Financial Operating Policy & Procedures MCC Omaha
Accepted as Revised: October 12, 2006
10/12/2004
Introduction Recognizing that MCC Omaha exists because of the good graces and love of God, our Creator, the Board of Directors of MCC Omaha commits itself to a wise and prudent stewardship of the gifts received by this community. The purpose of this document is to establish procedures for the management of the financial affairs of MCC Omaha, and to provide appropriate internal controls so as to protect the assets of MCC Omaha and ensure compliance with Generally Accepted Accounting Principles. These policies and procedures are approved by the Board of Directors and are subject to review and change by board action.
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I
BUDGETING
A. Overview The purpose of a budget is to enable the church to realize its organizational goals and objectives while striving to be faithful stewards of God’s gifts to our community. There are numerous means for determining the financial management of a church. The Board of Directors of MCC Omaha commits itself to the philosophy that the Mission of the church must come first, and so will utilize a faith-based budgeting process. It is recognized that historical information can provide a valuable aid and will be used in the budgeting process. 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 to 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.
B. Policy The budget for MCC Omaha shall be developed and approved annually. The Pastor, in conjunction with the Board of Directors, will define the church’s broad budgetary goals and mission. They will also develop annual objectives in collaboration with the Congregation. A Budget Committee, which will include, but not be limited to, the Pastor, Treasurer, Assistant Treasurer, and Financial Development Director, shall be established for the purpose of developing the annual church budget. The Finance Committee which will include, but not be limited to, the Treasurer or Assistant Treasurer, will review actual versus budget performance once per quarter, and provide a report to the Board of Directors at large. Budget variances will be explained by the Treasurer along with any recommendations for corrective action as required.
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10/12/2004 Changes and revisions to the budget during the year are made by the Board of Directors. At large members of the Budget Committee and the Finance Committee shall consist of volunteers and appointments.
C. Procedure 1. The Budget process shall begin no later than August 1 of each
year. 2. Steps of the Budget Process will include: a. The Treasurer will provide a report detailing the current year’s Income, Expenses, and budget, along with performance to date. b. The Budget Committee will estimate sources of revenues for the budget period. c. The Budget Committee will prepare a list of all assumptions used in the budget preparation. In addition, procedures and budgeting formats are established and a timetable is developed. d. The Pastor and Board of Directors will establish guidelines, priorities and assumptions for preparation of the budget. The pastor will communicate these assumptions to all ministry leaders. e. Ministry leaders will prepare their projections of revenues and expenditures for planned services, projects, and programs, along with a narrative support statement for each budget item. f. The Budget Committee will designate sufficient funds for achieving the annual objectives approved by the Board of Directors. g. The Budget Committee will consolidate and incorporate the ministry leaders’ budget requests into a total organizational budget, taking into consideration historical data and future growth plans. This consolidated package will be presented to the Board of Directors for their review and discussion. h. At the October Board meeting, the board shall discuss, review, amend, and approve a proposed final budget to be presented to the Congregation for a vote. 3
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i. The proposed budget will be presented to the Board at the October meeting for approval. The approved budget will be presented to the Congregation at the Fall Congregational Meeting for review.
D. Budget Revisions Budget revisions should be infrequent. Budget to actual variances should have explanation as to the deviations as opposed to revising the budget. An example of when a budget should be revised is receipt of a new significant funding source or significant loss of anticipated revenue.
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II
CASH MANAGEMENT
A. Overview Cash management centers around who has control of the funds and types of vehicles and methods used for investing current operating cash and reserve funds. Cash management consists of several elements including timely collections of receivables and strategic planning of payments of bills.
B. Policy The Treasurer, empowered and authorized by the Board of Directors and in cooperation with the Finance Committee, oversees the investment of the church’s funds. The Treasurer and the Finance Committee report to the Board of Directors, who approve the investment policy and decisions. Specific day-to-day activities including check signing are delegated to the Treasurer, who may delegate these activities as appropriate.
C. Cash Management MCC Omaha will maintain separate accounts, as necessary, to accommodate the various needs of the church. General Fund The General Fund provides for routine business check disbursement and all regular deposits from external sources. All members of the Board of Directors except the pastor may have signatory authority on this account. The General Fund, by nature, will have the greatest volume of activity. All checks written require two signatures as authorized by the Board of Directors. See Section VII Cash Disbursements for guidelines for processing of bills and invoices. See Section VI Cash Receipts for guidelines for processing of funds received. Endowment Account The Endowment Account provides for management of gifts provided to the church for the purpose of providing ongoing financial support. Generally speaking, the endowment itself will not be spent, while the income from investment of the endowment
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10/12/2004 funds shall accrue to the General Fund of MCC Omaha unless otherwise designated. Endowment monies shall be maintained in separate, interest bearing accounts. All members of the Board of Directors except the pastor may have signatory authority on this account. Investment Account Designated funds received in excess of $100 shall be placed into the MCC Omaha Investment Account by the Treasurer or Assistant Treasurer upon receipt. This account shall be an interest-bearing account. Interest earned on these deposits shall be credited to each designated fund as a percentage of the overall account. All members of the Board of Directors except the pastor may have signatory authority on this account.
Other Accounts From time to time, funds may be received by MCC Omaha, which must be segregated from the General Fund. These can include certain grants or funds collected through focused campaigns for high cost use. These funds shall be deposited into individual checking accounts established for each fund. All members of the Board of Directors except the pastor may have signatory authority on these accounts.
D. Borrowing Borrowing by MCC Omaha is never to be undertaken lightly. In the event that acquiring a loan to meet unforeseen expenses becomes necessary, the Board of Directors will seek out a minimum of two bids from lending institutions, looking at the total terms of each loan, and selecting that which is most cost effective over the course of the loan.
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III
BANK RECONCILIATION
A. Overview Cash is any organization’s most liquid and most sensitive asset. Therefore, it should be the object of utmost control. Bank reconciliation is a key control factor.
B. Policy MCC Omaha’s policy requires that each account must be reconciled on a monthly basis. The Bookkeeper should perform the reconciliation. The results of the account reconciliation must be reported to the Board of Directors no later than the following month. Reconciliation reports must be kept on file in the Treasurer’s records in accordance with the Records Retention Policy outlined in Section XII (Record Retention) of this financial policy and operating procedures document.
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IV
ASSET MANAGEMENT
A. Overview Fixed assets are physical or tangible assets that are used in the normal operations of the church that are not held for resale and that have a useful life of more than one year. These assets are accounted for at a historical cost, and all assets, except land, are subject to depreciation.
B. Policy It is MCC Omaha’s policy to capitalize all physical assets with a cost in excess of $1,000.00 and a useful life of more than one year. Items with acquisition cost of less than $1,000.00 and/or a useful life of less than one year are expensed in the year they are purchased.
C. Procedure 1. Establish a Fixed Asset Inventory All equipment and furnishings having a useful life of more than one year and an acquisition cost of $1,000.00 or more are covered under this policy. A record of all such assets is to be maintained by the Property Director or Assistant Property Director in a property log showing date of purchase or receipt, purchase cost or stated donation value, a complete description of the item (including color, size, model and serial number), and the specific location of the property. The inventory will be maintained in a database in the Board of Directors office, with a copy stored off-site.
2. Dispositions In the event that a fixed asset 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, this must be recorded in the financial statements.
3. Year End Inventory Every year, the Property Concerns Director will arrange for and conduct an inventory of fixed assets, to be completed within four
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10/12/2004 weeks before to four weeks after December 31 and reported to the Board of Directors in February.
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V
PURCHASING
A. Overview A purchasing system and/or approval process is in place to help facilitate the purchasing of supplies and equipment at the lowest reasonable cost.
B. Invoice Approval Goods will be counted and initialed, as received, by the Church Administrator or designee. The delivery ticket, receipt, or invoice, as applicable, will be forwarded to the Bookkeeper to be entered into the payment system.
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VI
CASH RECEIPTS
A. Overview Cash is any organization’s most liquid and most sensitive asset. Therefore, it should be the object of utmost control. Continuous attention should be a priority with cash receipts.
B. Policy Cash receipts will be monitored very closely.
C. Cash Receipts 1. Weekly Receipts Two members approved by the board of directors, one of whom must be a member of the board of directors, will count the weekly receipts. Spouses, partners and family members shall never process contributions together. All persons involved in processing of contributions shall be required to sign a Statement of Confidentiality.
2. Designated Giving MCC Omaha maintains various funds to which gifts may be designated and, on occasion, may take up a special offering for a worthy cause. These gifts will be segregated on the weekly count sheet as to the amount and purpose.
3. Miscellaneous Funds Received Upon opening of the mail, all checks will be immediately restrictively endorsed and, with any cash received, placed in the safe until the next regular deposit.
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VII
CASH DISBURSEMENTS
A. Overview MCC Omaha strives to maintain efficient business practices and good cost control. The primary objective for accounts payable and cash disbursement is to ensure that: 1. Disbursements are properly authorized. 2. Invoices are processed in a timely manner. 3. Vendor credit terms and operating cash are managed for maximum benefits.
B. Policy Accounts payable will be processed once a week.
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10/12/2004 C. Invoice Processing 1. All bills and invoices are to be opened upon receipt by the Office Assistant or designee, stamped with the date received stamp, and forwarded to the Bookkeeper for payment by placing it in the Bookkeeper’s mail box. 2. All invoices are to be reviewed once a week and paid by the due date. The Bookkeeper will process the bills and invoices for payment and print the required checks. In the event of insufficient funds, the Treasurer or Assistant Treasurer will determine the appropriate sequence for payment of invoices and report to the Board of Directors at the next regularly scheduled Board meeting. 3. After signing the checks, the Treasurer/Assistant Treasurer will return the invoices and checks to the Office Assistant for mailing if necessary. 4. The Office Assistant will mail all paid invoices on the next business day after receiving the checks.
D. Void/Stop Payment 1. Voided Checks Checks may be voided for processing errors. The Bookkeeper will clearly mark the check as VOID and file it.
2. Stop Payments Stop payment orders may be issued by the Treasurer or Assistant Treasurer for checks that are lost in the mail or other valid reasons. Stop payments are processed by telephone instruction and/or written authorization to the banking institution.
E. 1099's Consultants, individuals, and subcontractors who require a 1099 must be documented. This documentation must include their name, address, and taxpayer ID number. A report of all individuals who have received payments over $600 for the year (excluding the amounts for expense reimbursement) will be prepared by the Treasurer by January 15 each year.
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VIII
Travel and Expense Reimbursement
A. Overview MCC Omaha is dedicated to ensuring that attendance at these events create a minimal financial impact on those responsible for attending.
B. Policy 1. Travel Reimbursements. Travel and Expense reimbursement generally are the result of the Pastor and/or Lay Delegate(s) participation at Regional or General Conferences, but may include other church related activities. Event Registrations, hotel reservations, and where applicable, airline reservations will be made directly by the Church. Mileage, if applicable, and per diems for meals are to be paid in advance of the conference. It will not be necessary for delegates or Pastor to provide receipts to the Bookkeeper. In the event that a participant is unable to attend an event for which they have already received per diem and/or mileage, the participant is to refund the church. MCC Omaha utilizes the General Services Administration (a branch of the US Government) established per diem rates for all travel outside of Omaha. Anyone traveling on behalf of MCC Omaha is expected to travel at the lowest possible rate. If the traveler wishes to fly first class, the difference between coach and first class fare will be borne by the traveler. For those choosing to travel by personally owned vehicle, travel will be reimbursed at the current IRS allowed mileage rate. Mileage will be determined by use of travel aids, such as Mapquest or Rand McNally. Travel while at conferences is generally not reimbursed. Hotel accommodations are to be made early. Hotel expenses will be paid from the night before the conference opens through check out time the day the conference ends. Exceptions may be made by the Board due to extenuating circumstances. Hotel rooms will be paid at the single occupancy rate. When appropriate, delegates will be encouraged to share accommodations.
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2. Miscellaneous Reimbursements. The church is a tax-exempt entity and when goods are purchased for the church the tax-exempt number shall be presented at all times. Individuals may be reimbursed for items purchased for the church. Sales tax will not be reimbursed but may be applied towards the member’s tithes and offerings for the year.
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10/12/2004
IX
INSURANCE
A. Overview The church shall maintain an active risk management program that includes a comprehensive insurance package. This will ensure the viability and continued operations of the church.
B. Policy MCC Omaha will maintain adequate insurance as a minimum, in accordance with Fellowship and Region guidelines in their risk management program: Type of Coverage
Amount of Coverage
Comprehensive Liability
$1,000,000
Directors and Officers
$1,000,000 (with an adequate deductible level)
C. Insurance Definitions Comprehensive Liability This type of coverage may include, but is not limited to, directors, officers, employees and volunteers.
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X
TAX FILINGS
A. Overview MCC Omaha is required to make various filings with both federal and state authorities. These laws are subject to change and will be reviewed on an annual basis. As a tax-exempt church, MCC Omaha is not currently required to file Federal Form 990, state Business Income tax returns, or state and local Property Tax returns.
B. Policy The Treasurer shall be responsible for making all tax filings for MCC Omaha with the Internal Revenue Service and/or appropriate state or federal agencies in a timely manner as dictated by the taxing authority.
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XI
FELLOWSHIP AND REGIONAL FILINGS
A. Overview MCC Omaha will tithe to the Universal Fellowship of Metropolitan Community Churches (UFMCC) in accordance with the By-Laws of the Fellowship. MCC Omaha shall also file quarterly Board of Pension reports.
B. Policy The Treasurer shall ensure that all Fellowship and Region filings are made in a timely fashion.
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XII
CONTRIBUTION REPORTS
A. Overview MCC Omaha is required to provide an individual’s account of giving to those who donated money to the church. All donations received in the form of checks or in designated offering envelopes will be recorded, and the donor will be provided with a yearly statement for tax purposes. All loose currency shall be treated as a miscellaneous donation.
B. Policy The Treasurer shall be responsible for ensuring that contribution statements detailing tithes and offerings are mailed or distributed to all contributors by January 31. As per Internal Revenue Service regulations, anyone who gives a gift of $250 or more at one time shall be given a receipt at the time the donation is made.
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XIII
RECORD RETENTION
Records shall be retained as described in Addendum A. Computerized data will be backed up by the Treasurer, Assistant Treasurer, and Bookkeeper on a regular basis with copies maintained off-site. If records are maintained off site, care should be taken to ensure confidentiality is maintained and that the facility is climate controlled to ensure the longevity of the records.
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XIII
RECORD RETENTION Addendum A
RECORDS RETENTION POLICY Records and documents are to be retained according to the schedule below adopted from http://www.flsassetti.com/records.htm. Record/Document
Retention Period
Accident reports & claims
7 years
Accounts payable ledgers and schedules
7 years
Accounts receivable ledger and schedules
7 years
Audit reports
Permanent
Bank reconciliations
7 years
Bank statements
7 years
Business licenses
Permanent
Canceled checks- important (i.e., taxes, purchases of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction)
Permanent
Canceled checks- other
7 years
Capital stock and bond records; ledgers, transfer registers, stubs showing issues record of group interest, options, etc.
Permanent
Cash books
Permanent
Charts of accounts
Permanent
Construction records
Permanent
Contracts & leases-expired
7 years
Contracts & leases in effect
Permanent
Corporate board minutes
Permanent
Corporate bylaws
Permanent
Corporate shareholder records
Permanent
Corporate stock registers
Permanent
Corporate stock transactions
Permanent
Correspondence-customers & vendors (routine)
1 year
Correspondence-general
3 years
Correspondence-legal
Permanent
Deeds, mortgages and bills of sale
Permanent
Depreciation schedules
Permanent
Duplicate deposit slip
3 years
Employee personnel records after termination
7years
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10/12/2004 Employee benefit plan records
Permanent
Employee payroll records
7 years
Employee pension/profit sharing plans
Permanent
Employment applications
3 years
Employment taxes
7 years
Expense analysis & distribution schedules
7 years
Financial statements-year end
Permanent
Financial statements-other
7 years
General ledgers & trial balances-year end
Permanent
Inherited property records & valuations
Permanent
Insurance policies-expired
3 years
Insurance records
Permanent
Insurance audit reports
Permanent
Internal reports
3 years
Internal audits (in some situations, longer retention periods may be desirable)
3 years
Inventory records
7 years
Invoices to customers
7 years
Invoices from vendors
7 years
Journals
Permanent
Leasehold improvements
Permanent
Low-income housing records
7 years
Minute books of directors & stockholders
Permanent
Notes receivable ledger
7 years
Option records
7 years
Patents and trademarks
Permanent
Payroll records and summaries, including payments to pensioners
7 years
Petty cash vouchers
3 years
Physical inventory tags
3 years
Plant cost ledgers
7 years
Property appraisals
Permanent
Property records including costs, depreciation reserves, end-of-year trial balances, depreciation schedules, blue prints and plans
Permanent
Purchase orders (purchasing department copy)
7 years
Purchase orders (except purchasing
1 year
department copy)
Real estate purchases
Permanent
Receiving sheets
3 years
Requisitions
1 year
Sales records
7 years
Savings bond records-employee
3 years
Scrap & salvage records
7 years
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10/12/2004 Stenographer’s notebooks
7 years
Stock and bond certificates (cancelled)
7 years
Stock room withdrawal forms
1 year
Subsidiary ledgers
7 years
Tax returns, worksheets & revenue agents' reports and other documents relating to determination of income tax liability
Permanent
Time books
7 years
Trade mark registrations
Permanent
Voucher registers and schedules
7 years
Vouchers for payment to vendors, employees, etc. (includes allowances and reimbursement of employees, officers, etc., for travel and entertainment expenses)
7 years
Wage Garnishments
7 years
Worker’s Comp Reports
10 years
(Note: As cited from http://www.flsassetti.com/records.htm)
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