Structure and Responsibilities for the Kairos Prison Ministry by a2302339

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                                  Structure and Responsibilities
                                              for the
                             Kairos Prison Ministry International, Inc.
                                   Financial Accounting System
Introduction.

In 2005 the Kairos Prison Ministry International, Inc. is at an important milestone in its growth. We are a
multi-national organization with annual expenses in excess of $3,000,000, with a commensurate fund
raising effort. In order to sustain this level of effort and to grow to our potential, and at the same time be
in compliance with national and state laws, we must standardize our financial accounting system and
reach beyond the traditional sources of funds.

We also want to acknowledge the spirit of love and trust that the many volunteers in our organization who
have been husbanding our resources have exhibited. We in no way want to state suggest or imply any
displeasure with their performance. We are attempting to systematize the process so as to withstand
scrutiny from entities outside of the Kairos Prison Ministry International, Inc. organization and to reduce
the opportunities for error.

Perhaps it can be best stated that, “It is not enough to be honest, but we have to appear to be honest” when
it comes to satisfying the government agencies and accreditation organizations whose approval we seek.
So we are embarking on a course that will enable the Kairos Prison Ministry International, Inc. to sustain
an audit by an independent, third party accounting firm with a minimal number of discrepancies or issues
(something accountants call reportable conditions). It should be understood that the purpose of the audit is
to substantiate that what we claim on our financial reports is true. Detecting misappropriation is
secondary. To this end we must implement the financial accounting system described below. This system
has been developed with a recognition of the several different organizational models that already exist
within the Kairos Prison Ministry International, Inc structure, and with an eye towards minimizing the
changes necessary to implement it. It can best be described as a splitting apart or redistribution of
functions already being performed, rather than the creation of new positions. There has been a purposeful
effort not to use titles or names of positions already in use in the Kairos Prison Ministry International, Inc.
organization so as to allow flexibility for each entity – 3-Day Weekend Team, Advisory Council, Area
Committee or State Chapter Committee - to designate which positions in each respective organizational
level would perform the functions.

Objectives.

The objectives of the financial accounting system are:

          1. Segregation of duties with respect to handling money and the accounting function. This
             requires that the individual who has custody of the assets such as signatory authority on the
             bank account and physical access to the funds not be the same individual who has accounting
             responsibility such as general ledger maintenance, bank reconciliation and financial reporting.
          2. Segregation of duties with respect to the disbursement of funds. This requires that the
             individual who prepares and/or signs the checks not be the same person who performs the
             bank reconciliation.
          3. Reconciliation process. The individual with responsibility for bank reconciliation must do so
             each month before financial statements are prepared and forwarded to higher authority.
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          4. Dual control over incoming funds. This requires that two persons be involved in processing
             incoming cash, which is checks and currency. All checks processed should be restrictively
             endorsed, that is stamped with, “For Deposit Only to the Account # _________”.

Guidelines.

These guidelines are meant to be implemented at every organizational level where a checking account is
maintained. The checking account could be one established using the Kairos Prison Ministry
International, Inc. Federal I.D. Number or one where donations to the Kairos Prison Ministry
International, Inc. are deposited. It is required that the there be two people at any level where a checking
account is maintained who would each perform one of these functions: (1) the cash custodial function or
(2) the bookkeeping function.

Functions.

I. The following functions shall be performed by two different people at every organizational level that
maintains a checking account. This could be at the State Committee, Area Committee or Advisory
Council level.

          (1) Cash Custodial Function:

                 (a) Receive cash, which is checks and currency, from any source. (See Function 1 & 2 below.)
                 (b) Deposit cash into the bank
                 (c) Provide a copy of the deposit slip and the deposit receipt to the person performing the
                      bookkeeper function using two-part deposit slips.
                 (d) If source is other than a 3-Day Weekend Team or a Fund Raising Event (i.e. mailed in
                      donations), provide a list of donors to the person performing the bookkeeper function
                      showing name, address, check number (or cash) and date received.
                 (e) Provide an acknowledgement letter at a minimum to any donor whose contribution is
                      $250.00 or more, and preferably to all donors regardless of amount. This letter should
                      contain the phrase, “We acknowledge that no goods or services were rendered in exchange
                      for this donation.” Provide a copy of all acknowledgement letters to the person performing
                      the bookkeeper function.(Note: This activity could be assigned to the Bookkeeper
                      Function. The actual activity could be performed by another person at the direction of the
                      person to whom the function is assigned.)
                 (f) Upon receipt of an approval voucher from the person performing the bookkeeper function,
                      write checks for reimbursement, invoices, and advances using two-part, pre-numbered
                      checks. (Note: Procedures need to be established by the organizational level at which the
                      checking account resides for approval of expenditures.)
                 (g) Send a copy of the checks written to the person performing the bookkeeper function.

              (2) Bookkeeper Function:

                 (a) Receive all invoices and requests for reimbursement and advances.
                 (b) Send voucher to the person performing the cash custodial function approving payment of
                     invoices, reimbursements and advances. Reconcile vouchers with copies of checks issued.
                 (c) Reconcile donor lists, acknowledgement letters and deposits.
                 (d) Maintain all records including documentation of receipts/deposits and
                     disbursements/payments.
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                 (e) Reconcile the bank statement.
                 (f) Submit all required reports to the next higher level in the standardized format attached or
                     in Quick Books format, except the State Committee submit financial reports to the
                     national office in Quick Books format. Include a copy of the bank statement for each
                     account.

II. The following functions shall be performed by two different people wherever and whenever donations,
ticket sales, or cash is collected. This would usually be at 3-Day Weekend Team Meetings and Fund
Raising Events.

          (1) Function 1:

                 (a) Receive cash in the presence of the person performing Function 2.
                 (b) Prepare a list of donors including name, address, check number (or cash), amount and date
                     of receipt. (Form to be developed.) Sign the list in the presence of the person performing
                     Function 2. Send the list to the person performing the bookkeeper function at the next
                     higher level that has a checking account. This could be an Advisory Council, an Area
                     Committee, or a State Committee.

              (2) Function 2:

                 (a) Verify cash count and sign the list prepared by the person performing Function 1 in the
                     presence of that person. Stamp all checks with the endorsement, “For Deposit Only to the
                     Account # __________”.
                 (b) Forward the cash to the person performing the cash custodial function at the next higher
                     level that has a checking account. This could be an Advisor Council, an Area Committee,
                     or a State Committee.



It is strongly recommended that, where possible, checking accounts be established at the State Committee
level with large, nationwide or regional banks like Bank of America or Wells Fargo which offer master
accounts with connected subsidiary accounts. This would enable the person performing the bookkeeper
function at the State Committee level to monitor all the banking activity in the State. It would require a
corporate resolution from the National Board designating this person as the control point for the master
account with authority to designate who would be signatory on any given subsidiary account. Another
person would perform the cash custodial function. The bank statements for the master account and all
subsidiary accounts would go to the person performing the bookkeeper function at the State Committee
level and copies for each subsidiary account could go to the person performing the bookkeeper function at
the level of the subsidiary account. In those situations where a master account is not feasible, it is required
that copies of bank statements accompany financial reports.
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                                   SIMPLIFIED DIAGRAMS

                                        CASH DISBURSEMENTS

            Cash Receipts

                                                                                         All invoices and
            Cash Disbursements                                                           requests for
                                                                                         reimbursement
                                                                                         or advances sent
            Common to Both                                                               to person
                                                                                         performing the
                                                                                         Bookkeeper
                                                                Sends                    Function
                                                                voucher to
Issue                                                           person
advance                                                         performing the
                                                                Cash
                                                                Custodial
                                                                Function to
                                                                pay invoices
Pay                 Writes          CASH                        and requests            BOOKKEEPER
invoice             Checks        CUSTODIAL                     for reimburse-           FUNCTION
                                                                ment or
                                  FUNCTION                      advances


Pay
Reimbur-
sement
                                                 Sends copy of check with
                                                 explanation




                                                                  Bank statement
                                                                  sent to the person
                                                                  performing the
                                       BANK                       Bookkeeper Function
                                                                  to be reconciled


                                                                                         Sends required
                                                                                         reports to




    In this scenario, it would seem logical that the person                                 NEXT
    performing the Bookkeeper Function would be the user of                                HIGHER
    Quick Books, but would not have authority to sign checks. It                           LEVEL
    would also seem logical that the chain of “control” within the
    KPMI, Inc. organization would be through the persons
    performing the Bookkeeper Function.
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                                 SIMPLIFIED DIAGRAMS

                                            CASH RECEIPTS

                                                                                      Cash Receipts
                                             Cash from
                                          3-Day Weekend
                                               Team                                   Cash Disbursements


                                                                                      Common to Both



                                    Persons performing
          Cash from any             Functions 1 & 2 verify cash
           other source             and send list of donors to the
                                    bookkeeper.



                                    Persons performing
                                    Functions 1 & 2 send the
                                    cash to the cash custodian




                                          CASH                                            BOOKKEEPER
  Sends acknowledgement                 CUSTODIAL                                           FUNCTION
  letter to donors of $250 or           FUNCTION
  more
                                                                     Sends copy of
                                                                     deposit slip &
                                                                     deposit receipt to
                                      Deposits cash in               the person
                                      the bank                       performing the
                                                                     Bookkeeper
                                                                     Function



                                                                       Bank statement sent
                                                                       to the person
                                                                       performing the
                                        BANK                           Bookkeeper Function
                                                                       to be reconciled


                                                                                              Sends required
                                                                                              reports to

  In this scenario, it would seem logical that the person
  performing the Bookkeeper Function would be the user of
  Quick Books, but would not have authority to sign checks. It                                   NEXT
  would also seem logical that the chain of “control” within the                                HIGHER
  KPMI, Inc. organization would be through the persons
  performing the Bookkeeper Function.                                                           LEVEL

								
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