Financial Control Documentation

Introduction

Segregation of duties is critical to effective internal controls; it reduces the risk of both erroneous and inappropriate actions. The accounting function, the asset custody function, and the audit function should be separated among Board Members. When these functions cannot be separated, a detailed supervisory review of related activities is required as a compensating control activity.

Approval

Normal and regular expenses are authorized by the BOD and carried out by the control officers in due course. In the case of events and projects with a budget that are managed by a subcommittee, the BOD authorizes the budget. The committee leads are delegated the authority to authorize payments as prescribed by the budget and any accompanying resolutions.

Control Officers

Bookkeeper (Treasurer or supervised by the Treasurer): Maintains records of all transactions, pays bills, and provides reports to the BOD and the Auditor.

Audit (Any director who is not the Custody Officer or Bookkeeper): Reviews Bookkeeper’s reports and mail log, along with statements and other resources to verify the accuracy of the books

Custody Officer (Any director who is not the Auditor or Bookkeeper): Maintains secure custody of petty cash, blank checks, other negotiable instruments, event tickets, and unopened mail.

Negotiable Instruments and Cash

Check Signatures: All checks for $500 or more require 2 signatures. The Authorized Signers are 3-5 of the Directors of the board, and may include the Bookkeeper, Custody officer, and/or the Auditor.

Debit Cards: A debit card may be issued to one or more Directors. The transaction must be requested or approved by another Director. The Director may provide approval through email, fax, by signing a written order, by signing the expense envelope, or by signing the physical receipt. The Director must report the transaction and authorization to the Bookkeeper promptly. The Director must keep the card and its information in confidence and secure. All payments must be authorized by a budget or resolution of the BOD.

Cash: There is a petty cash fund maintained by the Custody officer, and the LLC takes in cash from fundraisers. The Custody officer may disperse cash payments with the written approval of another Director. The approval may be done through email, fax, by signing a written order, by signing the expense envelope, or by signing the physical receipt. Sales and purchases may be done by a single person provided there is proper control of the custody of cash and other valuables. Cash and other valuables (such as tickets) will always be balanced in dual custody, and when appropriate, placed in a tamper evident container in single custody. All records of cash flow will be provided to the Bookkeeper in electronic or physical form.

Workflow

The Custody Officer opens mail and logs all relevant items. The log includes the date, who it is from, Type (check, bill, correspondence, etc.), and the dollar amount of each item. Scans of statements are provided to the Auditor, and scans or originals of everything finance related are given to the Bookkeeper.

After appropriate approval of a transaction, the bookkeeper records the transaction. The Bookkeeper then emails the check-printing-file to the Custody officer who prints the checks, signs them, and disburses them. When the check is for $500 or more, another signatory will meet with the Custody officer and sign the check. The Bookkeeper may sign with the Custody officer. Transactions may not be split in order to stay below the $500 double signature limit.

Electronic Document Primacy

The primary document record is electronic, including scans of printed materials. If a document does not need to be printed it is not printed, it is emailed, showing the approval from appropriate people in the email history. The hard and soft copies are stored according to the Record Retention Guide.