Cherry Hill Huaxia Chinese School
FINANCIAL REULATIONS
DRAFT
Cherry Hill Huaxia Chinese School
May xx, 2010
[Prepared by Gary Wang, 5/19/2010]
CONTENTS
1. Purposes ....................................................................................- 2 -
2. General Rules............................................................................ - 2 -
3. Funding .....................................................................................- 3 -
4. Funds..........................................................................................- 3 -
5. Budget .......................................................................................- 4 -
6. Income and receipts ..................................................................- 5 -
7. Disbursements...........................................................................- 6 -
8. Banking and Checking..............................................................- 8 -
9. Fixed Assets Management ........................................................- 8 -
10. Loan .........................................................................................- 9 -
11. Bookkeeping and Reporting ....................................................- 9 -
12. The Accountant........................................................................- 13 -
13. Financial Audit.........................................................................- 14 每
14. Implementation ＃＃＃＃＃＃＃＃＃＃＃＃＃＃＃............-16-
1. Purposes
1.1. Under the Cherry Hill Huaxia Chinese School Bylaws (the ※Bylaws§), the School Financial Regulations (the ※Regulations§) are set forth by the Board of Directors (the Board) to establish general rules, to control policies, to administrate procedures, and to account for financial matters of the Cherry Hill Huaxia Chinese School (the ※School§).
2. General Rules
2.1 The School＊s funds and other assets shall only be used to serve the School under the objectives defined in the Bylaws.
2.2 The School management＊s decisions on the financial matters shall be made in the best interests of the School as a whole.
2.3 Services rendered by members to the School should generally be on a voluntary basis.
2.4 The School＊s financial operation shall be transparent to its members.
2.5 The Principal and Treasurer＊s responsibility is to manage the School＊s financial activities in accordance with the Bylaws and the Regulations.
2.6 The Principal is responsible to implement control policies and administrate procedures provided in the Regulations. The Treasurer is responsible to represent the Board to co-execute the board＊s decision with the Principal and attest the compliance of the Regulations.
2.7 The Board shall approve plans and actions on the School＊s major and important financial matters.
2.8 The Board may make decisions on financial matters that are not explicitly covered by the Regulations.
2.9 Functions of financial authorization and review, cash receipts and disbursements and record keeping shall be segregated from each other. No overlapping of these functions is allowed in job assignment within the Administrative Council.
2.10 The online banking shall be established and accessed for working convenience and monitoring purpose by designated personnel that will include but not necessarily be limited to, the following: the school＊s Principal, Accountant, Cashier, the board＊s Treasurer, and the board＊s Chair.
3. Funding
3.1 Sources of funding to the School＊s operation include, but not limited to, tuitions, donations, surplus from the School＊s auxiliary activities and any money raised through the School fundraising activities.
3.2 The School accepts donations or private grants that are not conditioned by any political, religious, or other requirements that are contradictory to the School＊s general objectives and well-being.
3.3 All auxiliary activities shall not be conducted for profit-seeking purposes.
3.3.1 Auxiliary activities include those cultural, social, and non-curricular activities organized, conducted, or participated by the School.
3.4 The Principal should take lead to organize fundraising activities.
4. Funds
4.1 All funding shall be categorized as Current Fund, Reserve Fund, and Restricted Fund.
4.2 Current Fund
4.2.1 The Current Fund is the amount of funding appropriated for the budgeted expenditures of the current year school＊s operation, and other expenditures under the Restricted Fund and the Reserve Fund approved by the Board members.
4.2.2 Sources of the Current Fund include
4.2.2.1 Tuition dues collected for the current school year and the amount of funding from the Reserve Funds appropriated for current year (or semester) school operation.
4.2.2.2 Funding appropriated from auxiliary activities for the current school year.
4.2.2.3 Funding appropriated from the Restricted Fund or the Reserved Fund for expenditures proposed by the Principal and approved by the Board of Directors for current year special expenditures.
4.2.2.4 Donation or grants received as budgeted and approved by the Board for current school year spending.
4.2.2.5 Interest income generated from bank deposits from current year.
4.2.3 Balance of the Current Fund, after closing the book of the school year, shall be transferred to
i) The Reserve Fund for the balance from school operations;
ii) The Restricted Fund for the balance from special expenditures.
4.3 Reserve Fund
4.3.1 The Reserve Fund is established to supplement insufficient funding to School operation and any special, non-budgeted spending approved by the Board.
4.3.2 The Reserve Fund is funded by the surplus from previous periods＊ Current Funds, the general donations and grants whose usage is not restricted by donors or grantors.
4.3.3 Spending and appropriation of the Reserve Fund shall be proposed by the Principal and approved by the Broad of directors.
4.3.4 The Reserve Fund is allowed in no case to be used for any commercial or business investment. The Reserve Fund shall be saved in a deposit account with least financial risk.
4.4 Restricted Fund
The Restricted Fund includes donations and grants for activities, projects, assets expenditure specified by donors or grantors and is classified as either temporary or permanent restricted fund
4.4.1 Spending of the Restricted Fund shall be conforming to the donor＊s request.
4.4.2 Disbursement of the Restricted Fund shall be directed by special resolutions of the Board.
5. Budget
5.1 Budget should be proposed by the Principal and approved by the Board. Budget should be reviewed under a semester basis by the Principal and approved by the board.
5.2 Budget should include estimated tuition dues, donations, proposed appropriation of other Funds for the current year (or semester); projected payroll and stipend expenses, rental and facility expenses, proposed equipment purchases, estimated other administrative expenditures, and estimated curriculum and non-curriculum activity expenditures.
5.4 Compensation rates, fixed stipend and other rewards shall be reviewed and adjusted periodically by the Principal and met other school policies and regulations as set forth by the school Board. . The compensation rates, fixed stipend and other rewards for the Principal shall be determined by the Board.
5.6 Total expenditures shall not exceed the total amount of funds available for the budget period.
5.7 Explanations and justifications shall be presented in the budget for any proposed equipment or assets purchase.
5.8 Explanations and justifications shall be presented in the budget for any significant of more than 10% increase of compensation changes.
5.9 The Principal may amend the budget during the budget period if the surrounding circumstance or any operating factors have been changed significantly beyond the control of the Administrative Council.
5.9.1 Procedures for amending budget shall generally follow the regular budgeting procedures.
6. Income and receipts
6.1 Tuition dues shall be collected only by a designated Registrar and/or school officer with the coordination of school Principal. The designated Registrar or school officer is in charge of collecting money and updating the cash receipts log.
6.2 The designated Registrar or school officer should prepare a cash receipts log. This cash receipts log should include the name of payer, purpose of payment, the date of payment, amount, and method of payment (cash or check). At the end of the day or event, the designated Registrar or school officer should reconcile the total amount on the cash receipts log with total cash and checks on hand with the Accountant and both of them should sign off.
6.3 Collected tuitions and other income collected shall be forwarded to the Accountant for depositing to bank within two weeks.
6.4 A copy of the bank deposit slip for the tuition and other income collected shall be attached to the bookkeeping record.
6.5 Any contributions or donations to the School shall be separately recorded in the book and deposited to the bank before its disbursement.
6.6 The School shall provide valid receipt or acknowledgement letter to donors or grantors.
6.7 All large auxiliary activities (such as Chinese New Year celebration) need dedicated personnel to maintain a separate information sheet to record detailed cash receipts, and disbursement. For those who donate more than $500, the name and address of donors should be obtained and may be announced if consent from donors.
6.8 All cash receipts and disbursement records with residual funds from auxiliary activities should be submitted to Accountant for bank deposit and bookkeeping.
6.9 School shall maintain donor information record including donor＊s name, address, donation date, donation description, and donor＊s restricted purpose if it applies.
7. Disbursements
7.1 The Principal has the overall responsibility and authority to
i) Execute the budget;
ii) Authorize spending;
iii) Ensure that spending is within the budget.
7.2 The Principal may approve non-budgeted purchases during the semester for a total amount not more than $200 provided that
7.2.1 Such purchases can be covered by the funds available for the current budget period;
7.2.2 Such purchases are justified by reasonable school operation needs and must be presented to the Board with backup documents.
7.3 Payroll and Compensation expenses shall not exceed the budgeted amount without approval of the Board.
7.3.1 Compensation related to the services that are performed under School＊s detailed instruction and supervision shall report to taxing authority with W-2 form.
7.3.2 Compensation for independent contractual service shall report to taxing authority with 1099 form.
7.4 Authorization of disbursement and reimbursement procedures
7.4.1 All non-routine disbursement shall be pre-approved by the Principal or his designee in lieu of school curriculum or administrative expenses.
7.4.1.1 Non-routine disbursements are expenses other than routine disbursements. Routine disbursement include pre-determined stipend to school administrative personnel, rent for school facilities, regular school supplies and other fixed, determinable and periodical payments for the school＊s ordinary operation.
7.4.1.2 If Non-routine disbursement and/or non-budgeted purchase exceed $200, then Cashier should acquire two signatures from the Principal and school Treasurer.
7.4.2 It is the approving person＊s (i.e. the Principal or designees) responsibility to check the availability of the fund before they approve purchases or disbursement.
7.4.3 Non-routine disbursement should be generally handled on a reimbursement basis.
7.4.4 The Cashier shall not issue a reimbursement check unless the reimbursement voucher is completed as follows:
i) The purposes of the disbursement are provided;
ii) The applicant＊s name is indicated on the voucher;
iii) The reimbursement application is reviewed and signed by related managing personnel (i.e. Principal for School staff and officers＊ expenses);
iv) The original receipt is attached;
v) The disbursed fund is indicated;
vi) The reimbursement check number is posted on the voucher.
7.4.5 The Cashier shall review and sign off the voucher before issuing the reimbursement check.
7.4.6 The Principal shall sign all disbursement checks, except the reimbursement and stipend check for himself or herself.
7.4.7 In case the Principal is absent, the school Treasurer should have the authority to sign checks except the reimbursement and stipend check for him or herself.
7.4.9 In no event should the Cashier or Accountant be allowed or designated to authorize and sign disbursement checks.
7.4.10 The Cashier may reject an approved reimbursement application based upon his/her judgment of appropriateness of the disbursement. After the rejection, the Cashier should return the voucher to the approving person for reconsideration. If the Cashier and the approving person cannot resolve the issue, either one of them can bring the issue to the Board for final decision.
7.4.11 The Principal is fully responsible for the justification of every purchase.
7.5 The Principal has full discretion to determine bonus or reward payment to administrative staff provided that the total amount of such payments for the semester (or the year) is within the budget.
7.6 Rewards or bonus to the Principal shall be determined by the Board.
8. Banking and Checking
Two bank accounts include checking account and saving account shall be maintained for the Current Fund. Another bank account with saving account type (e.g., money market account or CD) shall be maintained for the Reserve and Restricted Fund for the School.
8.1 The Principal may open a short-term certified deposit account with the Board＊s approval.
8.2 The Principal shall inform the Board of the purposes and the benefits of opening or closing such additional bank accounts.
8.3 The maximum balance of the checking account should be no more than 200% of estimated monthly disbursement.
8.4 Additional cash should be transferred from the savings account to the checking account on a monthly basis for disbursement.
8.5 Monthly bank statement reconciliation shall be completed before the bank＊s deadline for notification of fraudulence and discrepancy.
8.6 The Principal and school Treasurer shall register their signatures with the bank for authorization of withdrawal and disbursement of money from the bank and other banking activities.
9. Fixed Assets Management
9.1 Fixed assets include equipment, appliances, furniture & fixtures and separately purchased computer software.
9.2 An asset log sheet for equipment, appliances, furniture & fixtures, and software shall be established.
9.2.1 The log sheet should include asset＊s information, such as
i) Supplier information (name and address);
ii) Date of purchase;
iii) Costs, including invoice price, freight charges, and applicable taxes;
iv) Current condition (workable or with defects);
v) Current users;
vi) Date of obsolete.
9.3 All users must sign in the log sheet when he or she is assigned an asset used for school operation.
9.4 The user should return such assets to the School and sign off the log sheet when he or she no longer serves the duty.
9.5 All users of school assets shall exercise his or her due care to properly use and handle the assets.
9.6 All users shall report any damage or loss of the assigned assets to the School timely.
9.7 The Vice-Principal or the Administrative personnel shall be responsible for managing the school＊s assets and controlling the log-in and log-out of school assets.
9.7.1 The Accountant shall keep a copy of the assets log sheet.
9.7.2 The responsible school officer shall provide an updated copy of assets log sheet to the Accountant on a timely basis.
9.7.3 The assets logged onto the log sheet shall be reconciled to the amount of assets as recorded on accounting records.
9.8. Asset obsolete shall be concurred by the Principal by signing a written explanation from the responsible Vice-Principal or the Administrative personnel.
9.9 The Vice-Principal or the Administrative personnel shall maintain proper records and log sheet to track the use of school supplies and the inventory movement of the textbooks.
10. Loan
10.1 Generally, the School should not borrow or assume any loan or debt for the School＊s operation.
10.2 If, under unusual circumstances, the Principal determines that a loan is necessary to maintain the School＊s operation for a certain period of time, the loan must be approved by the school Board with 2/3 majority ※yes§ vote.
10.3 In case a loan is deemed necessary, loan agreement shall be in place and must be reviewed and approved by the Board.
10.4 Loans shall be disclosed to all board members in written notice.
10.5 The loan agreement shall be signed and executed by the Principal and the Chair of Board.
11. Bookkeeping and Reporting
11.1 The School shall maintain complete and accurate records of its financial activities.
11.2 Records
11.2.1 The financial records include, but not limited to
i) Copy of cash receipts log and checks deposited;
ii) Disbursement vouchers with attached original receipts or other proof of disbursement;
iii) Payroll worksheets with related payroll tax returns;
iv) Invoices or receipts of school expenses;
v) Canceled checks and check stubs;
vi) Bank deposit slips, monthly bank reconciliation and bank statements;
vii) Any other records or proof of disbursement and/or revenue receipts;
viii) General ledger;
ix) Financial statements;
x) Budget plan, related board resolution, board minutes and amendments to the budget;
xi) Asset log sheet and copy of insurance policies;
xii) Tax returns with copy of 1099s, W-2s, 990s, and so on;
xiii) Schedule of each program＊s cash receipts and direct disbursements;
xiv) The transaction details sheets for large auxiliary activities.
11.3 General Ledger
11.3.1 A general ledger shall be maintained to record accounting transactions timely.
11.4 Chart of Accounts
11.4.1 The Chart of Accounts should include at least the following separate accounts: (See below)
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11.4.2 The Accountant may set up additional accounts as deemed necessary.
11.5 Financial Statements
11.5.1 The School Principal shall prepare the following statements on an annual basis:
i) Balance sheet;
ii) Statement of Activities;
iii) Change in fund balances and cash flow statement;
iv) Schedules of functional expenses;
v) Fiscal year Tax filing form 990.
vi) Issuance of W2, 1099, and other tax form.
11.5.2 The financial statements should be prepared under accrual method.
11.6. Records Keeping
11.6.1 All financial records and books are the exclusive assets of the School.
11.6.2 All financial records for a period should be kept for no less than seven years.
11.6.3 All current accounting records should be maintained and kept by current Accountant and Cashier accordingly.
11.6.4 All unused accounting records should be boxed and sealed. The sealed records should be signed by the Accountant and two school officers.
11.6.5 The sealed accounting records should be kept by the Board＊s Treasurer.
11.6.6 A hard copy of financial statements and general ledger should also be kept for each semester.
11.6.7 In an event that the sealed package needs to be opened, the package should be re-sealed after use and it should be re-sealed by the user and two school member witnesses (at least one of the witnesses should be a school officer).
11.6.8 At the termination of the Accountant＊s service (internal or external), all financial records and books under the Accountant＊s care should be returned to the School, and kept by the succeeding accountant.
12. The Accountant and Cashier
12.1 The Accountant and Cashier are two segregated positions of the School Administration Council. His/her duty cannot be co-performed by any other School officers or staff.
12.2 The Accountant and Cashier has full responsibility in maintaining complete and accurate records of the School＊s financial activities and assisting the Principal to prepare budget and financial statements.
12.3 The Accountant and Cashier shall conduct his or her duties fully in accordance with the financial control policies and administrative procedures provided in the Regulations.
12.4 If the Accountant and/or Cashier cannot resolve his or her disagreement with school officers on financial matters, he or she has the right to bring the issue directly to the attention of the Board for further resolution.
12.5 If the Accountant and/or Cashier, based upon his or her judgment, believe that irregularity or misconduct exists in the School financial operation, he/she shall bring the concern to the attention of the Board.
12.6 As defined in the Bylaws, the Accountant and Cashier shall be appointed by the Principal.
12.6.1 No family members or relatives of any School officers or the Board shall be appointed as the Accountant and Cashier.
12.7 In the event that the Principal dismisses the Accountant or Cashier, an explanation must be provided to the Board.
12.7.1 The Board may, at its discretion, verify the causes of the dismissal and override the Principal＊s decision.
12.7.2 The dismissed Accountant or Cashier may appeal to the Board.
12.8 In transition of accountants and/or Cashier, the predecessor should provide all school financial records and files under his or her care to the successor.
12.9 The predecessor shall provide full cooperation to the successor during the transition.
12.10 The departing Accountant and/or Cashier shall assist the new successor in learning and operating the School＊s computerized accounting and bookkeeping system.
12.11 The predecessor shall reply to subsequent inquiries, after the transition, from the successor or school officers for the issues related to the period when predecessor was in service.
12.12 In the event that Principal is dismissed, his or her authority in using School accounts is immediately ceased; and his or her authority in bank accounts signature shall be terminated within 15 calendar days.
13. Financial Audit
13.1 Internal audit
13.1.1 Financial Audit The Board shall organize audit of financial statements on an annual basis to attest the fairness, completeness and accuracy of the financial statements reported by the School Administrative Council.
13.1.1.1 An interim audit for the first semester of the academic year may be conducted at the discretion of the Board.
13.1.2 Compliance Audit The Board may, at its discretion, organize an audit of compliance to attest whether the school financial operations are in compliance with the Bylaws and the Regulations.
13.1.2.1 Such a compliance audit shall be generally conducted as a part of the annual financial statement audit unless the Board deems as necessary to carry out a separate compliance audit.
13.1.3 Departure Audit The Board may, at its discretion, conduct an audit of financial activities, when a school officer or staff departs from his or her position before the end of his or her service term to clarify the School＊s financial condition at that time for transition purposes, or to clarify other transition-related financial issues under the consideration of the Board.
13.1.4 Special Audit The Board may, at its discretion or at a request petitioned by no less than two Board members, organize a special audit to investigate financial matters concerned by the Board members or the requested members.
13.2 Audit and Audit Report
13.2.1 Audits shall be conducted generally in compliance with audit procedures promulgated by relevant professional organizations.
13.2.2 The School officers and staff must provide full cooperation to auditors and provide, in his/her best knowledge, all necessary information requested by the auditors.
13.2.3 Auditors may suggest adjustments to the book for incorrect book entries or accounting treatment.
13.2.4 Auditors shall report any uncovered irregularity or misconduct in the School financial operation immediately to the Board before the conclusion of the audit.
13.2.5 The audit team shall issue audit reports for all types of internal audits to the Board to render auditors opinion on the matters under audit.
13.2.5.1 The format of an audit opinion on financial statements should generally fit for the purpose of the audit as defined in 13.1.1.
13.2.5.2 The format of an audit report for all other internal audits should be determined based upon the request and the satisfaction of the Board.
13.2.6 The audit team shall report its findings only to the Board.
13.2.7 Auditors shall not release any financial and audit related information, records, or reports to any persons or parties without written authorization of the Board.
13.2.8 The Board shall reach a resolution to an audit after reviewing the audit report.
13.3 Auditors
13.3.1 All internal audits should be conducted by an audit team with at least five members and headed by the Treasurer.
13.3.2 The audit team shall be appointed by the Board.
13.3.3. No school admin or their family members or relatives shall be appointed as audit team members.
13.3.4 The auditors can be school members or non-members.
13.3.5 The majority of auditors who is appointed as a member of the audit team should have sufficient relevant professional experience.
13.3.6 At least one CPA shall be appointed as a member of the audit team.
13.3.7 Auditors shall exercise their due diligence in conducting the audit.
13.4 External Audit
13.4.1 In the event that audited financial statements are required for any external purposes, the Board shall appoint an independent external qualified professional to conduct a financial statements audit to satisfy such external needs.
14. Implementation
14.1 The Board is the only authority that has the right to interpret the Regulations.
14.2 The Board may amend the Regulations under the Bylaws.
14.4 The Principal, Treasurer, Cashier and Accountant should study the Regulations thoroughly before carrying out their financial duties and authorities.
14.5 It is the responsibility of all school personnel, including the Board of Directors and the Administrative Council, to understand the related provisions of the Regulations before conducting any financial related activities.
14.6 The Board shall maintain a folder for all school bylaws and regulations for the purposes of school permanent records.
14.7 The Principal shall maintain a separate copy of the Bylaws and the Regulations for daily operation reference. These files shall be transferred to the incoming Principal by the outgoing Principal as one of the required transition procedures.
14.8 The Accountant and Cashier shall maintain a separate copy of the enforced Regulations for his or her reference. Such folder shall be transferred to the succeeding Accountant and Cashier by the departing Accountant and Cashier as one of the required transition procedures.