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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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:
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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.
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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:
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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.
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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:
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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.)
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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.
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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.
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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.
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.
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.
2. The CFO reviews the Description and Cost Estimate to determine the reasonableness and
allowability of the purchase.
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.
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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
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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.
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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.
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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:
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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.
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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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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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.
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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
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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))
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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.
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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.
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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:
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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.
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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
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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.
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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
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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:
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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.
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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
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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.
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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.
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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.
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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.
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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:
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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.
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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.
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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.
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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.”)
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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.
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.
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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
Payroll Administrator
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.
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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.
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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:
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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.
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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.
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Payroll Administrator
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
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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:
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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:
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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:
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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:
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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
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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.
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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.
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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.
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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.
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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.
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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)
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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
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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:
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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.
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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.
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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
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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
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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
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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
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EXHIBITS
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Exhibit #1
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Exhibit #2
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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
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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)
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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.
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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
Last updated October, 2013 Page 123
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
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initial lease term, GLCAC will revise amortization to reflect the remaining lease term as of the
effective date of the lease modification.
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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
Last updated October, 2013 Page 126
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