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Financial Management Guidelines

By Laurie Morales,2014-05-16 08:45
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Financial Management Guidelines

    Financial Management Operating Procedures

    For Louisiana’s 4-H Foundations

     The purpose of this guideline is to establish operating procedures for the financial

    management responsibilities of the Louisiana 4-H Foundation (State Foundation) and the

    Louisiana’s Parish 4-H Foundations. The State and Parish 4-H Foundations are separate and legal entities responsible for controlling and administering 4-H funds. These procedures are the

    basis from which the Louisiana State 4-H Foundation and the Parish 4-H Foundations are to

    develop policies and procedures to administer and control their funds.

Articles of Incorporation

1) Each 4-H Parish Foundation is to be properly incorporated as a non-profit entity organized so

    as to be recognized by the Internal Revenue Service as a 501(c)(3) or 509(a)(3) corporation.

    2) The articles of incorporation are to specifically identify the organization as an LSU AgCenter

    4-H supporting organization. The articles must also incorporate the United States Department

    of Agriculture’s (USDA) Federal regulations

    (Title 18, U.S.C. 707) on the oversight and use of

    the 4-H Name and logo.

    3) The 4-H Parish Foundation fiscal year must coincide with the State 4-H Foundation fiscal

    year of July 1 through June 30.

    4) The articles of incorporation and the bylaws of the Parish 4-H Foundations are to be crafted

    in such a way to ensure compliance with LA R.S. 17:3390 specifically regarding composition

    of the Parish 4-H Foundation Board of Directors. Membership must be clearly defined in the

    articles.

    5) The articles of incorporation must include provisions for the transfer of the organization’s

    assets upon disaffiliation or dissolution. The assets must be transferred to the State 4-H

    Foundation.

    6) Each Parish 4-H Foundation will obtain its own Federal Identification Number.

    7) Filings with federal and state agencies must be current. These include the corporation’s

    annual report to the Louisiana Secretary of State, IRS Form 990 and UBIT filings, etc.

    8) Meetings of Parish 4-H Foundations are to be held periodically in a public facility, open to

    all interested parties in accordance with all Civil Rights, Affirmative Actions and EEO

    Requirements.

    Affiliation Agreement

    1) Each Parish 4-H Foundation must execute an affiliation agreement with the State 4-H

    Foundation and the LSU AgCenter Louisiana Cooperative Extension Service (LCES). The

    State 4-H Foundation will enter into an affiliation agreement with the LCES.

    Controls

    1) The Parish 4-H Foundations must employ various control procedures to ensure that 4-H and

    system objectives are obtained. This is to include a system of controls that provides a

    reasonable assurance that errors will not occur and, if they do occur, that they will be

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    detected in a timely manner. Any fraud detected must be reported promptly to the appropriate

    officials including but not limited to the State 4-H Foundations and to the LCES Director.

    These control procedures involve the proper authorization of transactions and activities, the

    segregation of incompatible duties, appropriate documentation and records, and independent

    checks on performance and proper valuation of amounts recorded in the accounts. 2) A predominant control procedure is the Parish 4-H Foundation Boards’ oversight of the

    proper accounting for foundation activities. At least quarterly, a board member or designee

    must review the foundation books maintained to determine that policies and procedures are

    being followed and any deviation must be appropriately addressed and reported to the Parish

    Chair.

    3) Boards must verify that all funds raised and expended were in compliance with the youth

    development educational goals of 4-H. All bank balances must be reconciled with book

    balances on a monthly basis by someone other than the one who writes the check. The

    completed reconciliation must be reviewed and signed by the president or designee of the

    Parish 4-H Foundation. Any variances in the balances must be investigated and explained.

    Balances in the petty cash account must be reconciled on a monthly basis. All un-issued

    checks must be safeguarded and kept under lock.

    4) The Parish 4-H Foundation Boards are to require periodic financial reports from the

    accountant or treasurer which would allow proper oversight of the foundation’s financial

    activities including collects, disbursements, balances, and investments. These financial

    reports must be produced and reviewed in a timely manner by the Parish 4-H Foundation

    Boards. Professional skepticism of unusual balances, transactions, and the like are to be

    applied during the review. These financial reports must be approved by the Parish 4-H

    Foundation Boards and forwarded to the State 4-H Foundation for their review annually at

    fiscal year end. The Parish 4-H foundation annual report is due to the State 4-H Foundation

    within 60 days of the close of the fiscal year.

    5) An adequate system of internal controls is based on segregation of duties. Where two or more

    persons have separate responsibilities in the accounting process and their activities provide

    for a check on prior activities, there is a system of checks and balances. 6) A good system of internal accounting controls must provide the ability to trace a transaction

    through the accounting system. The term “audit or accounting trail” means that transactions

    can be traced from original documentation, invoices, receipts, etc., to the initial posting in a

    journal, to summarized entry in the general ledger, and to periodic financial statements. 7) Formal Parish 4-H Foundation Board’s policies must also address the safekeeping of the

    assets and records. For example, the use of locking files, storing of inventories, etc. All

    accounting records of the foundation are to be subjected to appropriate security measures

    which would protect them from theft, loss, unauthorized entry, fire water damage, etc. 8) A single interest-bearing bank account (including but not limited to the general 4-H,

    livestock and other 4-H money) must be established in accordance with the Parish 4-H

    Foundation’s policy and approved by the Parish 4-H Foundation Board. Separate books not

    bank accounts may be maintained for different project areas if necessary. Signature

    authorization must be kept to a minimum with checks over $500.00 requiring two signatures.

    AgCenter personnel are restricted from signing on Parish 4-H Foundation bank accounts. 9) Deposits must be made only in insured depositories and deposits must not exceed the insured

    amount unless the bank pledges collateral for any funds on deposit which exceed the insured amount. Any excess funds are to be deposited in a savings account or certificate of deposit Updated 5/16/2010 Page 2 of 4

    approved by the Parish 4-H Foundation Board. Investments are not to be made outside of

    public financial institutions. Loans are not to be made with foundation funds. 10) Maintenance of documentation, in an orderly and secured fashion, is extremely important.

    The public records act of the state law requires that this data be maintained for a period of

    three years. The Parish 4-H Foundations are to develop specific procedures for maintenance,

    security, and retention of records. The retention of records are to be at least three years with

    certain records kept longer, such as ownership records, minutes of meetings, etc. The

    disposal of records must be supervised by the foundation president, and a record made of the

    disposal, including the disposal date and signatures of those observing the disposal.

Budgeting

    1) Budgeting is financial planning and an important financial management and control tool. The

    extent to which budgeting is employed with the Parish 4-H Foundation is a decision to be

    made by the Parish 4-H Foundation Boards.

    2) The budget is an estimate of available funds and proposed expenditures for a fiscal year. The

    budget must correlate with the accounts used to record transactions during the year to

    facilitate periodic budget comparisons.

    3) The foundation president or designee is required to develop an annual budget with the 4-H

    agent and LCES’s personnel input and amend the budget during the year. The budget and any

    amendments must be adopted by the Parish 4-H Foundation Board and forwarded to the State

    4-H Foundation for review.

    4) The budget must reflect the operational plan of the Parish 4-H Foundation. When revenues or

    expenditures vary significantly from budgeted amounts, the causes for the variances are to be

    immediately investigated. If appropriate, the budget will be amended and adopted by the

    Parish 4-H Foundation Board and forwarded to the State 4-H Foundation.

    Accounting

    1) Accounting is the process of identifying, assembling, analyzing, classifying, recording, and

    reporting an entity’s transactions. Accounting is the development of an information system

    necessary to accomplish and report on the objectives of management.

    2) The chart of accounts is the heart of the accounting system and budgetary system. Within

    these accounts, transactions of the Parish 4-H Foundations are classified and summarized in a

    prescribed format. The accounts are to be developed in such detail as to allow the interested

    user of the accounting information to readily retrieve information previously committed to

    the systems, both accounting and budgetary.

    3) The basics of the accounting system are the books of original entry (the cash journals and

    general ledger), the chart of accounts, vendor files, check files, and other data that support

    the individual transactions.

    4) All transactions are to be recorded in a timely manner and adequately supported by

    documentation, such as receipts, invoices, delivery reports, purchase orders, etc. 5) The procedures and forms used in the foundation will be uniform. More stringent methods

    and procedures may be necessary in certain areas.

    6) Whenever there is an exchange of funds there must be included an exchange of prenumbered

    receipts, with signatures. Parish 4-H Foundations derive funds mostly for local 4-H clubs.

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    Most of these funds are handled by one or more persons before they are received by the

    Parish 4-H Foundation. The individual collecting funds at the local 4-H club is to be aware of

    the need to maintain accurate and systematic records of all cash collected. Accountability

    must be initiated when funds are first received by the local 4-H club. The control of fees or

    assessments of clubs lies primarily with the sponsor for the group who is to maintain proper

    accountability for the amounts collected. Control will be maintained through the club roster

    which will provide the indication of those who have paid and those who have not paid. 7) Funds received by the Parish 4-H Foundation must be deposited on a timely basis. A pre-

    numbered receipt for the exact amount of the funds received is to be issued. It is required that

    more than one person be present when counting and depositing cash with each person signing

    the receipt. The 4-H Foundation must have a blanket surety bond covering personnel who

    handle money and accounting records which is provided by Louisiana 4-H Foundation. 8) It is required that all expenditures be properly authorized and be made for the purpose of

    promoting the 4-H program. All disbursements are to be made by pre-numbered checks.

    Petty cash accounts may be used for minor emergency purchases when the petty cash fund

    has been approved by the Parish 4-H Foundation. Checks must never be paid to “cash” or

    “bearer” or presigned. A check must not be altered, erased or destroyed. Should an error be

    made, mark the check “void” and write another check. Remove the signature section of the

    voided check and retain the check in the numerical file or canceled checks.

Financial Reporting

    1) Interim financial reports are periodic statements prepared primarily for internal use by

    management. These reports are intended to aid management in the operation of the Parish 4-

    H Foundation and control financial activities. They may contain budgetary and cash flow

    projects and other pertinent information to aid management control during the year. The key

    criteria by which internal interim reports are evaluated are their relevance and usefulness for

    the purpose of management control.

    2) A statement of revenues, expenditures, and outstanding obligations must be prepared bi-

    annually and submitted to the Parish 4-H Foundation for approval and forwarded to the State

    4-H Foundation. Timeliness is a key issue in ensuring that the reports are useful. 3) Annual financial statements are prepared for each fiscal year to serve the information needs

    of both internal and external users. Basic financial statements for the Parish 4-H Foundation

    will consist of a Balance Sheet, Income Statement, and Statement of Cash Flows. Parish 4-H

    Foundations’ Annual financial statements must be submitted timely to the State 4-H

    Foundation for accumulation and consolidation.

Auditing

    1) Each year the State 4-H Foundation will have performed a State 4-H Foundation financial

    audit including the Parish 4-H Foundations by external independent auditors. Auditing is

    defined as the process of comparing what exists to what should exist. Access to all records

    shall be granted to external and internal auditors. The annual audit of the 4-H Foundation is

    due within 180 days of the close of the fiscal year.

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