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MOSAICA EDUCATION, INC. FINANCIAL POLICIES AND PROCEDURES MANUAL AUGUST 1, 2014. RESPONSIBILITIES OF THE ACCOUNTANT. 1 II. VENDOR BIDS. 2 III. PURCHASE OF GOODS OR SERVICES. 3 IV. ACCOUNTS PAYABLE / CASH DISBURSEMENTS. 7 VI. PAYROLL. 9 VII. MANAGING THE
MOSAICA EDUCATION, INC. FINANCIAL POLICIES AND PROCEDURES MANUAL AUGUST 1, 2014. RESPONSIBILITIES OF THE ACCOUNTANT. 1 II. VENDOR BIDS. 2 III. PURCHASE OF GOODS OR SERVICES. 3 IV. ACCOUNTS PAYABLE / CASH DISBURSEMENTS. 7 VI. PAYROLL. 9 VII. MANAGING THE
MOSAICA EDUCATION, INC. FINANCIAL POLICIES AND PROCEDURES MANUAL AUGUST 1, 2014. RESPONSIBILITIES OF THE ACCOUNTANT. 1 II. VENDOR BIDS. 2 III. PURCHASE OF GOODS OR SERVICES. 3 IV. ACCOUNTS PAYABLE / CASH DISBURSEMENTS. 7 VI. PAYROLL. 9 VII. MANAGING THE
I. RESPONSIBILITIES OF THE ACCOUNTANT ......................................................... 1 II. VENDOR BIDS ................................................................................................................. 2 III. PURCHASE OF GOODS OR SERVICES..................................................................... 3 IV. ACCOUNTS PAYABLE / CASH DISBURSEMENTS .................................................5 V. PETTY CASH ................................................................................................................... 7 VI. PAYROLL ......................................................................................................................... 9 VII. MANAGING THE DUE TO MEI ACCOUNT(S) ....................................................... 13 VIII. MANAGEMENT FEES ................................................................................................. 14 IX. BANK RECONCILIATION .......................................................................................... 15 X. CASH RECEIPTS .......................................................................................................... 17 XI. MONTH END CLOSING SCHEDULE ....................................................................... 18 XII. FINANCIAL STATEMENT REPORTING................................................................. 19 XIII. BOARD MEETINGS...................................................................................................... 20 XIV. BUDGETING, BUDGET PREPARATION AND CONTROL .................................. 21 XV. DEPRECIATION ........................................................................................................... 25 XVI. INSURANCE ................................................................................................................... 26 XVII. PERSONAL LEAVE ...................................................................................................... 27 XVIII. REAL ESTATE LEASE AGREEMENTS ................................................................... 28 XIX. FISCAL YEAR END ...................................................................................................... 29 XX. RECORD RETENTION ................................................................................................ 30 XXI. CHART OF ACCOUNTS .............................................................................................. 31
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MEI Procedures Manual
I. Responsibilities of the Accountant A. To help ensure the quality of its work, Mosaica sets high standards and provides guidance in meeting them. The quality of Mosaicas work depends on the competence, dedication, and enthusiasm of its multidisciplinary staff members. Some of the Accountants responsibilities are to: 1. Post all income to the General Ledger 2. Manage Accounts Payable 3. Reconcile bank statement 4. Perform monthly account analysis 5. Complete month end closing 6. Prepare Financial Statements and supporting schedules 7. Present Financial Statements to Mosaica and School Management three days prior to board meeting 8. Present Financial Statements to the Board 9. Perform End of Year Accruals 10. Assist with Audits B. Fund Accounting - The accounts of the Schools are presented on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts comprised of assets, liabilities, funds equity, revenues and expenditures. Fund accounting presentation segregate funds according to their intended purpose in compliance with finance related license provisions, authorizer requirements and governmental regulations. C. Basis of Accounting - The School shall use the Cash Basis of accounting. When necessary, reports shall be completed using the Modified Accrual Basis of accounting.
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II. Vendor Bids A. Any goods or services that require competitive bidding from contractors or vendors should be initiated by forwarding a request thru the Regional Vice-President (RVP) to the Manager of Purchasing. B. The Manager of Purchasing will put together the necessary information for the advertisement. This information will be sent back to the HoS for proofing. C. Once the ad has been proofed, the Manager of Purchasing will have it posted in the newspaper for the legally requisite number of times and/or publication period. D. The bids that are received will be reviewed by the Purchasing Manager and then forwarded to the HoS (copy to the RVP) with a recommendation as to which represents the lowest responsive bid, and any form of contract that may be required. E. The HoS forwards the bids to the Board of Directors for review and approval. F. Where required, bids requiring authorizer or other approvals or review will be forwarded by the HoS to the appropriate office or agency. G. Following approvals pursuant to paragraphs E and F above, the vendor of choice will be notified by the Purchasing Manager. H. The name of the legal entity, address, and social security number of all contractors must be on file before work begins or services provided. MEI Accounting Procedures Manual Page 3 of 31
III. Purchase of Goods or Services A. Purchase Orders 1. Purchase Orders are prepared at the School a. Teachers / Staff members must fill out a Purchase Order (Attachment E) with a complete description of the item or service. b. Completed Purchase Orders will then be transmitted to the HoS, who will verify the availability of budgeted funds. This information may be ascertained from the School Accountant or from online access to the schools accounting records. c. Additional approvals, if any, which are prescribed in the following table shall then be verified by a signature affixed to the Purchase Order either by hand or electronically: Amount of Purchase RVP Board < $1,000 No No $1,000 - $9999.99 Yes No > $10,000 Yes Yes d. The School submits the approved purchase order to the Manager of Purchasing and the School Accountant at the regional accounting office by e- mail or fax. 1) The Manager of Purchasing is responsible for: a) Insuring compliance with bid laws (see Section II above) b) Identifying lowest price meeting specifications for goods requested. 2) The School Accountant is responsible for: a) Verifying availability of budgeted funds; b) Coding and entering the Purchase Order into the Accounting System; c) Forwarding the approved and processed Purchase Order to the Vendor; d) Returning a copy of the approved and processed Purchase Order to the school; e) Filing a copy of the Purchase Order in the Vendor Files in the Accounting Office 2. Receipt of goods or services by the school a. The Building Administrative Assistant (or other designated school employee) is responsible for verifying conformity of delivery to the Purchase Order and to the invoice. Any discrepancies are to be reported directly to the vendor immediately. b. The Building Administrative (or other designated school employee) shall affix (or obtain) the signature of the employee verifying receipt and the date of such MEI Accounting Procedures Manual Page 4 of 31
signature, and then forward the invoice to the HoS for a signature authorizing payment. 1) If the purchase was made pursuant to a Purchase Order, it shall be sufficient to attach a copy of the approved and processed Purchase Order to the invoice bearing the signature of the receiving employee and the HoS. 2) If the purchase was not made pursuant to Purchase Order, the invoice shall be circulated to obtain the appropriate approval signatures in accordance with the signature table set forth in paragraph III.A.1.c above. 3) The verified copy of the invoice, request for payment and packing slip is sent to the Regional Accounting office via fax or e-mail within 24 hours of receipt and verification of goods. 4) Verification of receipt of services from all independent contractors must include an itemized invoice of services provided, which invoice must be verified and approved by the HoS. 3. The AP department at the Regional Accounting Office codes the Payment Voucher and issues a check to the vendor in accordance with Section IV below. MEI Accounting Procedures Manual Page 5 of 31
IV. Accounts Payable / Cash Disbursements A. The payment process is initiated by the school through transmittal of invoices to the Regional Accounting Office for input into the Accounting System following verification of the receipt of goods or services in accordance with Section III.A.2 above. B. The invoices must be signed by the employee who was responsible for verifying receipt, and by the HoS (and such other persons as may be required in accordance with the table set forth in paragraph III.A.1.c above) authorizing payment. C. Twice monthly, the Building Administrative Assistant (or other designated school employee) shall prepare a Transmittal of Unpaid Invoices which shall include all previously unsubmitted invoices received at the school to that date together with all such supporting information as may be required pursuant to paragraph III.A.2 above. 1. To preclude duplication of payment, all payments should be made on the basis of original invoices rather than statements 2. The Transmittal of Unpaid Invoices shall be signed for by the AP (Accounts Payable) Accountant, stamped received, and dated. 3. The AP Accountant determines the correct chart of account to be used while reviewing the invoices. The account numbers used are documented on each invoice and purchase order. 4. The AP Accountant will record all invoices received in the AP module in the Accounting system. 5. All invoices received shall be entered into the accounting records so as to indicate the anticipated payment date. 6. A report of this information is then printed to verify accuracy. D. On the fifth business day following the dates established in paragraph IV.C above, the AP Accountant will run an Aged Payable report to be transmitted to the schools HoS and such other school or Board personnel as the Board may direct. 1. It is understood that the Regional Accounting Office shall generally be responsible for entering all invoices into the Accounting system within three business days of receipt, provided that the school has provided such documents to the Accounting Office in accordance with the provisions of paragraph III.A.2.b.3) or paragraph IV.C above. 2. Invoices held at the school longer than the prescribed period and transmitted to the Accounting Office after the specified dates may not be entered into the Accounting system in time to appear on the Aged Payables Report provided for in this section. E. The HoS (or other designated school employee or Board member) shall determine what bills are to be paid after conferring with the School Accountant to verify availability of funds in the schools bank account(s). MEI Accounting Procedures Manual Page 6 of 31
1. Any deviation from a pattern of paying the oldest outstanding bills should be documented with a brief explanation by the HoS (or other designated school employee) as to the reason for recommended delay in payment and the contemplated date of payment. 2. The HoS shall then sign, date, and transmit to the AP Accountant the foregoing list of bills to be paid. F. The AP Accountant processes these bills in the Accounting System utilizing sequential check numbering. 1. The checks are printed and attached to a copy of the invoice or purchase order. 2. A Check Register Report is produced. 3. The Controller (or other authorized MEI personnel) reviews each payment and signs the checks. 4. The Check Register is posted to the general ledger. 5. Two copies of the checks are made, one is attached to the MEI file copy of the invoice or purchase order and the other is sent back to the school for their records. G. The original checks are then mailed to the school for second signature as prescribed in the following table, and thereafter mailed to the vendor. Amount of Check HoS Treasurer < $1,000 No No $1,000 - $9999.99 Yes No > $10,000 Yes Yes H. Voided checks shall be retained to ensure proper maintenance of checking account records. I. Whenever practical, invoices shall be paid in a timely fashion so as to take advantage of any discount available, but in any event within thirty (30) days of their issue unless alternative arrangements are made with vendors or unless a dispute arises. J. Accounts Payable records shall be retained alphabetically by vendor at the school and at the management company regional office so as to provide a backup for records that may be misplaced. Records of journal entries shall also be retained electronically, and on paper chronologically as an additional backup. MEI Accounting Procedures Manual Page 7 of 31
V. Petty Cash A. Each School is allotted a Petty Cash Account in an amount determined by the Board of Directors. When the Petty Cash Account is opened, a check is issued from the schools concentration account. There are two types of Petty Cash Accounts at the schools, a Petty Cash Checking Account and a Petty Cash fund. 1. Petty Cash Checking Account a. The Petty Cash Checking Account should be used primarily for supplies where the vendor is not willing to provide credit, or for emergency expenses. Purchases from this account generally exceed $25, but may not exceed $100. b. The Petty Cash Checking Account is to be managed by the HoS and maintained at the school in a secure location. c. Before Petty Cash is spent for appropriate expenses, a check request is filled out summarizing the expenses to be reimbursed. All Petty Cash checks shall be written sequentially, and no checks should be removed from the Petty Cash Checkbook except after being completed and the payment entered in the register. d. Requests for reimbursement should be submitted to the Board of Directors for approval then sent to the Regional Accounting Office to replenish the schools bank account. A check from the schools concentration account is issued and deposited into the Petty Cash Checking Account. e. A copy of the Petty Cash Checking Account bank statement must be sent to the Regional Accounting Office within two business days of receipt by the school. In the event that bank statements are sent directly to the Regional Accounting Office, the original shall be transmitted by the Regional Accounting Office to the school within two business days of receipt. f. The Accountant at the Regional Office makes a journal entry to record the Petty Cash Activity onto the books at the time of issuance of a replenishment check or at the time of bank reconciliation, whichever occurs first. g. Reimbursement of the Petty Cash Checking Account should be initiated by the HoS (or other designated school employee) when the Petty Cash Account is reduced to half of the allotment. h. To obtain reimbursement of Petty Cash Checking Account expenditures, the following steps must be followed: 1) The Petty Cash Tracking Log must be up-to-date 2) A Check Request summarizing expenditures reflected in the Tracking Log is submitted to the Board Treasurer for approval. Attached should be the Petty Cash Tracking Log and receipts. 3) Once the Board Treasurer approves the Check Request, the Check Request, Petty Cash Tracking Log and receipts are mailed, faxed, or emailed to the Regional Accounting Office. MEI Accounting Procedures Manual Page 8 of 31
4) The School Accountant will enter any necessary information into the Accounting System and will prepare and transmit a replenishment check to the school in accordance with the procedures established in paragraph IV.F above. B. Petty Cash Fund 1. The Petty Cash Fund is actual cash, managed by the HoS and maintained at the school in a secure location. 2. The fund is to be used only for those purposes in accordance with the formally adopted Board policy. The purchases should be less than $25.00. 3. The Board of Directors must approve all requests for increases in the Petty Cash Fund. 4. A Petty Cash Slip (Attachment A) and a receipt must accompany all petty cash transactions. Both the HoS and the recipient of the petty cash must sign the petty cash slip. The Petty Cash slip must be stapled to the receipt and kept with the petty cash fund. 5. All transactions from the Petty Cash Fund must be recorded on the Petty Cash Tracking Log (Attachment B). 6. Copies of all receipts for items purchased with petty cash must be provided to the Regional Accounting Office via fax or e-mail within 24 hours of the purchase. 7. Each month a Copy of the Petty Cash Tracking Log must be sent to the Regional Office in order for the School Accountant to record the monthly transaction from the Petty Cash Fund. 8. Any funds in excess of the agreed upon maximum balance must be deposited into the schools general checking account. The Regional Accounting office must be notified of this deposit and a Cash Transmittal Form must be completed. 9. The Petty Cash Fund must be reconciled each month with a copy of the reconciliation and Petty Cash Tracking Logs sent to the Regional Accounting Office by third day of the new month. 10. To obtain reimbursement of petty cash expenditures, the following steps must be followed: 1) The Petty Cash Tracking Log must be up-to-date 2) A Check Request summarizing expenditures reflected in the Tracking Log is submitted to the Board Treasurer for approval. Attached should be the Petty Cash Tracking Log and receipts. 3) Once the Board Treasurer approves the Check Request, the Check Request, Petty Cash Tracking Log and receipts are mailed, faxed, or emailed to the Regional Accounting Office. 4) The School Accountant will enter any necessary information into the Accounting System and will prepare and transmit a replenishment check to the school in accordance with the procedures established in paragraph IV.F above. MEI Accounting Procedures Manual Page 9 of 31
VI. Payroll A. Hiring Process Hiring shall be undertaken in accordance with the procedures established in the MEI Personnel Handbook, and all necessary payroll forms including signed and completed W-4s and I-9s shall be obtained prior to entry of any employee into Payroll. 1. School personnel shall be responsible for verifying that all necessary items as listed on the Personnel File Inventory Form (see Attachment E) have been obtained or requested prior to submitting a PAF (Personnel Action Form) to the MEI Payroll Office. A copy of the Personnel Inventory Form, signed by the school Administrative Assistant (or other designated personnel) and initialed by the HoS, verifying compliance with this paragraph, shall accompany the PAF. 2. Most items listed on the Personnel File Inventory Form are required before a paycheck may issue to an employee. Some, however, necessarily require some period of time before the document may be obtained, and employers are permitted to hire and commence payroll processing pending receipt. In all of the later cases, however, there is a finite period of time for documents to be obtained. The MEI Payroll Office shall establish a schedule for final receipt of all missing documents and shall take appropriate steps to insure such schedule is met by school personnel. B. Background for Hourly Employees - Overview 1. At the beginning of each fiscal year a payroll file (School Timesheet file) is provided to the school by the Regional Accounting office. This file will reflect all active employees account code, department, pay cycles, pay rates, positions and overtime pay policies with respect to hourly employees. a. Employees may be added or deleted from the School Timesheet file by the school (with assistance of the Regional Accounting Office as necessary) throughout the year which must be submitted on a PCF signed by the HoS and RVP. 2. The designated school employee must maintain the School Timesheet file on a pay period by pay period basis recording actual hours worked by each employee. 3. The file must be e-mailed to the Regional Accounting office within one business day following the close of the pay cycle. This file should be e-mailed with the return receipt function activated. There must be an assigned backup to e-mail this information in the event the primary person is out of the office. C. Background for Salaried Employees - Overview 1. At the beginning of each fiscal year a payroll file (School Timesheet file) is provided to the school by the Regional Accounting office. This file will reflect all active employees account code, department, pay cycles, pay rates, positions. In addition, this file will record any vacation or leave utilized by the salaried employee. a. Employees may be added or deleted from the School Timesheet file by the school (with assistance of the Regional Accounting Office as necessary) MEI Accounting Procedures Manual Page 10 of 31
throughout the year which must be submitted on a PCF signed by the HoS and RVP. 2. Throughout the pay period, a designated school employee must maintain the School Timesheet file, recording any vacation or leave utilized by salaried employees. 3. The file must be e-mailed to the Regional Accounting office within one business day following the close of the pay cycle. This file should be e-mailed the return receipt function activated. There must be an assigned backup to e-mail this information in the event the primary person is out of the office. D. Processing Payroll 1. Employee hours, employee status changes, and vacation or leave utilized will be entered into the excel School Time Sheet file by the business manager or other authorized personnel of each school. 2. At the end of each pay period all schools are required to e-mail their Excel School Time Sheet to the Regional Accounting Office by 5 pm on the day on which the pay period ends. 3. The Payroll Accountant is required to enter all the payroll details into the Ceridian Payroll software. 4. The Payroll Accountant also records all manual checks, void checks, adjustments, and stop payments into the Ceridian Payroll software. 5. Using the Ceridian software the Payroll Accountant will transmit the current pay information to Ceridian for processing. 6. On the next business day, Ceridian delivers the payroll checks and payroll reports to the Regional Accounting office. This information is verified for accuracy. 7. The checks are then sent by UPS next day morning delivery to each school. The authorized person at the school is not permitted to issue the checks to the employees until the actual payday. 8. Employees enrolled in the direct deposit program will receive a check stub rather than a payroll check. 9. Once the payroll has been processed, the Regional Accounting Office will make a journal entry based on department totals in the Sage reporting system to record the payroll. 10. In cases where Mosaica is funding the schools payroll. The accountant creates an invoice in the amount of the gross payroll and sends it to the school for payment. 11. The funding of the payroll is setup as a receivable on Mosaicas books and a payable on the schools books. 12. The Regional Accounting Office is required to e-mail to the Corporate Office the details of the payroll entry. This will prevent any discrepancies when Corporate bills the school for any payroll that was paid by Mosaica. MEI Accounting Procedures Manual Page 11 of 31
13. The schools are required to send a check or a wire transfer in the total amount of the invoice to Mosaica within 30 days. 14. When the funds are received, the Mosaica receivable account and the school payable account are cleared. 15. Payments of employer taxes and employee tax withholdings are paid by the payroll processing agency (currently Ceridian) directly to the appropriate governmental authority. Payments of all other withholdings and benefits are transmitted by the Regional Accounting Office in accordance with Section IV above. E. Manual Checks 1. Express checks are generated by either a request by the school or a correction made by the Regional Accounting Office. 2. In the case where the request is by the school, a request form must be submitted detailing the reason for the check and approved by the HoS or the assigned authorized party at the school. This form must then be e-mailed to the Regional Accounting Office for processing. 3. In the case where the express check is generated for a correction, the regional office will e-mail the HoS or authorized party at the school and carbon copy the VP of Administration of the Regional Office. 4. When requests or corrections are approved, an express check is drawn on the school bank account. Generally if the documented and approved request is received in the Regional Accounting Office before 3 pm, the check can be drawn that day and sent to the school for next day delivery. 5. The Express Check information is automatically reported on the next pay periods payroll report. F. Payments to Employees 1. All payments to employees for services rendered must be processed through the payroll system. a. It is a conflict of interest for any employee to contract with the school outside the employment relationship. b. All bonuses, stipends, after-school wage payments, and other employment compensation arrangements are to be submitted on a Personnel Action Form (PAF) bearing the approval of the RVP to the Regional Accounting Office no later that 5 pm at least two days (48 hours) prior to the Pay Period End (PPE) in order to be processed and paid with such pay period. c. These payments are never to be paid from AP or from Petty Cash. 2. All spending for teacher appreciation and/or employee gifts should be approved in advance by the Board and the RVP and should be only in accordance with the budget and with laws, rules, and regulations relating to public school spending. 3. Employee Reimbursements MEI Accounting Procedures Manual Page 12 of 31
a. No reimbursement for any employee payments shall be made except from a receipt. b. Employees using personal or business credit cards must submit receipts to support all purchases. Any employee purchasing anything on the corporate card without submitting a receipt shall reimburse the school for the full amount of the charge. c. No school employee may sign a check for their own reimbursement for expenses. d. All Employee Reimbursements shall be paid from Petty Cash in accordance with the procedures set forth in Section V above or through Accounts Payable as set forth in Section IV above. MEI Accounting Procedures Manual Page 13 of 31
VII. Managing the Due to MEI Account(s) A. The Due to MEI Account is used when a payment is made out of the Mosaica bank account on behalf of a school. B. Mosaica should be reimbursed for these advances within 4 to 5 business days or such other period as may be specified in the Management Agreement. C. In most cases the advances relate to Payroll, Rent and Lease Payments. D. The Due to MEI Account is made up of the following sub-accounts. 1. Due to MEI Management Fee 2. Due to MEI Rent 3. Due to MEI Payroll 4. Due to MEI Equipment Leases 5. Due to MEI Prior Year Balance 6. Due to MEI Other E. Mosaica sends an invoice out to the schools for these charges. The Corporate Office creates the invoice. F. Before the invoice is sent to the school, the Corporate Office should e-mail a copy of the invoice to the Regional Accounting Office. The e-mail should provide a detailed description of the associated charges. G. In the case of payroll, the Accountant at the Regional Accounting Office will provide Corporate with their payroll entry. The accountant is to be very clear about the amount related to Due MEI. They should inform by Corporate ASAP if there are any discrepancies between the amount to be billed to the school and the amount that was posted to the G/L. H. Once the amount of the invoice has been verified, the Regional Accounting Office should immediately contact the Corporate Office with confirmation of such. The Corporate Office can then send the invoice to the school for approval to pay. I. Once payment has been made the Due to MEI account should be cleared. J. This account must be reconciled on a monthly basis. K. The Controller or VP of Administration should be notified of amounts outstanding for more than 60 days and what steps were taken to collect the debt.
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VIII. Management Fees A. For services provide to the schools, Mosaica charges a Management Fee. 1. Management Fees are charged in accordance with the management agreement. 2. They are billed monthly from the corporate office upon receipt of revenue at the schools. The fees should be posted to the Management Fee account, and are generally divided 50/50 between Instructional Services and Administrative Services unless a different allocation is suggested by unique circumstances relating to a particular school.
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IX. Bank Reconciliation A. Bank Statements 1. Bank statements must be reconciled each month. 2. A copy of the original Bank Statements should be sent to the Regional Accounting Office and the corresponding School with the original maintained on file at the school. 3. Bank Statements should be received from the bank within 5 days into the new month. 4. Online banking access should be available to the Regional Accounting Office 5. The bank statement must be reconciled by the 8 th business day of the new month. 6. All reconciling items must be clearly documented. B. Deposits 1. When bank deposits are made, the HoS must complete a Transmittal For Financial Documents form, attaching all supporting information and forward it to the Regional Accounting Office within 24hrs. 2. The accountant at the Regional Accounting Office must record the transaction and file all supporting documentation in the current months cash activity file. This should include a copy the journal entry. 3. If there is insufficient information, it is the accountants responsibility to contact the HoS and have them provide the missing information. 4. The cash activity file must be kept in chronological order and clearly labeled. If the school has multiple accounts, it should be filed individually. C. Withdrawals 1. The most common bank withdrawals are Wire Transfers, ACH Debit or Automatic Account sweeps. 2. When these transactions occur, they are initiated by either an invoice from Mosaica Corporate or at the request of the HoS at the school. 3. These transactions should be recorded on a Transmittal For Financial Documents form, attaching all supporting information. D. Reconciling Bank Statement 1. The following documents are required to reconcile the bank account. a. Bank Statement b. Copies of cancelled checks where provided by the Bank. c. All current month Transmittal For Financial Documents Forms d. G/L Detail Report e. Cash Management Bank Activity Report MEI Accounting Procedures Manual Page 16 of 31
2. Beginning book balance is the prior month ending balance from the G/L cash account. 3. Reconcile the G/L Detail Report to the Cash Management Bank Activity Report. 4. Reconcile the Credits and Debits on the Bank Statement to the Deposit and Withdrawals in the Cash Management Bank Activity Report. 5. Any transaction that appears on the Bank Statement and not the Cash Management Activity Report or vice versa should be researched to identify its source. 6. Bank transactions that are not on the books that have been identified, an entry must be made in the Cash Management module in SAGE to record it on the books. 7. * Please note that the Management Company should have at a minimum read-only access to the bank accounts in order to expedite the Bank Reconciliation in real time. An accountant other than the AP Accountant or the assigned School Accountant shall perform the bank reconciliation.
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X. Cash Receipts A. All mail shall be opened by an employee designated by the HoS or Mosaica. B. For any checks received, a deposit slip shall be prepared along with a copy of the check, the check stub, and any other remittance information accompanying the check. C. At the earliest possible opportunity, the check shall be deposited into the appropriate bank account. D. A copy of the deposit slip shall be attached to the copies made in accordance with paragraph B, above. Original documents shall be retained on file at the school, and a copy at the Regional Accounting Office.
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XI. Month End Closing Schedule A. The following reports and schedules must be completed and reconciled by the indicated dates. 1. 1 st Qtr Financial Statements 10/31 2. Annual Audited Financials Statements 09/30 3. 2 nd Qtr Financial Statements 01/31 4. 3 rd Qtr Financial Statements 04/30 5. 4 th Qtr Financial Statements 07/31 6. General Ledger Detail Report 5 th business day of the new month 7. Expense analysis (Budget vs Actual) 5 th business day of the new month 8. Bank Reconciliation 8 th business day of the new month 9. Treasurers Report 10 th business day of the new month 10. Accounts Payable Aging Schedule 10 th business day of the new month 11. Due to MEI Reconciliation 15 th business day of the new month MEI Accounting Procedures Manual Page 19 of 31
XII. Financial Statement Reporting A. At the close of each month the Accountant is required to produce Monthly and Year to Date Financial Statements. Each month the Accountant is to provide the HoS with a Monthly Financial Statement stating Actual vs. Budget for the previous month and Actual Year to Date vs. Budget Year to Date. The Financial Statements lists sources of income and expense categories and includes budget projections in addition to the previous months expenses for each category. B. In preparing the Financial Statements, the Accountant must make sure that the Financial Statements present fairly the financial position, the results of operations and cash flows are in conformity with generally accepted accounting principles (GAAP). C. The financial information for these reports is obtained from data generated from the schools accounting system, monthly payroll entries and AP invoices (including petty cash entered into the accounting system) provided by the HoS. D. The statements are to be completed by 10 th business day of the new month E. The following schedules are required for presentation to the Board at the end of the month: 1. Income Statement Actual vs Budget for the Month and YTD 2. Comparative Balance Sheet Beginning YTD and Month End F. The following reports are presented to HoS End of Month Meeting 1. Current Month Variance Report 2. Current Month G/L Trial Balance 3. General Ledger Detail Report G. The Financial Statements will help the HoS evaluate how the school is doing financially. Any questions regarding these financial statements must be answered immediately.
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XIII. Board Meetings A. Purpose - Monthly Board meetings serve as a forum for discussing the school and the monthly Financial Statements in detail. B. Attendees - The primary attendees from Mosaica are as follows: 1. RVP Curriculum & Operation 2. Mosaica School Accountant or VP for Administration 3. Such other Mosaica personnel as may be necessary to address specific issues listed in advance on the agenda for the meeting
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XIV. Budgeting, Budget Preparation and Control A. Budgeting - The School budget is essentially a tool for planning and control as well as, a yardstick for measuring performance. Revenue projections are based on the estimated total student enrollment and the estimated number of special educations students. Revenue sources include: tuition per student, special education funds, start- up funds (if applicable) grants, bridge loans (if applicable), before/after school programs and food programs. Expenditure projections include: teacher and staff payroll and benefits, staff development, curriculum materials supplies, office supplies, equipment leases, office equipment maintenance, testing materials, insurance, accounting & legal, field trips, nursing services, security, utilities, rent allowance, maintenance & repair, marketing, after school program, food/cafeteria, curriculum and services provided by Mosaica Education, Inc., and contingencies. B. Budget Preparation 1. Strategic Planning a. Before preparing a budget there needs to be Board input on school goals for next fiscal year b. The Board, upon the recommendation of the HoS, should identify a list of priorities for the school for the upcoming year. The budget should then become the financial roadmap for achieving those goals -- or whatever portion of those goals that the school can afford. c. At the end of the process, ideally by the end of February, there should be a Budget Objectives document identifying key strategic objectives for the school for the upcoming fiscal year. The budget should then be developed as the financial roadmap for achieving those goals. 1) In setting these goals/objectives, the Board should establish priorities so that in the development of the budget we are able to say, "Goal A is more important that Goal B, so therefore we should put the money in line X rather than line Y." 2) Goals / Objectives should be realistic. a) The list of goals need not be all that much longer than one might reasonably expect the school to be able to afford. b) The list should overreach just enough to be sure that all the critical issues are on the table. 2. Recommended Budget - Once the goals are done, the HoS, school accountant and RVP will develop a Recommended Budget a document that should provide the Board at a minimum with a comparison of the current year budget, the current year projected actual, and the recommended budget for the upcoming year. a. Recommended Budget Ingredients The following should be assembled and available for reference throughout the Budget Development and Review process: MEI Accounting Procedures Manual Page 22 of 31
1) Budget Schedule developed based on the statutory or regulatory requirements and working backwards 2) A recent Payroll Register listing all current employees 3) The most recent monthly financial statements together with a projection of total actual current year activity 4) Copy of the most recent Consolidated Grant Application, together with any preliminary work that has been done on the upcoming years grants 5) Lease Agreements and Amortization Schedules 6) Real Estate Agreements and Development plans 7) Mortgage/Bond Payment Schedules 8) Revenue Estimates 9) Textbook purchase / replacement plans 10) Equipment purchase / replacement plans 11) Staffing needs 12) Long term contracts / bids / proposals including: a) Transportation b) Custodial Services c) Food Services d) SPED Services e) Copier Contracts f) Insurance 13) Budget forms / memos from a) Governmental Authorities b) Authorizers b. The Recommended Budget should: 1) Include all Door Openers critical items that are essential to the schools continued operation; 2) Outline the financial steps necessary to move the school toward each of the highest ranking goals; 3) Be completed in time to submit to the Board for review and consideration at the Regular April Board Meeting. 3. Budget Revision Following preliminary Board Review, the HoS, the RVP, and the School Accountant will apply to the extent possible within the limits of a balanced budget any changes or modifications requested by the Board. MEI Accounting Procedures Manual Page 23 of 31
4. Final Budget should be presented to the Board no later than the _______ Board meeting, in order to insure timely action by the Board before the applicable deadline. C. Budget submission / publication School Accountant 1. The approved budget is then sent back to the Regional Office to align the coding with the chart of accounts. 2. A budget report is then developed to indicate the correct coding for all AR and AP transactions. 3. After the budget is reviewed and finalized it is sent to the appropriate state agency or authorizer. No revenues or expenditures should be coded outside of the approved budgeted line items without the approval of the VP of Administration. Correct coding ensures that the financial statement accurately reflects the status of budgeted expenditures and encumbrances. D. Budget Control 1. The Board of Directors generally: adopts the annual budget, designates depositories for school fund, enters into contracts of any kind where the amount involved exceeds $200, fixes salaries or compensation of administrators, teachers, or other employees of the School, enters into contracts with and makes appropriations to an intermediate unit, school district or Area Vocational/Technical School for the charters proportionate share of the cost of services provided by those entities. 2. The HoS is provided with a board-approved budget with projected revenues and approved expense amounts. It is essential for the sound financial management of the School that every effort is made to adhere to the approved budget. Deviations from budget will be granted only through board approval. Budgets project revenues for the year as accurately as possible, however, actual school revenue performance may vary. The HoS is responsible for reviewing the projected revenue as compared with the actual revenue on a monthly basis so that adjustments to expenditures can be made accordingly. Using percentages rather than a dollar amount from the annual school budget allows for more accurate control of expenses. For example, if the current school revenue (based on enrollment) is higher than budget, by using the budgeted percentage for each line item rather than the straight dollar amount, as reflected on the budget, the HoS can calculate the increase in dollars available for each line item to spend to meet the needs of the increased enrollment. On the contrary if school revenue is less than the budgeted dollar amount the HoS can calculate the adjustments needed in expenditures to reflect the decrease in enrollment. E. Expense Tracking 1. The accounting program used by MEI offers several reports capable of tracking expenses for budget compliance. The reports that should be used for expense tracking are: a. Maintain Budgets b. Maintain GL Accounts MEI Accounting Procedures Manual Page 24 of 31
c. Invoice History d. Check History e. Accounts Payable Aging f. Accounts Receivable Aging 2. These reports will help the School Accountant, the HoS and VP of Administration with the necessary tools to monitor budgeted expenses.
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XV. Depreciation A. All equipment purchases shall require the prior approvals specified in Section II above. B. The Schools Capitalization Policy is attached hereto as Attachment D, and incorporated herein by reference: C. Capital Assets as defined under the Capitalization Policy shall be depreciated over their useful life. D. All purchases of property not fitting the definition of a capital asset shall be expensed in the period of purchase. MEI Accounting Procedures Manual Page 26 of 31
XVI. Insurance A. The School shall maintain appropriate insurance coverage, which, at a minimum shall include: a) commercial package; b) directors and officers liability; and c) workers compensation.
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XVII. Personal Leave A. The School shall carry accrued vacation and sick leave on financial statements as liabilities as necessary in accordance with personnel policy.
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XVIII. Real Estate Lease Agreements A. All schools that are renting or leasing space from Mosaica must enter into a Lease agreement. The lease agreement provides mandatory terms and conditions required in any lease of real property by, or on behalf, of Mosaica. If any Special Provisions are incorporated into the lease agreement, a copy of the Special Provision must be attached. B. Copies of all state Leases are kept at the Regional Accounting Offices and at the schools. C. Annually the lease payments must be reconciled.
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XIX. Fiscal Year End A. Fiscal calendar start on July 1 and ends on June 30 of the following year. 1. The books must be closed by July 31 of each year 2. Tentative budget finalized by June 30 3. Posting of accruals by July 20 th
4. Audit starts August 30 5. YTD account analysis 10 th business day into the new month 6. Due to MEI Account reconciled 7. Lease amortization schedule reconciled to the lease payments MEI Accounting Procedures Manual Page 30 of 31
XX. Record Retention A. Record Management is designed to provide control over records from the time of their creation or receipt to their ultimate disposition 1. Original copies of all invoices, purchase orders, rental agreement and any other financial documentation are kept at the schools. 2. Copies of these documents are kept in clearly labeled files at the Regional Accounting Office. 3. All documents are stored and retained on site at the school until the mandatory retention period has expired in accordance with applicable laws and regulations MEI Accounting Procedures Manual Page 31 of 31
XXI. Chart of Accounts A. A Chart of Accounts prescribed by applicable local regulation, or Authorizer mandate shall be utilized in the maintenance of all accounting records and budgets. In the absence of a prescribed Chart of Accounts, the Management Company will utilize an appropriate Chart sufficient to accurately reflect budget categories and to record and report all revenues and expenditures.
Date Receipt # Vendor Name Description G/L Code Amount issued Amount Reimbursed
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Attachment C Fax Transmittal For Financial Documents
Bank Deposits: _____ _____ Deposit Slip _____ _____ Copy of Check(s) deposited _____ _____ Check Stub(s) for checks deposited _____ _____ Copy of Remittance Advice or other revenue documentation Invoices / Petty Cash to be Paid / Reimbursed: _____ _____ Invoice / Receipt _____ _____ Signature verifying receipt of goods or services _____ _____ Signature authorizing payment Required Information: Anything else we should know: _______________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Attached Not Available Item Purpose: Instruction Admin Support Facility Object: Supplies Cntrct Svcs Travel Equipment Grant Funding: ______________________________________________
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Attachment D CAPITALIZATION POLICY Capital expenditure: Capital expenditure means the cost of the asset including the cost to put it in place. Capital expenditure for equipment means the net invoice price of the equipment, including cost of any modifications, attachments, accessories as well as cost of sales tax, transportation incurred or shipment of external suppliers. Equipment: Equipment is non-expendable, tangible, personal property which stands alone, is complete by itself, does not lose its identity and has a useful life of more than one year. Capital Equipment: The following shall be capitalized: 1. items of equipment which have a per unit acquisition cost of $500 or more; 2. items of equipment which are furniture used by students, teachers, or staff; 3. items of computer hardware accessories having a per unit price of $50 or more which are connected to student, teacher, or staff computers; 4. computer software having a per license price of $500 or more; and 5. textbooks or library books. Minor Equipment: All other items of equipment which do not meet the definition of Capital Equipment above shall be expensed as supplies and materials. Maintenance and Repair: Expenditures needed to maintain equipment in a proper operating condition or to restore equipment to a proper operating condition are expensed. Computer software: If software is associated with the specified computer, the software will be depreciated over the same period as that equipment. In addition, software costing over $500 per license will be capitalized and depreciated. Except as provided in the preceding sentences, all computer software is expensed. Depreciation: Depreciation will be calculated on a straight line basis with the following service life: Office equipment: 5 years Office furniture: 7 years School furniture: 7 years Computers: 3 years Computer software: 3 years