FINANCIAL MANAGEMENT GUIDELINES
DRAFT
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The management of the finances of any large organization is a complex task usually involving many different people performing different functions. The separation of functions is at the heart of what is called internal control. 

In general, internal control includes all actions taken by an organization to safeguard its assets, verify the accuracy and reliability of its accounting data, foster efficiency, and adhere to good management practices. Some of the more important features of a system of internal control include: physical protection of assets, adequate records, competent personnel, separation of accountability from physical custodianship, assignment of responsibility, division of work, rotation of personnel, and internal audit and review.  This can be accomplished by using well‑established procedures that minimize the vulnerability of the organization’s assets and provide a permanent record of the financial activity.

Financial Records    Financial record keeping is an important part of accountability.  Items such as deposit slips, receipts, disbursements, and various authorizations have historical value and should be preserved. It is important that the organization have an effective system of record keeping that provides complete documentation for all financial transactions. 

The key records must be preserved and safeguarded. In particular, all accounting records, investments, and unused checks should be kept in a locked fireproof cabinet or safe in the parish. 

Financial Accounts.     WISDOM should limit itself to a single checking account for operational disbursements, a separate checking account for payroll, and a savings or some other interest-bearing account.  Multiple accounts reduce accountability and lessen the effectiveness of internal controls. 

Periodically, a survey of local financial institutions should be conducted to determine if any accounts have been established in the name of WISDOM.  This survey should be the responsibility of the Treasurer of WISDOM. 

The executive officers of WISDOM should be the only authorized signators on all checking accounts, savings accounts, and other financial accounts.  Under no circumstances should a paid employee or volunteer office staff of WISDOM be an authorized signatory on any account. 

Procedures for Receipts.     Receipts include all monies received by WISDOM whether in the form of cash or check, and include grants, member dues, fund raising, and reimbursements/refunds. The following procedures should be followed regardless of the type of receipt. 

·         All receipts should be counted, deposited on a timely basis, and recorded in the general ledger.  Deposits should not be made by any of the WISDOM organizers.  If receipts cannot be deposited daily, they should be kept in a locked file cabinet or safe until a bank deposit can be made. 

·         The checks should restrictively endorsed ("For Deposit Only in the Account of WISDOM") immediately upon receipt. 

·         Two-part receipt forms should be used when cash is received.  The WISDOM office retains the carbon copy of the receipt. 

·         Bank reconciliations should be conducted on a monthly basis within two weeks of receipt of the statement. The WISDOM Treasurer or a volunteer independent of other cash functions should perform the bank reconciliations, and follow up promptly on significant, unusual reconciling items.  Bank reconciliations should be retained for future reference. 

Fund Raising Receipts Procedures.     Various fund raising events may be conducted by WISDOM in order to generate income. These events often involve large amounts of cash and can represent moments of high vulnerability. The following procedures should be followed by all persons involved in WISDOM fund raising activities: 

·         During fund raising events, at least two individuals must be present to control all cash receipts. These same individuals should take the cash receipts to a secure location for counting. Large amounts of cash should not be left to accumulate for a long period of time.  All individuals who participate in the cash count should sign the WISDOM Fund Raiser Cash Receipts form.  The signed forms are to be maintained in the WISDOM office. 

·         The counters should restrictively endorse (“For Deposit Only in the Account of WISDOM”) all checks received. 

·         All amounts received should be deposited in the bank deposit vault as soon as possible after the event. Where large amounts are involved, periodic deposits should be made during the event. A copy of the deposit slip(s) should be given to the WISDOM office staff.  Any amounts not deposited shall be kept in a locked fireproof cabinet or safe. 

·         The bookkeeper should record the deposit in the checkbook/general ledger. 

Reimbursement/Refund Receipts Procedures.     The following procedures regarding the handling of reimbursement and refund receipts should be followed. 

·            Reimbursements to WISDOM for unused cash advances (see Cash Advance Procedure in Disbursements below) should submitted in the form of a check to the WISDOM office within two weeks of the end of the event that necessitated the cash advance. 

·         Two-part receipt forms should be used when cash is received.  The WISDOM office retains the carbon copy of the receipt. 

·         Checks should be restrictively endorsed immediately upon receipt. All amounts should be deposited in the bank account on a daily basis. A copy of the deposit slip should be given to the bookkeeper, and the bookkeeper should record the amount in the checkbook or appropriate ledger, crediting the expense account that was charged in the original cash advance. 

Procedures for Disbursements.     While it is important to safeguard all receipts for the organization, it is equally important to ensure that disbursements are made for legitimate WISDOM purposes. The following procedures should be followed to establish that legitimacy: 

·         Only individuals who are authorized should order supplies and place orders on WISDOM's behalf, including contracts for maintenance, repairs, and construction.  Those designated as “authorized individuals” are organizers and paid office staff. 

·         Receipts, invoices, and other support for all disbursements should be maintained on file in an orderly manner. 

·         Before approving payment, the delivery of goods or services must be verified, and the invoice reviewed for mathematical accuracy.  The proper account to be charged should also be included on the invoice. 

·         All disbursements should be entered into the general ledger system (using the “Enter Bills” function) as soon after approval as possible.  If a vendor grants a purchase discount, the due date should be entered to allow for taking the discount whenever possible.  

·         After invoices have been properly approved by those individuals designated to perform this function, the checks are prepared by the bookkeeper with the appropriate supporting documentation or invoices attached and given to the authorized signators for their review and signature.  Pre-numbered checks should be used for all disbursements. 

·         Two signatures are required on all disbursements.  In most cases, the first signature is that of the person who is functioning as treasurer.  The president or another officer of WISDOM should be the second signer, and should review all support for the disbursement prior to signing.  This prevents fraudulent check writing and keeps organizers and other employees free from suspicion.  Under no circumstance should the checks be returned to the bookkeeper for mailing. 

·         Under no circumstances should blank checks be pre-signed by one of the signators, nor should a rubber stamp be used. 

·         All disbursements should be made via checks printed from the general ledger system.  Checks should be written twice a month (on the 15^th and 30^th day of each month – except February.)  “Emergency” checks require the approval of the treasurer before check writing. 

·         Once paid, all receipts, invoices, etc., should be marked paid, with date and check number identified to assure that such items are not paid twice by mistake. 

Petty Cash Fund Procedures.    A petty cash fund provides an amount of cash set aside for the purpose of making immediate small expenditures such as freight or postage, which, if paid by check, would cause delay, annoyance, and excessive expense of maintaining additional records. 

·         A petty cash fund may be established.  A petty cash fund should be established with a limit of $25.00 (twenty-five dollars.)  A single person should be designated as the cashier for a given petty cash fund. The cashier assumes full responsibility for the operation of the fund. 

·         Disbursements from the petty cash fund should meet the same documentation requirements as any other disbursements that would normally be paid by check.  Vouchers are used to support each disbursement. 

·         The fund should be reimbursed periodically for the exact amount of the vouchers so as to restore it to its original sum.  When reimbursed, the vouchers should be given to the bookkeeper for posting to the proper expense accounts. 

·         Revenues from any activities such as the sale of supplies or tickets shall not be deposited to any petty cash funds. 

Compensation and Payroll Procedures.     The proper recording and maintenance of payroll records is important not only for insuring that employees receive their just compensation and for determining the costs of WISDOM operations, they are also required for federal and state tax purposes. 

·         The Internal Revenue Service defines an employee as "anyone who performs services subject to the will and control of the employer both as to what shall be done and how it shall be done" and receives some type of remuneration for such services.  By this definition, the payments of “stipends” for tasks performed for WISDOM is inappropriate. 

·         WISDOM uses an outside payroll service that records current period earnings, by employee; quarterly and annual earnings, by employee; and current, quarterly, and annual totals for taxes withheld from all employees.  The outside payroll service files all of the necessary reports and forms for the government as well as preparing the withholding tax checks for both federal and state revenue agencies. 

·         Salaries and other compensation for individual employees should be approved by the Executive Committee and documented in the minutes of the related meeting.  

·         For part‑time or other employees paid on an hourly basis, some type of time report should be prepared by those individuals and approved by the organizer.  

·         The regular payroll should be reviewed by the treasurer of WISDOM.  The purpose of this review is to ensure that it has been prepared properly and is reasonable in light of WISDOM operations. The treasurer should also follow up on a regular basis to ensure that the organizations within WISDOM receive an accurate and timely billing for their portion of salaries and benefits as well as unemployment insurance. 

·         Employees may choose to participate in a tax sheltered annuity program. If WISDOM enters into a formal written contract with any one of its employees whereby such employee agrees to take a reduction in the salary previously agreed upon, such amount of reduction may be remitted to an authorized TSA program of the employee's choice to pay the premium of a "Tax Sheltered Annuity."  The Internal Revenue Service outlines the conditions which MUST be met by the parties to the contract in order to eliminate this part of the employee's compensation from income tax (the payment is not exempt from social security tax). One of the I.R.S. requirements is that the employer treat the payment on his books as a payment of a fringe benefit and not as salaries or wages.  

FINANCIAL REPORTING GUIDELINES AND PROCEDURES 

A key to effective management of any organization is the timely dissemination of relevant information to the correct users.  This is particularly true with regard to financial management. The key words in that management principle are timely, relevant, and correct. 

Financial Reporting for Management and Control of Operations         Management is usually concerned with two problems simultaneously, maintaining a positive cash flow on a continuous basis, and ensuring that the annual budget is complied with. Thus, some sort of meaningful, periodic financial reporting is needed.

·         Financial reports against the budget and previous year are very useful for controlling operations. The revenues and expenses that have occurred for the reporting period are compared with those budgeted for the period and those incurred in the previous year.  Generally, monthly reports are sufficient for most programs or functions in WISDOM.  The level of detail used must meet the management needs of WISDOM. 

·         A Profit and Loss statement will be prepared monthly for review by the Wisdom organizer and the executive committee.  The report will include a comparison to the budget and previous year-to-date.   

·         A Balance Sheet is the “barometer” of the financial health of an organization.  It shows the amounts in the organization’s financial accounts, the values of other organizational assets, and the liabilities and equity of the organization.  A Balance Sheet will be prepared monthly for review by the WISDOM organizer and the executive committee.  The report will include a comparison to the previous month and the previous year. 

·         Reports for the months of March, June, September and December shall be forwarded to the organizers of the member organizations of WISDOM.  Member organizations shall forward to WISDOM the same reports for those same months to WISDOM for review by the organizer and the executive committee.  This procedure will assist in finding potential “trouble spots” within the WISDOM network and formulating possible solutions or remedies.