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Local Checking Account

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					  Local Checking Accounts

EMPOWERMENT THROUGH EDUCATION
Local Checking Summary
• Web site:
   – http://osuebusiness.ag.ohio-state.edu/
• Intended Use: To collect fees and pay for low-
  dollar expenses.
• Restrictions: See restrictions list on the
  following pages.
• Form(s): Local checkbook and accounting
  system.
• Attachment(s): Original, itemized receipts and
  invoices.
• Distribution: Managed within local offices.
• Timing: Varies by office.
Extension Buying Tools
Local Checking Account Basics
Before you begin
• See forms, contacts and more detailed policies on the Business
   Office Web site: http://osuebusiness.ag.ohio-state.edu
• Find out who your Business Office Representative is and work
   closely with them on purchases.
• Business Office Fax 614-688-0529, Address: 4 Ag Admin
   Building, 2120 Fyffe Road, Columbus, OH 43210
• Provide vendor with Tax-exemption Certificate.
• Always tell the story behind what you are purchasing and file
   with every check documentation. What are you buying? Why
   are you buying it?
• Attend or review online Business Office Training: Buying 101,
   Purchasing Card, Reading eReports.
What is a Local Checking Account?


• A local checking account is a purchasing tool.
• It is used by regional and county extension
  offices that are not located on the Columbus
  Campus.
• It should be used for the purpose of doing daily
  business on behalf of Ohio State University
  Extension.
• There must be at least two people in an office in
  order to maintain a checking account.
• It is maintained under the University’s FEIN
  (Tax ID number).
    Authorizations and Reviews

•   The Director or County Coordinator of the unit is responsible for
    ensuring that the accounts are all managed properly.
     – He or she should set an internal control structure for pre-approval.
          • Pre-approval is required for all transactions. When is written pre-
            approval required? When is verbal pre-approval required? How will this
            be documented? (i.e. Purchase Authorization Form.)


     – When items are purchased for your Director or County Coordinator
       that could be of some personal value (computers, cell phones, food
       at meetings, etc.) the approval of the Director of the unit higher
       than yours is required before you can make the purchase.
          • See the signature authority document on the Business Office Web site.


     – The County Coordinator or Director cannot receive a check from
       the checking account.
                   Quiz 1

•    What is an Internal Control Structure?
    1. A set of rules that are provided by the
       generally accepted accounting principles.
    2. A written document with a series of checks
       and balances to prevent fraud.
    3. A verbal agreement with staff regarding
       fiscal procedures.
    4. A security system on the office space.
            Quiz 1 Answer

What is an Internal Control Structure?
2. A written document with a series of
    checks and balances to prevent fraud.

•   An Internal Control Structure should be
    written.
•   It is prepared at the department or unit level
    because every office works differently.
•   It should be universally accepted and
    followed by everyone in the office.
•   It should be reviewed periodically for
    accuracy.
    Authorizations and Reviews

•   A Unit Approver should sign all checks.
     – A backup may be assigned this responsibility.
     – Support staff may be authorized to sign checks only if they are dual
       signatures.
     – The Unit Approver should set an internal control structure to
       establish who signs checks and when they are permitted to do so.
     – A Unit Approver can never pre-sign a blank check.
•   A Unit Approver should receive the bank statement unopened
    for review.
•   A Unit Approver should review and sign the reconciliation of the
    bank statement.
•   Establish an audit committee (internal or external) to annually
    review books (recommended but not required).
 Authorizations and Reviews

• Segregate the duties of the checking account.
   – At least two people need to be involved in
     every transaction.
                  Typical office structure
                          Initiator             Approver
Receiving Money   All staff receive money    Unit Approver reviews
                  and record in ledger.      ledger and deposit
                                             before it goes to the
                                             bank.
Writing Checks    Support staff completes    Check signed and
                  paperwork and writes       reviewed by Unit
                  out check.                 approver.
Reconciliation    Support staff reconciles   Approver reviews
                  statement to ledgers.      statement unopened and
                                             approves reconciliation
                                             after it is complete.
               Documentation

For Receipts:
•   Use pre-numbered receipts or logs for all incoming cash and
    checks
•   All funds received in the office must be recorded, either on a log
    or with pre-numbered receipts, and also in a ledger.
•   Keep copies of incoming checks with deposit files.
•   Keep copies of your deposit receipts
•   Checks should be endorsed “FOR DEPOSIT ONLY”
    immediately upon receipt.
•   All funds received should be deposited in the form received.
    Checks should not be cashed from cash receipts, nor should
    bills be paid from cash receipts.
•   Always complete the entire receipt.
•   Document overages and shortages in the cash box on the
    ledger.
                   Documentation
For Checks:
•   Each check written should have some type of documentation. Ex. Invoice or
    receipt.
     –   This receipt must be itemized (list what you purchased)
     –   This receipt should also include a business purpose (why did you purchase?)
•   Always complete all fields on the check, including check memo.
•   All food/beverage purchases must have "Food/Beverage Documentation
    Form" or attendee list.
•   File packing slips on shipped orders with invoices and forms for that order.
•   For internet orders print an order confirmation and shopping cart information
    and file with your paperwork on that order.
•   A recipient list should always accompany gifts, shirts, and other personal
    items.
•   Refunds for previously paid items (books, registrations) should be documented
    by referencing the original receipt number associated to the payment on the
    check that is being written for the refund.
•   Always document exceptions to policy carefully. Get approval from the
    Business Office for anything out of the ordinary before you process.
                      Policies
• Make frequent deposits. University policy is $500 or once a
  week whichever comes first. This is very important!
    – It is recommended to make a deposit on the last day of the
        month to make balancing easier.
    – Have someone review deposits before they go to the bank.
• The funds are University funds and subject to all policies.
• If it requires a Purchase Order, it may not be paid from the
  local account. See the special approvals list.
• Large cash balances (checking accounts with more than
  $20,000) should be deposited into a county designated
  University fund number.
   – Exception: Camp fees collected once a year may temporarily
     inflate your balances.
• One account is permitted per field office.
• Monitor the account as if it was your personal money.
                                   Policies
•   Store funds in a locked location, limiting access. Move the money to another
    locked location at night.
•   Consider the risk for you and the University of each transaction; higher risk
    transactions should be done on a Purchase Order.
•   Follow State and University guidelines on collecting sales tax.
     –   http://www.ctlr.ohio-state.edu/accounting/TaxCompliance.shtm
•   Reimbursements may be submitted with back up receipts to reimburse the
    checking account from University funds up to $3000 per fund quarterly.

•   Year end adjustments or “housekeeping” entries should be thoroughly
    documented. This can include things such as bank service charges, interest
    and returned checks.
•   Implement an income and expense report for all programs

•   Do not handle funds for other organizations.
     –   This includes: Collecting money at the fair, holding money in the office for the
         treasurer, and purchasing items from your account that will later be “reimbursed” by
         another committee.
                    Quiz 2

•    If you purchased t-shirts online for
     camp craft supplies what should you
     have in your documentation file?
    1. An invoice
    2. A packing slip
    3. An order confirmation
    4. A letter describing why you cannot give a
       recipient list (because it was for craft
       supplies).
    5. The check carbon from the ledger
    6. All of the above.
             Quiz 2 Answer

•    If you purchased t-shirts online for
     camp craft supplies what should you
     have in your documentation file?

    6. All of the above.

    You should have all of this in your
       documentation.

    It is important to include a note when you are
          unable to meet a requirement, such as a
          list of attendees. That way the auditors
          know that you know the policy.
       Accounting Systems
•   Many OSU Extension offices use a pegboard (sometimes called
    "one-write") system to account for their checking accounts.

•   Pegboard accounting systems are intended to reduce the
    amount of time spent on routine bookkeeping tasks.

•   Other online systems can be used (ex. Quickbooks and
    Quicken) but the same level of detail should be printed and kept
    on file for audit records.
     – The Business Office cannot provide technical support for these
       types of programs.
        Accounting Systems
Regardless of the accounting system used, it is necessary to keep exact
  records of the inflow and outflow of all monies. This involves the
  following standard procedures:
• Receipting of all funds taken in, to show the amount, the source, and
  the reason for the transaction.
• Payment of all obligations by check or via a properly-documented
  petty cash fund, to record the amount, the payee, and the reason for
  the expenditure. Checks are supported by vouchers (usually vendor
  invoices) to document this information.
• Maintenance of a ledger(s) to record the income and expenses, plus
  the fund balance. Generally the ledger is used to subdivide the
  transactions into classes of expense/income or subaccounts (e.g. by
  program area).
• Monthly reconciling of the ledger to the statements furnished by the
  bank, to be sure that all items are properly recorded.
 Special Buying Considerations

• Local Checking account may be used to collect:
  registration fees, publications and other non-restricted
  income.

• Local Checking Account may be used to pay for: last
  minute small dollar supplies, subscriptions and
  membership fees, postage and payments to an OSU
  account.

• When in doubt ask your Business Office Representative,
  it is better to be conservative with the use of the checking
  account!
  Checking Account Restrictions


Items not permitted to be deposited into
   the checking account:
• Grant and contract earnings
• Donations
• Funds belonging to other
  organizations
• Checks to make change (ex. Acting
  like an ATM)
    Checking Account Restrictions

Items not to be purchased from the checking account:
• Travel reimbursements, expenses and cash advances.
    – Exception: Registrations for meetings for OSU Employees
• Donations
• Honoraria
• Scholarships
• Payroll: including summer interns and temporary help
• Payments to individuals or companies for services.
    – Example: Speakers, bus drivers, nurses, entertainers,
      photographers, cleaning, moving, vending, painting,
      equipment repair.
• Charters or any vehicle rental – Example: bus, van, boat
• Catering, especially those events requiring a contract
     Checking Account Restrictions

Items not permitted to be purchased from the checking account
• Purchases that require signing of contractual agreements. (ex.
   maintenance, facility use agreements)
• Advertising (except classified ads under $1,000)
• Letterhead, business cards.
• Personal expenses (even if you intend to “repay”)
• Signage (Interior and Exterior Building)
• Equipment – Example: copiers, radios, alarm systems, computers
• Guns, weapons, ammunition, explosives, controlled substances,
   radioactive material, gas cylinders and gasoline
• Alcohol
• Insurance – includes event insurance and volunteer insurance
• Off-Campus lease space
• Repair, renovation and construction of a building
                   Quiz 3

•    Which of these can be purchased
     from the Checking Account?
    1.   Envelopes with the University logo
    2.   Repair costs for the leaky sink
    3.   Paper
    4.   Payment to a volunteer for
         answering the phones for a few
         hours.
               Quiz 3 Answer

•    Which of these can be purchased from
     the Checking Account?

    3. Paper

    –   Envelopes should be purchased from
        UNIPRINT using the online ordering
        system.
    –   The repair should be put on a Purchase
        Order.
    –   The payment to the volunteer should be
        put on a payment request.
    Checking Account Restrictions

Items not to be purchased from the checking account
• Equipment Lease
• Satellite Dishes/Antennas
• Security Alarm Systems
• Telephone, Pager Equipment and Supplies
• Vehicles
• Invoices over $1,000
   Exceptions:
   – 1. any payment to OSU
   – 2. Postage
   – 3. Camp fees
   Checking Account Restrictions

Items not to be purchased from the checking account
• Support of political activities.
• Parking charges at home office sites or OSU annual
   parking decals for individual employees.
• Loans of any kind.
• Cash to make purchases.
• Savings Bonds for gifts
• Gift Cards to use as cash.
• Gift Cards that hold cash value (ex. Prepaid Visa)
Checking Account Restrictions

• People should generally not be paid from this account.

Exceptions:
   1. Refunds are permitted to individuals, who have paid for
      books/registration fees, etc. and return the item or do not
      attend meeting.
   2. Reimbursements are permitted to individuals for the
      purchase of office supplies or other goods for less than
      $50.00.

   Note that if the person is an authorized check signer they may
     not get reimbursement from the checking account.
 Checking Account and the General Ledger

The local checking account works with university fund numbers.
Money is transferred from one fund to another to make the revenue
   match the location of the expense.
        Imagine a program…
You have collected fees and deposited them in the local checking
     account. The REVENUE is in the checking account.

You have a speaker for the same program and have agreed to pay
     that speaker $250 which required a Purchase Order. This
     EXPENSE must be processed by the Business Office.


How do you resolve the problem?
1.  You would complete a requisition form to create the
    purchase order using a designated fund 06xxxx.
2.  You would send a check and a check transmittal form
    to create the transfer of revenue to cover the expense.
    •    It would be deposited into the same fund as above
         06xxxx with an account number of 41225 for Office
         Reimbursements
                 Quiz 4

•   What form would you use to send
    a check from your checking
    account to a University fund?
    1. Project Confirmation and Payment
       Transmittal
    2. Check Transmittal
    3. None, I should just write the fund
       number on the check.
    4. Fund Transfer form.
              Quiz 4 Answer

•    What form would you use to send a check
     from your checking account to a University
     fund?

    2. Check Transmittal
       –   The Project Confirmation and Payment Transmittal
           Form should be used for Grants and Contract, attach
           it to checks coming from the sponsor.
       –   When you send checks to the Research Foundation
           you can simply reference the project number on the
           check paperwork, no form is required.
       –   The funds transfer form is used to transfer cash
           between two university General Ledger fund
           numbers.
         Questions?

See the Website for:
  – Forms
  – Training Material
  – Contacts in the Business Office

  http://osuebusiness.ag.ohio-state.edu

				
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