procedures described earlier in this Policy.

Internal Controls System

Policy

It is the intention of the GLCAC management and Board of Directors that GLCAC operates on a

“best practices” basis and that the highest of integrity and ethical values are reflected in the

actions of all those who are employed or associated with GLCAC.

GLCAC policies and procedures are intended to ensure reliable financial reporting, effective and

efficient operations, and compliance with laws and applicable regulations. GLCAC policies and

procedures are intended to integrate the internal controls needed to minimize risk of accounting

errors and waste, fraud, and abuse.

The GLCAC system of internal controls is based principles developed by the Committee of

Sponsoring Organizations of Treadway Commission generally known as COSO. In each area,

the organization has considered and incorporated as appropriate the key COSO elements of

Control Environment, Risk Assessment, Information/Communication, Control Activities, and

Monitoring.

Internal Audit Function

As part of the Agency’s commitment to the highest quality of internal accounting control, the

Agency conducts periodic internal testing of its core financial systems on a quarterly basis.

Testing is primarily conducted by qualified personnel under the supervision and review of senior

management. A more detailed description is included in Special Topics at the end of this

manual.

Security

Accounting Department

Greater Lawrence Community Action Council, Inc. corporate seals and blank check stock are

stored in a fireproof file cabinet in the Accounting Department. This cabinet is locked with a key

that is kept in the Accounting Department. Access to this file cabinet shall be by keys in the

possession of the CFO, the Controller and the Sr. Accounts payable Bookkeeper.


Petty cash is stored in a drawer locked with a key. The Petty Cash Custodian (Controller) and the

CFO are the only employees with keys to the petty cash drawer.

Access to Electronically Stored Accounting Data

GLCAC utilizes passwords to restrict access to accounting software and data. Only duly

authorized accounting personnel with data input responsibilities will be assigned passwords that

allow access to the system.

Accounting personnel are expected to keep their passwords secret and to change their passwords

on a regular basis. Administration of passwords shall be performed by a responsible individual

independent of programming functions. Passwords are changed on a regularly scheduled basis

every 180 days.

Each password enables a user to gain access to only those software and data files necessary for

each employee's required duties.

Storage of Back-Up Files

The IT department will ensure that all critical data including data and email is backed up every

night and stored in an alternate secure offsite location. All servers shall have a bare metal restore

(BMR) to ensure quick restoration in an event of a file server failure. All data backed up will

have a 30 day retention policy. GLCAC uses a hybrid onsite/offsite solution which backups all

the data onsite, then uploads the data to a storage device in the cloud. The IT director and

network coordinator have management rights to the backup. The IT director is the primary

administrator of the backup system. The IT Department conducts testing of its capability to

restore from backup media on a regular basis.

Storage of Sensitive Data

In addition to accounting and financial data stored in the Accounting Department, other sensitive

data, such as social security numbers of employees or clients, etc. may be stored in areas other

than the accounting department, such as in program, Human Resources offices, etc. Therefore,

the Organization:

1. Minimizes the storage of sensitive data outside the Accounting Department by shredding

documents with such data or deleting the sensitive data from documents that are stored

outside the Accounting Department whenever possible; and

2. Requires that all sensitive data that is stored in areas other than the Accounting

Department be secured in locked filing cabinets that are placed in offices that are locked

after hours.


3. H.R. employee files are kept within the Accounting Department and are secured daily.

The H.R. Director and the CFO have keys to file cabinets.

Further, the Agency restricts access to sensitive data to Agency employees only (no temporary

workers, contractors, or volunteers) and only to employees with a legitimate need for such

access. The Agency also requires employees to claim print jobs which contain sensitive

information immediately upon printing.

Destruction of Client Information

As stated earlier, all sensitive data must be securely stored and shredded when no longer needed.

GLCAC will also shred employees’ confidential information, consumer and providers’

information obtained by the Agency and no longer needed. Shredding will be performed on a

schedule determined by each department that possesses such data and the schedule shall be made

a part of the Record Retention policy

Accounting System Overview

Methodology

GLCAC operates a computerized accounting system and utilizes the full accrual method of

accounting whereby revenue is recorded when earned and expenses are recorded when incurred.

GLCAC operates on a program fund accounting practice. A program fund is an independent

accounting record having separate asset, liability, revenue, expenditure and fund balance

accounts for each grant or contract. All monies received or expended by GLCAC must be

classified and defined in accordance with any special regulations, restrictions or limitations as

specified by the grant or contract.

All ledgers are maintained in a manner which will facilitate the preparation of internal and

external reports. The following books of account are utilized by the Greater Lawrence

Community Action Council, Inc. to record transactions:

General Ledger

The general ledger is the collection of all asset, liability, net assets, revenue and expense

accounts. It is used to accumulate all financial transactions and is supported by subsidiary

ledgers that provide details for certain accounts. The general ledger is the foundation for the

accumulation of data and production of reports.


Each GLCAC program has a separate general ledger containing appropriate program accounts.

All transactions are posted to the General Ledger during the monthly accounting cycle.

General Journal

The GLCAC maintains a general journal to record transactions, to adjust general ledger accounts

and to accrue expenses.

Accounts Receivable Journal

All invoices billed to and cash received from funding sources are posted to the Accounts

Receivable Journal. Since a full accrual system is utilized revenue is posted in the period it is

earned. When cash is received from funding sources the receipt is posted in the Accounts

Receivable Journal. The journal Contains the source of the funds, description, the date of the

receipt or invoice, the invoice number or check number, the amount of the invoice or receipt and

the program account to be credited. Copies of invoices billed to funding sources are kept in

duplicate in an open accounts receivable file until they are received. Two copies of the receipt

are maintained for documentation purposes. One copy is attached to the original invoice to the

funding source and the other copy is attached to the bank deposit made to the GLCAC, Inc.

Operating account.

Cash Receipts Journal

Miscellaneous cash receipts that are not billed to funding sources are processed through the

Master Module Cash Receipts Journal. The journal contains the date of the receipt, the source of

the funds, description, date of deposit, the account to be credited and the amount received.

Accounts Payable Purchase Journal

The GLCAC utilizes an encumbrance system for budgeting purposes. When a program places

an order and the order is received, the packing slip is attached to the purchase order, the purchase

order is receipted by the Account Payable Bookkeeper and the invoice payable to the vendor is

generated. These purchases are posted to the Accounts Payable Purchase Journal. Since a full

accrual system is utilized, expenditures are recognized in the period they are incurred. The

journal contains the invoice date, invoice number, description, invoice amount, due date and the

general ledger account to be charged.

Cash Disbursement Journal

The module contains the date of the disbursement, check number, the payee, amount of

disbursement, description and the general ledger account to be debited.


Chart of Accounts

The chart of accounts is the framework for the general ledger system and the basis for the

accounting system. The chart of accounts consists of account titles and account numbers

assigned to the titles. General ledger accounts are used to accumulate transactions and the impact

of these transactions on each asset, liability, net asset, revenue, expense, and gain and loss

account.

Distribution of Chart of Accounts

All GLCAC employees involved with account coding or budgetary responsibilities will be issued

a current chart of accounts. As the chart of accounts is revised, an updated copy of the chart of

accounts shall be promptly distributed to these individuals.

Control of Chart of Accounts

The CFO monitors and controls the chart of accounts, including all account maintenance, such as

additions and deletions. Any additions or deletions of accounts should be approved by the CFO,

who ensures that the chart of accounts is consistent with the Organizational structure of GLCAC

and meets the needs of each division and department.

Account Definitions

General Ledger

Account Range Category Definition

10000 -16101 Assets Assets are probable future economic benefits obtained or

controlled by the Organization as a result of past

transactions or events. Assets are classified as current

assets, fixed assets, contra-assets, and other assets.

Current assets are assets that are available or can be made

readily available to meet the cost of operations or to pay

current liabilities. Some examples are cash, temporary

investments, and receivables that will be collected within

one year of the statement of financial position date.

Fixed assets (property and equipment) are tangible assets

with a useful life of more than one year that are acquired

for use in the operation of the Organization and are not held

for resale.


Contra-assets are accounts that reduce asset accounts, such

as accumulated depreciation and reserves for uncollectible

accounts receivable

Other assets include long-term assets that are assets

acquired without the intention of disposing them in the near

future. Some examples are security deposits, property and

long-term investments.

20000 -25101 Liabilities Liabilities are probable future sacrifices of economic benefits

arising from present obligations of the Organization to

transfer assets or provide services to other entities in the

future as a result of past transactions or events. Liabilities are

classified as current or long-term.

Current liabilities are probable sacrifices of economic

benefits that will likely occur within one year of the date of

the financial statements or which have a due date of one year

or less. Common examples of current liabilities include

accounts payable, accrued liabilities, short-term notes

payable, and deferred revenue.

Long-Term Liabilities are probable sacrifices of economic

benefits that will likely occur more than one year from the

date of the financial statements.

3000 – 3999 Net Assets Net Assets is the difference between total assets and total

liabilities.

40000 - 42060 Revenues Revenues are inflows or other enhancements of assets, or

settlements of liabilities, from delivering or producing

goods, rendering services, or other activities that constitute

an organization’s ongoing major or central operations.

Revenues include grants and contracts received from

government agencies, private foundations and corporations,

fees for program services, and contributions received from

donors.

50000 – 58200 Expenses Expenses are outflows or other activities using assets, or

incurrences of liabilities from delivering or producing

goods, rendering services, or carrying out other activities

that constitute GLCAC’s ongoing major or central

operations.


Changes to the Chart of Accounts

The CFO and/or the Controller shall approve additions to, deletions from, or any other changes

to the standard chart of accounts.

Fiscal Year of GLCAC, Inc.

GLCAC shall operate on a fiscal year that begins on October 1 and ends on September 30. Any

changes to the fiscal year of the Agency must be ratified by majority vote of GLCAC’s Board of

Directors.

Accounting Estimates

GLCAC utilizes numerous estimates in the preparation of its interim and annual financial

statements. Some of those estimates include:

1. Useful lives of property and equipment

2. Fair market values of investments

3. Fair market values of donated assets

4. Values of contributed services

5. Joint cost allocations

6. Allocations of certain indirect costs

7. Allocations of time/salaries

The CFO will reassess, review, and approve all estimates yearly. All key conclusions, bases, and

other elements associated with each accounting estimate shall be documented in writing. All

material estimates, and changes in estimates from one year to the next, shall be disclosed to the

Finance Committee, the Audit Committee, and the external audit firm.

Journal Entries

All general ledger entries that do not originate from a subsidiary ledger shall be supported by

documentation and references detailing the requirement of the entry. At a minimum these

references must include Vendor name, Invoice number, Reference date, Check number if

applicable, etc.

Examples of such journal entries are:

1. Recording of noncash transactions

2. Corrections of posting errors

3. Non-recurring accruals of income and expenses

Certain journal entries, called recurring journal entries, occur in every accounting period. These

entries may include, but are not limited to:


1. Depreciation of fixed assets

2. Amortization of prepaid expenses

3. Accruals of recurring expenses

Recurring journal entries shall be supported by a schedule associated with the underlying asset or

liability account or, in the case of short-term recurring journal entries or immaterial items, a

journal voucher.

All journal entries not originating from subsidiary ledgers need to be validated and posted by the

CFO or the Controller.

POLICIES ASSOCIATED WITH REVENUES AND CASH

RECEIPTS

Revenue

Revenue Recognition Policies

GLCAC receives revenue from several types of transactions. Revenue from each of these types

of transactions is recognized in the financial statements in the following manner:

1. Grant income - Monthly accrual based on incurrence of allowable costs (for cost-

reimbursement awards) or based on other terms of the award (for fixed price, unit-of-

service, and other types of awards).

2. In-Kind Contributions – Recognized as income when received. (See below the section

titled “Cost Sharing and Matching”).

3. Program Income – Includes refunds and other applicable credits, and is recognized as a

reduction in expenditures in the period in which it is received or as an off-set to program

revenue.

4. Nongovernmental Cash Contributions - Recognized as income when received, unless

accompanied by restrictions or conditions (see the next section on contribution income).

Immaterial categories of revenue may be recorded on the cash basis of accounting (i.e., recorded

as revenue when received) as deemed appropriate by the CFO.


Definitions

The following definitions shall apply with respect to the policies described in this section:

Contribution: An unconditional transfer of cash or other assets to the Organization, or a

settlement or cancellation of the Organization's liabilities, in a voluntary nonreciprocal transfer

by another entity or individual.

Condition: A donor-imposed stipulation that specifies a future and uncertain event whose

occurrence or failure to occur gives the promisor a right of return of the assets it has transferred

to the Organization or releases the promisor from its obligation to transfer its assets.

Restriction: A donor-imposed stipulation that specifies a use for the contributed asset that is

either limited to a specific future time period or is more specific than the broad limits resulting

from the nature of the Organization, the environment in which it operates, and the purposes

specified in the Articles of Incorporation and Bylaws. Restrictions on the use of an asset may be

temporary or permanent.

Non-reciprocal Transfer: A transaction in which an entity incurs a liability or transfers assets to

GLCAC without directly receiving value in exchange.

Promise to Give: A written or oral agreement to contribute cash or other assets.

Exchange Transaction: A reciprocal transaction in which GLCAC and another entity each

receive and sacrifice something of approximately equal value.

Administration of Government Awards

Definitions

GLCAC may receive financial assistance from a donor/grantor agency through the following

types of agreements:

Grant: A financial assistance award given to the Organization to carry out its programmatic

purpose.

Contract: A mutually binding legal agreement where the Organization agrees to provide

supplies or services and the funder agrees to pay for them.

Cooperative Agreement: A legal agreement where the Organization implements a program with

the direct involvement of the funder.


Throughout this manual, Federal assistance received in any of these forms will be referred to as a

Federal “award.”

Preparation and Review of Proposals

Individual programs are responsible for preparing a Case for Support for any new proposals for

projects that the program intends to pursue, according to the Request to Pursue Funding Process

Guidelines. Applications for the renewal of existing grants or contracts and non-competitive

grants or contracts should also be completed at the program level. The Director of Development

& Planning will provide a budget template to be utilized to create the grant budget. Proposal

budgets should be prepared in collaboration with the assigned Grant Manager and reviewed and

approved by the CFO. All proposals shall be reviewed by the Director of Development &

Planning prior to submission to the funder. Final proposals shall be approved by the Executive

Director.

Post-Award Procedures

After an award has been made, the following steps shall be taken:

1. The Controller receives the award information from the Planning department. The

Controller reviews the award for the type and source of funding, time periods, etc. It is at

this time that a determination is made if the funding is that of a Federal nature. It is the

responsibility of the Controller to locate a Catalog of Federal Domestic Assistance

(CFDA) number for the award. If unable to locate a CFDA number on the contract or

grant, the Controller must contact the funding source directly to retrieve this number.

2. The Controller then determines which Grant Manager receives the new award based on

what type of services the award provides.

3. The grant manager reviews the award, verifying the specifications of the grant or contract

with the Program Director, reviewing the terms, time periods, budget and expected

expenditures associated with the award. All reporting requirements under the contract or

award shall be summarized.

4. The Grant Manager establishes a master file for each grant or contract. The file contains

the approved grant or contract, the final signed award document and all fiscal

correspondence to and from the funding source. In addition, all programmatic reports

shall reside in the master file, and is the responsibility of the Program Director to submit

all non-financial reports to the Grant manager so that the file is complete.


Compliance with Laws, Regulations and Provisions of Awards

GLCAC recognizes that as a recipient of Federal funds, the Organization is responsible for

compliance with all applicable laws, regulations, and provisions of contracts and grants. To

ensure that the Organization meets this responsibility, the following policies apply with respect

to every grant or contract received directly or indirectly from a Federal agency:

1. For each Federal award, an employee within the department responsible for administering

the award will be designated as "Grant Manager.”

2. Each Grant Manager shall attend a training on grant management prior to beginning

his/her role as a grant manager (or as early in their functioning as a grant manager as

practical). Thereafter, all grant managers shall attend refresher/update courses on grant

management every two years.

3. The Grant Manager shall take the following steps to identify all applicable laws,

regulations, and provisions of each grant and contract:

a. Read each award and prepare a summary of key compliance requirements and

references to specific laws and regulations.

b. Review the “OMB Circular A-133 Compliance Supplement" (updated annually)

published by the Office of Management and Budget (OMB) for compliance

requirements unique to the award and for compliance requirements common to all

Federal awards.

c. Review the section of the Catalog of Federal Domestic Assistance (CFDA)

applicable to the award.

d. The grants manager will communicate grant requirements to those who will be

responsible for carrying them out, or impacted by them.

4. The CFO or the Controller shall forward copies of applicable laws regulations to the

grant manager (such as OMB Circulars, pertinent sections of compliance supplements,

and other regulations).

5. The Grant Manager and/or the Controller shall identify and communicate any special

changes in policies and procedures necessitated by Federal awards as a result of the

review of each award.

6. The Grant Manager shall take all reasonable steps necessary to identify applicable

changes in laws, regulations, and provisions of contracts and grants. Steps taken in this

regard shall include, but not be limited to, reviewing subsequent grant and contract

renewals, reviewing annual revisions to the “OMB Circular A-133 Compliance

Supplement,” and communications with Federal awarding agency personnel.


Close Out of Federal Awards

GLCAC shall follow the close out procedures described in OMB Circular A-110 and in the grant

agreements as specified by the granting agency.

GLCAC and all sub-recipients shall liquidate all obligations incurred under the grant or contract

within 90 days of the end of the grant or contract agreement.

Cost Sharing and Matching (In-kind)

Overview

GLCAC values contributed services and property that are to be used to meet a cost sharing or

matching requirement at their fair market values at the time of contribution, unless award

documents or Federal agency regulations identify specific values to be used.

GLCAC shall claim contributions as meeting a cost sharing or matching requirement of a Federal

award only if all of the following criteria are met:

1. They are verifiable from GLCAC records.

2. They are not included as contributions for any other Federally-assisted project or

program.

3. They are necessary and reasonable for proper and efficient accomplishment of project or

program objectives.

4. They are allowable under OMB Circular A-122.

5. They are not paid by the Federal government under another award, except where

authorized by Federal statute to be used for cost sharing or matching.

6. They are provided for in the approved budget when required by the Federal awarding

agency.

7. They conform to all provisions of OMB Circular A-110.


8. In the case of donated space, (or donated use of space), the space is subject to an

independent appraisal to establish its value.

Volunteer Time and Services

Volunteer services furnished by professional and technical personnel, consultants, and other

skilled and unskilled labor will be included in in-kind if the services are an integral and

necessary part of the program. Examples of contributed services received and recorded as

income and expense by GLCAC include: mental health consultation services, ESOL instructor

services, medical and dental services, etc.

Volunteer services will be valued at rates consistent with those paid for similar work in the

Agency. For skills not found in the Agency, rates will be consistent with those paid for similar

work in our labor market. Rates should include gross hourly wages plus fringe benefits

calculated based on fringe benefits received by employees in similar positions, or on agency

average.

Volunteers must possess qualifications and perform work requiring those skills in order to be

valued at greater than an unskilled labor rate.

GLCAC requires volunteers to document and account for their contributed time in a manner

similar to the timekeeping system followed by employees. Each program that uses volunteers

will provide the volunteers a sign-in sheet which collects the following information:

Date service was performed

Volunteer name and address

Hours donated

Service provided

Signature of volunteer

Signature of supervisor

Reporting Volunteer Hours

Program Directors must submit a monthly report documenting volunteer hours and donated

services to their Grant Manager. The documentation described above should be kept within the

Division along with copy of the report.

Donated Supplies

Donated supplies must be used in the program and shall be valued at fair market value at the time

of donation. Supplies can be counted as match only if the program would have purchased such

items itself.


Billing/Invoicing Policies

Overview

The Organization’s primary sources of revenue are:

Reimbursement grants – billed monthly, or as funders require, based on allowed, incurred

expenses

Fee-for-service income – billed according to contract requirements based on number of

units of services provided

Responsibilities for Billing and Collection

GLCAC’s Accounting Department is responsible for the invoicing of funding sources (with the

exception of Child Care and Head Start) and the collection of outstanding receivables.

Once accounts payable is closed, Grant Managers prepare monthly invoicing to funding sources

and enter the Account Receivable in the subsidiary ledger. The cost reimbursement programs

are billed to recover allowable expenses incurred for the month. Fee for service programs are

billed based on total number of units or slots serviced reimbursed at the negotiated rate allowed

in the contract.

Other lesser sources of income such as transportation fees, meal charges or Child Care and Head

Start fees will be collected and recorded when the services are provided. These weekly client

fees are collected weekly and remitted to the finance office where the funds are deposited

immediately in the GLCAC, Inc. Operating Account. State and or Federal regulations govern

the arrearage and termination of clients due to outstanding receivables. The CFO reserves the

right to review program collections and monitor program fee processes.

It is the responsibility of the Program Billing Coordinator to remit Account Receivable aging

information on client fee collections to the GLCAC, Inc. Accounting Department. GLCAC, Inc.

programs maintain all information on client fee information.

Billing and Financial Reporting

GLCAC strives to provide management, staff and funding sources with timely and accurate

financial reports applicable to Federal awards. These reports include monthly and cumulative

expenditures, a project budget, and a balance remaining column.


GLCAC shall prepare and submit financial reports as specified by the financial reporting clause

of each grant or contract award document. Preparation of these reports shall be the responsibility

of Grant Manager subject to review and approval by CFO.

The following policies shall apply to the preparation and submission of billings to Federal

agencies under awards made to GLCAC:

1. The Organization will request reimbursement after expenditures have been incurred,

unless an award specifies another method.

2. GLCAC will strive to minimize the time between receipt and disbursement of grant

funds.

3. Each award normally specifies a particular billing cycle. Therefore, a schedule is

established for each grant and contract to ensure that reimbursement is made on a timely

basis along with any other reporting that is required in addition to the financial reports.

4. Requests for reimbursement of award expenditures will use the actual amounts as posted

to the general ledger as the source for all invoice amounts.

5. All financial reports required by each Federal award will be prepared and filed on a

timely basis. To the extent GLCAC’s year-end audit results in adjustments to amounts

previously reported to Federal agencies, revised reports shall be prepared and filed in

accordance with the terms of each Federal award.

GLCAC shall maintain separate billing records in addition to the official general ledger

accounting records. Billing records shall be reconciled to the general ledger on a monthly basis.

At the time invoices (requests for reimbursement) are prepared, revenue and accounts receivable

shall be recorded on the books of GLCAC by the Grant Manager.

If a Federal award authorizes the payment of cash advances to GLCAC, the CFO may require

that a request for such an advance be made. Upon receipt of a cash advance from a Federal

agency, GLCAC shall reflect a liability equal to the advance. As part of the monthly close-out

and invoicing process, the liability shall be reduced, and revenue recognized, in an amount equal

to the allowable costs incurred for that period.

Accounts Receivable Entry Policies

Individuals independent of the cash receipts function shall post customer invoices, credit

adjustments, and other adjustments to the accounts receivable subsidiary ledger.


Classification of Income and Net Assets

All income received by GLCAC is classified as "unrestricted,” with the exception of the

following:

1. Grants and other awards received from government agencies or other grantors, which are

classified as temporarily restricted.

2. Special endowments received from donors requesting that these funds be permanently

restricted for specific purposes.

From time to time, GLCAC may raise other forms of contribution income which carry

stipulations that the Agency utilize the funds for a specific purpose or within a specified time

period identified by the donor of the funds. When this form of contribution income is received,

GLCAC shall classify this income as Temporarily Restricted income.

As with all Temporarily Restricted net assets, when the restriction associated with a contribution

has been met (due to the passing of time or the use of the resource for the purpose designated by

the donor), GLCAC will reclassify the related net assets from "Temporarily Restricted" to

"Unrestricted" in its Statement of Financial Position and reflect this reclassification as an activity

in its Statement of Activities.

From time-to-time, the GLCAC Board of Directors may determine that it is appropriate to set

funds aside for specific projects. Such funds shall be classified as “unrestricted,” labeled

“Board-Designated,” and reported as a separate component of unrestricted net assets.

Cash Receipts

Overview

Cash (including checks payable to the Agency) is the most liquid asset an organization has.

Therefore, it is the objective of GLCAC to establish and follow the strongest possible internal

controls in this area to ensure that all cash receipts are safeguarded, deposited intact, and recorded

timely to the proper general ledger account and grant source.

Corporate Cash Receipts Procedures

Most funds received by GLCAC, Inc. funding sources are received via Electronic Funds Transfer

(EFT). However, there are occasions when checks are received from Non-Governmental

funding sources, terminated employees, foundations, etc.


The following procedures will be followed by the staff listed to process checks and cash received

in the mail:

Accounting Staff

1. Finance Office Assistant opens mail and restrictively endorses checks with "For Deposit

Only" stamp.

2. Account Payable Assistant enters the check received on a check receipt log noting date

received, source of funds, check number and amount of check.

3. Account Payable Assistant gives check to either CFO or Controller to review.

4. CFO or Controller returns check to Account Payable Assistant with details on deposit

information of check, i.e. program check applies to, which account to deposit check to,

etc.

5. Account Payable Assistant makes two (2) copies of all checks and either prepares manual

deposit in duplicate or scans checks to bank for deposit.

6. Accounts Payable Assistant delivers the deposit ticket and checks to the employee

authorized to make the deposits for GLCAC on that day, if preparing a manual deposit.

Delivers a copy of the deposit ticket to the Controller.

7. Accounts Payable Assistant delivers the copy of the deposit ticket and checks to the

Accounts Receivable clerk who pulls back-up documentation from the Account

Receivable subsidiary file if monies were from an Account Receivable funder. The

Account Receivable clerk then enters the bank deposit and cash receipt into the

accounting system

Note: Cash receipts, regardless of their form, (currency, check etc.) are retained in a secured location

until deposited into a bank account. All cash receipts are expected to be deposited the day of receipt

but within 24 hours of receipt.

Accounts Receivable Clerk

1. Records the cash receipts in either the Accounts Receivable Journal or Master

Module Cash Receipts Journal whichever is appropriate, ensuring that all cash receipts

are accounted for.

2. Attaches the copy of the checks to the copy of the deposit ticket and to the bank receipt

received from the authorized deposit employee.


Authorized Deposit Employee

1. Deposits all cash receipts and returns the receipt to the CFO for assurance that all

deposits were made in the correct amount.

Controller

1. The Controller matches the deposit ticket to the underlying documentation to assure that

the deposit was made intact.

Timeliness of Bank Deposits

Bank deposits will be made on a daily basis by electronic scanning of checks using the bank’s

on-line banking services. Cash deposits will be done on a daily basis as needed.

Reconciliation of Deposits

On a monthly basis, the CFO, who does not prepare the initial cash receipts listing or bank

deposit, shall reconcile the listings of receipts to bank deposits on the monthly bank statement.

Any discrepancies shall be immediately investigated.

Petty Cash

All sites maintain an imprest petty cash fund of approximately $100 to $250. All funds are

maintained in a locked box under the control of the Program Director or a designated senior staff

person. The Program Director is responsible for ensuring that expenditures are in accordance

with agency policies and allowable purchases. Petty cash cannot be used for personal loans.

Except in unusual circumstances, all expenditures from petty cash are expected to be under $50.

All expenditures must be documented by the agency petty cash voucher and sales slips or similar

proof of expenditure. Sales tax is not an allowed cost for petty cash reimbursement as GLCAC

is a tax-exempt entity. If an employee receiving petty cash does not turn a receipt justifying the

use of the funds, the employee will be responsible to reimburse GLCAC the undocumented

amount.

Replenishment of Petty Cash Funds

Replenishment of petty cash is performed as needed using the Petty Cash fund replenishment

form, reviewed and signed by the Program Director or designated staff person. All vouchers and

supporting documentation is forwarded to the grants manger that reviews for allowability and

adequate documentation and submission to Accounts Payable. The Senior Accounts Payable

Bookkeeper reviews and enters the expenses accordingly. Reimbursement checks are prepared

using standard check preparation procedures.


Grants Receivable Management

Procedure to Record Grants Receivable

GLCAC records grants receivable and income as follows:

1. GLCAC, Inc. records grants receivable when invoicing a funding source based on

expenses incurred for the period. The receivable and revenue is recorded at the

same time. This method of invoicing is prepared on a monthly basis with a Cost

Reimbursement contract. The Grant Receivable and Program Revenue are

recognized in the period in which it is earned.

2. GLCAC, Inc. records grants receivable when invoicing a funding source based on

units of services provided for the period. The receivable and revenue is recorded

at the same time. This method of invoicing is prepared on a monthly basis with a

Unit Rate or Fee-for-Service contract. The Grant Receivable and Program

Revenue are recognized in the period in which it is earned.

Accounts Receivable Management

Monitoring and Reconciliations

Accounts On a monthly basis, the Accounting Department will reconcile a detailed accounts

receivable report (showing aged, outstanding invoices by customer) to the general ledger. The

CFO will review the reconciliation and ensure that all differences are immediately investigated

and resolved.

Credits and Other Adjustments to Accounts Receivable

From time to time, credits against accounts receivable from transactions other than payments and

bad debts will occur. Examples of other credits include returned products and adjustments for

billing errors. The Controller will process credits and adjustments to Accounts Receivable, and

all credits shall be authorized by the CFO.

Accounts Receivable Write-Off Authorization Procedures

All available means of collecting accounts receivable will be exhausted before write-off

procedures are initiated. Write-offs are initiated by the department associated with the amount to


be written off, in conjunction with the Accounting Department. If an account receivable is

deemed uncollectible, the following approvals are required before the write-off is processed:

Amount Authorized in writing by

Less than $1,500 Controller

$1,500 or more CFO

Once a write-off has been processed, appropriate individuals in the originating department will

be advised so that further credit is not granted and to update the master list of bad accounts.

Customers listed as poor credit risks will be extended future credit only if the back debt is paid

and the customer is no longer deemed a collection problem.

If write-off procedures have been initiated, the following accounting treatment applies:

1. Current year invoices that are written off will either be charged against an appropriate

revenue or revenue adjustment account, or against the original account credited.

2. Invoices written off that are dated prior to the current year will be written off against net

assets.

POLICIES ASSOCIATED WITH EXPENDITURES AND

DISBURSEMENTS

Guidelines and Overview

Purpose

To establish the appropriate procurement method to be used for goods and services to be

purchased. The allowable methods comply with agency, state and federal regulation

requirements, particularly OMB A-110. All purchases will have to meet the following criteria:

1. Necessary to the program

2. Allowable (OMB A-112)

3. Allocable to the program

4. Reasonable

GLCAC requires the practice of ethical, responsible, and reasonable procedures related to

purchasing, agreements and contracts, and related forms of commitment. The policies in this


section describe the principles and procedures that all staff shall adhere to in the completion of

their designated responsibilities.

The goal of these procurement policies is to ensure that materials and services are obtained in an

effective manner and in compliance with the provisions of applicable Federal statutes and

executive orders.

Responsibility for Purchasing

All Program Directors or their designees shall have the authority to initiate purchases on behalf

of their program, within the guidelines described here. Program Directors shall inform the

Accounting Department of all individuals that may initiate purchases or prepare purchase orders.

The Accounting Department shall maintain a current list of all authorized purchasers.

The Accounting Department shall be responsible for processing purchase orders. The CFO has

approval authority over all purchases and contractual commitments, and shall make the final

determination on any proposed purchases where budgetary or other conditions may result in

denial. Purchases of electronic or computer equipment, capital expenditures or purchases over

$5,000 must be approved by the Executive Director. Limits of approvals are included elsewhere

in this manual.

Ethical Conduct

[Ref: Code of Conduct in Procurement OMB Circular 2 CFR 215.42 (A-110)]

Ethical conduct in managing the Greater Lawrence Community Action Council, Inc.'s

purchasing activities is absolutely essential. Staff must always be mindful that they represent the

Board of Directors and share a professional trust with other staff and the general membership.

Staff shall discourage the offer of, and decline, individual gifts or gratuities of value in any

way that might influence the purchase of supplies, equipment, and/or services. Staff shall

notify their immediate supervisor if they are offered such gifts.

No officer, board member, employee, or agent shall participate in the selection or

administration of a vendor if a real or apparent conflict of interest would be involved. Such a

conflict would arise if an officer, board member, employee or agent, or any member of

his/her immediate family, his/her spouse/partner, or an organization that employs or is about

to employ any of the parties indicated herein, has a financial or other interest in the vendor

selected.

Officers, board members, employees, and agents shall neither solicit nor accept gratuities,

favors, or anything of monetary value from vendors or parties to sub-agreements.

Unsolicited gifts of a nominal value may be accepted with the approval of the Executive

Director/CEO. "Nominal value" is $50 or less per instance and $150 or less per calendar

year.


Senior staff must disclose any known conflicts of interest and agree to abide by this policy by

signing the Code of Conduct policy adopted as part of the GLCAC, Inc.'s Procurement

Standards. Senior staff are those employees involved in the award, selection and

administration of a contract, including, but not limited to, the selection of vendors that

provide goods and services to the GLCAC, Inc. or its delegate agencies.

Procurement Procedures

Procurement Guidelines

The following are GLCAC’s procurement guidelines:

1. GLCAC shall avoid purchasing items that are not necessary for the performance of the

activities required by a Federal award. (A-110_44(1))

2. Where appropriate, an analysis shall be made of lease and purchase alternatives to determine

which would be the most economical and practical procurement for the Federal government.

(A-110_44(2)) This analysis should only be made when both lease and purchase alternatives

are available to the program.

3. Some form of cost or price analysis shall be made for every procurement over $5,000. Price

analysis may be made in various ways, including comparison of price quotations submitted

or market prices. Cost analysis is the review and evaluation of each element of cost to

determine reasonableness, allocability, and allowability. (A-110_45)

4. Documentation of the cost and price analysis associated with each procurement decision shall

be retained in the procurement files pertaining to each Federal award. (A-110_46)

5. For all procurements in excess of the small purchase acquisition threshold of $5,000,

procurement records and files shall be maintained the include all of the following:

a. The basis for contractor selection.

b. Justification for lack of competition when competitive bids or offers are not obtained.

c. The basis for award cost or price.

6. GLCAC shall make all procurement files available for inspection upon request by a Federal

awarding agency.

7. All contracts with vendors shall require the vendor to certify in writing that it has not been

suspended or disbarred from doing business with any Federal agency. (Alternatively, the

Organization may research potential vendors on the Excluded Parties List at the GSA\

website.)


All staff members with the authority to approve purchases will receive a copy of and be familiar

with A-110, federal cost principles.

Use of Purchase Orders

GLCAC utilizes a purchase order system. A properly completed purchase order shall be required

for each purchase decision (i.e., total amount of goods and services purchased, not unit cost). A

properly completed purchase order shall contain the following information, at a minimum:

1. Specifications or statement of services required

2. Vendor name, address, point of contact and phone number

3. Source of funding and account number

4. Delivery or performance schedules

5. Delivery, packing and transportation requirements

6. Special conditions (if applicable)

7. Catalog number (if applicable)

8. Net price per unit, less discount, if any

9. Total amount of order

10. Authorized signature

11. Date purchase order was prepared

A Purchase Order will not be needed in the following cases: petty cash reimbursements, travel

advances and expense reimbursements, insurance invoices, contract payments, utility bills, food

invoices, and fuel assistance payments.

Authorizations and Purchasing Limits

All completed purchase orders must be signed by the preparer and approved by the program or

division director. The following table displays required approvals and solicitations:

Amount of Purchase Required Approvals Required Solicitation

< $5,000 Program Director, Grant Manager, CFO 2 quotes, catalogue o price list

$5,000 ≤ $25,000 Program Director, Grant Manager, CFO,

Executive Director

3 written quotes

$25,001 ≤ $100,000 Program Director, Grant Manager, CFO,

Executive Director

3 written bids

> $100,000 Program Director, Grant Manager, CFO,

Executive Director, Board of Directors

3 written bids

The Executive Director is authorized to enter into any contract on behalf of GLCAC. Contracts

of $5,000 or less must be reviewed and approved by the Program Director, the Grant Manager,

the CFO and the Executive Director. These policies shall also apply to renewals of existing

contracts.


Invoices

Invoices for the purchase of goods and services should be dated when received and stamped and

signed by the Sr. Accounts Payable Bookkeeper to verify review and by the Controller to verify

approval for payment.

Aggregated Cost Procurement Guidelines

Policy

It is the Program Director’s responsibility to determine a cost estimate for the purchase in the

aggregate. “In the aggregate" means the total amount through single or multiple purchases of the

item. For example, if you are purchasing milk for the nutrition program and you make 40

purchases per year at $200 per purchase the aggregate amount would total $8,000. Program

Directors or designee must submit a Cost Estimate and Description Form detailing the

information for the purchase. These guidelines must be followed:

Goods and Services under $5,000 in the Aggregate

If the cost estimate is less than $5,000 in the aggregate, the Program Director does not have to

submit a written Cost Estimate and Description.

Procurement procedures will follow the “Small Purchases” procedures outlined elsewhere in this

procedures manual.

Goods and Services over $5,001 but less than $25,000 in the Aggregate

1. If the cost estimate is greater than $5,001 but less than $25,000 in the aggregate the Program

Director must submit a written Cost Estimate and Description to the CFO.

2. The CFO reviews the Description and Cost Estimate to determine the reasonableness and

allowability of the purchase.

3. The CFO will use the cost quote method of procurement.

Consumable items under $5,000

Items costing less than $5,000 and a useful life of less than 1 year are categorized as consumable

property. Every year the CFO or designee will conduct a pricing market analysis on all

consumable items.


Purchases of consumable property, goods and services costing less than $5,000 in the aggregate

will follow the small purchase procedures described elsewhere in this manual.

Consumable Items over $5,001 but less than $25,000 in the Aggregate

Purchase of expendable property over $5,001but less than $25,000 follows the same procedures

as Goods and Services over $5,001but less than $25,000.

1. If the cost estimate is greater than $5,001 but less than $25,000 in the aggregate the Program

Director must submit a written Cost Estimate and Description to the CFO.



3. The CFO will use the cost quote method of procurement.

Capital Property between $5,001and $25,000

1. Capital property is an article of property having a useful life of at least 1 year and an

acquisition cost greater than $5,001.

2. For all purchases of capital property, the Program Director (authorized manager) must submit

a written Cost Estimate and Description, obtain three cost quotes, and follow further

procurement steps outlined elsewhere in this procedures manual.

Capital Property over $25,001

Purchase of capital property over $25,001 follows the same procedures as Goods and Services

over $25,001.

1. If the cost estimate is greater than $25,001 in the aggregate the Program Director must

submit a written Cost Estimate and Description to the CFO.



3. The CFO selects the appropriate method of procurement, i.e., sealed bid, competitive

proposal or non-competitive proposal method of procurement outlined elsewhere in this

procedures manual.


4. SUMMARY

Description Method

Written

Cost

Estimate

Required

?

Cost Quote

Form (3

quotes)

Required?

Sealed bid,

competitive

proposal/non-

competitive

proposal?

Written

Inventory

Maintained?

Goods and

Services less

than $5,000 in

the aggregate

Small

Purchase

Procedures

No No No No

Goods and

Services

greater than

$5,001 but less

than $25,000 in

the aggregate

Cost Quote Yes Yes No No

Consumable

Items less than

$5,000 in the

aggregate

Small

Purchase

Procedures

No No No

Yes, if over

$1,000 per

item

Consumable

Items greater

than $5,001but

less than

$25,000 in the

aggregate

Cost Quote Yes Yes No

Yes, if over

$1,000 per

item

Capital property

between $5,001

and $25,000

Cost quote

procedures Yes Yes No Yes

Capital

Property greater

than $25,001

Bid/Proposal

Procedures Yes No Yes Yes


Procurement Consulting/Contractor Agreements

Policy

1. It is the intent of GLCAC that all contractor service agreements will conform to existing state

and federal regulations while meeting the needs of GLCAC.

2. All contractor service agreements must be executed and signed by the Executive

Director/CEO.

3. It is GLCAC’s policy that no employee (i.e., on the GLCAC payroll) may also be hired as an

independent contractor. Any work performed by an employee outside his/her regular duties

will be paid through the payroll system.

4. GLCAC strictly adheres to the policy that work performed by individuals must be

categorized as either employees or independent contractors based on IRS guidelines and that

Program Directors should be familiar with the difference.

5. The Program Director is responsible for obtaining and submitting the required information,

monitoring the contractor's activities, and reviewing and submitting contractor invoices to the

Finance Office.

6. Work may not begin under a contract until the written contract is signed.

Contracts

The following procedure should be followed for all contracts processed at GLCAC.

1. All contracts will be prepared with three signed copies, one for the contractor, one for the

Program Director, and one maintained in the Finance Office.

2. The Program Director forwards all originals to the Grant Manager to verify funding and

expense allocation. The Grant Manager initials the contract(s) and forwards to the CFO

for reasonableness, review, and approval. The CFO forwards all contracts to the

Executive Director for review and approval.

3. All approved contracts are forwarded to the Accounts Payable Assistant who creates the

purchase order.


4. GLCAC will accept contracts either created by the contractor or using the GLCAC

standard contract form. All contracts will include at least the following items and

conditions:

a. A description of the parties to the contract.

b. The effective date of the agreement (which cannot precede the date the contract is

executed.)

c. Scope of service that describes the services provided in detail.

d. Compensation describing the amount and method of payment.

e. Requirement of invoices from the contractor with detailed descriptions of time

periods and work performed consistent with the description of services.

f. Cancellation terms of the contract prior to the expiration date, if any, and making the

contract subject to the availability of funds if appropriate. If a contractor violates any

federal, state or local laws, or regulations that govern GLCAC’s funding sources, the

Agency may terminate the contract immediately.

g. W-9 Form completed by the Contractor or Service Provider if not an incorporated

company.

Note: For contractors that are not established vendors in the GLCAC vendor master file, the

Program Director is responsible for obtaining the information and submitting the New

Vendor Setup Form.

Procurement - Small Purchase Method

The Small Purchase Procedures are used for purchases of goods, services, and consumable

property less than $5,000.

Policy

To ensure that all purchases are allowable under contract agreements and the expenditure is both

reasonable and necessary to accomplish the program objective. Allowability is governed by

OMB A-110 and OMB A-122, the Cost Principles Governing Non-Profits, and specific

restrictions in grants/government programs. The agency follows the same procedures for non-

program related purchases (with Authorized Managers substituting for Program Directors).

To ensure that purchases are accurately recorded as to amounts, coding of general ledger

accounts, and timeliness.

To ensure that only valid and authorized payables are recorded and paid.


Procedure to Process Small Purchases

1. Program Directors and Grants Managers are expected to fully understand and follow

allowability and procurement rules as required by GLCAC policy, the award contract

requirements, state and federal rules (as applicable), especially OMB A-110 and A-122.

2. Program Directors may delegate preparation of Supply/Services Requests to designated

employees, but only Program Directors and Assistant Directors can approve the

Supply/Services Request. Once the Program Director has signed off on the request and

Grants Manager has approved the Supply/Services Request for funding and allowability the

request is forwarded to the CFO for approval. If approved, the request is then forwarded to

the Accounts Payable Assistant to create a purchase order in duplicate; one copy to return to

the program and the other to attach to the original request to be matched up later with the

packing slip and vendor invoice.

3. All program related purchases require a Supply/Services Request Form signed by the

Program Director and approved by the Grants Manager and the CFO before a purchase order

can be issued.

4. All purchases must use the organization’s Essex Street Office as the “Bill To” address,

regardless of the office or program for which the purchase is made, and regardless of how the

purchase order is communicated to the vendor (mail, phone, internet, etc.)

5. All purchase orders require a pre-approved vendor within the Blackbaud software accounts

payable system.

A new vendor can only be set up by authorized personnel and if applicable, a W-9

attached.

Anyone requesting a new vendor approval must fill out the New Vendor Request

Personnel and submit it to the Accounting Department for validation, approval,

and setup.

Supply/Services Request Form Approval Process

The following process should be followed by the staff here listed to process and approve all

supply/services requests:

Program Director Authorization

The Program Director is required to review and approve/sign (with date) all supply/services

requests related to his/her program. In signing off the request form, the Program Director is

asserting that he/she has reviewed and approved as follows:


a. The vendor is an approved vendor within the Blackbaud accounts payable system.

Otherwise, the Grants Manager will not approve the request.

For new vendors, the Program Director is responsible for approval and submission to the

accounting department of the New Vendor Request form and obtaining any additional

information required (proof that the vendor is valid, a signed W-9 from the vendor, etc. as

may be required in the circumstances).

b. The account code and program code are correct.

c. The request has the appropriate back-up (catalogue/brochure/quote, etc., depending on

the circumstances of the purchase).

a. The expenditure is a budgeted expense.

b. The remaining budgeted funds indicated are accurate and sufficient for this expenditure

c. The expenditure is necessary for/appropriate to the program

d. The expenditure is an allowable expense – and allocable to the program - under the terms

of the program/grant and OMB A-122.

e. The expenditure is “reasonable” as to price and quantity.

Grants Manager Review and Approval

The Grants Manager is required to review and approve/sign (with date) all supply/services

requests related to his/her program. In signing off the request form, the Grants Manager is

asserting that he/she has reviewed and approved as follows:

a. The vendor is an approved vendor within the Blackbaud system.

b. The Program Director is an authorized approver.

c. The account code and program code are correct.

d. The request has the appropriate back-up (catalogue/brochure/quote, etc., depending on

the circumstances of the purchase, proof of payment if this is a reimbursement).

e. The remaining budgeted funds indicated are accurate and sufficient for this expenditure

f. The stated reason for the expenditure must be transparent and the amount appear

reasonable for the program.

g. The expenditure is an allowable expense – and allocable to the program - under the terms

of the program/grant and OMB A-122 (to their best knowledge).

Accounts Payable Assistant

The Accounts Payable Assistant issues the actual purchase orders. It is the responsibility of the

Accounts payable Assistant to review the requisition for appropriate vendor address, proper

authorizations, and payment method before issuing the purchase order.


Procurement - Cost Quote Method

Procedure

The Cost Quote method is used for consumable items and capital property between $5,001 and

$25,000. When using this procurement method, the following procedures must be followed:

Program Director (Authorized Manager)

1. The Program Director (authorized manager for non-program related purchases) must submit

a written Cost Estimate and Description.

2. The Program Director (authorized manager) obtains three (3) cost quotes. The quotes must

meet the description and must be in writing. Catalog prices can serve as a written quotation.

3. The Program Director (authorized manager) completes the Cost Quotation Form, attaches

written cost quotes, and makes recommendation based on price or provide justification for not

accepting the lowest cost.

4. The Program Director submits all documentation to the Grants Manager for approval as to

allowability, etc. and assurance that the funding source has approved the item(s) for purchases

requiring pre-approval. The Grants Manager approves and forwards to the CFO.

Note: for non-program acquisitions, the requesting authorized manager forwards the documentation to

CFO.

CFO

1. Reviews the Cost Estimate and Description and Cost Quotation Form and approves or

disapproves it.

2. Ensures that pre-approval criteria have been satisfied.

3. Signs, dates, and forwards the documentation to the Purchasing clerk who issues the

purchase order.

Account Payable Assistant

1. The Accounts Payable Assistant issues the purchase order and notes the item(s) in the

property log for further documentation when the items are received.


Receipt and Acceptance of Goods

Procedure

Each individual program within the Greater Lawrence Community Action Council, Inc. is

responsible for receipt and acceptance of goods for purchases made from vendors. Because

GLCAC, Inc. maintains various operating sites, responsibility for receipt of goods is maintained

at the program level. It is the responsibility of each program to designate a minimum of two (2)

staff people at each site responsible for receipt of purchases from vendors. The designated staff

person receiving the goods must be separate from the person responsible for purchasing the

goods. This staff person shall inspect all goods received. Upon receipt of any item from a

vendor, the following actions shall immediately be taken:

2. Review bill of lading for correct delivery point

3. Verify the quantity of boxes/containers with the bill of lading

4. Examine boxes/containers for exterior damage and note on the bill of lading any

discrepancies (missing or damaged boxes/containers, etc.)

5. Sign and date the bill of lading

6. Remove the packing slip from each box/container

7. Compare the description and quantity of goods per the purchase order to the packing slip

8. Examine goods for physical damage and make any notes for adjustments on the packing slip

for the Accounts Payable department.

9. Count or weigh items, if appropriate, and record the counts on the purchase order

This inspection must be performed in a timely manner to facilitate prompt return of goods and/or

communication with vendors. The packing slip and the bill of landing are then forwarded

immediately to the Accounts Payable department where it is to be attached to the original

purchase order awaiting the invoice from the vendor.

Procurement - Property/Equipment

This section provides applicable policies and procedures for the procurement, record-keeping,

and disposition of property furnished or acquired in whole or in part under contracts supported

by federal and state grant funds. The primary references are from OMB A-110 and A-122.


Note: These guidelines apply to Federal Grants. For state grants, if a state statute differs from

these policies, the statute governs.

Definitions

a. Capital or Non-expendable property

(i) Equipment is defined as non-expendable tangible personal property having a

useful life of more than one year and an acquisition cost “which equals or exceeds

the lesser of the capitalization level established by the non-profit organization for

financial statement purposes, or $5000.”

(ii) Other non-expendable property includes capital expenditures for purchase of – or

improvements to - land, buildings, or equipment which materially increase the

value or useful life.

b. Consumable or Expendable Property is defined as an article of property having a useful life

of less than one year and an acquisition cost of less than $5,000 per unit.

Purchases of program-related equipment or other capital expenditures for non-expendable

property require “prior approval”. Because the definition of ‘prior approval’ can be somewhat

vague, it is GLCAC’s policy to attempt to obtain specific authorization for equipment purchases

in addition to emphasis in program budgets approved by the granting source.

Acquisition Cost

Acquisition cost is defined as the net invoice unit price of an item of equipment, including the

cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it

usable for the purpose for which it was acquired. Cost can also include freight and installation

where such costs are more than incidental.

Title

Title to both expendable and non-expendable personal property (e.g., equipment) acquired shall

be vested with GLCAC. The funding source maintains a reversionary interest in it, whereby they

may require GLCAC to transfer title to the property.

Use of Property

GLCAC may use property acquired under a grant agreement as long as there is a need for the

property to accomplish the purpose of the program, regardless of whether the program continues

to be supported by the funding source from which the equipment was acquired.

When there is no longer a need for the property to accomplish the purpose of a program, GLCAC

shall use the property in connection with other programs supported by other funding sources.


The funding source continues to have a reversionary interest in the property and could at its

discretion require transfer of title.

Disposition of Property

a. FMV less than $5,000. In accordance with OMB Circular A-110 (revised 05/30/94) property

with a Fair Market Value (FMV) less than $5,000 and no further use can be retained,

disposed of, or sold with no further obligation to the funding source.

b. FMV over $5,000. Equipment with a Fair Market Value (FMV) in excess of $5,000 cannot

be sold or disposed of without prior approval from the funding source. Upon approval, the

equipment must be sold within one hundred twenty (120) days and proceeds of the sale must

be reimbursed to the funding source. GLCAC is allowed to keep $500 or 10% of the

proceeds whichever is greater.

These guidelines apply to Federal Grants. If a state statute differs then the statute will govern.

Recordkeeping - Property Ledger

Property records are kept on both expendable and non-expendable equipment with an acquisition

cost of $1,000 or more. The records are kept in the Finance Office. The property records

contain the following:

Product description

Identification number

Program

Acquisition date

Funding source

Vendor

Acquisition cost

Purchase order number

Check number

Disposal history

Transfer history

Physical Inventory

A physical inventory is conducted every two (2) years to verify the need, existence and

utilization of equipment. The results of the inventory are reconciled with the property records.

Any differences between quantities determined by the physical inspection and those shown in the

property records shall be investigated to determine the reason for the discrepancy.

Note : the employees maintaining the inventory records do not take the physical inventory in

order to maintain segregation of duties internal control. Generally, the finance department


employees maintain the records, and those taking the physical will be non-finance department

employees.

Property Control

Each Program Director is responsible for adequately safeguarding their program's property. No

property can be transferred or disposed without the approval of the Executive Director/CEO.

Requests to transfer or dispose of property must be made in writing to the Executive

Director/CEO who will make the determination. The approval is then transferred to the CFO

who will update the property records. If any property is moved without the approval of the

Executive Director/ CEO the Program Director will be held accountable. Please refer to the

Physical Inventory section.

All property is insured for replacement value to safeguard our assets.

Procurement Process for Sealed Bid, Competitive Proposal or Non-

Competitive Proposal Methods

All purchases of goods, services, expendable and non-expendable property greater than $25,000

must follow these procedures.

Determining the Selection Method

The CFO

1. Reviews the description and cost estimate to determine the reasonableness and allowability

of the purchase.

2. Selects the appropriate method of procurement:

a. Sealed Bid - Advertisement of an "Invitation for Bid" (IFB) establishing certain

conditions. The award must be made to the lowest bidder.

b. Competitive Proposal - Advertisement of a “Request for Proposal" (RFP) establishing

certain conditions. The award is based upon multiple criteria, including but not limited to

price.

c. Non-competitive Proposal - Commonly referred to as a sole source proposal, a situation

where only one (1) bid is received or one (1) source is solicited. Non-competitive


proposals must be used only when items or services being purchased are only available

from a single source or an emergency exists. All non-competitive proposals must be

authorized by the funding source.

Preparation of Bid/Proposal Package

The Program Director/Authorized Manager, in consultation with members of senior

management, is responsible for the following tasks for preparing the bid/proposal package and

awarding the proposal.

1. Prepares the scope of work to be solicited.

2. Establishes a time frame for solicitation which includes:

a. Date and time period for advertisement, if applicable

b. Closing date for receipt of bids/proposals

c. Opening date of bids/proposals.

3. Establishes minimum requirements and evaluation criteria.

4. Prepares the bid/proposal package which includes:

a. Cover Sheet (closing and opening date)

b. Instructions for Bid/Proposal submission

i. Conditions of Proposal

ii. Inquiries

iii. Instructions to prospective contractors

iv. Right to reject or accept all bids/proposals

v. Minimum requirements

vi. Evaluation criteria

c. Statement of work specifications on materials to be purchased.

d. Work Quality Standards

e. Period of Contract

f. Bid/Proposal Form

Additional considerations:

1. Affirmative Action steps must include giving preference to minority and women-owned

business enterprises and small businesses. These affirmative action requirements are in

accordance with OMB A-110.

2. GLCAC, Inc. shall make awards only to responsible contractors possessing the ability to

perform successfully under the terms and conditions of proper procurement. Consideration

must be given to such matters as contractor integrity, compliance with public policy, record

of past performance and financial and technical resources.


3. Minimum requirements cannot be unreasonable or excessive. For example, The Department

of Health and Human Services has ruled that certain geographic conditions are unreasonable

and serve to restrict competition.

Solicitation of Bids/Proposals

Purpose: To establish a standard method of advertising procurement activities to ensure

maximum open and free competition.

The Program Director/Authorized Manager, in consultation with the CFO, is responsible for

ensuring that the following tasks are completed. Some tasks may be delegated to a project

assistant.

1. The Program Director or designee prepares the advertisement for newspaper and submits the

advertisement for review to CFO.

2. After approval, the Program Director or designee submits the advertisement to newspaper

and posts advertisement.

3. The Program Director or designee secures documentation of advertisement (i.e., copy of

newspaper ad)

4. The Program Director or designee notifies all individuals on the bidders list for solicitation, if

applicable. A bid list can be created for the solicitation of bids if desired.

5. The Program Director or designee records the name of individuals or firms requesting

bid/proposal packages. The date the request was received and the date the package was sent

should be recorded.

Bidders’ Conference

If a bidders’ conference is required, the Program Director/Authorized Manager will prepare the

technical information required and conduct it. The following are required,

1. Provide sign-in sheet for bidders’ conference and ensures all individuals sign.

2. Records minutes of bidders’ conference.

Receipt of Bids/Proposals

Purpose: To establish procedures to be followed to assure equal treatment of all prospective

bidders.


All sealed bids should be sent to the attention of the Executive Director. The Executive

Assistant will complete the following steps:

1. Receives sealed bids/proposals and logs them into the bid/proposal control sheet.

Information required on the sheet will include the name of individual or firm, date of receipt

and time.

2. Each bid/proposal will be stamped with the date, time of receipt and initialed by the person

receiving the bid.

3. Bids/proposals will be maintained in a secure location until time of opening.

4. Returns all bids received after the closing date, unopened, to bidder including a letter of

explanation as to the reason it was returned.

Bid/Proposal Opening

Purpose: To evaluate the bids/proposals submitted, select the contractor and award the contract.

An authorized member of senior management is responsible for the following:

1. Conducts bid opening. Opening can be public or private.

2. For public bid openings, "IFB’s" (Invitation for Bids), the bid amounts will be announced at

the opening. For proposals "IFP's" (Invitation for Proposals), the individual or firm name

will be announced.

Bid/Proposal Evaluation

Senior management will be responsible for creating an appropriate evaluation panel, generally

made up of the CFO, Program Director and an administrative staff member (excluding Executive

Director/CEO), and scheduling the meeting of the evaluation panel.

The Evaluation Panel

1. Evaluates bids/proposal for compliance with all requirements.

2. Evaluates the responsive bid/proposals based on the cost criteria established in the

bid/proposal package.

3. Grades each responsive proposal using either a point system or cost system established in the

bid/proposal package.


4. Submits the name, bid/proposal amount and justification for selection of the individual/firm

selected for contract award to Executive Director/CEO for approval.

Upon approval of the Executive Director/CEO, the CFO will:

1. Obtains Certification of Insurance, as applicable.

2. Obtains copy of all required licenses, as applicable.

3. Verifies that the insurance meets requirements, as applicable.

4. Secures fully executed contract between agency and successful contractor/bidder.

5. Provides written notification to unsuccessful bidders.

6. Schedules debriefing conference for unsuccessful bidders based on individual requests.

Additional Information

1. These Policies provide standards of conduct for employees to avoid conflict of interest.

2. Responsive bidder is a bidder who meets all requirements identified in the bid proposal

opening.

3. The contract is not awarded at the time of the public bid/proposal opening.

Debriefing Conference

A debriefing conference may be held at the request of bidders. A sample format for a debriefing

conference is as follows.

1. Schedule date and time of debriefing conference with unsuccessful contractors.

2. Inform unsuccessful contractors of the following:

a. Points for each criterion of unsuccessful contractors bid.

b. Dollar amount of successful contractor.

c. Unsuccessful contractors will have the opportunity to review all bids and their

evaluations, however, no copies are allowed to leave the GLCAC. All bids are the

property of GLCAC.


Protest Procedures

Purpose: To provide specific actions which will be taken should a protest be filed by an

unsuccessful bidder.

The Protester must file a written complaint within ten (10) working days after notice of rejection.

Complaint should be addressed to Executive Director/CEO. Protest Format will contain the

following:

a. Notice of protest and specific reasons for filing the protest. A detailed statement of the

grounds for protest.

b. A specific request for a ruling and a statement of the relief requested.

If this information is not furnished, the GLCAC, Inc., may refuse to consider the protest.

GLCAC senior management forms a protest committee made up of the Executive Director/CEO,

CFO and Program Director to review the complaint. The Protest Committee will set up the

following process:

1. Conducts meeting to review complaint within ten (10) working days of the receipt of protest.

3. Records minutes of protest committee meeting.

4. Issues a decision within five (5) working days of the meeting.

5. Notifies protester of the decision of the committee.

Records Management

Purpose: To detail the required information that must be maintained in the bid/proposal process,

and protest (if applicable) to ensure proper documentation.

Bid Proposal File

The CFO in consultation with Senior Management is responsible for establishing and

maintaining the bid/proposal file which includes:

1. Cost Estimate and approval to proceed with the procurement.

2. Documentation of advertisement

3. Bid/Proposal package

4. List of individuals attending bidders conference, if applicable

5. Minutes of bidders conference, if applicable

6. List of individuals evaluating the bids received

7. Evaluation forms of all bids

8. Recommendation and justification for selection of successful bidder


9. Copy of rejection letters to unsuccessful bidder.

10. Copy of award letter to successful bidder.

Contractor Files

The Program Director/Authorized Manager is responsible for maintaining contractor files which

include

1. Bid/Proposal

2. Copy of Service Contract

3. Certificate of Insurance

4. Licenses, if applicable

5. Performance Evaluations

Protest Files

The Accounting Department is responsible for maintaining a protest file which includes:

1. List of protest committee members

2. Copy of protest

3. Copy of protest committee correspondence, meeting minutes and work papers.

Affirmative Consideration of Minority, Small Business & Women-

Owned Businesses (A-110_44(3)(b))

Policy

The Greater Lawrence Community Action Council, Inc. continues to give preference to business

certified by the State Office of Minority and Women Business Assistance (SOMWBA) regarding

its bidding process.

In seeking bids for goods or services, GLCAC makes a concerted effort to notified SOMWBA

certified business on the Commonwealth of Massachusetts Operational Services Division Prime

Bidders listing. The list can be accessed at

http://www.mass.gov/Eoaf/docs/osd/sdo/sdp/20guidance.doc

Positive efforts shall be made by GLCAC to utilize small businesses, minority-owned firms, and

women's business enterprises, whenever possible. Therefore, the following steps shall be taken:

1. Ensure that small business, minority-owned firms, and women's business enterprises are

used to the fullest extent practicable. (A-110_44(3)(b)(1))


2. Make information on forthcoming opportunities available and arrange time frames for

purchases and contracts to encourage and facilitate participation by small business,

minority-owned firms and women's business enterprises. (A-110_44(3)(b)(2))

3. Consider in the contract process whether firms competing for larger contracts tend to

subcontract with small businesses, minority-owned firms and women's business

enterprises. (A-110_44(3)(b)(3))

4. Encourage contracting with consortiums of small businesses, minority owned firms and

women's business enterprises when a contract is too large for one of these firms to handle

individually. (A-110_44(3)(b)(4))

5. Use the services and assistance, as appropriate, of such organizations as the Small

Business Administration and the Department of Commerce's Minority Business

Development Agency in the minority-owned firms and women's business enterprises. (A-

110_44(3)(b)(5))

6. Provide training to Program Directors on the advantages of contracting with minority

owned business enterprises.

Charging of Costs to Federal Awards

Overview

GLCAC charges costs that are reasonable, allowable, and allocable to a Federal award directly or

indirectly. All unallowable costs shall be appropriately segregated from allowable costs in the

general ledger in order to assure that unallowable costs are not charged to Federal awards.

Segregating Unallowable from Allowable Costs

The following steps shall be taken to identify and segregate costs that are allowable and

unallowable with respect to each Federal award:

1. The budget and grant or contract for each award shall be reviewed for costs specifically

allowable or unallowable.

2. Accounting personnel shall be familiar with the allowability of costs provisions of OMB

Circular A-122, "Cost Principles for Non-Profit Organizations," particularly:

3. The list of specifically unallowable costs found in Attachment B (Selected Items of Cost),

such as alcoholic beverages, bad debts, contributions, fines and penalties, lobbying, etc.


4. Those costs requiring advance approval from Federal agencies in order to be allowable in

accordance with Attachment B, such as foreign travel, equipment purchases, etc.

5. No costs shall be charged directly to any Federal award until the cost has been

determined to be allowable under the terms of the award and/or OMB Circular A-122.

6. For each Federal award, an appropriate set of general ledger accounts (or account

segments) shall be established in the chart of accounts to reflect the categories of

allowable costs identified in the award or the award budget.

7. All items of miscellaneous income or credits, including the subsequent write-offs of

uncashed checks, rebates, refunds, and similar items, shall be reflected for grant

accounting purposes as reductions in allowable expenditures if the credit relates to

charges that were originally charged to a Federal award or to activity associated with a

Federal award. The reduction in expenditures shall be reflected in the year in which the

credit is received (i.e., if the purchase that results in the credit took place in a prior

period, the prior period shall not be amended for the credit).

Criteria for Allowability

All costs must meet the following criteria from A-122, Attachment A, in order to be treated as

allowable direct or indirect costs under a Federal award:

1. The cost must be “reasonable” for the performance of the award, considering the

following factors:

a. Whether the cost is of a type that is generally considered as being necessary for

the operation of the Organization or the performance of the award;

b. Restraints imposed by such factors as generally accepted sound business

practices, arm’s length bargaining, Federal and state laws and regulations, and the

terms and conditions of the award;

c. Whether the individuals concerned acted with prudence in the circumstances;

d. Consistency with established policies and procedures of the Organization,

deviations from which could unjustifiably increase the costs of the award.

2. The cost must be “allocable” to an award by meeting one of the following criteria:

a. The cost is incurred specifically for a Federal award;

b. The cost benefits both the Federal award and other work, and can be distributed in

reasonable proportion to the benefits received; or

c. The cost is necessary to the overall operation of the Organization, except where a

direct relationship to any particular program or group of programs cannot be

demonstrated.


3. The cost must conform to any limitations or exclusions of OMB Circular A-122 or the

Federal award itself.

4. Treatment of costs must be consistent with policies and procedures that apply to both

Federally financed activities and other activities of the Organization.

5. Costs must be consistently treated over time.

6. The cost must be determined in accordance with generally accepted accounting principles.

7. Costs may not be included as a cost of any other Federally financed program in the

current or prior periods.

8. The cost must be adequately documented.

Direct Costs

Direct costs include those costs that are incurred specifically for one award or non-Federal

function. GLCAC identifies and charges these costs exclusively to each award or program.

Each invoice is attached to the corresponding P.O. which shall be coded with the appropriate

account number reflecting which program received direct benefit from the expenditure.

Time sheets or personnel activity reports are also submitted on a regular basis, reflecting

employees' work and which programs directly benefited from their effort. Time sheets or

personnel activity reports shall serve as the basis for charging salaries directly to Federal awards

and non-Federal functions. See the Payroll section of this manual for detailed procedures.

Equipment purchased for exclusive use on a Federal award and reimbursed by a Federal agency

shall be accounted for as a direct cost of that award.

Indirect and Joint Costs

Indirect costs are those that have been incurred for common or joint objectives and cannot be

readily identified with a particular grant or program. Joint costs benefit more than one, but not

necessarily all, awards, and are allocated by the use of a Cost Allocation Plan. Indirect costs, but

not joint costs, may be allocated to benefiting grants through the use of an indirect cost rate.

Examples of indirect costs are:

The Accounting Department

The Human Resources Department

The Board of Directors

Examples of joint costs are:


Shared space

Vehicle insurance

Per Federal guidelines, each grant will be charged its fair share of costs. Any costs not

reimbursed by a particular funding source will be charged to corporate or other funds that may

cover indirect or joint costs after the allocation process is complete.

Indirect Cost Rate Proposal

Upon the completion of the agency fiscal year on September 30th

, the GLCAC, Inc has until

March 31st

of the subsequent year to submit an indirect cost rate proposal to Health and Human

Services. Once the audit is completed, all costs are categorized as direct or indirect. Direct costs

are those that can be identified specifically with a particular final cost objective. Indirect costs

are those that have been incurred for common or joint objectives and cannot be readily identified

with a particular final cost objective. Indirect cost rate is determined by dividing the total indirect

costs into the total direct costs. Certain direct costs are excluded from total direct cost base.

These costs include direct services to clients, in-kind contributions, CSBG expenses, and

depreciation on federally-funded assets.

Cost Allocation Plan

In addition to an indirect cost rate proposal, the GLCAC, Inc. also completes a cost allocation

plan. The purpose of the cost allocation plan is to summarize, in writing, the methods and

procedures that the GLCAC, Inc. will use to allocate costs to various programs, grants, contracts

and agreements.

OMB Circular A-122, “Cost Principles for Non-Profit Organizations,” establishes the principles

for determining costs of grants, contracts and other agreements with the Federal Government.

GLCAC, Inc.’s Cost Allocation Plan is based on the Direct Allocation method described in OMB

Circular A-122. The Direct Allocation Method treats all costs as direct costs except general

administration expenses. General administration expenses are put into an indirect cost pool and

allocated to programs through an approved indirect cost rate.

Direct costs are those that can be identified specifically with a particular final cost objective.

Indirect costs are those that have been incurred for common or joint objectives and cannot be

readily identified with a particular final cost objective.

Only costs that are allowable, in accordance with the cost principles, will be allocated to

benefiting programs by GLCAC, Inc.

General Approach

The general approach of GLCAC, Inc. in allocating costs to particular grants and contracts is as

follows:

1. All allowable direct costs are charged directly to programs, grants, and activities.


2. Allowable direct costs that can be identified to more than one program are prorated

individually as direct costs using a base most appropriate to the particular cost being

prorated.

3. All allowable general and administrative costs (costs that benefit all programs and cannot be

identified to a specific program) are allocated to programs, grants, etc. through an approved

indirect cost rate.

Specific Elements of Costs

The following information summarizes the procedures that will be used by GLCAC, Inc. to

allocate specific costs to grants and programs.

1. Salaries - Documented with timesheets showing time distribution for all employees and

allocated based on time spent on each program or grant. Salaries and wages are charged

directly to the program for which work has been done. Costs that benefit more than one

program will be allocated to those programs based on the percentage of time spent in

each program.

a. Payroll Taxes and Fringe Benefits (SUI, FICA, Worker’s Compensation MA

Health Tax, Pension, Life Insurance, Dental Insurance, Health Insurance, and

Employee Assistance) are allocated in the same manner as salaries and wages.

b. Vacation, holiday, personal time and sick pay are allocated in the same manner as

salaries and wages.

2. Travel Costs - Allocated based on the purpose of travel. All travel costs (local and out-

of-town) are charged directly to the program for which the travel was incurred. Travel

costs are not allocated to grants and programs based on salary allocation rather they are

allocated to grants and programs by the activity for which that travel was completed.

3. Consultants & Contract Services (expenses such as consultants, accounting and

auditing services) - Allocated to the program benefiting from the service. All

professional service costs are charged directly to the program for which the service was

incurred. Costs that benefit more than one program will be allocated to those programs

based on an appropriate base. For example, a consultant whose services benefit both

Head Start and Early Head Start would be allocated to each program based on the

percentage of children that benefit from those services. Costs that benefit all programs

(such as audit costs) will be allocated to programs through an approved indirect cost rate.

4. Occupancy & Related Space Costs - Allocated based upon square footage. Facilities

costs for the headquarters at 305 Essex Street are pooled into a separate fund. Those costs

are allocated to programs that utilize space in that facility through a usage fee. The usage

fee is calculated by the ratio of square footage used by each program to the total square

footage. Interest expense is not allocable to federal programs that do not have an


ownership interest in the facility at 305 Essex Street.

5. Consumable Supplies - Allocated based on usage. Expenses used for a specific program

will be charged directly to that program. Costs that benefit more than one program will

be allocated to those programs based on an appropriate base. For example, supplies that

benefit both Head Start and Early Head Start would be allocated to each program based

on the percentage of children that benefit from those services. Supply Costs that benefit

all programs and are used to support the Administration of the GLCAC, Inc. will be

allocated to programs through an approved indirect cost rate.

6. Equipment Purchases - Allocated to programs benefitting from the use of the

equipment. All equipment costs are charged directly to the program that benefits from the

use of that equipment. Equipment costs that benefit more than one program will be

allocated to those programs based upon an appropriate base. For example, equipment that

benefits both Head Start and Early Head Start would be allocated to each program based

on the percentage of children that benefit from those services. Equipment costs that

benefit all programs (such as copiers) and are used to support the Administration of the

GLCAC, Inc. will be allocated to programs through an approved indirect cost rate.

7. Staff Training – Allocated to the programs that benefit from that training. Costs that

benefit more than one program will be allocated to those programs based upon an

appropriate base. Training costs that benefit all programs and are used to support the

Administration of the GLCAC, Inc. will be allocated to programs through an approved

indirect cost rate.

8. Insurance - Insurance needed for a particular program is charged directly to the program

requiring the coverage. For example, the cost of general liability insurance for a building

that strictly services the Head Start program would be allocated entirely to the Head Start

Program. Other insurance coverage that benefits all programs (such as Directors &

Officers Insurance) is allocated to programs through an approved indirect cost rate.

9. Telephone/Communications - Long distance calls are charged to directly to the

programs that made the calls. The current vendor does provide an itemized billing for

each location, this enables us to allocate the costs directly to the program that made the

calls. Other costs such as the cost of a T1 line are charged directly to the program that

benefits from the cost of that line. For example, the cost of a T1 line in a building that

only serves LMCC clients would be charged entirely to the LMCC Program. The cost of

a T1 line in a building that serves clients in multiple programs would be allocated based

upon the ratio of the number of telephone sets to the total number of sets.

10. Depreciation - Allocated to programs based on the programs ownership interest in the

depreciable property. The cost of depreciation that benefits more than one program will

be allocated by an appropriate base. Depreciation that benefits all programs and are used

to support the Administration of the GLCAC, Inc. are allocated through the use of an

approved indirect cost rate.


11. Program Support Costs - Program Support Costs such as printing, postage, data

processing & shipping & handling are allocated to programs that directly benefit from

those costs. If these costs benefit more than one program they will be allocated to those

programs through the use of an appropriate base. Costs that benefit all programs and are

used to support the Administration of GLCAC, Inc. are allocated through the use of an

approved indirect cost rate.

12. Interest – Interest is allocated to those programs that have incurred the debt. If interest

expense benefits more than one program, interest will be allocated through the use of

appropriate base. Interest expense cannot be charged to federal programs unless the

federal program has an ownership interest in the property that has been financed.

Accounts Payable Management

Overview

GLCAC strives to maintain efficient business practices and good cost control. A well-managed

accounts payable function can assist in accomplishing this goal from the purchasing decision

through payment and check reconciliation. The following are general policies for accounts

payable:

1. Assets or expenses and the related liability are recorded by an individual who is not

responsible for ordering and receiving.

2. The amounts recorded are based on the vendor invoice for the related goods or services.

3. The vendor invoice should be supported by an approved purchase order where necessary,

and a packing list prior to being processed for payment.

4. Invoices and related general ledger account distribution codes are reviewed prior to

posting to the subsidiary system.

The primary objective for accounts payable and cash disbursements is to ensure that:

Disbursements are properly authorized

Invoices are processed in a timely manner

Vendor credit terms and operating cash are managed for maximum benefits


Recording of Accounts Payable

All valid accounts payable transactions, properly supported with the required documentation,

shall be recorded as accounts payable in a timely manner.

Accounts payable are processed on a daily basis. Information is entered into the system from

approved invoices or disbursement vouchers with appropriate documentation attached.

Only original invoices will be processed for payment unless duplicated copies have been verified

as unpaid by researching the vendor records. No vendor statements shall be processed for

payment.

Accounts Payable Cut-Off

For purposes of the preparation of the Organization’s monthly financial statements, all vendor

invoices that are received, approved and supported with proper documentation by the second

Friday of the following month shall be recorded as accounts payable as of the end of the

immediately preceding month if the invoice pertains to goods or services delivered by month-

end.

Establishment of Control Devices

The Senior Accounts Payable Bookkeeper establishes control of invoices as soon as they are

received. Vendors will be instructed to mail all invoices directly to the Accounts Payable

Department.

Upon receipt, each invoice shall be recorded on a log of invoices received, “date received”

stamped, and distributed to the appropriate personnel for approval. The log is to be reviewed

daily to determine which, if any, invoices have not been returned to the Accounting Department.

Vendor Setup/Change

To ensure that only valid vendors are set up in the accounts payable system after appropriate

request and approval.

Change Request, Approval, and Input Process

Before any purchase order or any payment to a vendor can be processed, a valid vendor must be

set up in the accounts payable system. This is facilitated by the use of the Company’s standard

Vendor Setup Form.

The following process should be followed:


1. Vendor Setup Form can be prepared by any designated employee.

2. For program related requests, Vendor Setup Form must be signed/approved by the Program

Director.

3. Non-Program requests are approved by an authorized manager based on the GLCAC

Approval Matrix. By approving, he/she is verifying that the vendor is valid and is

responsible for ensuring that appropriate documentation is attached.

4. Types of evidence for most vendors can be web site, phone listings, etc. The person

approving is responsible for ensuring that the documentation has been attached validating the

vendor’s existence, etc.

5. The actual vendor setup in the accounts payable system is performed by a designated person

not involved in accounts payable. The person inputting is responsible for ensuring that the

appropriate signatures (and dates) are on the form and that the appropriate documents are

attached.

6. The Vendor Set up Form must indicate if the vendor is a Minority Owned Enterprise (MOE),

a Women Business Enterprise (WBE), a Minority Women Business Enterprise (MWBE), or

a Minority/Women Non-profit.

7. The Vendor Set up Form must also indicate if the minority enterprise is Certified by the State

of Massachusetts, and the certification expiration date.

8. Periodically, the Controller will run reports to verify current certifications and for vendor

information updates.

9. Payments shall not be made to any vendor whose file does not comply with the preceding

requirements.

Note: On a quarterly basis, the Controller reviews the report of New Vendors for reasonableness.

Accounts Payable - Receipt of Goods Ordered

The following procedure should be followed when receiving goods:

1. Person receiving goods signs the packing slip (or its equivalent)

2. Signed packing slip should be sent to Accounts Payable

3. If the vendor included an invoice with the packing slip, this should be attached to the packing

slip and sent to Accounts Payable as well.


For services received, the invoice (copy) will be sent by accounts payable personnel to the

appropriate supervisor for written acknowledgement that the services were performed and

pricing correct. Approval can be by manual signature or electronically (e-mail, etc.).

Accounts Payable - Processing

The following guidelines should be followed by the designated staff to record account payables:

Accounts Payable Staff

1. The Accounts Payable personnel receive vendor invoices, match the vendor invoice to

the purchase order and any receiving documents, and input the invoice into the

Blackbaud accounts payable module.

2. It is the responsibility of the accounts payable clerk to insure that key information per the

vendor invoice agrees to the purchase order, Supply/Services Request (with backup

documents) and any receiving documentation as follows:

Vendor name and address

‘Deliver to’ address

Item description

Price, quantity, total dollars (price x quantity)

Sales taxes not charged

3. The Senior Accounts Payable Bookkeeper initials the invoice as input and creates the

“voucher package” consisting of the invoice and all other documentation.

Preparation of a Voucher Package

Prior to any accounts payable being submitted for payment, a package called a “voucher

package” shall be assembled. Each voucher package shall contain the following documents:

1. Vendor invoice (or employee expense report)

2. Packing slip (where appropriate)

3. Receiving report (or other indication of receipt of merchandise and authorization of

acceptance).

4. Purchase order as required by procurement policies.

5. Any other supporting documentation deemed appropriate


Processing of Voucher Packages

The following procedures shall be applied to each voucher package by the Senior Accounts

Payable Bookkeeper:

1. Check the mathematical accuracy of the vendor invoice.

2. Compare the nature, quantity and prices of all items ordered per the vendor invoice to the

purchase order, packing slip and receiving report.

3. Document the general ledger distribution, using the Organization’s current chart of

accounts.

4. Obtain the review and approval of the Program Director (or their designee) associated

with the goods or services purchased.

Approvals by Program Directors indicate their acknowledgement of satisfactory receipt of the

goods or services invoiced, agreement with all terms appearing on the vendor invoice, agreement

with general ledger account coding, and agreement to pay vendor in full. Approvals shall be

documented with initials or signatures of the approving individual.

Processing Payment Discounts

To the extent practical, GLCAC takes advantage of all prompt payment discounts offered by

vendors. When such discounts are available, and all required documentation in support of

payment is available, payments will be scheduled so as to take full advantage of the discounts.

Processing Employee Expense Reports

Reimbursements for travel expenses, business meals, or other approved costs will be made only

upon the receipt of a properly approved and completed expense reimbursement form (see further

policies under “Travel and Other out of Pocket Expenses”). All required receipts must be

attached, and a brief description of the business purpose of trip or meeting must be noted on the

form.

Expense reports, with the exception of mileage reimbursements, will be processed once a month.

Deadline for submitting expense reports is the last Friday of the month.


Cash Disbursements

Policy

To ensure that all purchases are allowable under GLCAC policy and the expenditure is both

reasonable and necessary to accomplish the organization’s objectives. Allowability is governed

by OMB A-122, the Cost Principles Governing Non-Profits.

To ensure that purchases are accurately recorded as to amounts, coding of general ledger

accounts, and timeliness.

To ensure that only valid and authorized payables are recorded and paid.

Check Preparation Guidelines

GLCAC prints vendor checks and expense reimbursement checks on a weekly basis. Checks

shall be prepared by persons independent of those who initiate or approve expenditures, as well

as those who are authorized check signers.

All vendor and expense reimbursement checks shall be produced in accordance with the

following guidelines:

1. No check shall be signed prior to the check being completed in its entirety (no signing of

blank checks).

2. Checks shall be signed by an individual other than the one who approved the transaction

for payment.

3. Expenditures must be supported in conformity with purchasing, accounts payable, and

travel and business entertainment policies described in this manual.

4. Timing of disbursements should generally be made to take advantage of all early-

payment discounts.

5. Generally, all vendors shall be paid within 30 days of submitting a proper invoice upon

delivery of the requested goods or services.

6. Total cash requirements associated with each check run is monitored in conjunction with

available cash balance in bank prior to the release of any checks.

7. All supporting documentation is attached to the corresponding check prior to forwarding

the entire package to an authorized check signer.


8. Checks shall be utilized in numerical order and unused checks are stored in a locked safe

in the accounting department.

9. Checks shall never be made payable to “bearer” or “cash.”

10. Checks shall never be signed prior to being prepared.

11. Upon the preparation of a check, vendor invoices and other supporting documentation

shall immediately be canceled in order to prevent subsequent reuse.

The following procedures should be followed by the listed staff in preparing, approving, and

signing checks:

The Controller

Checks are generally written once weekly. Based on open invoice and other reports, the

Controller determines which payments should be made and forwards the marked report to the

Senior Accounts Payable Bookkeeper.

Accounts Payable Staff

1. The Senior Accounts Payable Bookkeeper clerk prints all checks requested with a check

register.

2. The Senior Accounts Payable Bookkeeper matches up all checks with the appropriate

voucher packages and staples the check advice section of the check to the voucher

package.

3. The Senior Accounts Payable Bookkeeper also includes a window envelope and the

transmittal vendor advice.

4. The Senior Accounts Payable Bookkeeper forwards the checks and copy of the check

register with the voucher packages to one of the authorized check signers (2 signatures

required).

Notes:

Checks are printed on blank stock which is maintained in a locked area within the

accounting office.

All printed checks and voucher packages are maintained in a locked cabinet until they are

sent to check signers for signing.


Check Signers

1. The check signer matches the key information for each check to the voucher package,

ensuring name, amount, and invoice number, etc. are correct.

2. Check signers are also responsible for ensuring that the voucher package appears to have

the appropriate documentation for the type of transaction (e.g., purchase order, contract

info, approvals, etc.)

3. The first check signer forwards the voucher packages to the second check signer, and the

process is repeated.

4. The last check signer forwards all checks, the check register, and voucher packages to the

assigned staff in the Accounting Department.

Finance Assistant (or designee)

1. The Finance Assistant or designee is responsible for ensuring that all check and voucher

packages on the check register are accounted for (i.e., none missing).

2. The Finance Assistant or designee inserts the checks into the window envelopes and

mails.

3. The Finance Assistant or designee signs and dates check register. By doing so, Finance

Assistant or designee validates that he/she has mailed all checks listed and has returned

all voucher packages to the accounting department.

4. A log of check numbers is maintained for each run recording first and last numbers used.

If there are any missing number sequences, he/she reports this situation immediately to

the Controller.

5. The Finance Assistant or designee receives the check register, ensures that all voucher

packages are present, and stamps the voucher packages “Paid” prior to filing.

Voided Checks and Stop Payments Process

1. Checks may be voided due to processing errors by making proper notations in the check

register and defacing the check by clearly marking it as “VOID.”

2. All voided checks shall be retained to aid in preparation of bank reconciliations.

3. Stop payment orders may be made for checks lost in the mail or other valid reasons.

4. Stop payments are processed on-line by either the CFO or the Controller.

5. A journal entry is made to record the stop payment and any related bank fees.


Credit Card Policy

Authorization

A purchase order is required for all purchases. Agency credit cards are not to be held in an

employee’s possession with the exception of Home Depot credit cards which are used by

maintenance staff at remote locations.

In instances where an employee has to use the agency’s corporate card, written authorization is

required from the Executive Director/CEO

Maintenance & Care of Credit Cards

All cards are kept in a locked file in the Accounts Payable Office and a log is maintained for

each card.

The authorized use of any credit card will require an employee to sign out the card and sign the

card back in once the transaction has been completed. The log will contain the authorized

purchase order number for the transaction. The use of the log will also ensure that we can track

the employee that last held the card in the event a card is not returned.

Conditions of Use

Use of a GLCAC, Inc. credit card is subject to the following conditions:

1. Credit cards are to be used for official agency business, not personal expenses. Charging

personal expenses to agency cards is not acceptable under any circumstance. Credit card

transactions will be scrutinized to ensure compliance with this policy;

2. In all cases of misuse, the agency reserves the right to recover any monies from the

employee that misused the card and to revoke the privilege of using agency credit cards

in the future,

3. Credit cards cannot be used to obtain cash advances or cash equivalents such as bank

checks, traveler’s checks and electronic cash transfers,

4. All employees using agency credit cards must sign and declare that they have read this

policy and that they understand it.

Credit Card User’s Responsibilities

Credit card users are responsible for the following:


1. They must submit transactional evidence to support all charges. The most acceptable

form of evidence is the original receipt. The receipt must be submitted to Accounts

Payable upon completion of the purchase.

2. The card must be returned to Accounts Payable upon completion of the purchase. The

card user must sign the log indicating they have returned the card.

3. The card user must avoid the payment of state sales tax by supplying the vendor with a

tax exemption certificate. The card user will be responsible for the payment of any sales

taxes that he/she fails to get abated.

4. Card purchases without receipts are the responsibility of the user. A failure to provide

receipts or a credible explanation for the unsupported expenditure could result in payment

by the card user. Employees should keep copies of receipts in case future questions arise.

5. Reimbursement for return of goods and/or services must be credited directly to the credit

card account. No cash should be received by the card user.

6. Lost or stolen cards must be reported immediately to the Accounts Payable Department.

7. Employees using credit cards are in a position of trust. Improper use or unauthorized use

of the card may result in the employee being held liable for expenditures,

legal/disciplinary action being brought against the employee, termination of card-use,

and/or termination from the agency.

8. Upon termination from the agency any credit cards in the possession of an employee

must be returned to the Accounts Payable Department.

Records Management

All documentation associated with the payment of credit card bills will be maintained in the

Accounts Payable Department.

Monthly credit card statements must be approved by GLCAC Board of Directors and by the

Head Start Policy Council for Head Start’s purchases.

Food Policy

Purpose

To ensure that reimbursement for food from federal and state funds for meetings is reasonable,

allowable and allocable to federal and state funds.


In accordance with OMB A-122, Paragraph 29, the costs of meetings and conferences, the

primary purpose of which is the dissemination of technical information, are allowable. This

includes costs of meals, transportation, rental of facilities, speakers' fees, and other items

incidental to such meetings or conferences.

Allowable Food Costs:

The reimbursement for food at meetings will be allowable if the following conditions are met:

1. Light meals for staff or participants who are cloistered in an all-day training session

where it would be impractical for participants to obtain meals on their own and where

attendance at the training is essential to accomplishing the objectives of the program,

2. Light meals during a “working session” whereby participants are engaged in activities

during the normal meal time as stated on the agenda and in which no other opportunity

for a meal will be provided,

3. Refreshments for meetings and activities when necessary to encourage attendance and to

accomplish the objectives of the program, such as Head Start parent meetings, and

4. Light refreshments for Board of Directors meetings where the purpose of the meeting is

to conduct official agency business.

Requirements:

In order to allocate food costs at a meeting to a federal or state funding source, it is necessary to

provide an agenda for the meeting and a list of participants that attended. This is necessary to

determine if the purpose of the meeting was the dissemination of technical information and to

determine whether the cost of the refreshments was reasonable based on the number of

participants.

Unallowable Food Costs:

1. Any food costs that are not necessary to accomplish the objectives of the program.

2. Refreshments or light meals at a meeting in which the objective is not the dissemination

of technical information.

Funding sources differ on the allowability of food costs for meetings. It is important to ask your

program representative for technical advice on this subject. For example, the WIC Program will

only allow the cost of food provided at meetings if it is an all-day meeting and it is impractical to

have the participants obtain meals on their own.


Payroll and Related Policies

Payroll Processing Policy

To ensure that all personnel costs are authorized and payment is made at the approved salary

levels.

To ensure that all personnel costs are accurately coded to the appropriate general ledger

account in the appropriate program (where applicable).

To ensure that the time sheets record actual time worked for each activity/program that the

employee is engaged in and all time for the employee is accounted for.

Payroll Administration

GLCAC operates on a weekly payroll. A personnel file is established and maintained for all

employees with current documentation, as described in GLCAC's Human Resources Procedures

manual.

Personnel Time Sheets

GLCAC follows the guidelines in OMB Circular A-122, Attachment B.8, Compensation for

Personal Services, as well as requirements in specific grants. Therefore, salaries and wages

charged to Federal grants will be supported as follows:

1. Charges will be based on documented payrolls approved by responsible officials of

the Organization.

2. Every staff member whose compensation is charged, in whole or in part, directly or

indirectly to Federal awards, will complete a time sheet that accounts for the total

activity for which the employee is compensated.

3. The time sheet will reflect an after-the-fact determination of the actual activity of

each employee. Budget estimates will not be used as support for charges to awards.

4. The time sheets must be signed by the individual employee or by a responsible

supervisor who has first-hand knowledge of the activities performed by the employee.

5. The time sheets will be prepared on the same basis as the pay periods.

6. Charges for non-exempt employees will also be supported by records required by the

Fair Labor Standards Act.


7. Salaries and wages of employees used in meeting cost sharing or matching (in-kind)

are supported in the same manner as salaries and wages charged to Federal awards.

Payroll Taxes

The Accounting Department is responsible for ensuring all required tax forms are properly

completed and submitted, and that all required taxes are withheld and paid. The Accounting

Department may utilize the services of an outside payroll service center for the processing of

payroll, as determined by the CFO and approved by the Executive Director.

Time Sheet Preparation, Approval, and Processing

Compliance with OMB A-122

GLCAC policy is designed to include the requirements of OMB A-122 for employee time

recording. Program Directors must submit to the Accounting Department electronically the

revised and approved timesheet of all employees they supervise no later than 12:00 noon on the

1st regular working day following the close of each pay period.

In filling out time sheets, GLCAC policy requires that for all employees (or supervisors who may

fill out the employee time sheet in special circumstances):

1. The time sheet reflects actual – not budgeted - time spent on each activity

2. Time sheets must be submitted electronically

3. The time sheet records all time and activities for the period (i.e. each employee only has

one time sheet which accounts for a full day, notwithstanding that the employee may

have worked in several parts of the agency during that day)

4. Compensated absences (vacation, holiday, sick leave, etc.) should be clearly identified as

such.

5. The time sheet is electronically signed by the employee by submitting the time sheet to

the supervisor for approval. The supervisor must have first-hand knowledge of the

employee’s work and proper allocation of time. The supervisor may approve or reject the

time sheet.

6. A time sheet must be prepared for each pay period.

7. The time sheet should contain a short description of work performed (e.g., “Taught Head

Start children at ____location.”)


Employee

1. Every employee completes timesheet as to hours and time allocation. No employee will

be paid without an approved time sheet.

2. By submitting for approval his/her time sheet, the employee is verifying that the time the

sheet reflects are actual hours worked in total and a reasonable estimate of time worked

in the individual departments/programs indicated.

Note: Under unusual circumstances, a supervisor may have to prepare, approve and submit a

time sheet for an employee, in which case the supervisor is asserting that he/she has first-hand

knowledge of the employee’s activities.

Program Director or Other Authorized Approver

1. The Program Director (or other authorized approver) approves each of his/her program

employees’ time sheets.

2. By approving the employee time sheet, the approver is verifying that the employee

worked as indicated in the department/program indicated.

3. The Program Director forwards electronically approved time sheets to the Payroll

Administrator.


1. Reviews individual time sheets for reasonableness of total time reported, programs

charged, etc.

2. Reviews all time sheets to ensure that they have been properly approved by employee’s

direct or back up manager.

3. Program Directors and Supervisors are responsible for reviewing their staff’s time sheets

to make sure that they reflect the correct allocation of time in the system, and that the

number of hours is correct. The Payroll Administrator will reject incorrect time sheets,

and will question anything that seems unreasonable.

4. Inputs each time sheet into the payroll system and runs a “pre-process” register to

compare to time sheets. Signs and files the pre-process register to verify that the

information is correct.

5. Transmits payroll information to automated payroll service company.

6. Receives payroll register information from automated payroll service company and

agrees to pre-process register.


7. Receives payroll checks/direct deposit advices from automated payroll service company,

files in a secure area of the finance department.

8. The Payroll Administrator will distribute pay stubs on payroll pay day.

Process to Prepare the Payroll Journal Entry


1. Once payroll is processed and sent to the GLCAC, Inc. payroll service company, the

Payroll Administrator must wait to receive the processed weekly payroll files. Within

twenty four (24) hours of sending the payroll information, the Payroll Administrator

downloads the updated payroll information from the payroll service company and

downloads this information to the GLCAC, Inc. database.

2. The updated payroll files includes the weekly payroll processing, all changes to employee

demographic information, updated benefit accruals, new employee hires and

terminations, etc.

3. The weekly payroll checks are received on the same day as payroll files are received and

reviewed for accuracy. The checks are then segregated into departments for

disbursement to department heads on Friday mornings.

4. Once the Payroll Administrator receives all updated payroll files, an excel file is

generated in a comma separate value (csv) format within the payroll company report

software and imported to excel. This file contains the Payroll Journal entry which holds

all general ledger information for gross wages and tax information to be charged to the

programs as well as employee liabilities that are withheld from weekly paychecks to be

paid out to various vendors at the end of the month.

5. At the same time, the Controller prepares the interagency transfers from the weekly

payroll reports. These transfers are made from the two agency accounts to the payroll

account to cover the weekly impounded payroll taxes and net cash that are automatically

withdrawn from the GLCAC, Inc. Payroll account each Thursday. Once these transfers

are made, all paperwork is forwarded to the Payroll Administrator.

6. The Payroll Administrator cross references the transfer reports forwarded from the

Controller to the Payroll Journal entry. The totals transferred must reconcile to the

amounts on the Payroll Journal entry. Any discrepancies will be reconciled between the

Controller and the Payroll Administrator at this time.

7. The Payroll Administrator reviews this entry for accuracy and may make adjustments.

8. Once the entry and transfers are reconciled and the Payroll Administrator has fine-tuned

the Payroll Journal entry, the transfer paperwork is returned to the GLCAC, Inc.

Controller.


9. The Controller then imports the Payroll Journal entry from excel to the Blackbaud

accounting system. The transfer paperwork prepared in duplicate is coded with the

journal entry number and the original is filed with account payable disbursements and the

other forward to cash receipts for entry in the GLCAC, Inc. accounting system.

10. The CFO then posts the Payroll Journal entry.

11. It is the intention of the Fiscal department to maintain the highest level of internal

controls possible. This process of integrating the weekly Payroll Journal entry into the

GLCAC, Inc. accounting system exhibits a solid internal control system.

Travel and Other Out of Pocket Expenses

Policy

To ensure that all travel/out of pocket expenses paid by the agency complies with GLCAC and

Federal/State/program policies (as appropriate to the specific activity).

To ensure that the travel/out of pocket expense is appropriate to the program and to GLCAC

operations.

To ensure that the travel/out of pocket costs are accurately and timely calculated and recorded in

the general ledger and that proper documentation is maintained.

The following guidelines must be applied when making hotel and flight reservations and

reporting expenses:

Reasonableness of Travel Costs

GLCAC shall reimburse travelers only for those business-related costs that are reasonably

incurred.

1. Suites and other upgraded rooms at hotels shall not be allowed. Travelers should stay in

standard rooms. When a group of employees are traveling together, room double

occupancy is recommended.

2. Conference discount rates, nonprofit, government or corporate rates should be applied.

3. When utilizing rental cars, travelers should rent midsize or smaller vehicles. Share rental

cars whenever possible.


4. Business-related long-distance telephone calls while away on business travel are

permitted, but should be kept to a minimum. Expense reports should explain long-

distance charges. Avoiding use of the hotel’s long-distance service if possible, is highly

recommended.

5. WIFI and internet use for business purposes are allowed, when necessary.

6. Tips for baggage handling will be reimbursed at a rate not to exceed $5 per day and

should be included as part of incidental expenses. No receipts are required.

Special Rules Pertaining to Air Travel

The following additional rules apply to air travel:

1. Air travel should be at coach class or the lowest commercial discount fare at the time the

ticket is purchased.

2. Cost of flight insurance is not reimbursable.

3. When airfare is $500 or more, two quotes should be obtained and attached to the expense

report.

4. Payment of flight reservations and hotel room rate and tax must be charged to GLCAC’s

company credit card at all times. Proper documentation of flight and hotel reservations

must be submitted to the Accounting Department.

5. When returning on a Sunday or departing on a Saturday in order to obtain a cost savings

in airfare due to the Saturday-night stay-over, travelers should provide a total cost

comparison (showing that the lower airfare plus one extra night lodging, meals &

incidentals is less costly than airfare without the Saturday night stay-over).

6. Cost of upgrades in flight accommodations is not reimbursable.

7. Cost of canceling and rebooking flights is not reimbursable, unless it can be shown that it

was necessary or required for legitimate business reasons (such as changed meeting

dates, etc.).

8. The Agency will reimburse luggage fees for the first luggage piece checked in.

Reporting Expenses

At the conclusion of a business trip, a GLCAC’s employee that has incurred business-related

expenses should complete an expense report in accordance with the following policies:


1. Identify each separately incurred business expense (i.e., do not group all expenses associated

with one trip together). General ledger account coding must be identified for all expenditures.

2. With the exception of tips, reimbursed mileage, and per diems, all business expenses must be

supported with invoices/receipts.

3. Vendor receipts/invoices must be submitted for all lodging and for any expenditure other

than meals.

4. Credit card charge slips do not represent adequate supporting documentation – a hotel receipt

must be obtained to substantiate all lodging expenditures.

5. For airfare, airline-issued receipts should be obtained. If a traveler fails to obtain a receipt,

other evidence must be submitted indicating that a trip was taken and the amount paid (for

example, a combination of an itinerary, a credit card receipt, and boarding passes)

6. Mileage may be reimbursed at the standard GLCAC mileage reimbursement rate.

7. The business purpose of each trip must be adequately explained on the travel authorization

request.

8. Alcohol consumption is not an allowable expense.

9. All expense reimbursement reports must be signed and dated by the employee, and submitted

to the Grant Manager within thirty (30) days of travel.

10. All expense reimbursement reports must be approved by the employee's Program Director or

immediate supervisor.

11. Final approval of expense reimbursement reports will be given by the Grants Manager and

the CFO.

An employee will not be reimbursed for expense reports not meeting the preceding criteria. If the

expense report results in a balance due to GLCAC (as a result of receiving a travel advance

greater than actual business expenditures), the employee must attach a check or sign a statement

indicating authorization to settle the balance due through a payroll deduction.

No further travel advances will be issued to any employee who has an outstanding balance due to

GLCAC from previous business trips.


Local (in State) Travel

Mileage cost will be paid to employees traveling on business and using their own vehicles. Cost

of mileage will not be paid in advance. All mileage reimbursement payments will be processed

through payroll on a biweekly basis.

Employees traveling within GLCAC’s service area or beyond, using their own vehicles to

mobilize should follow the following procedures to process mileage reimbursements:

Employee

1. Employee/Traveler completes Mileage Reimbursement Voucher on a weekly basis

detailing the number of miles driven and the activity performed.

2. Employee submits completed Mileage Reimbursement Voucher to Program Director for

approval.

3. Parking and toll expense should be reported separately in the Travel Expense

Reimbursement Form.

4. Employees must submit Mileage Reimbursement Voucher forms their supervisor or

Program Director in a timely fashion. Any forms submitted for travel completed more

than thirty (30) days past will be returned and not paid.

Note: Mileage rates are set by GLCAC policy and may change periodically.

Program Director/Manager

1. Reviews and approves (signs and dates) all Mileage Reimbursement Vouchers to verify

accuracy of calculations, account/program codes, and to validate the necessity of the

travel.

2. Submits approved vouchers to the Grant Manager.

Grant Manager

1. Reviews Mileage Reimbursement Voucher for accuracy of calculations and coding and

forwards to the Finance Office Assistant

Finance Office Assistant

1. Organizes voucher forms by program and employee, totals each employee travel and

forwards to the Payroll Administrator for submission in the payroll system on a bi-

weekly basis.



1. Payroll Administrator processes vouchers for payment through the payroll system.

2. Stamps travel vouchers “paid”.

3. Forwards paid travel vouchers to general accounting clerk for proper filing.

Out-of-Area (out of State) Travel – Prior Approval

Out-of –Area-Travel procedures should be followed every time a GLCAC staff member is

traveling to conferences, conventions, program related training, etc., which require the employee

to leave the State and/or using a mode of transportation other than their own vehicle, and staying

overnight.

Advance notice of travel plans is required. Employees should consult with their Program

Director/Supervisor well in advance of making travel plans.

Employee/Traveler

1. Completes the (Out-Of-Area) Travel Authorization and Advance Request Form and

submits it to the Program Director/Manager for approval. The approved form should be

submitted to the Accounting Department for processing at least 30 days in advance of traveling.

2. If a per diem allowance is requested, the per diem allowable amount must be obtained from the

Grants Manager at the time of preparing the form.

Program Director/Manager

1. Program Director or Manager approves request, thereby verifying that the expenditure is

allowable and reasonable for the stated purpose.

2. For travel which is budgeted and allocable to a program/contract, Program Director

forwards to Grants Manager for approval.

3. Administrative staff should submit the (Out-Of-Area) Travel Authorization and

Advance Request form to the CEO, COO, or CFO (whichever is most appropriate for

the expense) for approval.

Grants Manager/CEO/COO/CFO

1. For Out-Of-Area Travel which is budgeted and allocable to a program/contract, the Grants

Manager approves the request by signing and dating, validating that it is appropriate to


the program within the scope of the grant and forwards one copy to the accounts payable

clerk for later matching with the expense report.

2. The Grants Manager submits the Out-of-Area Travel Authorization and Advance Request

Form to the CFO for review and signature.

3. The CFO submits the completed request to the Executive Director for final approval.

4. For administrative staff travel authorization requests the COO/CEO/CFO approves the

request by signing and dating and forwards to the CFO or the Finance Assistant for

processing and follow-up.

Request of Per Diem Advance

Employees staying overnight may be approved for a per diem advance in accordance with

Federal Travel Regulations and the following process:

1. The Grants Manager calculates the per diem allowable amount for the designated travel

location by using the Meals and Incidentals Worksheet. This is the amount to be entered

in the per diem row of the Out-of-travel Authorization and Advance Request Form.

2. Per diem advances will be processed when the employee submits the (Out-Of-Area)

Travel Authorization and Advance Request, prior authorization of Program

Director/Manager.

3. A check in the amount authorized will be processed and delivered to the employee traveling

within ten (10) days prior to travel.

2. Upon return, the employee will complete the Travel Expense Reimbursement Form to account

for the funds advanced. Receipts must be attached as appropriate.

3. If the employee incurred in out-of-pocket expenses, after verification by the Grants

Manager and approval by the CFO, a reimbursement check will be processed and

delivered to the employee.

4. If the employee traveling receives a per diem advance that is greater than the actual

expended amount (i.e. if the travel time is shorten), the employee must reimburse the

overpayment to the Agency. Failure to do this will result in the overpayment being

classified as taxable wages.

Accounts Payable Process for Expense Reports

The Accounts Payable Department receives the approved Travel Expense Reimbursement Form

and attached receipts for validation, posting, and payment. The Accounts Payable Department:


2. Matches the Out-Of-Area Travel Authorization and Advance Request Form (where

required) to the expense report.

3. Ensures that all charges are in accordance with agency policy.

4. The Grant manager matches amounts per the expense report to each of the attached

receipts, and checks the mathematical accuracy of the expense report.

5. The Grant Manager ensures that the general ledger accounts charged appear correct (or

inserts them).

6. Ensures that the employee and appropriate Authorized Approver(s) have signed and

dated the report.

7. After completion of the above tasks, the Senior Accounts Payable Bookkeeper signs the

expense report (with date) and posts the expense report for payment.

8. At the time of payment, the Senior Accounts Payable Bookkeeper attaches the check to

the expense report package, and forwards them to the check signer.

Check Signer(s)

Before signing, the check signer(s) are required to:

1. Match the check to the expense report for such information as name and amount.

2. Ensure that the appropriate approvals are present in accordance with agency policy.

3. Perform a limited, general review for reasonableness to obtain appropriate satisfaction

that the expense report and backup documentation is reasonable and in accordance with

GLCAC’s policy.

4. After all checks are signed by all check signers, the second check signer returns the

signed checks and expense report packages to the Sr. Account Payable Bookkeeper who

mails or otherwise delivers the checks to the employee and returns the expense report

package to the accounts payable department for filing.

Training and Workshops Requests

Requests for workshops and other program related training should be processed by completing

the Tuition and Workshops Request Form, following this procedure:


1. All training and workshop requests must have a completed registration form attached for

all program staff requesting to participate in the training or workshop.

2. Request must be submitted by filling the Tuition, Training & Workshops Request Form.

This form must be completed by the direct supervisor, listing the staff participating and

the corresponding training or workshop dates.

3. The form must be approved and signed by the Program Director who will forward the

form to the Grant Manager.

4. The Grant Manager will verify allowability and funding availability, completes the

coding sections and submits to the CFO for approval.

5. The CFO reviews the information, approves the requests and sends to the ED or the COO

for final approval.

6. After approval by the ED or the COO the form will be submitted to the Accounts Payable

assistant to prepare the Purchase Order.

Tuition Reimbursement Policy and Process

Policy

It is the policy of GLCAC to assist employees in developing their abilities to perform their jobs

or to qualify for subsequent steps in their career paths within the Agency.

Eligibility

1. Applicants must be full time employees who have completed at least twelve (12) months of

employment. Permanent part-time employees may be approved at the discretion of the

Program Director and the Executive Director/COO.

2. Courses must be offered by an accredited college, university, technical school or online

school. Courses that are offered by each accredited institutions through distance learning are

acceptable.

3. Contingent upon availability of funds, GLCAC will pay for courses that present a reasonable

correlation with the employee’s career path or advancement within fields pertinent to work at

their program.

4. If the employee stays less than 12 months after completing the courses(s), the employee will

repay course expenses that were paid for the course on a pro-rated basis.


Each Program Director is responsible for monitoring her/his employees. If an employee

leaves the program prior to the end of this twelve-month period, the Program Director will

notify the Controller or the CFO. The Program Director will send 1) a copy of the ‘tuition

Reimbursement Form and Contractual Agreement” with 2) the final time sheet and 3) a

memo explaining the amount of money to be withheld from the departing employee’s

paycheck, to the Finance Office.

5. Courses must be taken during the employee’s off-duty hours or during periods of approved

leave. Consideration may be given to the following, provided the arrangement does not

impact delivery of services or work objectives:

a. An adjusted work week;

b. Voluntary use of annual leave

Cost Sharing

1. To encourage participation GLCAC will reimburse up to a maximum of $2,000 per calendar

year per eligible employee. The employee’s Individual Professional Development Plan (IPD

plan) found in her/his most recent evaluation should identify study as a goal; funding

availability will be based on a first come first serve basis.

2. No other costs or fees, such as text books or lab fees, will be reimbursed.

3. To maximize use of tuition funds, employees must consider obtaining instruction at the

lowest possible cost to GLCAC. Employees must apply for any and all financial assistance

as well as pursue other funding opportunities to leverage the Agency’s contribution to their

further education. This will allow each employee greater opportunity to access funds, so they

can expedite coursework towards their career objectives.

4. Tuition assistance payments will be coordinated with any other external education benefits

for which the employee may be eligible. GLCAC will contribute only up to the amount not

covered by other tuition assistance programs not to exceed $2,000 per calendar year.

Process

1. An employee seeking Tuition Reimbursement must discuss his or her request with their

direct supervisor who will confer with the Program Director. Tuition Reimbursement is

contingent on the availability of funding in the employee’s particular program.

2. Each course must have a completed Tuition, Training & Workshop Request form as well

as a Tuition Reimbursement Agreement form. Both forms need to be signed by the

Program Director and forwarded to the Grant Manager.

3. The Grant Manager verifies the allow ability of the expense, verifies the existence of

funding, signs off, checks for all signatures and forwards to the CFO.


4. The CFO reviews and signs and forwards to the Executive Director, or the COO for final

approval. If approved, the paperwork is then forwarded to the Accounts Payable

Assistant for issuance of a Purchase Order.

5. It is the policy of GLCAC, to defer tuition payments on behalf of employees. That is, the

agency prefers to do business with institutions that accept purchase orders on account.

Once an employee has completed the coursework and GLCAC, Inc. is satisfied that the

employee has satisfactorily completed all coursework with a grade of C or better and the

agency has a valid invoice and grade, payment will be forthcoming to the institution on

behalf of the employee. It is the employee’s responsibility to forward all tuition invoices

and grades to the GLCAC, Inc. Finance office in a timely fashion

In instances where a passing grade of C or better has not been attained, GLCAC, may have to

pay the institution on behalf of the employee. In this situation as in an early withdrawal from

class by the employee, GLCAC, Inc. will garnish the employees’ paycheck through a weekly

payroll deduction until the debt is fully reimbursed.

POLICIES PERTAINING TO SPECIFIC ASSET ACCOUNTS

Cash and Cash Management – Cash Accounts

Operating Account

The primary operating account provides for routine business check disbursements. All cash and

checks deposits are made to this account.

Excess funds in this account are transferred into an overnight repurchase sweep account. This

account earns interest. The overnight sweep account is not insured by FDIC. Each night, the

balance in the operating account is invested in overnight securities that are backed by the federal

government. These transactions are considered relatively safe due to the secured collateral.

Interest earned on such funds will be allocated to Federal awards based average balance of funds

received for each federal award.

Payroll Account

The payroll account is separate from the operating account. Each week, the amount needed to

cover the payroll is transferred into this account from the Operating Account and LLC Account.

Transfers into the payroll account are periodically scheduled. The Controller is responsible for

initiating the transfer of funds into the payroll account.


LLC Account

All transactions related to the management of the property at 305 Essex Street are made from the

GLCAC, LLC Account.

Authorized Signers

The following GLCAC personnel are authorized to sign checks drawn on the general operating

and payroll accounts:

1. Executive Director

2. Chief Operating Officer

3. Board President

4. Board Vice President

5. Board Treasurer

6. Board Secretary

7. Designated Board Member….

The CFO will promptly notify the Organization’s financial institutions of changes in authorized

signatures upon the departure of any authorized signer. Refer to the section titled “Check

Signing” for procedures.

Bank Reconciliations

Bank account statements are received each month and forwarded unopened to the Chief

Financial Officer. The CFO opens the statements and reviews their content for unusual or

unexplained items, such as unusual endorsements on checks, indications of alterations to checks,

etc. (This review must be performed in a timely manner so that reconciliation of the bank

account is not delayed.)

After this review is complete, the entire bank statement is forwarded to the Accounting

Department, where a reconciliation between the bank balance and general ledger balance is

prepared by someone who is not an authorized check signer. The bank reconciliation process will

be completed within 30 days of receipt of each bank statement.

The reconciliation process involves an inspection of the fronts and backs of cancelled checks

returned with the bank statement. The purpose of this inspection is to identify signs of forgery,

altered or substitute checks, unusual endorsements, or other signs of fraudulent activity. If the

Bank does not return original cancelled checks or paper copies thereof, the person preparing the

monthly bank reconciliation shall view electronic copies of cancelled checks provided by the

Bank via CD-ROM or Internet access to the GLCAC’s web site.

All bank reconciliations, including any adjusting journal entries resulting from preparing bank

reconciliations, are reviewed by the CFO on a monthly basis.


Bank reconciliations, cancelled checks, and copies of resulting journal entries are filed in the

current year's accounting files.

Cash Flow Management

The CFO monitors cash flow needs on a weekly basis to eliminate idle funds and to ensure that

payment obligations can be met. Cash transfers between accounts are performed on an as-needed

basis.

GLCAC adheres to the requirements of its grants which may prohibit loaning funds between

programs (for example, Head Start), therefore, cash management and reporting is performed at

the program level as well as for the Organization as a whole.

Stale Checks

The Controller will void checks of $1,000 or less that are more than 6 months old that have not

cleared the Organization's bank. For uncashed checks that are more than 6 months old and that

exceed $1,000, contact will be made with the payee to resolve the issue.

All stale checks that are written off within the same fiscal year as they were written are credited

to the same expense or asset account that was debited when the check was written, or the

expenditure incurred. For stale checks written off in fiscal years subsequent to the year in which

the check was written, the credit shall be to miscellaneous income.

GLCAC will also comply with the Massachusetts laws regarding unclaimed property.

Accordingly, if uncashed checks are subject to a state reporting and transfer requirement, the

Organization shall file all appropriate forms and remit unclaimed property to the appropriate

jurisdiction.

Petty Cash

GLCAC will provide imprest funds for valid, minor office expenditures (not for travel for

employee advances), and will periodically replenish these funds up to its authorized balance. A

detailed procedure to handle petty cash funds is outlined on page 37 in this manual.

Line of Credit

Should the agency require to use its line of credit, the following procedure will be followed. The

CFO monitors the Agency’s cash requirements in consultation with other members of the finance

department. Should the CFO determine that a drawdown is necessary, he will prepare and sign

the Agency check request form indicating a bank drawdown and have it approved in writing by

the CEO. It will be forwarded and filed in the finance department. The CFO will decide when

and how much is to be paid back against the loan. Payback of funds will follow standard

Agency accounts payable check request and production procedures.


Prepaid Expenses

Accounting Treatment

GLCAC treats payments of expenses that have a time-sensitive future benefit as prepaid

expenses and will amortize these items over the corresponding time period. For purposes of this

policy, payments of less than $500 are expensed as paid and not treated as prepaid expenses,

regardless of the existence of a future benefit.

Prepaid expenses with future benefits that expire within one year from the date of the financial

statements are classified as current assets. Prepaid expenses that benefit future periods beyond

one year from the financial statement date are classified as non-current assets.

Procedures

As part of the account coding process performed during the processing of accounts payable, all

incoming vendor invoices are reviewed for the existence of time-sensitive future benefits. If

future benefits are identified, the payment is coded to a prepaid expense account code.

The Accounting Department maintains a schedule of all prepaid expenses. The schedule

indicates the amount and date paid, the period covered by the prepayment, the purpose of the

prepayment, and the monthly amortization. This schedule is reconciled to the general ledger

balance as part of the monthly closeout process.

Property and Equipment

Capitalization Policy

Physical assets acquired with unit costs in excess of $5,000 are capitalized as property and

equipment in the Organization’s financial statements. Items with unit costs below this threshold

shall be expensed in the year purchased.

If an awarding agency requires a lower amount for equipment, GLCAC will adhere to that dollar

amount only for that program or contract.

Capitalized property and equipment additions are accounted for at their historical cost and all

such assets, except land, are subject to depreciation over their estimated useful lives, as described

later.

Capitalized assets will be reported as expensed for grants if they were so budgeted in the grant

application. However, for the Organization’s financial statements, these assets will be

capitalized and depreciated according to these policies.


Contributed Assets

Assets with fair market values in excess of $5,000 (per unit) that are contributed to GLCAC shall

be capitalized as fixed assets on the financial statements. Contributed items with market values

below this threshold shall be expensed in the year contributed.

Capitalized contributed assets are accounted for at their market value at the time of donation and

all such assets, except land and certain works of art and historical treasures, are subject to

depreciation over their estimated useful lives, as described later.

Equipment and Furniture Purchased with Federal Funds (A-110_34)

GLCAC may occasionally purchase equipment and furniture that will be used exclusively on a

program funded by a Federal agency. In addition to those policies on Asset Management

described earlier, equipment and furniture charged to Federal awards will be subject to certain

additional policies as described below.

For purposes of Federal award accounting and administration, "equipment" shall include all

assets with a unit cost equal to the lesser of $5,000 or the capitalization threshold utilized by

GLCAC, described under Asset Management.

All purchases of “equipment” with Federal funds shall be approved, in advance and in writing,

by the Federal awarding agency. In addition, the following policies shall apply regarding

equipment purchased and charged to Federal awards:

1. Adequate insurance coverage will be maintained with respect to equipment and furniture

charged to Federal awards.

2. For equipment (or residual inventories of supplies) with a remaining per unit fair market

value of $5,000 or less at the conclusion of the award, GLCAC shall retain the equipment

without any requirement for notifying the Federal agency.

3. If the remaining per unit fair market value is $5,000 or more, GLCAC shall gain a written

understanding with the Federal agency regarding disposition of the equipment. This

understanding may involve returning the equipment to the Federal agency, keeping the

equipment and compensating the Federal agency, or selling the equipment and remitting

the proceeds, less allowable selling costs, to the Federal agency.

4. The Grant Manager shall determine whether a specific award with a Federal agency

includes additional equipment requirements or thresholds and requirements that differ

from those described above.


5. A physical inventory of all equipment purchased with Federal funds shall be performed at

least once every two years. The results of the physical inventory shall be reconciled to the

accounting records of and Federal reports filed by GLCAC.

Establishment and Maintenance of a Fixed Asset Listing

All capitalized property and equipment shall be recorded in a property log. This log shall include

the following information with respect to each asset: (A-110_34 (f)(1))

1. Date of acquisition

2. Cost

3. Description (including color, model, and serial number or other identification number)

4. Source of the equipment, including the Federal award number, if applicable

5. Whether the title vests in the Organization or the Federal Government

6. Information to calculate the Federal share of the cost of the equipment, if applicable

4. Location of asset

5. Depreciation method

6. Estimated useful life

A physical inventory of all assets capitalized under the preceding policies will be taken on an

annual basis by GLCAC. This physical inventory shall be reconciled to the property log and

adjustments made as necessary. All adjustments resulting from this reconciliation will be

approved by the CFO.

Receipt of Newly-Purchased Equipment and Furniture

At the time of arrival, all newly-purchased equipment and furniture shall be examined for

obvious physical damage. If an asset appears damaged or is not in working order, it shall be

returned to the vendor immediately.

In addition, descriptions and quantities of assets per the packing slip or bill of lading shall be

compared to the assets delivered. Discrepancies should be resolved with the vendor immediately.

Depreciation and Useful Lives

All capitalized assets are maintained in the special property and equipment account group and

are not included as an operating expense. Property and equipment are depreciated over their

estimated useful lives using the straight-line method.

In the year of acquisition, depreciation is recorded based on the number of months the asset is in

service, counting the month of acquisition as a full month (Example: an asset purchased on the

15th

day of the fifth month shall have eight full months of depreciation (eight-twelfths of one

year) recorded for that year.)


Estimated useful lives of capitalized assets shall be determined by the Accounting Department in

conjunction with the department or employee that shall utilize the asset. The following is a list of

the estimated useful lives of each category of fixed asset for depreciation purposes:

Furniture and fixtures Up to 10 yrs

General office equipment 5 yrs

Computer hardware and peripherals 3-5 yrs

Computer software 3-5 yrs

Leased assets life of lease

Leasehold Improvements remaining lease term

Alternatively, at the direction of the CFO, capitalized assets may be depreciated over useful lives

expressed in terms of units of production or hours of service in place of the preceding useful

lives expressed in terms of time.

For accounting and interim financial reporting purposes, depreciation expense will be recorded

on a monthly basis.

Changes in Estimated Useful Lives

If it becomes apparent that the useful life of a particular capitalized asset will be less than the life

originally established, an adjustment to the estimated useful life shall be made. All such changes

in estimated useful lives of capitalized assets must be approved by the CFO.

When a change in estimated useful life is made, the new life is used for purposes of calculating

annual depreciation expense. In the year in which the change in estimate is made, the cumulative

effect of the change shall be reflected as depreciation expense in the Organization’s statement of

activities.

For example, if in the fourth year of an asset’s life, it is determined that the asset will last five

years instead of the original estimate of seven years, depreciation expense for that year shall be

equal to the difference between 4/5 of the asset’s basis (accumulated depreciation at the end of

year four) and 3/7 of the asset’s basis (accumulated depreciation at the beginning of the year).

Repairs of Property and Equipment

Expenditures to repair capitalized assets shall be expensed as incurred if the repairs do not

materially add to the value of the property or materially prolong the estimated useful life of the

property.

Expenditures to repair capitalized assets shall be capitalized if the repairs increase the value of

property, prolong its estimated useful life, or adapt it to a new or different use. Such capitalized

repair costs shall be depreciated over the remaining estimated useful life of the property. If the

repairs significantly extend the estimated useful life of the property, the original cost of the

property shall also be depreciated over its new, extended useful life.


Dispositions of Property and Equipment

If equipment is sold, scrapped, donated or stolen, adjustments need to be made to the fixed asset

listing and property log. If money is received for the asset, then the difference between the

money received and the "book value" (purchase price less depreciation) of the asset will be

recorded as a loss (if the money received is less than the book value) or a gain (if the money

received is more than the book value).

Write-Offs of Property and Equipment

The CFO approves the disposal of all capitalized fixed assets that may be worn-out or obsolete.

Property that is discovered to be missing or stolen will be reported immediately to the CFO. If

not located, this property will be written off the books with the proper notation specifying the

reason.

POLICIES PERTAINING TO LIABILITY AND NET ASSETS

ACCOUNTS

Accrued Liabilities

Identification of Liabilities

The Accounting Department shall establish a list of commonly incurred expenses that may have

to be accrued at the end of an accounting period. Some of the expenses that shall be accrued by

GLCAC at the end of an accounting period are:

Salaries and wages

Payroll taxes

Vacation pay (see policy below)

Rent

Interest on notes payable

In addition, GLCAC shall record a liability for deferred revenue (revenue received but not yet

earned) in accordance with the revenue recognition policies described elsewhere in this manual.

Adjustments to deferred revenue accounts shall be made monthly.


Accrued Leave

Personnel policies permit employees to carry forward half of unused vacation leave from year to

year, depending upon their accrual rate. Such unused vacation leave is payable to an employee

upon termination of employment.

Accordingly, GLCAC records a liability for accrued leave to which employees are entitled. The

total liability at the end of an accounting period shall equal the total earned but unused hours of

leave, multiplied by each employee’s current hourly pay rate.

Leave that does not “vest” with employees (i.e., leave that is not paid to employees if unused at

the time of termination of employment), such as sick leave, shall not be accrued as a liability.

Notes Payable

GLACAC requires that all notes payable be approved by the Board of Directors and signed by

the Executive Director.

Recordkeeping

GLCAC maintains a schedule of all notes payable, mortgage obligations, lines of credit, and

other financing arrangements. This schedule shall be based on the underlying loan documents

and shall include all of the following information:

1. Name and address of lender

2. Date of agreement or renewal/extension

3. Total amount of debt or available credit

4. Amounts and dates borrowed

5. Description of collateral, if any

6. Interest rate

7. Repayment terms

8. Maturity date

9. Address to which payments should be sent

10. Contact person at lender

Accounting and Classification

An amortization schedule is maintained for each note payable. Based upon the amortization

schedule, the principal portion of payments due with the next year is classified as a current

liability in the statement of financial position. The principal portion of payments due beyond one

year is classified as long-term/non-current liabilities in the statement of financial position.

Demand notes and any other notes without established repayment dates shall always be classified

as current liabilities.


Unpaid interest expense shall be accrued as a liability at the end of each accounting period.

A detailed record of all principal and interest payments made over the entire term shall be

maintained with respect to each note payable. Periodically, the amounts reflected as current and

long-term notes payable per the general ledger shall be reconciled to these payment schedules

and the amortization schedules, if any, provided by the lender. All differences shall be

investigated.

Net Assets

Classification of Net Assets

Net assets of the Organization shall be classified based upon the existence or absence of donor-

imposed restrictions as follows:

Unrestricted Net Assets - Net assets that are not subject to donor imposed stipulations.

Temporarily Restricted Net Assets - Net assets subject to donor imposed stipulations that may or

will be satisfied through the actions of the Organization and/or the passage of time.

Permanently Restricted Net Assets - Net assets subject to donor imposed stipulations that the

Organization permanently maintain certain contributed assets. Generally, donors of such assets

permit the Organization to use all or part of the income earned from permanently restricted net

assets for general operations or for specific purposes. Permanent restrictions do not pass with the

expiration of time, nor can they be removed through the Organization’s actions.

Net assets accumulated that are not subject to donor imposed restrictions, but which the Board of

Directors of the Organization has earmarked for specific uses, shall be segregated in the

accounting records as "board-designated" funds within the unrestricted category of net assets.

Restrictions may be associated with either a time period (e.g. a particular future time period) or a

purpose (e.g. specific programs). A purpose stipulation will be considered a restriction only if it

is more specific than the broad limits resulting from the nature of the Organization, the

environment in which it operates, and the purposes specified in GLCAC's Articles of

Incorporation and Bylaws.

Reclassifications from Restricted to Unrestricted Net Assets

The Agency shall report in its statement of activities a reclassification from restricted to

unrestricted net assets if any of the following events occur:


1. Fulfillment of the purpose for which the net assets were restricted (e.g. spending

restricted funds for the stipulated purpose)

2. Expiration of time restrictions imposed by donors

3. Death of an annuity beneficiary

4. Withdrawal by the donor (or by a court) of a time or purpose restriction

If a donor stipulates multiple restrictions (such as a purpose and a time restriction),

reclassifications from temporarily restricted to unrestricted net assets shall be reported only upon

the satisfaction of the final remaining restriction.

Reclassifications from Unrestricted to Restricted Net Assets

If the Agency receives a restricted contribution from a donor who further stipulates that the

Agency set aside a portion of its unrestricted net assets for that same purpose, the Agency shall

report in its statement of activities a reclassification of net assets from unrestricted to temporarily

or permanently restricted, based on the specific nature of the restriction.

Disclosures

The Organization discloses in a footnote to the financial statements the different types of

temporary and permanent restrictions associated with the Organization’s net assets as of the end

of each fiscal year.

POLICIES ASSOCIATED WITH FINANCIAL AND TAX

REPORTING

Financial Statements

Standard Financial Statements of the Organization

Preparing financial statements and communicating key financial information is a necessary and

critical accounting function. Financial statements are management tools used in making

decisions, in monitoring the achievement of financial objectives, and as a standard method for

providing information to interested parties external to the Organization. Financial statements

may reflect year-to-year historical comparisons or current year budget to actual comparisons.

The basic financial statements that are maintained on an organization-wide basis shall include:


1. Statement of Financial Position - reflects assets, liabilities, and net assets of the

Organization and classifies assets and liabilities as current or non-current/long-term.

2. Statement of Activities - presents support, revenues, expenses, and other changes in net

assets of the Organization, by category of net asset (unrestricted, temporarily restricted

and permanently restricted), including reclassifications between categories of net assets.

3. Statement of Cash Flows - reports the cash inflows and outflows of the Organization in

three categories: operating activities, investing activities, and financing activities.

4. Statement of Functional Expenses – presents the expenses of the Organization in a

natural or objective format and by function (i.e., which program or supporting service

was served).

Frequency of Preparation

The objective of GLCAC’s Accounting Department is to prepare accurate financial statements in

accordance with generally accepted accounting principles and distribute them in a timely and

cost-effective manner. In meeting this responsibility, the following policies shall apply:

A standard set of financial statements described in the preceding section shall be produced on a

monthly basis, by the 20th

of each month. The standard set of financial statements described in

the preceding section shall be supplemented by the following schedules:

1. Individual statements of activities on a departmental and functional basis (and/or

program/grant basis)

2. Comparisons of actual year-to-date revenues and expenses with year-to-date budgeted

amounts

The monthly set of financial statements shall be prepared on the accrual method of accounting,

including all receivables, accounts payable received by the 2nd

Friday of the subsequent month.

Review and Distribution

It is the responsibility of GLCAC’s CFO the oversight of the preparation of all financial

statements and supporting schedules on a timely manner.

After review and approval by the CFO, a complete set of monthly financial statements, including

the supplemental schedules described above, shall be distributed to the following individuals:

Executive Director

Treasurer and all members of the Finance Committee

Program Directors and any other employee with budget-monitoring responsibilities


The Treasurer will present the complete set of financial statements for approval at the next

monthly Board meeting.

Financial statements may include an additional supplemental schedule prepared or compiled by

the CFO. The purpose of this schedule is to provide known explanations for material budget

variances in accordance with GLCAC’s budget monitoring policies described later in this manual

(under the “Financial Management Policies” section).

Budget Variance Analysis and Projections

On a quarterly basis, financial statements distributed to Department Directors with budgetary

responsibilities shall be accompanied by a request for variance analysis and projections. Each

Program Director shall prepare a report explaining the reasons for year-to-date variances from

budget in excess of the greater of $1,000 or five percent for each line item. In addition to

explaining the reasons for such variances, Program Directors shall also provide a projection of

the annual variance from budget or the steps that will be taken to avoid budget variances by year-

end. If a program has a deficit then the review and discussion of variances should occur on a

monthly basis until the program is running well financially.

Budget variance reports prepared by Program Directors shall be submitted to the CFO no later

than 30 days after the end of each quarter and shall be reviewed by the CFO.

Program Directors will inform the CFO as soon as they become aware of variances in future

periods that will exceed the about amount of 10%. The CFO will determine if awarding agency

approval is required for any budget changes.

Annual Financial Statements

A formal presentation of the Organization's annual financial statements shall be provided by the

Independent Auditor to the full Board of Directors. This presentation will be preceded by a

meeting with the Finance Committee, at which the Finance Committee will vote to accept or

reject the annual financial statements. See separate policies regarding the annual audit under

“Financial Management Policies.”

Trend Analysis

On an annual basis, in connection with the preparation of the preceding financial statements, the

CFO shall prepare a five-year revenue and expense report in order to facilitate the analysis of

financial trends experienced by the Organization. This report shall also include a five-year

comparison of certain key operating ratios, based on the Organization’s annual financial

statements. This report shall be submitted to the Executive Director, the Finance Committee and

the Audit Committee no later than 120 days after year end.


Government Returns

Overview

To legitimately conduct business, GLCAC must be aware of its tax and information return filing

obligations and to comply with all such requirements of Federal, state and local jurisdictions.

Filing requirements of GLCAC include, but are not limited to, filing annual information returns

with IRS, (IRS Form 990 Attorney General Public Charities Report (Form PC) and the Secretary

of State Annual Report).

Filing of Returns

The CFO shall be responsible for identifying all filing requirements and assuring that GLCAC is

in compliance with all such requirements. The Organization will file complete and accurate

returns with all authorities and make all efforts to avoid filing misleading, inaccurate, or

incomplete returns.

Filings made by GLCAC include, but are not limited to, the following returns:

1. Form 990 - Annual information return of tax-exempt organizations, filed with IRS. Form

990 for GLCAC is due on the fifteenth day of the fifth month following year-end, which

is February 15th. An automatic 3-month extension of time to file Form 990 may be

obtained filing Form 8868. Upon expiration of the first 3-month extension, a second 3-

month extension may be requested using Form 8868.

2. Form 990-T - Annual tax return to report GLCAC’s unrelated trade or business activities

(if any), filed with IRS. Form 990-T is due on the fifteenth day of the fifth month following

year-end, which is February 15th. An automatic 6-month extension of time to file Form

990-T may be obtained by filing Form 8868.

3. Form 5500 - Annual return for GLCAC’s employee benefit plans. Form 5500 is filed for

our health, dental life and pension plans. The health, life, and dental returns are due

January 31st whereas the pension return is due on July 31

st. A 3 month automatic

extension may be granted by filing a Form 5568 with the IRS. The returns are filed

electronically on the US Department of Labor’s EFAST website.

4. W-2's and 1099's - Annual report of employee and non-employee compensation, based

on calendar-year compensation, on the cash basis. These information returns are due to

employees and independent contractors by January 31 and to Federal Government by

February 28. W-2 and 1099 Forms are mailed out to each employee and to each non-

employee as it applies.


5. Form 941 - Quarterly payroll tax return filed with IRS to report wages paid to employees

and Federal payroll taxes. Form 941 is due by the end of the month following the end of each

quarter, or 10 days later if all payroll tax deposits have been made in a timely manner

during the quarter.

6. Attorney General Public Charities Report (Form PC) - Public Charities in

Massachusetts are required to file a Form PC with the Attorney General’s Office. The

report is due on February 15th

of each year and the filing fee is $1,000

7. Annual Report - Annually, non-profits in Massachusetts are required to file an annual

report with the Secretary of State’s office. This report is completed shortly after the

annual meeting. The filing fee is $15.00.

8. Uniform Financial Report (UFR) - Non-profits in Massachusetts need to file a uniform

Financial Report (UFR with the Massachusetts Operational Services Division within 145

days of the close of the fiscal year (February 15th)

.

GLCAC’s fiscal ends on September 30th

and tax year-end is on December 31st . All annual tax

and information returns of GLCAC (Form 990, Form 990-T) are filed on the accrual basis of

reporting.

Federal and all applicable state payroll tax returns are prepared by the Organization's external

payroll administrator.

GLCAC complies with all state payroll tax requirements by withholding and remitting payroll

taxes to the state of residency of each GLCAC employee.

Public Access to Information Returns

Under regulations that became effective in 1999, GLCAC is subject to Federal requirements to

make the following forms "widely available" to all members of the general public:

1. The three most recent annual information returns (Form 990), excluding the list of

significant donors (Schedule B) that is attached to the Form 990, but including the

accompanying Schedule A, and

2. GLCAC’s original application for recognition of its tax-exempt status (Form 1023 or

Form 1024), filed with IRS, and all accompanying schedules and attachments.

GLCAC adheres to the following guidelines in order to comply with the preceding public

disclosure requirements:

1. Anyone appearing in person at the offices of GLCAC during normal working hours

making a request to inspect the forms will be granted access to a file copy of the forms.


The CFO shall be responsible for maintaining this copy of each form and for making it

available to all requesters.

2. GLCAC shall comply with the Federal requirements to make its forms widely available

by posting all required forms on the Organization's web site and referring all requesters to

this web site within 7 days of receipt of any request for copies. In addition to making its

returns widely available on its web site, GLCAC will also permit visual inspections of its

returns to anyone personally appearing at the Organization's offices during normal

working hours and making such a request.

FINANCIAL MANAGEMENT POLICIES

Budgeting

Overview

Budgeting is an integral part of managing any organization in that it is concerned with the

translation of organizational goals and objectives into financial and human resource terms. A

budget should be designed and prepared to direct the most efficient and prudent use of the

Organization's financial and human resources. A budget is a management commitment of a plan

for present and future organizational activities that will ensure survival. It provides an

opportunity to examine the composition and viability of the Organization's programs and

activities simultaneously in light of the available resources.

Budgets are also prepared for funding sources and each grant manager must be aware of budget

modification requirements. Awarding agencies may or may not require approval for changes in

line items. GLCAC will document and follow all such requirements.

Preparation and Adoption

In preparing GLCAC’s annual budget, the following steps with be followed:

1. GLCAC will prepare an annual budget on the accrual basis of accounting. The CFO

gathers proposed organization-wide budget information from all Program Directors and

others with budgetary responsibilities and prepares the first draft of the budget.

2. After appropriate revisions and a compilation of all department budgets by the CFO, a

draft of the Organization-wide budget, as well as individual department budgets, is

presented to the Executive Director for discussion, revision, and initial approval.


3. The revised draft is then submitted to the Finance Committee, and finally to the entire

Board of Directors for adoption.

It is the policy of GLCAC to adopt a final budget before the beginning of the Organization’s

fiscal year.

Budgets for programs that are not on the Organization’s fiscal year will be prepared in

accordance with awarding agency requirements.

Monitoring Performance

It is the responsibility of GLCAC’s CFO to monitor its financial performance by comparing and

analyzing actual results with budgeted results. This function shall be accomplished in

conjunction with the monthly financial reporting process described earlier.

On a monthly basis, financial reports comparing actual year-to-date revenues and expenses with

budgeted year-to-date amounts shall be produced by the Accounting Department and distributed

to all Program Directors and to each employee with budgetary responsibilities. These individuals

shall be responsible for responding with a written explanation of all budget variances in excess

of five percent on a quarterly basis.

In addition, Program Directors shall submit monthly performance (non-financial) reports to the

Executive Director, the CFO and Board of Directors.

Budget and Program Revisions

GLCAC will request prior approval from Federal awarding agencies for any of the following

program or budget revisions:

1. Change in the scope or objective of the project or program, even if there is no associated

budget revision requiring prior written approval.

2. Change in a key person (Project Director, etc.) specified in the application or award

document.

3. The need for additional Federal funding.

4. The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or

vice versa, if approval is required by the Federal awarding agency.

5. The inclusion, unless waived by the Federal awarding agency, of costs that require prior

approval in accordance with OMB Circular A-122.


6. The transfer of funds allotted for training allowances (direct payment to trainees) to other

categories of expense.

Budget Modifications

After a budget has been approved by the Board of Directors and adopted by the Organization,

reclassifications of budgeted expense amounts of less than $5,000 within a single program may

be made by the Program Director, with approval from the CFO. Reclassifications of budgeted

expense amounts across programs of more than $5,000 may be made only with approval of the

Executive Director.

Any budget modification resulting in an increase in budgeted expenses or decrease in budgeted

revenues shall be made only with approval of the Executive Director and communicated to the

Board of Directors.

Annual Audit

Role of the Independent Auditor

GLCAC will arrange for an annual audit of the Organization's financial statements to be

conducted by an independent accounting firm. The independent accounting firm selected by the

Board of Directors will be required to communicate directly with the Organization's Audit

Committee upon the completion of their audit. In addition, members of the Audit Committee and

Executive Committee are authorized to initiate communication directly with the independent

accounting firm.

Audited financial statements, including the auditor's opinion thereon, will be submitted and

presented to the Board of Directors by the independent accounting firm at the Organization’s

monthly Board meeting following the completion of the audit, after the financial statements have

been reviewed and approved by the Audit Committee. In order to file the audit report and

Uniform Financial Report prior to the February 15th

deadline the audit needs to be approved at

the January Board meeting.

How Often to Review the Selection of the Auditor

GLCAC shall review the selection of its independent auditor in the following circumstances:

1. Anytime there is dissatisfaction with the service of the current firm

2. When a fresh perspective and new ideas are desired

3. Every 5 years to ensure competitive pricing and a high quality of service (this is not a

requirement to change auditors every five years; simply to re-evaluate the selection)


Selecting an Auditor

The selection of an accounting firm to conduct the annual audit is a task that is taken very

seriously. The following factors must be considered by GLCAC in selecting an accounting firm:

1. The firm’s reputation in the nonprofit community

2. The depth of the firm’s understanding of and experience with not-for-profit organizations

and Federal reporting requirements under OMB Circular A-133

3. The firm’s demonstrated ability to provide the services requested in a timely manner

4. The ability of firm personnel to communicate with Organization personnel in a

professional and congenial manner

If GLCAC decides to prepare and issue a written Request for Proposal (RFP) to be sent to

prospective audit firms, the following information shall be included:

1. Period of services required

2. Type of contract to be awarded (fixed fee, cost basis, etc.)

3. Complete description of the services requested (audit, management letter, tax returns,

etc.)

4. Identification of meetings requiring their attendance, such as staff or Board of Director

meetings

5. Organization chart of GLCAC

6. Chart of account information

7. Financial information about the Organization

8. Copy of prior year reports (financial statements, management letters, etc.)

9. Identification of need to perform audit in accordance with OMB Circular A-133

10. Other information considered appropriate

11. Description of proposal and format requirements

12. Due date of proposals


13. Overview of selection process (i.e., whether finalists will be interviewed, when a decision

shall be made, etc.)

14. Identification of criteria for selection

Minimum Proposal Requirements from prospective CPA firms shall be:

1. Firm background

2. Biographical information (resumes) of key firm member who will serve GLCAC

3. Client references

4. Information about the firm's capabilities

5. Firm's approach to performing an audit

6. Copy of the firm’s most recent quality/peer review report, including any accompanying

letter of findings

7. Other resources available with the firm

8. Expected timing and completion of the audit

9. Expected delivery of reports

10. Cost estimate including estimated number of hours per staff member

11. Rate per hour for each auditor

12. Other information as appropriate

In order to narrow down the proposals to the top selections, the CFO shall meet with the

prospective engagement teams from each proposing firm to discuss their proposal. Copies of all

proposals shall be forwarded to each member of the Audit Committee. After the CFO narrows

down the field of prospective auditors to three firms, final interviews of each firm are conducted

by the Audit committee who makes the final recommendation to the Board of Directors for

approval.

Preparation for the Annual Audit

GLCAC shall be actively involved in planning for and assisting with the Organization’s

independent accounting firm in order to ensure a smooth and timely audit of its financial

statements. In that regard, the Accounting Department shall provide assistance to the

independent auditors in the following areas:


Planning - The CFO is responsible for the timely preparation of the audit so that GLCAC can

comply with its federal, state and local tax filling obligation within the due time. The CFO is

responsible for delegating the assignments and responsibilities to accounting staff in preparation

for the audit. Assignments shall be based on the list of requested schedules and information

provided by the independent accounting firm.

Involvement - Organization staff will do as much work as possible in order to assist the auditors

and, therefore, reduce the cost of the audit.

Interim Procedures - To facilitate the timely completion of the annual audit, the independent

auditors may perform selected audit procedures prior to the Organization’s year-end. By

performing significant portions of audit work as of an interim date, the work required subsequent

to year-end is reduced. Organization staff will provide requested schedules and documents to

assist the auditors during any interim audit fieldwork.

Throughout the audit process, GLCAC will make every effort to provide schedules, documents

and information requested by the auditors in a timely manner.

Concluding the Audit

Upon receipt of a draft of the audited financial statements of GLCAC from its independent

auditor, the CFO shall perform a detailed review of the draft, consisting of the following

procedures:

1. Carefully read the entire report for typographical errors.

2. Trace and agree each number in the financial statements and accompanying footnotes to

the accounting records and/or internal financial statements of GLCAC.

3. Review each footnote for accuracy and completeness.

Any questions or errors noted as part of this review shall be communicated to the independent

auditor in a timely manner and resolved to the satisfaction of the CFO.

It shall also be the responsibility of the CFO to review and respond in writing to all management

letter or other internal control and compliance report findings and recommendations made by the

independent auditor.

In addition, the Single Audit Clearinghouse form shall be completed and a copy submitted to the

Audit Committee.


Internal Audit

Overview and Process

As part of the Agency’s commitment to the highest quality of internal accounting control, the

Agency conducts periodic internal testing of its core financial systems on a quarterly basis.

Testing is conducted by qualified personnel under the supervision and review of senior

management. Testing is as follows:

1. For approximately 5% of employees on the Health and Dental Insurance company (ies)

invoice(s), trace to inclusion on the payroll register at the appropriate level (e.g., single,

family, etc.) and to the personnel file deduction authorization form. [The agency has the

choice of three (2) plan types and the option of an Individual or Family plan.]

2. For employees on FMLA without pay, trace charges from the medical/dental, disability,

and life insurance invoices to the billings sent to the employees and payments received

from the employees. Verify that benefit deductions are being collected through Accounts

Receivable.

3. On a sample basis, examine 5% of agency employees’ time sheets for appropriate

signatures, and trace time allocation on time sheet to the payroll register.

4. Employees are paid in-area travel on a bi-weekly basis. Quarterly select one employee

from varying departments (selected on a rotating basis) and trace the date of travel to the

time sheet to verify that the employee was indeed at work those days.

5. Run an Accrued Time Report in payroll, at the end of each quarter to verify that no

employee has been paid without time earned

6. On a quarterly basis, select fee collections (cash) received by Head Start, Child Care and

Community Service locations and trace to receipt and bank deposit by the Finance

Department.

7. On a quarterly basis, select employees serviced by GLCAC, Inc. programs and examine

income documentation to determine program eligibility.

8. On a quarterly basis, select a sample of cash disbursements and test whether all

procurement processes have been followed.


INTERNAL AUDIT TESTING SUMMARY

Quarter Ended:____________________

Health Insurance Deductions: Sample Size:____________

Dental Insurance Deductions Sample Size:____________

FMLA Collection of Benefit Deductions Sample Size:____________

Employee Timesheets Sample Size:____________

In-Area Travel Sheets Sample Size:_____________

Accrued Time Report

Fee Collections Head Start ` Child Care Community Service

Cash Disbursement Testing

Employees Served by GLCAC, Inc. Programs Employees

Examined

Please attach a separate report that documents details of testing and any areas that require

corrective/disciplinary action that needs to be taken as a result of this internal audit.

Signed by

_____________________________________ Date:____________________

_____________________________________ Date:____________________

Chief Financial Officer


Insurance

Overview

It is fiscally prudent to have an active risk management program that includes a comprehensive

insurance package. This will ensure the viability and continued operations of GLCAC.

GLCAC maintains adequate insurance against general liability, as well as coverage for buildings,

contents, computers, fine arts, equipment, machinery and other items of value.

Coverage Guidelines

As a guideline, GLCAC will arrange for the following types and levels of insurance as a

minimum:

Type of Coverage Amount of Coverage

Comprehensive General Liability $1,000,000/$3,000,000

Automobiles for Employees, $1,000,000

Employee dishonesty/bonding $100,000

Property Insurance GLCAC, Inc. property is insured at

replacement value

Directors and Officers $1,000,000 (with an appropriate deductible

level)

Theft $550,000

Workers' Compensation To the extent required by law

Child Accident Insurance $10,000/$25,000 coverage for Child Care & Head

Start children that are taken off-site.

Pollution Occurrence Insurance Environmental insurance required by United States

Department of Energy $1,000,000

Lead Paint Liability Insurance $1,000,000

Umbrella $1,000,000


Computer Coverage $808,000 computers & electronic equipment are

insured at replacement value.

GLCAC shall maintain a detailed listing of all insurance policies in effect. This listing shall

include the following information, at a minimum:

1. Description (type of insurance)

2. Agent and insurance company, including all contact information

3. Coverage and deductibles

4. Premium amounts and frequency of payment

5. Policy effective dates

6. Date(s) premiums paid and check numbers

Record Retention

Policy

GLCAC retains records as required by law and destroys them when appropriate. The destruction

of records must be approved by the CFO and logged into the Organization’s Destroyed Records

Log. The formal records retention policy of GLCAC is as follows:

Accident reports/claims (settled Cases) 7 Years

Accounts payable ledgers and schedules 7 Years

Accounts receivable ledgers and schedules 7 Years

Audit reports Permanently

Bank reconciliations 3 Years

Bank Statements 3 Years

Chart of Accounts Permanently

Cancelled Checks 7 Years

Contracts, mortgages, notes and leases:

Expired 7 Years

Still in effect Permanently

Correspondence:

General 2 Years

Legal and important matters only Permanently

Routine with customers and/or vendors 2 Years

Deeds, mortgages and bills of sales Permanently

Depreciation schedules Permanently

Duplicate deposit slips 3 Years

Employment applications 3 Years

Expense analyses/expense distribution schedule 7 Years


Financial statements:

Year end Permanently

Other Optional

Garnishments 7 Years

General ledgers/year end trial balance Permanently

Insurance policies (expired) 3 Years

Insurance records (policies, claims, etc.) Permanently

Internal audit reports 3 Years +

Internal reports 3 Years

Inventories of products, materials and supplies 7 Years

Invoices (to customers, from vendors) 7 Years

Journals Permanently

Minute books of directors, bylaws and charters Permanently

Notes receivable ledgers and schedules 7 Years

Payroll records and summaries 7 Years

Personnel records (terminated) 7 Years

Petty cash vouchers 3 Years

Physical inventory tags 3 Years

Property records (incl. depreciation schedules) Permanently

Purchase orders:

Purchasing department copy 7 Years

Other copies 1 Year

Receiving sheets 1 Year

Retirement and pension records Permanently

Requisitions 1 Year

Sales records 7 Years

Subsidiary ledgers 7 Years

Tax returns and worksheets, examination reports

and other documents relating to determination

of income tax liability Permanently

Time sheets/cards 7 Years

Trademark registrations and copyrights Permanently

Training manuals Permanently

Voucher register and schedules 7 Years

Withholding tax statements 7 Years


EXHIBITS


Exhibit #1


Exhibit #2


Investment Policies

Overview

GLCAC treats all assets of the Organization, including those funds that are legally unrestricted,

as though they are held in a fiduciary capacity for the purpose of accomplishing the

Organization’s tax-exempt mission. As such, the policies described in this section are to be

interpreted in light of that overall sense of stewardship, and the investment standards shall be

those of a prudent investor.

Funds to be invested do not include those from Federal awards. Such funds will be spent on

program requirements as budgeted, or returned to the awarding agency. Any advances of

Federal funds will be maintained in an interest-bearing account. Interest earned on such funds

will be allocated to federal grants based on a percentage of funds received during the month.

Delegation of Authority

The Board of Directors of GLCAC has delegated supervisory authority over its investing

activities to the Finance Committee. The Finance Committee is responsible for regularly

reporting on the Organization’s investments to the full Board of Directors.

The Finance Committee is authorized to retain one or more Investment Counselors to assume the

investment management function. In that regard, the Finance Committee may enter into

agreements with, delegate investment authority to, pay compensation to, and receive reports

from one or more Investment Counselors.

Investment Objectives

GLCAC’s investment objectives are the preservation and protection of the Organization’s assets,

as well as the maintenance of liquid reserves to meet obligations arising from unanticipated

activities, by earning an appropriate return on investments.

Allowable Investments

Investments of GLCAC shall be made exclusively with the following securities:

1. Federally-insured Certificates of Deposit, including interest, at commercial banks or

savings and loan institutions;

2. U.S. Treasury securities and securities of Federal agencies and instrumentalities;

3. Repurchase agreements with financial institutions collateralized by U.S. Treasury or

Federal agency securities;

Exhibit #3


4. Corporate bonds and notes rated A or better by Moody’s and Standard & Poors;

5. Commercial paper rated P-1/A-1 by Moody’s and Standard & Poors;

6. Money market funds that invest in securities approved under these guidelines.

GLCAC shall not engage in margin transactions, short selling, commodity transactions or use of

derivatives.

Accounting Treatment

All purchased investments shall initially be recorded at cost. All investments acquired by

donation to GLCAC shall initially be recorded at their fair market value as of the date of

donation. Donated investments shall be recorded as unrestricted, temporarily restricted, or

permanently restricted income and net assets based on the existence or absence of such

restrictions, as defined earlier.

Subsequent to acquisition, GLCAC carries all equity securities with readily determinable fair

market values and all debt securities at their market values. Adjustments to market value shall be

made in the accounting records and financial statements of GLCAC on a monthly basis.

Adjustments to market value result in unrealized gains and losses on investments. Such gains and

losses resulting from contributed investments (or from investments purchased with contributed

funds) shall be classified as unrestricted, temporarily restricted, or permanently restricted based

on the existence or absence of explicit restrictions on such appreciation and depreciation from

the donor, as defined earlier. Such unrealized gains and losses from investments purchased with

unrestricted funds shall be classified as unrestricted.

Procedures and Reporting

The following procedures will be followed to ensure that investments are properly managed and

that these investment policies are consistent with the mission of GLCAC and accurately reflect

the current financial condition of the Organization:

1. The CFO shall maintain a schedule of investments and reconcile this schedule with the

general ledger and with investment account statements on a monthly basis.

2. The schedule of investments shall include the following information with respect to each

investment:

a. Date acquired

b. Method of acquisition (purchase or donation)

c. Cost or basis at acquisition

d. Description of investment

e. Interest rate (if applicable)


f. Date of maturity (if applicable)

g. Holder/issuer of security

h. Current market value

i. Unrealized gain or loss

j. Accrued interest receivable (if applicable)

k. Income received, year-to-date (i.e., interest, dividends, etc.)

3. The monthly investment reports detail the portfolio’s composition and performance for

the month, along with a comparison to budget and to the prior year.

4. The annual investment report is presented to the Board of Directors at the time the

GLCAC audit is presented, outlining in detail the investment portfolio’s composition and

performance for the fiscal year, along with a comparison to appropriate market indices.

The report will show results for the most recently-completed fiscal year and for last three

years.

5. Investment policies shall be reviewed annually by the CFO and the Executive Director,

working with the Finance Committee, to determine any appropriate modifications.

6. Recommendations for any revisions or modifications to the investment policy will be

made by the Finance Committee to the Board of Directors for their approval.


Leases

Classification of Leases

GLCAC classifies all leases in which the Organization is a lessee as either capital or operating

leases. GLCAC shall utilize the criteria described in Statement of Financial Accounting

Standards No. 13 in determining whether a lease is capital or operating in nature. Under those

criteria, a lease shall be treated as a capital lease if, at the time of entering into the lease, any of

the following factors are present:

1. The lease transfers ownership to GLCAC at the end of the lease term;

2. The lease contains a bargain purchase option;

3. The lease term is equal to 75% or more of the estimated economic life of the leased

property; or

4. The present value of the minimum lease payments is 90% or more of the fair value of the

leased property (using, as the interest rate, the lesser of GLCAC's incremental borrowing

rate or, if known, the lessor's implicit rate).

All leases that do not possess any of the four preceding characteristics shall be treated as

operating leases. In addition, all leases that are immaterial in nature shall be accounted for as

operating leases.

Reasonableness of Leases

GLCAC assess the value of leases according to the requirements of A-122_43 as follows:

The rate is reasonable when compared to similar property in the same area,

The rate of any alternatives, and

The type, life expectancy, condition and value of the property leased.

Rental arrangements will be reviewed every 3 to 5 years to determine if circumstances have

changed and other options are available.

Accounting for Leases

All leases that are classified as operating leases and immaterial capital leases shall be accounted

for as expenses in the period in which the lease payment is due. For leases with firm

commitments for lease payments that vary over the term of the lease (i.e., a lease with fixed

Exhibit #4


annual increases that are determinable upon signing the lease), the amount that GLCAC shall

recognize as monthly lease expense shall equal the average monthly lease payment over the

entire term of the lease. Differences between the average monthly payment and the actual

monthly payment shall be accounted for as an asset or liability.

All leases that are classified as capital leases shall be treated as fixed asset additions. As such,

upon the inception of a capital lease, GLCAC shall record a capitalized asset and a liability under

the lease, based on the net present value of the minimum lease payments (or the fair value of the

leased asset, if it is less than the present value of the lease payments). Periodic lease payments

shall be allocated between a reduction in the lease obligation and interest expense. The

capitalized asset recorded under a capital lease shall be depreciated over the term of the lease,

using the straight-line method of depreciation.

GLCAC shall also maintain a control list of all operating and capital leases. This list shall

include all relevant lease terms, including a schedule of future annual lease payments

obligations.

Scheduled Increases in Rent Payments

Leases with fixed (determinable amounts stated in the lease) increases in monthly rental

payments shall be accounted for in a manner that results in an equal monthly rent expense being

reported in each month over the entire initial lease term. Accordingly, monthly rent expense in

the first year of such leases shall be greater than the monthly cash payment, with the difference

being recorded as a liability. This liability will be reduced in the later years of the lease when the

monthly cash rent payment is less than the monthly rent expense. To the extent future rent

increases are not determinable at the beginning of the lease (because they are based on inflation

or other factors), the preceding policy shall not apply and monthly rent expense shall be equal to

the monthly cash payment, except as noted below.

Rent Abatements and Lease Incentives

Abatements of monthly rent payments, cash incentives, and other lease incentives shall be

accounted for in a manner that results in an equal amount of monthly rent expense over the term

of the lease agreement (before considering the effects of inflation-based rent increases, which

will increase rent expense over the term of a lease). As a result, incentives received up front or

over the early months of a lease, shall be established as a liability in GLCAC’s accounting

records (as deferred lease incentives or some similar name). This liability shall be amortized as

an offset (credit) to rent expense over the term of the lease agreement.

Changes in Lease Terms

As described in earlier policies, leasehold improvements and deferred rent incentives are

amortized over the initial lease term. If such lease term is changed prior to the expiration of the


initial lease term, GLCAC will revise amortization to reflect the remaining lease term as of the

effective date of the lease modification.


Vending Machine

Policy

The purpose of this policy is to establish procedures to govern vending machines installed in

GLCAC, Inc. facilities

It is the policy of the GLCAC, Inc., to contract for, supervise, maintain and account for the

proceeds from vending machines located in GLCAC, Inc. facilities in a manner that is fair, that

maximizes the revenues from those machines, and that establishes controls to avoid fraud, theft

or the appearance of impropriety.

Vending machines for the dispensing of food, beverages or other approved items are authorized

in GLCAC, Inc. facilities provided that all contracts for vending machines are approved by the

GLCAC, Inc. Board of Directors.

1. All vending machines shall be under the supervision of the Property Director, Program

Director or supervisor in charge of the facility in which the machine is located. That

person is responsible for supervising the operation of the machine so it is compliance

with this policy and any applicable laws.

2. The items to be dispensed from a vending machine located in a GLCAC, Inc. facility

shall be approved by the person responsible for the operation of the machine. The

GLCAC, Inc. attempts to promote a healthy work environment for its employees, in

keeping with this philosophy, healthy snack alternatives will be made available.

3. Vending machines should be located in an area that conforms to any applicable building,

fire or life/safety codes and that provides convenience of operation, accessibility and ease

of maintenance.

4. The process of contracting for vending machines shall be conducted in compliance with

GLCAC, Inc. Procurement Procedures outlined on pages 74 to 82 in the Policies and

Procedures Manual. A record shall be kept of all bids or quotations received with the

names, amounts and successful bidder indicated. All bids and quotations will be kept on

file for a period of three years after their receipt.

5. Any bid or quotation must specify all commissions to be paid from the machines and any

non-commission amounts to be paid as a result of the award of the contract. The non-

commission amounts can include, but are not limited to, cash payments and in-kind

contributions.

6. All contracts for vending machines must be approved by the GLCAC, Inc. Board of

Directors. Any contract not made in compliance with this policy shall be void. Any

employee signing an unauthorized contract will be subject to personal liability and will

Exhibit #5


be subject to disciplinary action outlined in the GLCAC, Inc. Administrative Policies,

Rule and Regulations.

7. All vending machine contracts must conform to the GLCAC, Inc Conflict of Interest

Policy. No GLCAC, Inc., employee or Board member shall be involved directly or

indirectly in a vending machine contract with the GLCAC, Inc.

Accounting of Vending Machines Proceeds

1. Proceeds from vending machines must be accounted for and reported in compliance with

generally accepted accounting principles (GAAP).

2. The proceeds from the machines must be expended in accordance with established

procedures outlined in the GLCAC, Inc. Accounting Policies and Procedures Manual.

3. All proceeds and expenditures from vending machines will be subject to audit as part of

our annual audit process.

4. All proceeds are submitted to the Assistant CFO. The Assistant CFO will ensure that the

proceeds are deposited into the proper GLCAC, Inc. bank account.

5. A separate fund will be maintained for the vending machines in each facility so that the

proper accounting records will be maintained and revenue and expenses can be

documented in a manner that is transparent.

6. Some of the proposed uses of the proceeds from the vending machines, include but are

not limited to, expenditures designed to boost employee morale, improve work

performance and improve employee-employer relations

Documents

Greater Lawrence Community Action Council, Inc. “GLCAC ...The Greater Lawrence Community Action Council, Inc. (GLCAC) is a private non-profit agency incorporated under the statutes