Columbia-Pacific RC&D

MANUAL OF

ACCOUNTING PROCEDURES



Last Revised Date:

September 2, 1998





September 2, 1998
 

Managers and Employees of the Columbia-Pacific RC&D
303 South "I", Suite 102
Aberdeen, WA 98530
 

To All Employees:

I am furnishing you with a copy of the Manual of Accounting Procedures. This contains the official financial management and accounting procedures of the Agency.

This Manual was developed to codify the organization's procedures to strengthen its traditional financial management and accounting functions. This Manual also contains our procedures on integrity, cost estimating, property management and compensation. In this period of increased auditor scrutiny of organization's practices, this Procedure Manual and the enforcement of these procedures are essential to safeguard the organization's assets and practice.

More than simply collecting dust on one's shelf, these procedures are intended to be observed. Your performance will be judged, in part, by your adherence to these procedures.

It is our intention to keep this Manual up to date. For your part, after reading it, we would appreciate your input on how these procedures could be made more relevant to your job and your suggestions for new or changed procedures.

It is our goal to keep Columbia-Pacific RC&D a strong and viable operation and we consider this Manual to be an important step in that direction.

Sincerely,

Carlton Appelo
Treasurer
 
 


Columbia-Pacific RC&D

MANUAL OF ACCOUNTING PROCEDURES

Table of Contents

100 INTRODUCTION

101 Purpose of Manual
103 Scope and Organization
105 Definition of Terms
107 Amending the Manual of Accounting Procedures 200 INTERNAL CONTROL PROCEDURES 201 Ethical Standards in Bidding, Negotiation and Performance of Government Awards
202 Board of Directors Authorities
203 Signature Authorities
204 Endorsement Requirements for Agency Checks
205 Political Activity
206 Davis-Bacon Compliance
207 Relocation Assistance Compliance
208 Control of Non-Contemporaneous Cost Transfers
209 Special Internal Control Safeguards over Participant Contributions
210 Taking Security Deposits and Making Payments on Behalf of Clients
212 Government Access to Records
213 Security of Financial Data
214 Other Internal Control Procedures 300 FINANCIAL MANAGEMENT PROCEDURES 301 Basis of Accounting
302 Incurred Costs
303 Elements of an Acceptable Financial Management System
304 Cash Management
305 Budgets
306 Insurance and Bonding
307 Record Retention and Disposal
308 Monitoring Subrecipients and Grantees
309 Financial Reporting
310 Audit
311 Scope of Audit Report
312 Procuring Audit Services
314 Frequency of Audits and Due Date for Audit Report Submissions
315 Audit of Subrecipients
316 Oversight of Subrecipient Audits 400 PROCEDURES RELATED TO ASSETS, LIABILITIES AND NET ASSETS 401 Capitalization of Equipment
402 Donated Property or Equipment
403 Authorized Investments
410 LIABILITIES
411 Accounts Payable
412 Advance Payments
413 Deferred Revenue
420 NET ASSETS
421 Unrestricted, Temporarily Restricted and Permanently Restricted Net Assets 500 REVENUE SOURCES 501 Donated Facilities or Services
502 Segregation of Revenues 600 COST ACCOUNTING PROCEDURES 601 Cost Accounting Period
602 Administrative Costs
603 Management and General Expenses
604 Direct and Indirect Costs
605 Allocation of Legal Fees
606 Contributed Services and Materials
607 In-Kind Costs
608 In-Kind Contributions, Valuation of
609 Accounting for In-Kind Costs, Acceptable Methods of
610 In-Kind Costs, Documentation of
611 Subgrant Awards
612 Subgrant Accounting
613 Depreciation Method
614 Purchased Computer Software Licenses
615 Compensated Personal Absences, Accounting for
616 Bid and Proposal Costs 700 COST ESTIMATING PROCEDURES 701 Management Fee or Allowance
702 Comparison of Estimates to Actual Costs 800 PROPERTY MANAGEMENT PROCEDURES 801 Identification of Government Property
802 Government Property, Record and Report of
803 Material, Record of
804 Plant Equipment, Record of
805 Physical Inventories
806 Disposal of Property, Plant and Equipment
807 Fully-Depreciated Assets
808 Other Records and Reports
809 Disposable Items
810 Disposition of Real Property and Equipment 900 COMPENSATION PROCEDURES 901 Consultant Utilization, Evidence for
902 Independent Contractors, Control of
903 Frequent Flyer Bonuses  


100 INTRODUCTION

101 Purpose of Manual

A. The Manual of Accounting Procedures of the Columbia-Pacific RC&D is the official document of the Corporation for the conduct of business and the accounting and administration for grants and subgrants with the U.S. government and other funding sources.   B. The purpose of the Manual of Accounting Procedures is to provide detailed information on the accounting and administration of grants. This Manual should guide employees of Columbia-Pacific RC&D in the application of various Federal and state laws and regulations to grants awarded by the U.S. government and other funding sources.   C. This Manual constitutes all current fiscal procedures and standards that have been developed by the Columbia-Pacific RC&D, unless otherwise noted, through the time of issuance. 103 Scope and Organization The general organization of the Manual of Accounting Procedures is as follows:

Section 100 Introduction -- provides a description of the purpose of the Manual of Accounting Procedures and its organization.

Section 200 Internal Control Procedures -- describes the system of organizational, systems and human controls in place to safeguard the assets of the Columbia-Pacific RC&D and to ensure business is conducted in an ethical manner.

Section 300 Financial Management Procedures -- sets forth Procedures for the operation of the financial management structure of the Columbia-Pacific RC&D.

Section 400 Accounting for Assets, Liabilities and Fund Balance -- establishes Procedures for accounting for the Organization's assets, liabilities and fund balance.

Section 500 Revenue Procedures -- reflects when and how to recognize income on sales of goods and services of the Columbia-Pacific RC&D to its funding sources.

Section 600 Cost Accounting Procedures -- deals with the measurement, assignment and allocation of costs of the Columbia-Pacific RC&D to its various cost objectives.

Section 700 Cost Estimating Procedures -- describes those procedures to be used in applying for grants with the U.S. government and the Organization's other funding sources.

Section 800 Property Management Procedures -- presents procedures and practices over the identification, control and disposition of government property and Columbia-Pacific RC&D owned property, equipment and materials.

Section 900 Compensation Procedures -- establishes procedures over the control of compensation, cost-related fringe benefits, the status of employees and consultants, and the expenditure of funds on behalf of the Corporation by its employees.

 105 Definition of Terms When reference is made to terms herein, the terms defined in OMB Circulars A-110 and A-122. 107 Amending the Manual of Accounting Procedures This Manual contains the essential fiscal procedures of the Columbia-Pacific RC&D, as determined by the U.S. government and other funding sources of the Columbia-Pacific RC&D, applicable to grants and subgrants as of the date of promulgation. From time to time, as additional matters require promulgation or changes to this Manual are appropriate, officials of the Columbia-Pacific RC&D may amend this Manual. 200 INTERNAL CONTROL PROCEDURES

201 Ethical Standards in Bidding, Negotiation and Performance of Government Awards

A. The organization will strictly observe the laws, rules and regulations which govern acquisition of goods and services by the U.S. government. We will compete fairly and ethically for such business opportunities.   B. Employees involved in the negotiation of grants will make all reasonable efforts to assure that all statements, communications and representations to funding source representatives are accurate and current. Care should be taken by personnel in a position to know that there are no material substitutions from specifications and the products meet or exceed contractual specifications. 202 Board of Directors Authorities The Board of Directors shall have the sole authority to approve and will incorporate into its own minutes such matters as: (i) change of the organization's name, (ii) adoption of the annual operating budget, (iii) selection or termination of the chief executive officer, chief operating officer, and department heads, (iv) staff promotions and salary increase, (v) investment policies, (vi) incurring of long-term debt, (vii) leasing of real property, (viii) award of subcontracts, (ix) increases in fees for services, (x) adoption of fund-raising projects, (xi) major changes in program offerings or client services, (xii) major endowment decisions, (xiii) opening up or closing checking or savings accounts, (xiv) selection of the organization's public accountant, (xvi) etc. 203 Signature Authorities A. Expenditures for: Type of Expenditure Authority or Transaction Amount by Position 1. Major investments (capital and up to $2,500 President President of the Board construction-in-progress;sale/leaseback arrangements; major modifications or betterment; intangible assets) 2. Capital asset purchases up to $2,500 President
3. Leases and rental transactions (direct up to $2,500 President and indirect) 4. Business meetings and business-related up to $2,500 President social activities 5. Overhead expenses up to $2,500 President
6. Consultants and representatives and up to $2,500 President executive search agreements 7. Legal fees and retainers up to $2,500 President Type of Expenditure Authority or Transaction Amount by Position B. Business Commitments and Authorizations 1. Proposals/grant applications up to $2,500 President
2. Contracts/grants up to $2,500 President
3. Authorization to incur costs, unfunded up to $2,500 President expenditure request 4. Procurements (including subgrants) up to $2,500 President C. Personnel Matters 1. New hires Personnel Committee/Project Coordinators
2. Temporary employees or contract labor President personnel
3. Transfers or changes in labor President classification (direct to indirect and vice versa)
4. Employment agency fees and/or Executive Director employment advertising
5. Salary action, transfer, promotion and Personnel Committee termination
6. Job descriptions Personnel Committee
7. Leave of absence President
8. Education authorization and refund Executive Board
9. Relocation expense Executive Board D. Other Costs 1. Time card approvals Supervisor
2. Exempt overtime authorization Executive Director
3. Compensatory time off Executive Director
4. Travel authorization Executive Director
5. Temporary travel advance Executive Director Type of Expenditure Authority or Transaction Amount by Position 6. Permanent travel advance Executive Director
7. Expense reports Supervisor
9. Employee activities Supervisor
10. Employee incentive payments Executive Board E. Other Matters 1. Disposal of capital assets Executive Board
2. Write-off of accounts receivable Executive Board 204 Endorsement Requirements for Agency Checks A. All checks issued by the Agency should be signed by two authorized officials, each of whom is independent of the control of the other person.   B. The practice of presigning blank checks is a specific violation of the Organization's internal control structure. 205 Political Activity A. The Hatch Act and the Intergovernmental Personnel Act of 1970 preclude Federal funds from being used for partisan political purposes of any kind by any person involved in the administration of Federally-assisted programs. 206 Davis-Bacon Compliance A. For all construction, etc., covered by the Davis-Bacon Act, all laborers and mechanics employed by grantees or subgrantees to work on construction projected financed by Federal assistance must be paid wages not less than those established for the locality of the project by the Secretary of Labor.   B. Columbia-Pacific RC&D will insert the appropriate contract provisions regarding the Davis-Bacon Act in all applicable invitations for bid/requests for proposal, and resulting contracts, for federal funded projects.   C. Columbia-Pacific RC&D will require all contractors and subcontractors to which the Davis-Bacon Act applies to certify all salaries and wages in compliance with the Act. Appropriate personnel of Columbia-Pacific RC&D will examine the payroll records of such contractors on a sample basis to determine compliance with the Davis-Bacon Act, for all federal funded projects. 207 Relocation Assistance Compliance For grant activity involving displacing residents or businesses in accordance with the Uniform Relocation Assistance and Real Property Acquisition Procedures Act of 1970, Columbia-Pacific RC&D will make arrangements for locating adequate replacement housing or facilities and paying any appropriate compensation, for federal funded projects. 208 Control of Non-Contemporaneous Cost Transfers For all transfers of costs from one grant to another, and from a direct cost to an indirect cost or vice versa, made on other than a contemporaneous basis, Columbia-Pacific RC&D will: A. Have available in its accounting records an appropriate written justification statement for any cost transfers   B. Reflect the adjustment in its General Journal. 209 Special Internal Control Safeguards over Participant Contributions Because of the cash nature of participant contributions, Columbia-Pacific RC&D should exert special safeguards over such funds. At a minimum, the organization should employ one or all of the following precautions: (1) have two persons count all cash contributions; (2) deposit the amount intact; (3) deposits should be made on a daily basis; (4) until deposit, all cash contributions should be maintained in a secure place; (5) counts of cash should be regularly compared with the deposit receipts received from the bank; (6) staff should be rotated periodically, if staffing permits, etc. 210 Taking Security Deposits and Making Payments on Behalf of Clients Unless Columbia-Pacific RC&D has an approved program for such purposes and any such security deposits and payments are explicitly covered under the agency's fidelity bond coverage, all officers, employees, volunteers and agents will be precluded from and be periodically instructed about not taking security deposits or making payments on behalf of program participants. In situations where such programs are provided for and explicitly covered under the agency's fidelity bond coverage, adequate safeguards will be set in place and periodically assessed. 212 Government Access to Records The Treasurer will provide access to the organization's records to the Comptroller General or his designee and provide supporting records as requested by government auditors to facilitate the completion of such audits or reviews. 213 Security of Financial Data A. The organization's automated accounting system will have sufficient built-in general controls and application controls to preclude unauthorized access to data.   B. Access to any computer-based financial data will be granted on a need-to-know basis and will be restricted by a series of passwords to be revised yearly.   C. The system's accounting data will be backed up after use and stored in a safe location. 214 Other Internal Control Procedures As an organization doing business with the U.S. government, Columbia-Pacific RC&D has instituted the following additional internal control Procedures related to its government grants: A. Cost data will be reconciled on a sample basis with labor and materials distributions and verified with source records (i.e., time cards, purchase orders, etc.).   B. Labor charges will be periodically compared with work actually performed on a sample basis.   C. Any alteration made to a time card by an employee or a project supervisor will be justified in writing on the source document.   D. Costing data will be periodically reconciled with the books of account or, if not integrated, with control accounts.   E. Government invoices will be periodically compared on a sample basis with the underlying time charges and the time sheets.   F. Invoices unpaid beyond 60 days of submission will be followed up for collection.   G. Charges on representative invoices will be compared with the timing of labor and materials payments. Representative invoices will be compared with approved costs in the cost proposal before submission. 300 FINANCIAL MANAGEMENT PROCEDURES

301 Basis of Accounting

A. Columbia-Pacific RC&D will report program outlays and income on the cash basis. To do so, it will develop the necessary accrual information through analysis of pertinent documentation on hand. Appropriate worksheet entries can be made to convert the books of account under the cash basis to financial statement presentation under the accrual basis.   B. Columbia-Pacific RC&D will observe the cash basis of accounting for U.S. Department of Agriculture (USDA) funding and the commodities-received basis for USDA commodities. This variance from the accrued method of accounting is realistic given the difficulty in estimating the amount of the receivable for USDA billing, even though sums have been incurred and collection is reasonably assured. An unbilled receivable will not be reflected for such USDA receivables. 302 Incurred Costs Outlays or expenditures represent charges made to the project or program. They may be reported on a cash basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expense charged, the value of in-kind contributions applied, and the amount of cash advances and payments made to subgrantees. For reports prepared on an accrual basis, outlays are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expenses incurred, the value of in-kind contribution applied, and the net increase (or decrease) in the amounts owed by the grantee for goods and other property received, for services performed by employees, grantees, subgrantees and other payees and other payees and other amounts becoming owed under programs for which no current services or performance are required such as annuities, insurance claims and other benefit payments. 303 Elements of an Acceptable Financial Management System A. Columbia-Pacific RC&D will maintain records and make reports in such form and containing such information as may be required by its funding sources. Columbia-Pacific RC&D will maintain such accounts and documents as will serve to permit expeditious determination of the status of funds and the levels of services, including the disposition of all moneys received from its funding sources and the nature and amount of all charges claimed against such funds.   B. Title 45 Code of Federal Regulations Subpart 74.61(b) and the administrative rules of other Federal agencies require that grantees or subgrantees have records that identify adequately the source and application of funds for grant or subgrant-supported activities. At a minimum, these records will contain information pertaining to grant or subgrant awards, authorizations, obligations, unobligated balances, assets, outlays, income, and, if the recipient is a governmental entity, liabilities.   C. For the purpose of determining the adequacy of a subrecipient's financial management system, Columbia-Pacific RC&D will maintain on a current basis as a minimum: 1. General Journal,
2. General Ledger,
3. Separate or combined Cash Receipts and Disbursements Journal or Voucher Register,
4. Payroll Register (if the agency has more than 10 employees),
5. Fixed Assets Register for all owned and leased property and equipment,
6. In-Kind Journal/Worksheets,
7. Project Cost Control Subsidiary Ledger/Worksheets, and
8. Bank statements reconciled. 304 Cash Management A. Only cash necessary to meet anticipated day-to-day outlays plus a reasonable cushion of $200.00 for contingencies will be kept available.   B. Any excess cash will be invested in short-term investments having maturities of less than one year.   C. A schedule of aged accounts receivables will be prepared monthly and reviewed for collection with the Project Director. Appropriate collection procedures will be initiated. Follow-up contacts will be recorded and maintained in a log for use in any legal proceeding.   D. Columbia-Pacific RC&D will maintain a financial forecasting system to adequately forecast its fund flows -- intake and outgo -- and needs.   E. According to Treasury Circular 1075, the time elapsed between the transfer of funds from the U.S. Treasury and disbursement by Columbia-Pacific RC&D should be minimized and should be limited to the actual, immediate cash requirements of Columbia-Pacific RC&D.   F. If required by the Federal agency, Columbia-Pacific RC&D will, insofar as feasible, limit cash advances in the hands of their subgrantees or grantees to not more than three day's needs.   G. Fiscal personnel of Columbia-Pacific RC&D will ascertain through telephone contact and other means the actual cash balances held by its subgrantees and grantees. 305 Budgets A. Columbia-Pacific RC&D will have prepared, have approved by the Board of Directors and keep up to date an annual operating budget of revenues and expenses.
      1. The agency will maintain a budget of its indirect costs and its bases of allocation for the periods covering the longest grant that it bids.
306 Insurance and Bonding A. The Agency will maintain the following minimum levels of coverage: 1. Comprehensive $2,000,000 liability
2. Automobile insurance $1,000,000 for employees and consultants
3. Fire and water damage Coverage for all items with acquisition cost of greater than $100,000
4. Directors' and officers' $1,000,000 (with an level) liability adequate deductible
5. Theft Coverage for all items with acquisition cost of greater than $75,000
6. Workers' compensation To the extent required by state law
7. Dishonesty Bond $75,000 B. For personnel handling cash or preparing or signing checks, Columbia-Pacific RC&D will obtain minimum insurance coverage of two months' cash flow, including checks received, in blanket fidelity bond coverage.   C. These insurance coverage’s will be increased where grant provisions require an increased level of coverage.   D. The Agency will require proof of adequate insurance coverage from all prospective subgrantees. 307 Record Retention and Disposal A. All financial and programmatic records, supporting documents, statistical records and other required or pertinent records of Columbia-Pacific RC&D will be retained for three years from the day it submits its final expenditure report. For grants involving continued support or renewed annually, the retention period starts on the day Columbia-Pacific RC&D submits its expenditure report for that period.

B. If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the three-year period, the records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular three-year period, whichever is later.

C. In accordance with the "Guide to Record Retention Requirements," National Archives and Records Administration, U.S. Department of Commerce, for the Internal Revenue Service, the following records will be retained for the indicated minimum periods:

1. For six years after the close of the year or until the tax audit of the return for the year is completed, whichever is longer: accounts payable and accounts receivable ledger, payroll register, inventory ledger, bad debt write-off supporting details, cash book, petty cash book, check register and checks, invoices (funding sources and vendors), and insurance safety reports.   2. Permanently: Audit reports, chart of accounts, financial statements, general ledger, fixed asset records, journal vouchers, profit and loss statements, tax returns, annual corporate reports, charters and by-laws and minutes, grants and agreements, tax and legal correspondence, incorporation records, labor grants, insurance claims and Procedures, accident reports and retirement and pension records.


D. The disposal date determined under this policy will be the end of the fiscal year in which occurs the anniversary date of the required number of years from the act specified or, where not specified, from completion of a grant, date of final payment of a grant or year in which an entry is made charging or allocating a cost to a government grant, as the case may be.

  E. All records not supporting government grants or otherwise covered by rules of the Internal Revenue Service will be retained for three years from the end of the fiscal year in which the records were originally prepared.   F. All financial records will be maintained in chronological order, organized by fiscal year, starting with the fiscal year commencing January, 1991. No separate files or accounting records will be maintained by individual grants.   G. In connection with the disposal of any records, a memorandum of record disposal will be prepared by the designated Records Disposal Officer listing the record or the class of records disposed of. This memorandum of records disposal will be certified by the Records Disposal Officer. 308 Monitoring Subrecipients and Grantees Columbia-Pacific RC&D program and fiscal personnel will develop criteria to categorize subrecipients and grantees for monitoring as follows:  
Category 1 -- Experience has shown that subrecipients and grantees may be relied upon to submit well prepared and documented grant applications, have highly qualified program and fiscal personnel and systems and can be relied upon to comply with the principal requirements. For organizations in this category, Columbia-Pacific RC&D will arrange an annual fiscal assessment, rely upon the subrecipient's annual audit and respond to reports for technical and other assistance.

Category 2 -- Experience indicates that subrecipients and grantees in this category have fairly reliable procedures and controls. Columbia-Pacific RC&D will rely upon a quarterly visit/contact and the annual audit.

Category 3 -- Other subrecipients who are known to be careless or less proficient in grant application preparation, grant cost accounting, reporting and grant/contract compliance. These subrecipients or grantees will be intensively and regularly visited and follow-up actions taken.

 309 Financial Reporting The Chief Financial Officer will maintain supporting records in sufficient detail to prepare the organization's financial reports, including: A. Annually: 1. Financial statements for audit: Statement of Financial Position, Statement of Activities and Statement of Cash Flows
2. Annual budget(s)
3. Indirect cost submission to the organization's cognizant audit agency B. Monthly: 1. Trial balance
2. Invoices to the organization's funding sources
3. Cost summaries and analyses, by grant and group of grants C. Quarterly 1. Financial status report
2. Record of cash transactions
3. Quarterly progress report D. Periodically: 1. Annual Federal and state corporate tax return
2. IRS Forms 941, 501 and payroll tax returns and comparable state taxing authority returns
3. Other reports upon request. 310 Audit A. The organization will have conducted annually a full-scope audit by a qualified independent public accountant.   B. Each agency sponsored by a government entity and receiving $300,000 or more of funding from Federal assistance awards will have conducted an annual audit in accordance with the Single Audit Act of 1996, and OMB Circular A-133. Moreover, independent public accountants conducting such audits will abide by the American Institute of Certified Public Accountant's (AICPA) Audit and Accounting Guide, Audits of Certain Nonprofit Organizations. 311 Scope of Audit Report
 
The Single Audit provides that:
A. The audit will be made by an independent auditor in accordance with generally accepted government auditing standards covering financial and compliance audits.   B. The audit will cover the entire operations of an agency or, at the option of that agency, it may cover departments, agencies or establishments that received, expended or otherwise administered Federal financial assistance during the year. A series of audits of individual departments, agencies and establishments for the same fiscal year may be considered a single audit. The auditor will determine whether: 1. The financial statements and the accompanying schedules of the agency present fairly its financial position and the results of its financial operations in accordance with generally accepted accounting principles.   2. The organization has internal accounting and other control systems to provide reasonable assurance that it is managing Federal financial assistance programs in compliance with applicable laws and regulations.   3. The organization has complied with laws and regulations that may have a material effect on its financial statements and on each major Federal assistance program. 312 Procuring Audit Services A. In arranging for audit services, an agency will follow the procurement standards for retaining professional services. Small audit firms and audit firms owned and controlled by socially and economically disadvantaged individuals will have the maximum practical opportunity to participate in audit contracts awarded under this section.   B. In soliciting and retaining auditors to conduct the annual audit, an agency must make specific reference in its request for proposal and any resulting contract that the auditor would be required to conform its audit to the contract requirements in Circular A-133. This would relate to the scope of the audit, standardized audit report, reportable events, monitoring by the granting agency and quality assurance review, access to audit work papers, plan for corrective action and resolution of audit findings.   C. The audit solicitation and any resulting contract for audit services will make specific reference that "if it is determined that the contractor's audit work was unacceptable as determined by the granting agency or a Federal supervisory agency, either before or after a reasonable time after a draft or final report was issued because it did not meet the granting agency's standards, the AICPA Standards or those promulgated by the Comptroller General of the United States, the contractor may, at the written request of Columbia-Pacific RC&D, be required to reaudit at its own expense and resubmit a revised audit report which is acceptable."   D. Columbia-Pacific RC&D will award multi-year audit contracts of not longer than a five-year duration. At the end of such a multi-year period, Columbia-Pacific RC&D will observe competitive procedures in reprocuring audit services. 314 Frequency of Audits and Due Date for Audit Report Submissions A. An audit of agencies and their grantees and cost-reimbursement contractors will be conducted no less frequently than annually.   B. The audit report will be submitted to the granting agency by September 30th. If for reasons within the control of the agency, this report cannot be submitted by this time, funding of the agency may be suspended by the granting agency. An agency will make a written request for an extension of time for justifiable reasons to the granting agency before September 30th. Such request will be submitted with sufficient time for granting agency review and approval. 315 Audit of Subrecipients A. Agencies will ensure that all grantees and cost-reimbursement contractors receiving awards of $300,000 or more annually will be audited. This audit will either be conducted by a subrecipient-selected auditor or by the agency's independent public accountant. All audit reports of the agency's subgrantees will be made available to the agency's independent public accountant.   B. For grantees and cost-reimbursement contractors receiving less than $300,000 a year from the agency, the agency may employ substitute means to satisfy itself that its subrecipient spent its funds in accordance with applicable laws and regulations. These substitute means could include, but not be limited to, audit by the agency's accountant, program reviews, fiscal assessments, accounts examination, etc. The results of the agency's substitute means will be documented and made available for review by representatives of the granting agency for a period of three years after completion. 316 Oversight of Subrecipient Audits A. The agency's independent public accountant retained to conduct an audit of the agency should include in its audit report an opinion on the costs incurred by the agency's subrecipients. This is normally accomplished by the agency's auditor reviewing the subgrantees' unqualified audit report for the same period and otherwise satisfying himself or herself of the extent to which such audit report may be relied upon. Section 543.03 of the Generally Accepted Auditing Standards provides guidance to independent auditors when they either assume or not assume responsibility for another auditor's work.   B. The agency should provide to its independent public accountant copies of all subgrantees' audits for an expression of an opinion on the overall agency's financial operations, including funding made available to its service providers.   C. The agency or its auditor will review all subgrantee audits using the following guidance: 1. In general, a determination should be made during the desk review of audited financial statements as to whether: a. The audit reports include financial statements and a schedule of Federal assistance, including footnotes of the recipient organization.   b. The financial statements cover the entire operations of the agency, including all Federal funds known to have been received by the auditee.   c. The audit report: (1) Identifies the statements examined and the period covered.
(2) Identities the various programs under which the organization received Federal funds, and the total amount of the expenditures for each Federal program.
(3) States that the examination was made in accordance with the Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, and Guidelines for Financial and Compliance Audits of Federally Assisted Programs, issued by the Comptroller General.
(4) Expresses an opinion as to whether the financial statements are fairly presented in accordance with generally accepted accounting principles and state the nature of any qualifications, if an unqualified opinion cannot be expressed. 2. Report on Compliance The auditor's report on compliance should contain a statement of positive assurance with respect to those items tested for compliance, including compliance with laws and regulations pertaining to financial reports and claims for advances and reimbursements: a. Negative assurance on those items not tested.
b. A summary of all instances of noncompliance.
c. An identification of total amounts questioned, if any, for each Federal assistance award, as a result of noncompliance. 3. Report on Internal Control The desk review should determine that the auditor's report on the study and evaluation of internal control systems identifies (1) the organization's significant internal accounting controls, and those controls designed to provide reasonable assurance that Federal programs are being managed in compliance with laws and regulations, and (2) the controls that were evaluated, the controls that were not evaluated, and the material weaknesses identified as a result of the auditor's evaluation. 4. Comments on Other Matters The desk review should determine whether the recipient has provided comments on the independent auditor's findings and recommendations and its corrective action plan to address the recommendations. 5. Adequacy of Information Provided The review should also determine whether the information provided by the auditor on findings identified in the report is sufficient to facilitate resolution by program officials. If the findings contain insufficient information to enable resolution by program officials, the granting agency or the agency should contact the recipient or subrecipient and arrange for corrective action. 400 PROCEDURES RELATED TO ASSETS, LIABILITIES AND NET ASSETS

401 Capitalization of Equipment

A. All tangible personal property with a useful life of more than one year and a unit acquisition cost of $2,500 will be capitalized and depreciated over its useful life using the straight-line method of depreciation. Columbia-Pacific RC&D will expense the full acquisition cost of tangible personal property below these thresholds in the year of purchase.   B. The basis of accounting for depreciable fixed assets is acquisition cost, and all normal expenditures, including installation costs, architect-engineer fees, etc., of readying an asset for use will be capitalized. However, unnecessary expenditures that do not add to the utility of the asset will be charged to the period incurred. 402 Donated Property or Equipment Donated assets which, at the time of receipt, meet the organization's criteria for capitalization will be capitalized at their fair or appraised value. 403 Authorized Investments Funds not required to be used on a current basis will be invested in short-term interest-bearing investments consisting of certificates of deposit and other income-producing securities with maturities of less than one year. These investments should be readily convertible to cash and stated at the lower of cost or their market value. 410 LIABILITIES

411 Accounts Payable

Only valid accounts payable transactions based on documented vendor invoices, receiving report or other approved documentation shall be recorded as accounts payable. 412 Advance Payments The Agency receives payment on some grants in advance. These revenues are deferred and recognized as income in the period in which the related products or services are delivered. 413 Deferred Revenue Many governmental entities and non-profit organizations recognize revenue upon receipt of an award of a grant or contract. However, for services against such awards to be rendered in subsequent fiscal years, the organization treats such revenues as temporarily restricted. 420 NET ASSETS

421 Unrestricted, Temporarily Restricted and Permanently Restricted Net Assets

According to FASB 117, Columbia-Pacific RC&D will organize its net assets into three classes -- permanently restricted, temporarily restricted and unrestricted -- based on the existence or absence of donor-imposed restrictions. 500 REVENUE SOURCES

501 Donated Facilities or Services

Contributed facilities or services (e.g., volunteers) shall be recognized as revenue if the services received: A. Create or enhance non-financial assets, or   B. Require specialized skills: are provided by individuals possessing those skills; and would typically need to be purchased if not provided by donation. 502 Segregation of Revenues Columbia-Pacific RC&D will separately identify the source and application of funds provided for Federally-funded activities in its coding structure. 600 COST ACCOUNTING PROCEDURES

601 Cost Accounting Period

The fiscal year of Columbia-Pacific RC&D will be January 1st to December 31st. The same accounting period will be used for all adjusting entries, accruals and deferrals as well as accumulating costs in an indirect cost pool and establishing its base. 602 Administrative Costs All costs for the overall operation of Columbia-Pacific RC&D will be considered administrative. In general, the following list of costs which are considered necessary for the overall administration of the agency will be included in this category: A. The personnel expenses of the Executive Director and administrative secretarial staff, and fiscal and planning staff to the extent they are involved in activities of a general nature related to the overall operation of the agency. Such activities include personnel management or supervision by administrative staff that is not traceable to any specific service.   B. Staff time devoted to planning activities, which are of a general nature and not assignable or allocable to a service such as: preparing testimony, addressing public hearings, conducting public hearings, overall agency program performance reviews and analysis of program effectiveness, and revision of agency objectives and plans as necessary.   C. Staff time assigned to coordination activities (which may include joint planning with other agencies), assisting in the development of other agency programs to better serve the clientele; involvement in jointly funded activities and information sharing.   D. Staff time spent in researching and acquiring other resources to be used for the development and expansion of services.   E. Providing travel expenses, meal allowances, etc., that is not traceable to any specific service.   F. Staff travel expenses for personnel activities charged to the agency administration cost center.   G. General agency personnel management and record keeping related to employee benefits, as well as developing and implementing agency personnel Procedures and such activities as staff orientation and training of a general nature.   H. Financial management of the entire agency operation such as maintaining necessary journals, ledgers and accounts, making requisite bank deposits and withdrawals, invoicing and payment processing, payroll administration and preparing periodic financial reports that encompass the overall agency financial status. The cost of project accounting for grant/contract activities may be treated as an allocable cost.   I. Costs of office furniture, supplies and equipment designated specifically for the administrative staff.   J. The portion of the agency's annual audit relating solely to the audit of its administrative functions. The portion of the agency's annual audit cost allocable to its program activities may be allocated on a rational basis.   K. The costs of general liability insurance, fidelity bonds, etc.(unless specifically allowed by the granting agency) 603 Management and General Expenses Costs that cannot be related to a specific program or fund-raising activity will be classified as management and general costs. These costs generally include executive direction, legal, budgeting and accounting, preparation of the organization's grant application and grant proposals, and like kind of management and general activities. 604 Direct and Indirect Costs A. Costs incurred specifically for a final cost objective (e.g., a grant, subgrant, etc.) will be treated as direct cost. Costs benefiting more than one cost objective will be consistently treated as indirect costs. Costs necessary for the overall operation of the organization will be treated as management and general costs.   B. Columbia-Pacific RC&D will treat all fringe benefits including compensated personal absences as allocated among direct labor, overhead and management and general. 605 Allocation of Legal Fees Legal fees incurred specifically in connection with a final cost objective will be allocated as a direct cost. Minor amounts of direct legal fees and all legal fees benefiting more than one cost objective will be treated as an indirect cost. 606 Contributed Services and Materials A. Contributed services in the form of volunteer services will be recognized if all of the following conditions exist. 1. The services performed are significant and form an integral part of the efforts of the organization.   2. The organization controls the employment and duties of the service donors.   3. The organization has a clearly reasonable basis for the amount to be recorded.   4. The services of the reporting organization are not intended for the benefit of its members. B. Materials received as support will be recorded based on their estimated fair market value. When a reasonable fair market value cannot be determined, no support should be recognized. 607 In-Kind Costs A. To satisfy a matching or cost-sharing requirement on a grant or contract, Columbia-Pacific RC&D will account for the following allowable in-kind costs: 1. Charges incurred by Columbia-Pacific RC&D as project costs, including non-cash items such as depreciation or use charges.   2. Project costs financed with cash contributed or donated to the organization by non-Federal third parties or in the case of Federal funds, other Federal funds specifically authorized by law for matching.   3. Project costs represented by services and real or personal property donated to the grantee by non-Federal third parties, provided such costs are: a. Identifiable from grantee records
b. Not included as contributions for all other Federally assisted programs
c. Necessary and reasonable for proper and efficient accomplishment of project objectives
d. Allowable if the grantee itself was required to pay for them. B. Several items are not normally counted as in-kind: 1. Goods and services normally available free in the community and which would be available whether you operated the project or not, e.g., CPR training, space in a community center, etc.   2. Donated overtime of project staff whose regular working hours are paid with Federal funds.   3. Contributed time of elected officials of the Boards of Directors and Advisory Councils.   4. Value of space donated for meetings and other purposes in the homes of individuals, especially staff members.   5. Outdoor space such as playgrounds, park space and undeveloped lots. C. Valuation of third-party, in-kind contributions: 1. Volunteer services: unpaid services valued at rates paid by other activities of the organization should be consistent with those paid for similar work in the same labor market. Rates of employees of other agencies should be priced at the base compensation rate exclusive of fringe benefits and overhead costs.   2. Donated real or tangible personal property: a. Tangible personal property and donated real property (land and buildings): purchase price or fair market value at the time of transfer.   b. Donated use of property: valued as if the grantee has rented the property and has paid the property's fair rental value.   c. Grantees may be required to establish the value of real property through the use of an appraiser. 3. Other charges: adequately supported and permissible. Charges must be reasonable and properly justified. 608 In-Kind Contributions, Valuation of Agencies will not declare an hourly rate for volunteer time of more than $12.50 an hour without granting agency prior approval. This rate has been determined to be reasonable, based on the average state hourly wage rate for volunteer services. In situations where an agency seeks approval of any higher in-kind volunteer hourly rate, it must submit an analysis based on the local labor market's rate. In-kind contributions for volunteer time should be listed under "Other Non-Federal Resources." Higher rates maybe used in grant submittal and recorded as in-kind, if the volunteer is currently employed as a professional and the duties relate directly to his/her job. 609 Accounting for In-Kind Costs, Acceptable Methods of A. By way of background, there are three accepted methods of accounting for in-kind costs: (1) a book of original entry, (2) general journal entries supported by worksheets detailing the in-kind costs, and (3) worksheet entries without recording in-kind in the agency's official books of account.   B. There is considerable concern that recording in-kind costs in the books of account could distort the financial position of the agency, especially when more than minimum match is reflected. On the other hand, a true picture of an agency's ability to achieve its mission would not be reflected if in-kind costs were not fully reflected.   C. In situations where in-kind services, equipment or space represents a major element whereby the agency can achieve its overall mission, in-kind costs should be recorded in the books of account a general journal entry. 610 In-Kind Costs, Documentation of Columbia-Pacific RC&D will obtain the same kind of documentation, to be retained for the same period of time, as required for incurred costs. To the extent feasible and practical, the organization will obtain independently generated documentation for in-kind costs: time sheets or log-in sheets for donated labor, written verification of the value of donated equipment or space, etc. 611 Subgrant Awards A. The Federal Grant and Cooperative Agreement Act of 1977, 41 USC § 501 et seq., as repealed by PL 97-258, § 5(b) provided guidance to awarding agencies in making the determination between a grant vs. a contract. The Act defines two basic categories: "procurement activities, " where contracts are to be used and "assistance activities," where grants or cooperative agreements are to be used. The major distinction is whether the transaction is an "acquisition," in which case a contract is to be used, vs. a "support arrangement," in which case a grant is to be used.   B. An acquisition is found where the result of the performance is "for the direct benefit or use" of the government. This benefit would be occasioned by the "acquiring by purchase, lease or barter [of] property or services."   Contracts, or procurement actions, are always entered into to meet an awarding party's need for a particular product or service. Such agreements establish mutual rights and obligations of the awarding party as buyer and the contractor as the seller. The awarding party has rights it may or may not choose to exercise.   Under contracts, the awarding party pinpoints the particular product or service to be obtained. This could be stated as a unit of service provided the unit is measurable. In addition to its measurability, any quality standards should be spelled out.   Cost of the product or unit of service is usually a major factor in making an award to otherwise qualified bidders. Since the interests of the contractor are not overwhelming considerations in such relationships, an awarding party may cancel for convenience (with recovery of some costs by the contractor) and for cause in cases of significant nonperformance.   C. The objectives of a grant are defined as general support, stimulation, equalization and demonstration. Such financial assistance may be awarded for obtaining support or building capacity. This type of assistance relationship is one featured by the granting agency serving in the role of a "patron (supporter) or partner."   Under such a financial assistance relationship, the purpose of the award may be to advance the capacity and interests of the subgrantee, not of the granting agency. The awarding agency also does not direct work or approve deliverables. The granting agency acts as a resource and provides advice and guidance to the recipient. Except for clearly demonstrated cutbacks in funding or substantiated changes in program priorities, financial assistance made may not be unilaterally terminated for the convenience of the awarding party. Granting agencies may terminate for cause in cases of substantial noncompliance with the terms and conditions of the award.   D. Finally, selection of the instrument to be used in a specific situation will determine many of the procedures to be followed in entering into the arrangement because of the regulatory guidance applicable to the different instruments. If a contract is used, the Purchasing Officer must follow the applicable procurement regulations which are detailed in the Purchasing System Procedures Manual. If a grant is used, there will be much more latitude to the awarding agency.   E. Based upon a determination of Columbia-Pacific RC&D, subgrants may be awarded competitively or noncompetitively. Irrespective of how awarded, all subgrants should: 1. Contain a provision for compliance with OMB Circular A-110   2. Provide for all clauses required by Federal statute and executive orders and their implementing regulations   3. Ensure that subgrantees are aware of requirements imposed upon them by Federal statutes and regulations. F. Columbia-Pacific RC&D will insert in any request for grant application a certificate precluding award to "high-risk grantees" as defined by OMB Circular A-102. 612 Subgrant Accounting A. According to AICPA SOP 78-10, grants made by nonprofit organizations to other organizations should be recorded as an expense when the recipient organization is entitled to the grant. Accrual usually occurs when the governing board of the nonprofit organization approves the grant or notifies the recipient organization that it is entitled to the grants.   B. Grants that extend over more than one year and require no substantial review or approval other than routine performance on the part of the recipient organization, should be recorded as an expense and liability at the point of the initial review of the grant. When the multi-year grant is subject to revocation regardless of performance by the recipient organization the grant should not be accrued. Grants subject to periodic review and approval will be recorded as an expense when reapproval occurs.   C. For billing purposes on subgrant awards under grants with Federal, state and local government entities, only costs incurred by or on behalf of subgrantees may be charged to the various governments. For this reason, for such subgrants, only billable costs will be reflected. 613 Depreciation Method The cost of buildings, and improvements (less salvage value of 10%), is depreciated on the straight-line method over periods of 10 to 40 years. The cost of equipment (less salvage value of 0%) is depreciated on the straight-line method over periods from 5 to 10 years. 614 Purchased Computer Software Licenses Purchased computer software of more than $1,000 is amortized by the straight-line method over the period expected to be benefitted, which is generally five to eight years. 615 Compensated Personal Absences, Accounting for The cost of vacation will be reflected when vacation time is taken, not when earned. This method of accounting for compensated personal absence has been adopted because many of the funding sources of Columbia-Pacific RC&D will not reimburse for the cost of vacation before the applicable vacation time is taken. 616 Bid and Proposal Costs The costs of the technical effort in preparing grant applications and cost proposals to the funding sources of Columbia-Pacific RC&D will be treated as an management and general labor cost. The cost of word processing, printing, packaging and delivering grant applications/contract proposals will be charged as a direct expense. 700 COST ESTIMATING PROCEDURES

701 Management Fee or Allowance

Nothing precludes Columbia-Pacific RC&D from bidding and billing for a reasonable management fee or allowance on a government grant. As circumstances permit, Columbia-Pacific RC&D will bid a fee of 15% of allowable direct and indirect costs. This practice can be justified because of the need for funds for working capital accumulation, paying for the unamortized portion of depreciable costs, plant or office expansion and covering the cost of necessary, but unallowable, costs, like interest. 702 Comparison of Estimates to Actual Costs Columbia-Pacific RC&D will make a periodic comparison of grant cost estimates on all grants of over $300,000 with subsequent actual costs. 800 PROPERTY MANAGEMENT PROCEDURES

801 Identification of Government Property

A. Columbia-Pacific RC&D will tag all government property -- both government-furnished and Columbia-Pacific RC&D acquired -- upon receipt and will record assigned numbers on all applicable documents pertaining to the property control system.   B. Columbia-Pacific RC&D will mark government-owned special tooling and test equipment, if any, with a serial number and identify the agency owning the property.   C. Markings will be removed or obliterated when government property is sold, scrapped or donated. 802 Government Property, Record and Report of Property records will be maintained that include: A. A description of the property   B. A serial number or other identification number   C. The source of property who holds title   D. The acquisition date   E. The cost of the property   F. Percent of Federal participation in the cost of the property   G. The location   H. Use and Condition of the property, and   I. Any ultimate disposition date, including the date of disposal and sale price of the property. 803 Material, Record of All government material furnished to the grantee, as well as other material, title to which has passed to the government by reason of allocation from grantee-owned stores or purchase for direct charge to a government grant, will be recorded in the property control system. 804 Plant Equipment, Record of A. Columbia-Pacific RC&D will maintain individual item records for each item of plant equipment having a unit cost of $500 or more. Summary stock records may be maintained for plant equipment costing less than $500 per unit.   B. In addition to the information required for government property, the grantee's records of government-owned plant equipment, regardless of value, will include: 1. Federal Supply Code for the manufacturer   2. Federal Supply Classification   3. The original manufacturer's model or part number. C. For government-owned plant equipment having a unit cost of $500 or more, Columbia-Pacific RC&D will maintain information on: 1. Serial number and year built   2. Government identification/tag number, and   3. Acquisition and disposition document references and dates. 805 Physical Inventories A. Columbia-Pacific RC&D will once every two years physically inventory all government and grantee-owned property in its possession or control and will cause subgrantees which have accountable government property in their possession or control to do likewise.   B. Personnel performing the physical inventory will not be the same individuals who maintain the property records or have custody of the property unless the grantee's other staff is unavailable to perform the inventory count. 806 Disposal of Property, Plant and Equipment A. No item of property, plant and equipment shall be removed from the premises without prior approval from the responsible official.   B. When property is retired, the appropriate asset and accumulated depreciation accounts and asset accountability records shall be adjusted and any profit or loss reflected. 807 Fully-Depreciated Assets Records of fully-depreciated assets shall be maintained as long as the property is in continuous use. 808 Other Records and Reports A. Columbia-Pacific RC&D will also maintain records of completed products, transportation and installation costs of plant equipment, misdirected shipments and property returned for rework.   B. Records of Columbia-Pacific RC&D will provide annually the acquisition cost of government property for which the grantee is accountable under each grant with each government agency, including government property at subgrantee plants and alternate sites for: 1. Land   2. Other real property   3. Plant equipment of $5,000 or more   4. Plant equipment of less than $5,000. 809 Disposable Items All small-dollar items direct costed on a grant expected to be used and disposed within two years of purchase will not be tagged, inventoried and tracked. 810 Disposition of Real Property and Equipment A. When original or replacement real property or equipment acquired under a grant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the real property or equipment will be made as follows: 1. Columbia-Pacific RC&D will request disposition instructions from the awarding agency. The instructions will indicate whether the agency will retain title after compensating the awarding agency, sell the property and compensate the awarding agency, or transfer title to the awarding agency or to a third-party designated/approved by the awarding agency.   2. Equipment Disposition of the equipment will be made as follows: a. Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency.   b. Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency will have a right to an amount calculated by multiplying the current market value or proceeds from the sale by the awarding agency's share of the equipment. B. In the event a grantee is provided government-furnished equipment, the grantee may retain custody, but not title, to the equipment for as long as the equipment is needed. When the equipment is no longer needed, disposition instructions will be requested from the Federal agency owning the equipment. 900 COMPENSATION PROCEDURES

901 Consultant Utilization, Evidence for

Whether used in a direct or an indirect capacity, the utilization of all consultants, grant personnel and consulting firms will be sufficiently evidenced with: A. Details of all agreements (e.g., work requirements, rate of compensation, and nature and amount of other expenses, if any) with the individuals or organizations providing the services and details of actual services performed   B. Invoices or billings submitted by consultants, including sufficient detail as to the time expended and nature of the actual services performed, and   C. Consultant's work products and related documents, such as trip reports indicating persons visited and subjects discussed, minutes of meetings, and collateral memoranda and reports. 902 Independent Contractors, Control of The use of consultants will be closely monitored so as not to vary from the rules of the Internal Revenue Service. In particular, consultants will: A. Not be controlled as to what services will be performed and how these services will be performed. Consultants will not have set hours of work.   B. Furnish their own tools of trade -- tools, materials, and the like -- in performing their work   C. Adhere to a precise contract scope of services, recompeted or at least adjusted annually. This consultant agreement should specify the obligation of the consultant to pay his or her own self-employment taxes, if applicable.   D. Not receive any fringe benefits as such, although their fee may include provision for fringe benefits   E. Not be assigned a permanent work station   F. Make their services available or work for a number of firms or persons at the same time   G. Will use his or her own stationery or timesheet in billing for services. 903 Frequent Flyer Bonuses The Organization's travel agent has been instructed not to select the preferred airline, but will select the least expensive airfare without unduly inconveniencing the traveler.