Accounting Policies and Procedures Manual

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 1 of 80

Accounting

Policies and Procedures

Manual

(Updated for 2 CFR Part 200 [New EDGAR

Standards])

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 2 of 80

Table of Contents

Page

INTRODUCTION 4

I. BUDGETS 9

II. GENERAL LEDGER

A) Chart of Accounts 10

B) Recording Transactions in the General Ledger 14

C) Preparing Journal Entries 16

III. REPORTS

A) Board Reports 18

B) Internal Reports 19

C) Funding Sources Report 20

D) Cash Flow Reports 21

E) Tax Reports 22

IV. CASH

A) Cash Receipts 23

B) Petty Cash 25

C) Bank Account Reconciliations 28

V. ACCOUNTS RECEIVABLE

A) Invoice Billing and Accounts Receivables 29

VI. ACCOUNTS PAYABLE

A) Accounts Payable, Cash Disbursements, Accrued Expenses,

and AP Purchasing Credit Card & Payment 32

B) Credit Card 36

C) Procurement - Contract Approval and Procurement Guidelines 40

D) Purchasing 45

E) Check Requests 48

F) Cafeteria Invoices 50

G) Void Checks 52

H) Travel Reimbursement 53

VII. PAYROLL

A) Payroll Processing, New Hires and Terminated Employees 57

B) Timesheets 59

C) Administrative Salaries Allocation Procedures 60

VIII. COST ALLOCATION PLAN

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A) Direct Expense 60

B) Indirect Expense 62

IX. FIXED ASSETS AND OTHER ASSETS

A) Fixed Assets Control 65

B) Capitalization and Depreciation of Fixed Assets 68

C) Prepaid Expenses 70

X. OTHER LIABILITIES

A) Long-Term Debt 71

XI. MISCELLANEOUS ITEMS

A) Release of Financial and Confidential Information 73

B) Property Tax Assessments 74

C) Records Security and Retention 77

D) Nepotism/Conflict of Interest 78

XII. ATTACHMENTS

A) Attachment (1) - Asset Disposition Form 80

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 4 of 80

Introduction

As may be applicable in 2 CFR Part 200.101 the following provisions apply:

A. 200.101 Applicability.

(a) General applicability to Federal agencies. The requirements established in this

part apply to Federal agencies that make Federal awards to non-Federal

entities. These requirements are applicable to all costs related to Federal

awards.

(b) Applicability to different types of Federal awards. The following table

describes what portions of this part apply to which types of Federal awards.

The terms and conditions of Federal awards (including this part) flow down to

subawards to subrecipients unless a particular section of this part or the

terms and conditions of the Federal award specifically indicate otherwise. This

means that non-Federal entities must comply with requirements in this part

regardless of whether the non-Federal entity is a recipient or subrecipient of a

Federal award. Pass-through entities must comply with the requirements

described in Subpart D—Post Federal Award Requirements of this part,

§§200.330 Subrecipient and contractor determinations through 200.332 Fixed

amount Subawards, but not any requirements in this part directed towards

Federal awarding agencies unless the requirements of this part or the terms

and conditions of the Federal award indicate otherwise.

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January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 6 of 80

entity. When a non-Federal entity is awarded a cost-reimbursement contract,

only Subpart D—Post Federal Award Requirements of this part, §§200.330

Subrecipient and contractor determinations through 200.332 Fixed amount

Subawards (in addition to any FAR related requirements for subaward

monitoring), Subpart E—Cost Principles of this part and Subpart F—Audit

Requirements of this part are incorporated by reference into the contract.

However, when the Cost Accounting Standards (CAS) are applicable to the

contract, they take precedence over the requirements of this part except for

Subpart F—Audit Requirements of this part when they are in conflict. In

addition, costs that are made unallowable under 10 U.S.C. 2324(e) and 41

U.S.C. 4304(a) as described in the FAR subpart 31.2 and subpart 31.603 are

always unallowable. For requirements other than those covered in Subpart

D—Post Federal Award Requirements of this part, §§200.330 Subrecipient

and contractor determinations through 200.332 Fixed amount Subawards,

Subpart E—Cost Principles of this part and Subpart F—Audit Requirements of

this part, the terms of the contract and the FAR apply.

(d) With the exception of Subpart F—Audit Requirements of this part, which is

required by the Single Audit Act, in any circumstances where the provisions of

Federal statutes or regulations differ from the provisions of this part, the

provision of the Federal statutes or regulations govern. This includes, for

agreements with Indian tribes, the provisions of the Indian Self-

Determination and Education and Assistance Act (ISDEAA), as amended, 25

U.S.C 450-458ddd-2.

(e) Federal awarding agencies may apply subparts A through E of this part to for-

profit entities, foreign public entities, or foreign organizations, except where

the Federal awarding agency determines that the application of these

subparts would be inconsistent with the international obligations of the United

States or the statutes or regulations of a foreign government.

(d) Except for §200.202 Requirement to provide public notice of Federal financial

assistance programs and §§200.330 Subrecipient and contractor

determinations through 200.332 Fixed amount Subawards of Subpart D—Post

Federal Award Requirements of this part, the requirements in Subpart C—Pre-

Federal Award Requirements and Contents of Federal Awards, Subpart D—

Post Federal Award Requirements of this part, and Subpart E—Cost Principles

of this part do not apply to the following programs:

(1) The block grant awards authorized by the Omnibus Budget

Reconciliation Act of 1981 (including Community Services, except to

the extent that the cost and accounting standards of OMB apply to

subrecipients of Community Services Block Grant funds pursuant to 42

U.S.C. 9916(a)(1)(B);

(2) Federal awards to local education agencies under 20 U.S.C. 7702-

7703b, (portions of the Impact Aid program);

(3) Payments under the Department of Veterans Affairs' State Home Per

Diem Program (38 U.S.C. 1741); and

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(4) Federal awards authorized under the Child Care and Development

Block Grant Act of 1990, as amended:

(i) Child Care and Development Block Grant (42 U.S.C. 9858)

(ii) Child Care Mandatory and Matching Funds of the Child Care and

Development Fund (42 U.S.C. 9858)

(e) Except for §200.202 Requirement to provide public notice of Federal financial

assistance programs the guidance in Subpart C—Pre-Federal Award

Requirements and Contents of Federal Awards of this part does not apply to

the following programs:

(1) Entitlement Federal awards to carry out the following programs of the

Social Security Act:

(i) Temporary Assistance to Needy Families (title IV-A of the Social

Security Act, 42 U.S.C. 601-619);

(ii) Child Support Enforcement and Establishment of Paternity (title

IV-D of the Social Security Act, 42 U.S.C. 651-669b);

(iii) Foster Care and Adoption Assistance (title IV-E of the Act, 42

U.S.C. 670-679c);

(iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and XVI-

AABD of the Act, as amended);

(v) Medical Assistance (Medicaid) (title XIX of the Act, 42 U.S.C.

1396-1396w-5) not including the State Medicaid Fraud Control

program authorized by section 1903(a)(6)(B) of the Social

Security Act (42 U.S.C. 1396b(a)(6)(B)); and

(vi) Children's Health Insurance Program (title XXI of the Act, 42

U.S.C. 1397aa-1397mm).

(2) A Federal award for an experimental, pilot, or demonstration project

that is also supported by a Federal award listed in paragraph (e)(1) of

this section;

(3) Federal awards under subsection 412(e) of the Immigration and

Nationality Act and subsection 501(a) of the Refugee Education

Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash

assistance, medical assistance, and supplemental security income

benefits to refugees and entrants and the administrative costs of

providing the assistance and benefits (8 U.S.C. 1522(e));

(4) Entitlement awards under the following programs of The National

School Lunch Act:

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 8 of 80

(i) National School Lunch Program (section 4 of the Act, 42 U.S.C.

1753),

(ii) Commodity Assistance (section 6 of the Act, 42 U.S.C. 1755),

(iii) Special Meal Assistance (section 11 of the Act, 42 U.S.C.

1759a),

(iv) Summer Food Service Program for Children (section 13 of the

Act, 42 U.S.C. 1761), and

(v) Child and Adult Care Food Program (section 17 of the Act, 42

U.S.C. 1766).

(5) Entitlement awards under the following programs of The Child

Nutrition Act of 1966:

(i) Special Milk Program (section 3 of the Act, 42 U.S.C. 1772),

(ii) School Breakfast Program (section 4 of the Act, 42 U.S.C.

1773), and

(iii) State Administrative Expenses (section 7 of the Act, 42 U.S.C.

section 1776).

(6) Entitlement awards for State Administrative Expenses under The Food

and Nutrition Act of 2008 (section 16 of the Act, 7 U.S.C. 2025).

(7) Non-discretionary Federal awards under the following non-entitlement

programs:

(i) Special Supplemental Nutrition Program for Women, Infants

and Children (section 17 of the Child Nutrition Act of 1966) 42

U.S.C. section 1786;

(ii) The Emergency Food Assistance Programs (Emergency Food

Assistance Act of 1983) 7 U.S.C. section 7501 note; and

(iii) Commodity Supplemental Food Program (section 5 of the

Agriculture and Consumer Protection Act of 1973) 7 U.S.C.

section 612c note.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 9 of 80

Title: BUDGETS

Policy: To facilitate attainment and measurement of progress to the approved goals

of the organization.

Purpose: To provide a planned guidance for the expenditures of funds.

Scope: This procedure applies to all divisions in the organization.

Procedure:

1.0 An annual budget will be prepared by each program director and/or school

superintendent in consultation with the President/CEO, Chief Financial Officer and

Controller.

2.0 To meet applicable TEA deadlines, the school’s FSP budget will be prepared first and

submitted to the charter holder’s President/CEO for approval. Thereafter, the school

superintendent will present the FSP budget to the school’s Education Committee for

approval. Annually in June, the Board’s Education Committee chairman will present

the FSP budget to the Board for approval, or as may otherwise be established by the

Board.

3.0 After the Programs have completed their individual budgets, the CFO, Controller, and

respective program directors will present the budget to the President and CEO for

approval. Once approved, a consolidated budget will be prepared and provided to

the President/CEO for approval. The target date for the completion of No. 3.0 is

June of each year.

4.0 The CFO will provide the Finance Committee with the Consolidated budget for the

upcoming fiscal year. The target date for completing No. 4.0 is June of each year, or

as may otherwise be established by the Board.

5.0 The Finance Committee Chairman or his/her designate will present the Consolidated

budget to the Board for approval. The target date for completing No. 5.0 is July of

each year, or as may otherwise be established by the Board.

6.0 Budgets will be entered into the system no later than 30-days after they have been

approved by the Board.

7.0 As necessary, budget amendments will be presented to the Board for approval and

once approved, entered into the system within 30-days.

8.0 Monthly, a comparison of budget versus actual results will be communicated to the

Board as part of AAMA’s financial statements.

9.0 In accordance with EDGAR §200.308 and §200.407, as required, grantees will report

deviations from budget or project scope or objective, and request prior approvals

from federal awarding agencies for budget and program plan revisions.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 10 of 80

Title: CHART OF ACCOUNTS

Policy: To facilitate the record keeping process for accounting, all ledger accounts are

assigned a descriptive account title and account number.

Purpose: To provide the method for assignment and maintenance of the organization's

chart of accounts.

Scope: This procedure applies to all ledger accounts used in the accounting

department.

Definition: Chart of Accounts - A listing of all the account titles and numbers being used

by an organization is called a chart of accounts.

Procedure:

1.0 DESIGN OF ACCOUNTS

1.1 Accounts have titles and numbers that indicate specific ledger accounts such

as Cash in Checking, Furniture, Accounts Payable-Trade, etc.

1.2 Accounts are arranged in the same sequence in which they appear in the

financial statements, that is, asset accounts should be numbered first,

followed by liability accounts, owner's equity accounts, revenue accounts and

expense accounts as follows:

10000 - Asset Accounts

20000- Liability Accounts

30000 – Net Assets Accounts

40000 - Revenue Accounts

50000 - Expense Accounts

60000 – Non-Operation Prior Year

A sub-division among the balance sheet accounts is also designated by short

term to long term, (i.e. current assets precede long term assets and current

debt precedes long-term debt accounts).

Further, accounts are numbered so that expense amounts are recorded

according to the department that is accountable for the cost and the nature of

the cost.

Unassigned number sequences should be left open within each group of

accounts to provide for additional accounts which may be added later.

1.3 Accounts are numbered using a two digit sequence for fund, a three digit

sequence for program and a five digit sequence for general ledger account.

Below is a general description of the meaning of the numbers in the

organization's chart of accounts.

2.0 DESCRIPTION AND DEFINITION OF ACCOUNTS

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2.1 Each account is given a short title description that is brief but allows the

reader to quickly ascertain the purpose of the account.

2.2 For training and to ensure consistent transaction coding as well as assist

managers in tracking funding by specific grant and line item, each account is

defined. Definitions are concise and meaningful.

The definition tells the user what can be recorded in a specific numbered

account.

Since the definitions are reference sources, they are developed for quick and

easy lookup. The account number and name are on one line.

Definitions are as follows:

ASSETS

10000 CASH AND MARKETABLE SECURITIES ACCOUNTS

10000 Petty Cash

Includes the petty cash fund held by the custodians. This account is

used only when a new fund is initiated or an existing fund is

terminated.

11100 Cash in Checking

Includes all cash held in the operating bank account. All withdrawals

by check and deposits are recorded here. The reported balances are

supported by a bank reconciliation prepared monthly.

11200 Marketable Securities

Include debt securities such as government and corporate bonds and

equity securities such as common and preferred stock acquired with

cash that is not immediately needed in operations.

12000 RECEIVABLES

12000 Accounts Receivable

Short-term receivables generated from services and other activities.

12100 Inter-company Transfers

12300 Accounts Receivable Other

12900 Allowances for Uncollected Accounts

The estimated accrual for bad debts that will result from the current

period's activities.

13000 PREPAID EXPENSE ACCOUNTS

13000 Prepaid Insurance

The current portion of insurance premiums paid by the organization to

cover for future periods.

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13100 Prepaid Rents

13150 Prepaid Other

14000 FIXED ASSET ACCOUNTS

14000 Land

Represents the organizations original cost for the purchase of real

estate holdings.

14100 Buildings & Improvements

Represents the organization’s original cost for the purchase of

buildings and structures and building improvements.

14200 Furniture & Equipment

Represents the organizations original cost for the purchase of

machinery and equipment.

Furniture and Fixtures- Represents the organization’s original cost for

the purchase of furniture and other accessory items.

Vehicles- Represents the organization’s original cost for the purchase

of automobiles and trucks.

14300 Leasehold Improvements

Represents the organization’s original cost for structural additions to

leased (rented) premises.

15000 ACCUMULATED DEPRECIATION ACCOUNTS

The cumulative amount of depreciation expense recorded to date for

all assets in a class.

15000 Accumulated Depreciation, Buildings & Improvements and leasehold

improvements.

15100 Accumulated Depreciation, Furniture & Equipment, Furniture and

Vehicles.

16000 OTHER ASSET ACCOUNTS

17000 Deposits

Current deposits paid by the organization for future services or

acquisitions such as rent deposits, deposits on an equipment purchase,

etc.

LIABILITY ACCOUNTS

20000 CURRENT LIABILITY ACCOUNTS

20000 Accounts Payable

Balances owed to others for goods, supplies and services purchased on

open accounts.

21000 Notes Payable – Short Term

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Obligations in the form of written promissory notes that will mature

within one year. Also, the portion of the principal of long-term debt

that will be repaid during the next year.

22000 Payroll Taxes Payable

Represents the amount of employees’ payroll taxes withheld and

employer's taxes due on employees’ payroll that have not yet been

deposited.

23500 Wages and Salaries Payable

The amount of wages or salaries earned for time worked but not yet

paid as of the period being reported.

26000 LONG-TERM LIABILITY ACCOUNTS

2310 Bank Loan

Represents the amount of debt principal that is to be repaid after the

next twelve month period.

NET ASSETS ACCOUNTS

30000 Net Assets

Represents the organization’s cumulative net increases and decreases

to date.

40000 REVENUE ACCOUNTS

Revenue from services performed.

50000 EXPENSE ACCOUNTS

Cost of goods and services.

(See INTRANET for Chart of Accounts)

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 14 of 80

Title: RECORDING TRANSACTIONS IN THE GENERAL LEDGER

Policy: The accounting department is responsible for the proper posting of journals

and entries to the general ledger and for the maintenance of the accounts to

ensure accuracy, validity and reliability of financial records.

Purpose: To record, adjust and correct transactions to maintain the accuracy of the

general ledger and ensure the reliability of the organization’s financial

statements.

Scope: This policy applies to all accounting personnel with involvement in recording

accounting transactions.

Procedure:

1.0 POSTING TRANSACTIONS AND JOURNALS

1.1 The computerized accounting system aids in the maintenance of journals and

posting of transactions to general ledger accounts. The following functions are

performed on a monthly basis to update the general ledger for the month's

activities:

a. All transactions are required to have proper coding at minimum to the

individual fund, program, grant and general ledger codes. All check

requests must be on the proper division coding sheets. Return any

incorrectly coded check requests to the originator.

b. All activities recorded in journals will be posted to the general ledger using

the computerized posting feature. These journals include:

 Cash Journal

 Revenue Journal

 Expenditure Journal

c. The recurring adjusting journal entries will be posted via Journal

Vouchers. Recurring journal entries will be established for adjustments

that occur equally each monthly accounting period. Recurring journal

entries can include the following:

 Amortization of prepaid expenses

 Depreciation of Fixed Assets

Recurring journal entries are reviewed monthly and adjusted accordingly.

d. Adjusting journal entries are prepared for transactions that have not been

recorded in other journals or to correctly restate account balances to

accurate amounts. The need to make adjusting journal entries may be due

to any of the following:

 Accrual of income and expense items

 Correction of errors

 Recording of non-cash transactions

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 15 of 80

1.2 All journal entries are reviewed and authorized by the Controller/Financial

Analyst before being posted. Adequate supporting documentation will be

prepared and maintained for each journal entry.

2.0 TRIAL BALANCE

2.1 After posting all journals and adjusting entries, a trial balance is printed. The

trial balance is reviewed to ensure that the general ledger is in balance. Next,

all control accounts in the general ledger are reconciled to subsidiary ledgers.

Any differences will be investigated and appropriate adjustments are made.

2.2 The CFO/Controller will make a final review of the trial balance for accuracy

and proper reflection of account balances before printing financial statements.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 16 of 80

Title: PREPARING JOURNAL ENTRIES

Policy: To ensure that all journal entries to the organization’s general ledger are

properly prepared, documented, reviewed, approved, recorded and

maintained in accordance with GAAP.

Purpose: To describe the process and requirements for preparing journal entries.

Scope: All journal entries made to general ledger system.

Procedure:

This policy assures that all journal entries are properly prepared, reviewed,

authorized, and posted. This policy requires:

1. All journal entries are to be signed by both the preparer and reviewer

prior to posting.

2. Person(s) preparing a journal entry cannot approve the same journal

entry.

3. All journal entries should have supporting documentation and a

description that fully explains the nature of the entry and amounts being

recorded.

4. All journal entries have to be properly processed prior to closing the

accounting period.

5. All posted journal entries and related documentation should be maintained

in an accessible file for review by management and external auditors, if

necessary.

1.0 JOURNAL ENTRY PREPARATION, REVIEW, AND PROCESSING

1.1 The person preparing a journal entry is responsible for reviewing all detailed

supporting documents and ensuring they are accurate prior to preparation.

1.2 The person preparing a journal entry is responsible for explaining the reason

to justify the journal entry and the basis used in preparing the journal entry.

This includes ensuring that the debits and credits on the journal entry are in

balance. The system will not allow one sided entries.

1.3 Before any journal entry is processed in the accounting system, a Journal

Entry Form must be filled out completely and conform to the following

requirements:

 All fields must be filled out completely.

 Entry type must be specified.

 The “Period” section must be completed.

 The preparer must initial in the “Entered By” section.

 The preparer must date the journal entry form.

 The journal entry number must be filled out in order to process the

journal entry through the accounting system.

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 A detailed description shall be included on the journal entry form.

 Documentation must be attached to the Journal Entry to support the

entry being made.

1.4 Once the Journal Entry Form has been completed and supporting documents

attached, the preparer will record the journal entry in the accounting system.

The Unposted General Ledger Transaction Report will be printed and attached

to the journal entry.

1.5 The journal entry will be submitted for review and approval.

2.0 JOURNAL ENTRY REVIEW AND APPROVAL

2.1 Approval of journal entries is limited to an accounting department staff that is

at least one level higher in the organization than the preparer. Occasionally,

a member of the Management team will authorize the journal entry.

2.2 Individuals who approve journal entries are required to review the detail

accompanying the journal entry and ensure that the detail fully explains and

supports the journal entry they are authorizing.

2.3 The preparer of a journal entry cannot post the journal entry to the general

ledger until proper review and approval has been given.

2.4 Once a journal entry has been reviewed and approved, it is posted by the

preparer and a Posted General Ledger Transaction Report is printed and

attached to the journal entry.

2.5 The journal entry is filed by the preparer and maintained for future

reference/review, if necessary.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 18 of 80

Title: BOARD REPORTS

Policy: To ensure timely completion of reports required by the Board of Directors and

management to adequately monitor operations.

Purpose: To describe the process for preparing the necessary board reports.

Scope: Reports presented to the Board of Directors.

Procedure:

1.0 DESCRIPTION OF REQUIRED REPORTS

1.1 Financial Summary Reports consists of Summary Income Statements,

including review of revenues and expenses.

1.2 Cash, Accounts Receivable and Accounts Payable Snapshot Report consists of

summary data noting Cash balances, Accounts Receivable and Accounts

Payable for each program and on a consolidated basis.

1.3 Budget Variance Report consists of variance analysis of each program’s actual

revenue and expenses compared to budgeted revenue and expenses including

a brief explanation for cause of variance.

1.4 Reports requiring Board approval are recorded in the Board minutes.

Final Audit reports will be presented to the Board by the Audit firm partner

and finance committee for review and approval. Audit will conform to GAAP

guidelines and requirements by grant or government funding sources. IRS

990 will be presented to the Board for review before final submission to the

IRS.

2.0 TIMING OF REPORTS

2.1 Board reports must be available for the monthly Board of Directors meeting

held on the first Friday of each month. To ensure that the monthly financial

statements are timely, it is essential that they be completed and issued by

the 6

work day of each month for all months except August. For the month

of August, we leave the books open for an additional two (2) work days.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 19 of 80

Title: INTERNAL REPORTS

Policy: Timely completion of reports is required by the accounting department to

ensure all monthly transactions have been properly posted.

Purpose: To describe the process for preparing the necessary accounting and other

internal reports.

Scope: Reports that provide the framework to ensure all transactions have been

posted with considerable accuracy.

Procedure:

1.0 DESCRIPTION OF REQUIRED REPORTS

1.1 Trial Balance

1.2 General Ledger

2.0 TIMING OF REPORTS

2.1 These reports must be prepared prior to beginning the work on the Board

reports. Thus, these reports must be completed by the 6

business day of the

month. There will be exceptions to this deadline if information from the

different departments is not submitted to accounting by the 2

work day of

the month and at the end of the fiscal year to ensure accuracy of the financial

data at yearend.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 20 of 80

Title: FUNDING SOURCES REPORTS

Policy: To ensure timely completion and accurate transmittal of reports required by

the various funding sources of the organization.

Purpose: To describe the process for preparing the necessary reports required by the

organization's funding source.

Scope: Reports that are required by the funding sources.

Procedure:

1.0 DESCRIPTION OF REQUIRED REPORTS

1.1 DSHS Quarterly FSR's & Close-out Report

1.2 TEA PEIMS Submissions:

 Fall

 Midyear

1.3 TRS Monthly Reports

1.4 ARRA Quarterly Reports

1.5 Annual Audited Financial Statements with disclosures according to Generally

Accepted Accounting Practices, Government Auditing Standards and the OMB

Circular A-133

1.6 Other reports as required by funding sources and mangement.

2.0 TIMING OF REPORTS

2.1 Funding sources reports have different due dates and cycles. It is essential

that the accounting staff verify the required due dates and ensure that these

reports are submitted timely.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 21 of 80

Title: CASH FLOW REPORTS

Policy: To ensure proper use of resources and to ensure that payroll, accounts

payable, and other critical payments are made on a timely basis.

Purpose: To describe the process for ensuring that adequate cash flow is on hand.

Scope: Reports that analyze the receipts and disbursement aspects of the

organization.

Procedure:

1.0 DESCRIPTION OF REQUIRED REPORTS

1.1 Cash and Cash Equivalents Schedule

2.0 TIMING OF REPORTS

2.1 This report is produced monthly.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 22 of 80

Title: TAX REPORTS

Policy: To ensure proper submission of required tax reports.

Purpose: To describe the process for ensuring that the required tax reports are

submitted timely.

Scope: Reports that provide the federal and state governments with the required

information on the organization’s tax withholding and payments and other

pertinent information.

Procedure:

1.0 DESCRIPTION OF REQUIRED REPORTS

1.1 Form 941 Quarterly Payroll Tax Reports

1.2 Annual Form 990 Tax Return

This report will be presented to the Board for review before submitting to IRS.

1.3 Annual Form W-2 and Form 1099 submissions

1.4 TWC State Reports

1.5 Form 5500

2.0 TIMING OF REPORTS

2.1 Tax reports have different due dates and cycles. It is essential that the

accounting staff verify the required due dates and ensure that these reports

are submitted timely.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 23 of 80

Title: CASH RECEIPTS

Policy: Accurate internal control of cash receipts and deposits are maintained at all

times. Cash deposits are made within twenty four hours of receipt.

Purpose: To establish the procedures according to generally accepted accounting

principles to be followed for separation of duties regarding the receiving,

documenting, applying and depositing of Federal, State, County and Local

cash receipts.

Scope: This procedure applies to all cash receipts received by the organization.

Procedure:

1.0 RECEIVING

1.1 The mail clerks open and review contents in the envelopes for their records.

The mail clerk will then hand carry the envelopes to the accounting

department.

1.2 The accounting department totals daily cash receipts and count the number of

checks. There should always be backup documentation for all checks and

should be stapled to the checks and the envelopes should be discarded. The

checks and attachments are then immediately forwarded to the Financial

Analyst.

2.0 APPLICATION

2.1 The accounts receivable clerk assists the Financial Analyst in photocopying all

checks and attached documents.

2.2 The Financial Analyst endorses all checks with the restrictive endorsement

"For Deposit Only" along with the organization's designated bank deposit

account number. No check should be withheld from daily deposit unless it is

legally imperfect. The Financial Analyst gathers endorsed checks and prepares

deposit slips to be taken and deposited to the organization’s authorized bank

by the Accounts Receivable Clerk.

2.3 Accounts Receivable uses the photocopy of the checks and customer

remittance to apply the cash to the corresponding grants and the payments to

the Accounts Receivable ledger. Unapplied payments are to be credited

against the oldest open aging column on the accounts receivable ledger,

unless it is past the fiscal yearend, then it will need to be confirmed with the

funding source for proper application of funds. A standard letter of

information and/or inquiry is to be sent or emailed to the payer when there is

any question as to the correct application of the receipt.

2.4 For all Houston based locations, whenever cash on hand is equal to or

exceeds $20.00 at the end of a business day, such cash must be brought to

Accounting no later than the following business day, accompanied by copies

of the cash receipts issued.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 24 of 80

Accounting will match up the cash receipt dates and amounts to the bank

deposit dates to ensure that the bank deposits are made timely as required

by the above procedure.

For all remote locations, whenever cash on hand is equal to or exceeds

$20.00 at the end of a business day, a bank deposit must be made no later

than the following business day.

The bank deposit receipt along with a copy of the cash receipt provided to

clients must be mailed to the Administrative Assistant, in Houston, no later

than the following business day. The same day as the bank deposit is made.

A further comparison of the cash receipt dates and amounts to the bank

deposit dates will be made to ensure that bank deposits are made timely as

required by the above procedure.

3.0 DEPOSIT

3.1 The Financial Analyst prepares the deposit slips and sends the Accounts

Receivable Clerk to make the deposits to the organization’s authorized bank.

3.2 The final net cash deposit must reconcile with the original accounting

department log.

3.3 Federal and State funding sources Direct Deposit funds into the Organization’s

bank account. This process accounts for the majority of the organization’s

funding.

4.0 RECORDING

4.1 All cash received from funding sources will be appropriately applied to

outstanding billing invoices.

4.2 Designated cash received in advance to accomplish program goals and

objectives, will be deferred until such services have been provided, at which

time, the revenue will be recognized and recorded.

4.3 Unrestricted cash will be recorded as revenue at time of receipt or at the time

a pledge to give is received.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 25 of 80

Title: PETTY CASH

Policy: To facilitate minor business expenses, a petty cash fund will be available to

employees.

The head of each department or activity must designate one

specific individual to act as custodian of the petty cash fund. Each custodian

will be required to sign a Petty Cash Receipt Acknowledgement Form to

indicate their understanding of the responsibilities and requirements as

custodian of a petty cash fund. In addition, the respective department head

or director will also be required to sign, indicating his or her acknowledgment

of the policies and procedures associated with the petty cash fund.

Purpose: To outline the disbursement and replenishment of petty cash.

Scope: These procedures apply to all employees of the organization.

Procedure:

1.0 FUND CONTROL

1.1 The Custodian maintains control of the cash box, petty cash journal

and all petty cash transactions. The petty cash fund is set up in the

amounts ranging between $250-$1500 according to program needs for

authorized out-of-pocket expenses and advances for minor business

expenses.

1.2 Advances or reimbursements from petty cash are limited to amounts

of $100.00 or less. Petty cash is not to be used for per diem or gas for

employee’s car. If an employee requires funds in a greater amount,

they should request a company check (See Check Request Procedure).

Custodian Responsibilities

a. Assignment of Petty Cash Funds to Custodians - The AAMA Accounting

Department issues a check payable to the Custodian to establish the petty cash

fund. The Custodian remains accountable for the petty cash until custody is

formally transferred to another employee or until the fund is formally closed. It is

the responsibility of both the Custodian and the Department Head to acquire a

thorough knowledge of the applicable policies and procedures and to ensure the

funds are properly safeguarded.

b. Protection of Petty Cash - Access to cash funds must be restricted to the

Custodian only. To prevent access by anyone except the Custodian, petty cash

must be kept in a locked strong box in a locked desk or cabinet whenever not in

use or whenever the Custodian is absent. In case of theft, the AAMA Accounting

Department must be notified. The Custodian's supervisor should periodically

inspect the records and count the cash (in the continual presence of the

Custodian) in the petty cash fund to ensure proper accountability. If a Custodian

fails to provide receipts or a reconciliation of petty cash when asked, the balance

unaccounted for will be charged to the operating budget of the Custodian's

department, reported to the IRS as income to the Custodian and AAMA may

choose to prosecute.

c. Change of Custodian - One Custodian may not informally transfer a fund to a

new Custodian without obtaining written approvals as required on the Petty Cash

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 26 of 80

Receipt Acknowledgement Form. The petty cash fund must be physically counted

and reconciled before it is accepted by the new Custodian.

d. Absence of the Custodian - During absence or vacation, a Custodian may place

the petty cash fund with a temporary Custodian. The temporary Custodian and

the regular Custodian must physically count the petty cash box and prepare a list

of cash, receipts and replenishment requests in process. These must total the

authorized value of the petty cash fund. The temporary Custodian signs a copy of

the reconciliation as a receipt. This receipt is retained by the regular Custodian

since that individual is transferring personal responsibility for the value of the

fund. When the regular Custodian returns, the same procedures must be followed

with the receipt retained by the temporary Custodian.

e. Change of Location or Purpose of Petty Cash Fund - If the physical location

or the original purpose of the petty cash fund should change from that which was

stated and approved on the original Petty Cash Receipt Acknowledgement Form,

the Custodian should immediately submit a new Petty Cash Receipt

Acknowledgement Form to AAMA’s Accounting Department for approval.

f. Confirmation of Petty Cash Funds - Custodians may receive an annual request

from AAMA’s Accounting Department or Annual Auditors to confirm the amount of

the petty cash fund. Some funds maybe selected each year for a surprise audit of

cash and records to ensure proper accountability of funds and proper application

of policies and procedures.

g. Closing a Petty Cash Fund - If a petty cash fund is no longer needed, the

Custodian must close the fund. If a Custodian leaves without formally closing the

fund and there are no receipts or records, the balance unaccounted for will be

charged to the operating budget of the Custodian's department, reported to the

IRS as income to the Custodian, and AAMA may choose to prosecute.

Summary of Responsibilities

1. Custodian

a. Assumes personal responsibility for the cash in the fund.

b. Maintains physical security of the fund (i.e., in a locked container or safe in

a secured area).

c. Ensures that the sum of cash plus accumulated receipts equals the fund

balance.

2. Department/Unit Head/Designated Approver

a. Establishes departmental procedures for use of petty cash.

b. Exercises prudent judgment and ensures compliance with policies and

procedures.

c. Approves disbursements of petty cash and replenishments.

Petty Cash Receipt Acknowledgement Form Department: _________________

I hereby acknowledge that I understand my responsibility and requirements as Custodian of

Petty Cash:

(Custodian sign here) _______________________________________

I hereby acknowledge that I understand my responsibility and requirements as Department /

Unit Head of Petty Cash:

(Department Head sign here) ___________________________________

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 27 of 80

2.0 DRAWS

2.1 When an employee requests a petty cash draw, the Custodian will record the

amount advanced, date of disbursement, reason for the draw and name of

the employee receiving the advance. For the AAMA petty cash account

(including all GIS petty cash transactions), a check request payable to petty

cash should be coded and approved before any amount can be distributed to

the requestor.

The employee should, by the next business day, return the receipt(s) and any

change to the Custodian. A petty cash voucher will then be completed with

the receipt attached. It is the requestor’s responsibility to ensure sales tax is

not paid by providing the Texas Sales Tax Certificate to the vendor. If in case

sales tax is charged, it will be charged to the program’s fundraising.

3.0 REPLENISHMENT

3.1 At the end of each month or whenever the petty cash fund drops below a

balance of $100.00, the Custodian completes the replenishment paperwork

from the journal with the itemized descriptions of expenses, and attaches all

vouchers and submits to Accounting for review. Once the Accounting

Department has reviewed for accuracy and reasonableness of account code

data and expenses, the Custodian is then issued a check in the amount of the

request and will be responsible for obtaining cash from the bank to replenish

the cash box.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 28 of 80

Title: BANK ACCOUNT RECONCILIATIONS

Policy: Errors or omissions can be made to the cash records due to the many cash

transactions that occur. Therefore, it is necessary to prove periodically the

balance shown in the general ledger. Cash on deposit with a bank is not

available for count and is therefore proved through the preparation of a

reconciliation of the organization’s general ledger record of cash in the bank

and the bank's record of the organization’s cash that is on deposit.

Purpose: To outline the procedures for preparation of a monthly bank reconciliation and

recordkeeping of any adjustments and a timely review of all cash

reconciliations by the Controller and reviewed by the CFO.

Scope: This policy statement applies to all bank accounts maintained by the

organization.

Procedure:

1.0 FORMAT

1.1 The bank reconciliation will be completed within the accounting system of

AAMA each month. A printed copy of the completed detail reconciliation will

be attached to the appropriate original bank statement each month.

2.0 PREPARATION AND RECONCILING ITEMS

2.1 Upon receipt of the monthly bank statement including cleared checks, deposit

slips and any other transaction notifications, the monthly bank reconciliation

is prepared by the Controller and reviewed by the CFO. The Controller only

signs company checks when none of the other authorized signers are

available and only on an emergency case basis.

2.2 All cleared transactions on the bank statement will be reconciled and cleared

in the accounting system. After all cleared items for the month have been

selected, the book ending balance and the bank ending balance must match

with a zero difference.

2.3 Any discrepancies between these two balances will require research to

determine the cause, such as recording errors, omissions, mispostings, etc.

This may also include recalculation of the bank statement for any possible

errors made by the bank.

3.0 ADJUSTMENTS AND JOURNAL ENTRIES

3.1 Any book reconciling items such as interest, bank charges and any recording

errors are summarized and drafted in journal entry form for recording to the

general ledger. All supporting documentation will be maintained for audit

purposes.

3.2 Further, any outstanding payroll checks over one year and vendor checks

over three years will follow state rules for reporting of unclaimed property.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 29 of 80

Title: INVOICE BILLINGS AND ACCOUNTS RECEIVABLE

Policy: Program Managers are responsible for the timely preparation and distribution

of invoices/billings to optimize cash flow and payment promptness by funding

sources/grantors. Accounting maintains accurate records over accounts

receivable and abide by proper internal controls.

Purpose: To explain the methods for preparation of invoices and accounts receivable

billing and processing and maintaining of supporting documents.

Scope: This procedure applies to all Federal, State, County and Local

grantors/funding sources of the organization.

Procedure:

1.0 CUSTOMER BILLINGS AND REVIEW

1.1 There are two types of Billings:

 Cost Reimbursement and

 Per Unit of Service provided

Cost Reimbursement Billings for the WIA program are prepared by program

staff based on the funding source recommendations every month, but no later

than every three months. Documentation as required by the funding source

must be provided. This may include payroll registers, time sheets, student

information etc. The Reimbursement Billing is based on actual expenses

incurred by the program. As part of the billing process, all billings must be

reviewed and approved by the Program Director for accuracy to comply with

established terms agreed upon by the contract. Any disallowed costs will be

reviewed to determine if resubmission of billing data is required. A 12.5%

advance of the total awarded grant is given as an advance at the beginning of

the grant year. This is then reduced from each monthly reimbursement

throughout the year. These funds are directly deposited into the

organization’s accounts by the funding sources.

Cost Reimbursement requests for Federal and State grants are requested by

the Financial Analyst online for TEA & DSHS grants. Requests are based on

the final month-end General Ledger actual expenses. These expenses are

used to calculate the amount of reimbursement. The drawdown is reviewed

and approved by the Controller and then submitted for reimbursement to the

funding sources by the Financial Analyst. TEA processes the request and

reimburses funds within three business days, while DSHS can take up to 3-5

business days. These funds are directly deposited into the organization’s

accounts by the funding sources.

Cost Reimbursements Billings for local programs are prepared by the

Accounts Receivable clerk. An invoice is created and billed to grantors based

on the funding source recommendations every month, but no later than every

three months. Documentation as recommended by the funding source must

be provided. This may include payroll registers, time sheets, invoices

expensed to the program, etc. The Reimbursement Billing is based on actual

expenses incurred by the program. As part of the review billing process, all

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 30 of 80

billings must be reviewed and approved by the Program Director for accuracy

to comply with established terms agreed upon by the contract. Any disallowed

costs will be reviewed to determine if resubmission of billing data is required.

In the event that the organization ends with excess Federal or State funds

due to any expense refunds or adjustments, the revenue will be coded to

deferred revenue and will be used in future periods to accomplish program

goals. If it happens to be the end of the grant period, such funds will be

returned to the funding source.

Per Unit of Service Provided grants’ billings are prepared by the program

staff. Accounting Department records the Accounts Receivable based on the

billing report submitted monthly by Program Staff to Accounting. The billing

process for the requests are initiated by the program staff by logging into the

respective program funding website, submitting the required program data

and the grantor will review and process the payment for the services

provided. The program staff submit billings to the state every ten days and

the state processes the billings within 3-5 business days directly deposited

into the Organization’s bank account. County and Federal Probation grants

are billed once a month and the reimbursement payments process can take

up to 60-90 days.

1.2 As part of the review process, all billings must be reviewed for accuracy to

comply with established terms agreed upon by the contract. Any disallowed

costs will be reviewed to determine if resubmission of billing data is required.

1.3 The billing information will then be posted to the revenue Journal and the

Accounts Receivable ledger in a batch with other daily billing information.

1.4 In the event that AAMA request advances from federal awards provisions of

§200.305 shall be applicable.

1.5 Allowability of costs for federal grants will be determined in accordance with

§200.302(b)(7) Subpart E—Cost Principles of this part and the terms and

conditions of the Federal award. Grant manager or designee shall review and

approve the allowability of costs for all federal grants.

1.6 Request for reimbursement shall only be made during the period of the

federal award or as otherwise allowed by the Federal Awarding Agency.

1.7 In accordance with §200.307 as allowed by the federal awarding agency and

as appropriate AAMA shall attempt to earn income to defray program costs.

2.0 ACCOUNTS RECEIVABLE

2.1 Accounts Receivable Clerk will create all A/R journal entries and prepare them

based on end of month billing information provided by program staff for Per

Unit of Services provided grants and by the Financial Analyst based on actual

expenditures for cost reimbursement grants. The Financial Analyst reviews

and approves all A/R journal entries. After approval, the Financial Analyst will

then post the entry. In absence of the Accounting Clerk, the Financial Analyst

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 31 of 80

will prepare the entry and the Controller will review, approve, and post the

entry.

2.2 On a monthly basis, Accounts Receivable generates an aged trial balance of

Federal, State and Local funding sources accounts with individual billing

information and days outstanding and will forward to the Controller for

review. This report is provided to management staff monthly.

2.3 Accounts Receivable Clerk records payments in the General Ledger from

Federal, State, County and Local funding sources that are directly deposited

into the organization’s bank account and applies funds to outstanding

invoices/billings.

2.4 Accounts Receivable Clerk is responsible for reconciling receipts from Federal,

State, County and Local funding sources with the Accounts receivable

balances and for issuing credit memos to accounts upon receipt of cash and

notification from the billing clerk that disallowed costs will not be resubmitted

for payment. The Financial Analyst will review, approve, and post the credit

memo entries.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 32 of 80

Title: ACCOUNTS PAYABLE, CASH DISBURSEMENTS, ACCRUED EXPENSES

AND AP PURCHASING CREDIT CARD & PAYMENT

Policy: Proper internal controls are followed to ensure that only valid and authorized

payables are recorded and paid. Accounting procedures are implemented to

ensure the accuracy of amounts, coding of general ledger accounts and

appropriate timing of payments.

Purpose: To explain the procedures for documenting, recording and issuing payments

for accounts payable transactions.

Scope: This procedure applies to all purchases including COD amounts, credit card

purchases and reimbursement of travel and expense reports.

Procedure:

1.0 DOCUMENTING ACCOUNTS PAYABLE

1.1 The following documents are forwarded to accounts payable for temporary

filing and subsequent matching to form an accounts payable voucher

package:

 Purchase Order if applicable

 Packing Slip with receiving report if applicable

 Vendor invoice

 Check request with proper approvals (Required for all payments whose

nature is not a utility bill or contractual agreement on file by the

Accounting Department)

1.2 Once the accounts payable department has all of the above documents, the

following steps are performed to ensure proper authorization, validity of

purchase, receipt of purchased items or services and accuracy of amounts.

 The vendor invoice will be attached to the check request. When

applicable, the packing slip and purchase order should also be

attached along with any other supporting documentation.

 The purchase order should be evaluated for proper authorization and

the nature of the purchase and pricing as shown on the invoice

reviewed for validity.

 The quantities shown shipped or delivered on the invoice will be

compared to the packing slip.

 Check requests should include proper general ledger account coding.

This coding should reasonably describe the expense to be incurred as

well as correspond with approved and allowable budgetary items.

 Calculations on the invoice will be recomputed, such as, quantities

received multiplied by unit price and totals. Sales tax amounts listed

on the invoice will be reviewed so that when appropriate, sales tax

exempt notifications can be sent to the vendor.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 33 of 80

 If any paperwork needs to be mailed with the AP check, the

department forwarding the request needs to send the original and a

copy of the document that must accompany payment.

 Any discrepancies to the steps listed above must be addressed and

resolved prior to commencing with the accounts payable voucher. If

necessary, requests will be returned to requestor for necessary

corrections.

2.0 RECORDING

Once the accounts payable voucher package has been properly assembled,

the voucher package is then reviewed by Accounts Payable for proper coding

and accuracy. Once this review has occurred the voucher package is then

batched and entered into the computerized accounts payable system. Once

the batch has been entered, the batch is posted to the accounts payable

ledger.

2.1 The voucher package is then temporarily filed by due date in the unpaid

invoice files to await payment.

3.0 PAYMENT OF ACCOUNTS PAYABLE

3.1 On Tuesday and Thursday of every week, accounts payable invoices are

selected for payment according to their terms for payment. Accounts payable

should normally be paid within seven days of their due date unless otherwise

determined by the Controller. If payment terms are not specified on the

invoice, payment will be issued within 30 days of the invoice date.

Any debit balances (amounts owed to the organization) are applied to credit

amounts when determining payment.

3.2 Accounts payable invoices are submitted to the Financial Analyst for review

and payment approval. Upon approval, checks are then printed for the

accounts payable invoices to be paid.

The deadline for receipt in our office for eligibility in Tuesday’s check run is

the preceding Monday at 12:00 p.m. The deadline for receipt in our office for

eligibility in Thursday’s check run is Wednesday at 12:00 p.m.

3.3 After the checks are printed, they are matched to the voucher package and

submitted to an authorized signer for signing. Checks in the amount of

$10,000 and over, require two signatures. The Controller only signs company

checks when none of the other authorized signers are available and only on

an emergency case basis. Upon return of the checks to accounts payable, the

2-part checks will be separated and processed as follows:

 Original - Mailed to the vendor along with any necessary payment

stubs. Check stub is attached to the voucher package and filed

alphabetically in the paid vendor files.

3.4 Positive Pay procedures have been implemented for check writing security

and fraud prevention. Procedures include forwarding to the bank a .csv file

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 34 of 80

initiated by Accounts Payable and released by the Financial Analyst with check

numbers, check date, amounts and payees for the bank to clear only those

checks listed. This file is released electronically by the Financial Analyst after

checks have been signed and approved by an authorized check signer.

4.0 COD PAYMENTS

4.1 All requests for COD are to be originated and authorized through preparation

of a Check Request form and accompanied with an invoice, proper approvals

and general ledger account coding. The Accounts Payable Manager reviews

the check package and presents it to an authorized signer for check

signatures.

4.2 The COD voucher package will be batched and entered into the computerized

accounts payable system on Tuesdays and Thursdays. A preliminary batch

report is printed for review by the Financial Analyst. Once this review has

occurred and all necessary corrections made the batch is posted to the

general ledger and year to date purchases updated to vendor files.

Check stub is filed alphabetically in the paid vendor file.

5.0 ACCRUED EXPENSES

5.1 The Financial analyst is responsible for preparing records of accrued expenses

at the end of each month. Accrued expenses represent amounts due for

services or benefits that the organization has received but are not yet

payable. Types of expenses may include:

 Payroll

 Payroll Taxes

 Rent

 Utilities

 Interest

 Lease Charges

 Audit Fees

5.2 The Financial Analyst determines the proper amount of each expense that

should be accrued based on prior month’s expense.

5.3 Once all amounts have been determined, the accrued expenses are properly

coded and a journal entry will then be prepared for recording to the general

ledger after proper review and approval by the Controller.

5.4 The Financial Analyst also reviews all existing accrued expenses recorded

from prior periods and ensures that reversing accounting entries are made.

6.0 ACCOUNTS PAYABLE PURCHASING CREDIT CARD AND PAYMENT

POLICY

6.1 The purchasing credit card assigned to Accounts Payable will be used for the

following services:

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 35 of 80

- Bus Services for the school

- Utilities

Other urgent purchases as authorized by the Controller/CFO/ Management

6.2 Before processing payments for the above services, Accounts Payable must

obtain approval signatures.

6.3 Payments to the credit card company for purchases done by Accounts Payable

must be processed by other than Accounts Payable and approved by the

Controller/CFO.

6.4 Accounts Payable must submit all itemized credit card receipts for approval to

the Controller/CFO.

6.5 Financial Analyst must verify coding and signatures before processing

payment.

6.6 Payments must be processed by the Accounts Receivable Specialist.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 36 of 80

Title: CREDIT CARD POLICY

Policy: To promote efficient processing and record keeping of all credit card

transactions. Ensure that cardholders understand and acknowledge

responsibilities pertaining to the AAMA credit card.

Purpose: To set forth guidelines in regards to the application, use, and termination of

credit cards issued to organization employees.

Scope: Applies to all cardholders

Procedure:

1.0 ORIGINATION

1.1 Credit card statements will be emailed to all cardholders every month after

the closing date for the specific period.

1.2 It is the cardholder’s responsibility to review statements for accuracy and

validity of purchases and to reconcile all transactions to the credit card

statement. It should only include expenses allowed in the Credit Cardholder’s

agreement. The credit card should not be used to purchase items for

personal use. In the event that is used for personal items, the cardholder will

reimburse AAMA for such amounts.

1.3 After review and reconciliation of the credit card statement, the cardholder

will create a travel expense form for all transactions on the credit card and

attach all original receipts and supporting documents to a coded check

request.

1.4 The coded check request along with all supporting documents will then be

submitted to the appropriate department manager / supervisor for review and

approval.

1.5 Once approved, the check request is then submitted to Accounts Payable for

review and payment processing on a timely manner to avoid unnecessary

fees.

2.0 PROCESSING

2.1 Accounts Payable will review coding of expenses and ensure that all

transactions are supported with appropriate documentation and that all

transactions reconcile with the credit card statement.

2.2 Any incorrectly coded items / unsupported transactions on a check request

will be returned to the originator for necessary corrections.

2.3 Once a check request has been reviewed and deemed accurate, it will be

entered in the accounting system and submitted for payment based on the

due date specified on the statement to ensure that no fees will be incurred by

the organization.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 37 of 80

CARDHOLDER AGREEMENT

OVERVIEW

It is the policy of the organization to permit use of authorized credit cards by employees

designated by appropriate authorities for charging legitimate organizational expenses. After

reading this policy, all employees who currently have obtained a credit card must sign

acknowledging that they understand all responsibilities involved and will abide by the

cardholder policy.

Eligible employees, who request to have an authorized credit card, should discuss with their

direct manager. Management would then request approval from the CEO. Prior written

approval from the CEO must be attained before any arrangements from the Plan

Administrator can be made for obtaining a credit card.

POLICY

Credit cards are issued by JPMorgan Chase Bank at the discretion of the CEO to current

employees who have been determined to incur legitimate business expenses. The

cardholder agrees to comply with all applicable organization policies and procedures and this

Credit Card Agreement.

It is the organization’s policy that all original itemized receipts and any other supporting

documents must accompany the cardholder’s statement, expense report, and check request

prior to obtaining approval from the department’s manager. Expense reports should be fully

detailed with purpose of expenses and any other required information. Failure to provide

supporting documents or any other required information will result in delay of processing

credit card payments. All efforts should be made to comply and provide all required

information/documentation timely.

Credit card expenses for a current statement period must be submitted to Accounts Payable

2 weeks prior to the statement due date to ensure ample review and processing time. This

time period will ensure that payment in full can be issued by the designated due date as

shown on the monthly statement from JPMorgan Chase Bank. JPMorgan Chase Bank will

place a hold on all credit cards if payment is not received on the due date.

COMPLIANCE WITH POLICY, VIOLATIONS AND CONSEQUENCES

Cardholder violations to this policy, or to any other organization’s policy regarding the

purchase or goods or services, will be examined by Management and any other appropriate

staff. Recommended actions that might be taken include: written warnings, removal of

credit card privileges, and other disciplinary actions, if necessary.

The organization will consider the facts and circumstances of each incident, and will take

action as appropriate. Violations to the policy will result in notification to the cardholder’s

Manager/Supervisor.

Credit card violations may include but are not limited to:

 Purchase of items for personal use

 Purchase of items in violation of the organization travel policy

 Purchase of alcoholic beverages

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 38 of 80

OWNERSHIP AND CANCELLATION OF THE CREDIT CARD

Credit Cards may not be transferred to, assigned to, or used by anyone other than the

designated cardholder. The cardholder is accountable for the activity on the card.

Cardholder privileges may be suspended or cancelled by the organization at any time for

any reason. The cardholder will surrender the credit card upon request to the organization

or to his/her manager.

SPENDING LIMITS

Each credit card has a pre-set limit that may not be exceeded. Cardholders may request a

credit limit increase to their direct Supervisors. In order to increase a credit limit, the

Supervisor must request approval from the organization’s CEO.

RECEIPTS

It is the cardholder’s responsibility to obtain itemized receipts from the merchant each time

the credit card is used. Receipts are to be reconciled to the statement, attached to the

expense report, and submitted for processing and approval.

DISPUTED ITEMS

It is the cardholder’s responsibility to follow-up on any unauthorized charges, returns or

adjustments to ensure that proper credit is given on the subsequent month’s statement.

VALIDATION AND SAFEKEEPING

Sign the credit card immediately upon receipt. The credit card should always be treated with

the same care as a personal credit card, bank card, cash and checks. Keep your card in an

accessible, but secure location.

When the expiration date has passed and/or after you have received a new card, shred the

old card and dispose of it.

If the credit card is lost or stolen, contact JPMorgan Chase Banks’ toll free number

immediately then notify your immediate Supervisor and the Plan Administrator.

SUMMARY OF CARDHOLDER’S RESPONSIBILITIES

 Purchasing items for business use only.

 Submitting detailed itemized receipts, expense forms, coding and approval for the

total balance due every month.

 Never lending or sharing the credit card account number.

 Purchasing only goods and services that are in accordance with the organization’s

policies.

 Attaching other supporting documents, such as agendas, detail and reason for

travel/expense with expense reports

 All charges on the credit card statement shall be examined by the cardholder to

ensure that they represent actual, valid and authorized expenses.

 Reading this policy and signing as verification of understanding to comply with the

organization’s policies.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 39 of 80

I have read and understood the Credit Card Policy and agree to abide by the terms and

conditions of this policy. I certify that as a cardholder, I understand and assume the

responsibilities listed above.

Employee’s Signature Name (Print) Date

Manager’s/Supervisor’s

Signature

Name (Print) Date

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 40 of 80

Title: PROCUREMENT

Policy: The organization uses purchase procurement procedures to obtain services,

supplies, or other property as provided for below.

1.0 General Procurement Guidelines:

1.1 All procurement transactions must be conducted in a manner providing full

and open competition consistent with the standards of this section. In order

to ensure objective contractor performance and eliminate unfair competitive

advantage, contractors that develop or draft specifications, requirements,

statements of work, or invitations for bids or requests for proposals must be

excluded from competing for such procurements. Some of the situations

considered to be restrictive of competition include but are not limited to:

 Placing unreasonable requirements on firms in order for them to

qualify to do business;

 Requiring unnecessary experience and excessive bonding;

 Noncompetitive pricing practices between firms or between affiliated

companies;

 Noncompetitive contracts to consultants that are on retainer contracts;

 Organizational conflicts of interest;

 Specifying only a “brand name” product instead of allowing “an equal”

product to be offered and describing the performance or other relevant

requirements of the procurement; and

 Any arbitrary action in the procurement process.

1.2 AAMA must conduct procurements in a manner that prohibits the use of

statutorily or administratively imposed state, local, or tribal geographical

preferences in the evaluation of bids or proposals, except in those cases

where applicable Federal statutes expressly mandate or encourage geographic

preference.

1.3 AAMA’s procurement procedures must ensure that all solicitations:

a. Incorporate a clear and accurate description of the technical

requirements for the material, product, or service to be procured. Such

description must not, in competitive procurements, contain features

which unduly restrict competition. The description may include a

statement of the qualitative nature of the material, product or service

to be procured and, when necessary, must set forth those minimum

essential characteristics and standards to which it must conform if it is

to satisfy its intended use. Detailed product specifications should be

avoided if at all possible. When it is impractical or uneconomical to

make a clear and accurate description of the technical requirements, a

“brand name or equivalent” description may be used as a means to

define the performance or other salient requirements of procurement.

The specific features of the named brand which must be met by offers

must be clearly stated; and

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 41 of 80

b. Identify all requirements which the offerors must fulfill and all other

factors to be used in evaluating bids or proposals.

1.4 AAMA must ensure that all prequalified lists of persons, firms, or products

which are used in acquiring goods and services are current and include

enough qualified sources to ensure maximum open and free competition.

Also, AAMA must not preclude potential bidders from qualifying during the

solicitation period.

2.0 Specific Procurement Procedures:

2.1 Except as may be provided for herein, all goods and services in excess of $

2,500 require three competitive bids. For any one-item purchase under

$2,500, price or rate quotations are not required.

2.2 The organization obtains three verbal or written prices or rate quotations for

any purchase between $2,500 and $5,000. Telephone and other verbal

quotations must be documented.

2.3 The organization obtains three written prices or rate quotations for any item

purchase over $5,000.

2.4 The organization selects the vendor providing the best value and documents

the rationale for selection.

2.5 The organization will document the rationale for selection of the vendor.

NOTE: Exceptions to this policy are for goods and services contracted through

the State of Texas Controller’s, TEA Region 4 Cooperative Purchasing

Services, TCSA’s Purchasing Cooperative Purchasing Services, “Non-

Competitive bid transactions”, and other exceptions as provided for below.

Non-competitive bid transactions are characterized as follows:

 Available only from a single source

 Where management decides that prevailing economic conditions

preclude the value of competitive bidding.

 Commodities and services not subject to bid solicitation or price

negotiation

 Emergency requirements affecting health and safety

 Items of unbiddable nature such as repair of equipment and

machinery. (Standard price are normally charged for the parts and

labor is charged at prevailing hourly rates.)

 Every effort should be made to obtain 3 price quotes for each non-

competitive bid item and they should be documented through a

Competitive Bid Process Waiver.

2.6 Time and material contracts will only be used in limited circumstances and

only then in accordance with §200.318.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 42 of 80

2.7 As provided by the Board of Directors in its March 7, 2014 Board Meeting, all

contracts for the procurement of goods and services in excess of $25,000

(previously $10,000) require approval of the Board of Directors. This applies

to all contract amendments and change orders to previously approved

contracts if such contract amendments and/or change orders either cause the

purchase to exceed the threshold of $25,000, or if such threshold has already

been reached and the contract amendment and/or change order is less than

$25,000.

2.8 CHARTER SCHOOL SPECIFIC REQUIREMENTS: Notwithstanding anything to

the contrary contained herein, if Texas Education Code Section 12.1053,

Financial Accountability System Resource Guide (FASRG) or Federal

requirements are more strict in terms of dollar thresholds or other stated

requirements pertaining to charter schools than those provided for herein,

then the organization’s charter school shall obtain legal advice to determine

applicability and if applicable, the organizations’ charter school shall abide by

such State and/or Federal requirements unless the organization’s school

charter contract says otherwise:

a. Competitive bidding is required when a charter school engages in any

public works contract (i.e., a contract for the construction, repair or

renovation of a building) worth over $50,000. For public works contracts,

charter schools must follow the specific procedures set forth in Texas Local

Government Code, Chapter 271, Subchapter B. This subchapter requires

timely newspaper advertisements, sealed bids, a public bid opening, and

an award to the lowest responsible bidder. NOTE: To be on the safe side,

TCSA recommends for member schools to follow this process for any

public works contracts potentially worth over $45,000. Therefore, if any

such public works contract may be over $45,000, then the organization

shall obtain legal advice as to applicability.

b. When the organization’s open-enrollment charter school seeks a contract

for professional services with state funds, then the school cannot award

the contract on the basis of competitive bids. The Professional Services

Procurement Act is set forth in Texas Government Code, Chapter 2254.

According to the Act, any provider of professional services to the school

must be selected on the basis of demonstrated competence, demonstrated

qualifications, and a fair and reasonable price. Professional services

include accounting, architecture, landscape architecture, land surveying,

medicine, optometry, professional engineering, real estate appraising, and

professional nursing. This process is not applicable if the charter school’s

approved charter contract states otherwise concerning the procurement of

professional services.



c. When using federal funds, open enrollment charter schools operated by

non-profit corporations (e.g. AAMA) will follow the procurement standards

set forth in 34 CFR Sections 74.40 through 74.48. These standards

require all procurement transactions to be conducted in a manner in which

provides open and free competition. AAMA’s charter school school’s

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 43 of 80

procurement procedures will endeavor to accomplish the following

objectives:



 Charter schools avoid purchasing unnecessary items;

 Solicitations for goods and services must provide a clear and

accurate description of the goods or services being solicited;

 Positive efforts shall be made by charter schools to utilize small

businesses, minority-owned firms, and women’s business

enterprises whenever possible;

 The type of procurement instruments used (e.g. fixed price

contracts, purchase orders, and incentive contracts) must be

appropriate for the particular procurement;

 Contracts are made only with responsible contractors who possess

the potential ability to perform successfully under the terms and

conditions of the proposed procurement;

 Charter schools, on request, shall make available pre-award review

and procurement documents when: (1) recipient's procurement

procedures fail to comply with the federal regulations; (2) the

procurement is expected to exceed the small purchase threshold

($25,000) and is to be awarded without competition or only one

bid is received in response to a solicitation.

 When a transaction is expected to exceed the small purchase

threshold ($25,000), then the charter school must retain the

following minimum records concerning the transaction: (1) the

basis for contractor selection; (2) justification for lack of

competition when competitive bids or offers are not obtained; and

(3) basis for award cost or price.

2.9 In accordance with §200.112, §200.113 and §200.318 AAMA shall

a. Disclose in writing any potential conflict of interest to the Federal

awarding agency or pass-through entity in accordance with applicable

Federal awarding agency policy.

b. Timely disclose in writing to the Federal awarding agency or pass-through

entity all violations of Federal criminal law involving fraud, bribery, or

gratuity violations potentially affecting the Federal award (Failure to make

required disclosures can result in any of the remedies described in

§200.338 Remedies for noncompliance, including suspension or

debarment. [See also 2 CFR part 180 and 31 U.S.C. 3321]).

c. Maintain oversight to ensure that contractors perform in accordance with

the terms, conditions, and specifications of their contracts or purchase

orders.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 44 of 80

d. Abide by AAMA’s conflict of interest policy as contained within the

Employee Handbook shall be followed in the selection, award and

administration of contracts. No employee, officer, or agent may participate

in the selection, award, or administration of a contract supported by a

Federal award if he or she has a real or apparent conflict of interest.

AAMA’s officers, employees, and agents shall not solicit nor accept

gratuities, favors, or anything of monetary value from contractors or

parties to subcontracts. De minimis exceptions may be authorized by

Executive Management. Violation of this policy shall result in appropriate

disciplinary action.

e. Conduct appropriate lease vs. purchase analyses.

f. Enter into state and local inter-governmental agreements or inter-entity

agreements for procurement or use of common or shared goods and

services.

g. Use Federal excess and surplus property in lieu of purchasing new

equipment and property whenever such use is feasible.

3.0 The Executive Director and Chief Financial Officer will develop procedures to

implement these guidelines.



LEGALAUTHORITY



January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 45 of 80

Title: PURCHASING AND PURCHASE ORDERS

Policy: To promote the development and use of purchasing processes that promotes

increased efficiencies and record keeping within the organization.

Purpose: This policy is intended to establish the parameters of a purchasing structure

that is specifically designed to support the best methods and best practices

for the organization when acquiring supplies, materials, equipment, goods,

and services.

Scope: Applies to the acquisition of supplies, materials, equipment, goods, and

services.

1.0 Introduction

1.1 The goal for every purchasing transaction is to obtain the best value possible.

Best value can be determined by evaluating many factors (such as price,

delivery capabilities, quality, past performance, training, service capabilities,

ease of ordering, payment, etc.). When a vendor that offers the best

combination of those factors has been determined, the requestor/end user

can begin the requisition/purchase order process (refer to Procurement Policy

for bid requirements).

2.0 Role / Responsibility

2.1 The requestor/end user’s responsibility in the purchasing process is to provide

the support and documentation needed in order to determine the best value.

Before submitting the requisition request for processing, the requestor/end

user must do the following to ensure that the purchasing process is not

delayed and best value is obtained.

a. Requestor/end user (teachers, principals, staff. etc.)

 Determine what is needed

 Determine if the need can be fulfilled by a Preferred Vendor (i.e.

Staples, Unisource, Goodman Bus)

 Research vendors & request quotes

 Analyze costs budgets and evaluate other factors (i.e. delivery,

quality, service, school budgets and funding, etc.)

 Select vendor

 Prepare and submit all necessary and required documents to the

appropriate requisition processor to prepare an electronic

requisition through the accounting system (Sage Fund Accounting

Electronic Requisitions)

 Send official purchase order to vendor once it has been approved

and provided to you

 Ensure proper receipt of ordered goods and services

 Submit documents and paperwork to processor (i.e. packing slips,

invoices, etc.)

2.2 The responsibility of the Requisition Processor in the purchasing process is to

ensure that proper controls have been taken into consideration and that all

electronic requisitions are processed.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 46 of 80

 Requisition Processor (administrative assistant, receptionist, secretary,

etc)

 Review all supporting documentation that has been submitted before

an electronic requisition is prepared (supporting documents include

coding, quotes, bids, contracts, etc.) If all necessary documents have

not been submitted, the request for requisition will be returned to

requestor/end user for revisions.

 Vendor has been evaluated by requestor to determine best value

 Initiate an electronic requisition through our electronic system (Sage

Fund Accounting Electronic Requisitions) and submit to supervisor for

approval.

 Provide purchase order to requestor / end user once requisition has

been approved

 Track documents and paperwork (i.e. packing slips, invoices, other

supporting documents)

 Submit purchase transactions to the Accounts Payable department

once the invoice has been received (includes: PO, quotes,

confirmation, packing slips, invoice)

2.3 All requisitions for purchase orders require approval regardless of dollar

amount. The approver is responsible for the following:

a. Approver (CEO, director, principal, supervisor, etc.)

 Validate the legitimate business purpose of the transaction

 Validate that adequate funding is available

 Ensure compliance with purchasing policy

 Approve requisitions or deny, if necessary

 Negotiate and resolve disputes with vendors

2.4 All employees involved in the purchasing process should take full

responsibility in understanding this policy. Purchasing decisions should be

made with the highest consideration for what is in the best interest of the

organization.

3.0 Processing Purchasing Transactions

3.1 The purchase of goods and services begins with the initiation of a Requisition

request by the requestor / end user. At this point, the responsibility of the

requestor is to ensure that all necessary actions listed above have been taken

(i.e. budget check, vendor selection, etc) before submitting request to the

appropriate processor for review, electronic processing, and approval. Once

reviewed, an electronic requisition is created and submitted for approval

through the Sage Fund Accounting Electronic Requisitions module. The

module provides an appropriate audit trail since transactions are captured

into the system by individual transactions. The fully approved Requisition is

then sourced into the Sage Fund Accounting Purchasing module and a

Purchase Order will then be automatically created by the system and printed

in batches once per day at 12:00pm by Accounts Payable. The official

Purchase Order is then sent to the requisition processor to continue with the

order process.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 47 of 80

3.2 Purchase Orders will be sent, by requestor, to the vendor by one of the

following methods:

 Fax

 E-mail

 U.S. Mail

 Online

3.3 Once the purchase has been completed and items have been received and

verified, all necessary documents (i.e. packing slips, invoices, etc.) received

with goods / services should be submitted to the appropriate processor in

each division. At this point, the processor will gather all completed

documentation and submit to the Accounts Payable department.

3.4 Accounts Payable will then review the invoice and all supporting

documentation to ensure accuracy and compliance. If everything is submitted

correctly, the invoice will be processed into the Sage Fund Accounting

Accounts Payable Module and will be matched to the Purchase Order number.

4.0 Invoices / Payment

4.1 A purchase transaction is considered to be complete once the goods / services

have been received and the vendor has been paid. When a Purchase Order is

issued from the accounting system, funds are properly encumbered. The

encumbrance ensures that the required funding is set aside and available to

pay outstanding obligations.

4.2 Priority will be given to invoices supported with the issued Purchased Order,

confirmation of receipt of goods / services, and all other properly completed

paperwork. If a payment request is incomplete or has discrepancies, it will be

returned to the appropriate division processor for revisions and corrections.

4.3 Invoices are selected for payment according to their terms. Normally,

accounts payables will be paid within seven days of their due date unless

otherwise determined. If payment terms are not specified on the invoice,

payment of vendor invoices will be issued within 30 days of the invoice date.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 48 of 80

Title: CHECK REQUESTS

Policy: To ensure efficient processing and record keeping. All check requests are

prepared on a written check request form.

Purpose: To describe the process for completing a check request form.

Scope: All check requests.

Procedure:

1.0 ORIGINATION

1.1 The Check Request form is required for all payments whose nature is not a

utility bill or contractual agreement on file by the Accounting Department. The

Check Request form should be completed with supporting documentation

attached, and with departmental approval before submitting to the Accounts

Payable Department. All transactions are required to have proper coding at

minimum to include fund, program, grant and general ledger codes. All check

requests must be on the proper division coding sheets. Any incorrectly coded

or incomplete check requests will be returned to the originator for necessary

corrections.

1.2 Check requests require proper approvals by authorized signers.

1.3 Check requests include proper general ledger account coding. This coding

should reasonably describe the expense to be incurred as well as correspond

with approved and allowable budgetary items.

2.0 PROCESSING

2.1 The check request, along with necessary supporting documentation is

forwarded to the Accounts Payable Department for review and check

preparation. Once the check has been processed, the check is signed by an

authorized check signer. Checks in the amount of $10,000 and over, require

two signatures. The Controller only signs company checks when none of the

other authorized signers are available and only on an emergency case basis.

If a check is to be mailed directly to the vendor, any applicable

documentation such as order forms, etc., should be attached to the Check

Request.

2.3 If a request is submitted to Accounting to issue an advance check to a

business or hotel for AAMA / G.I.S. related business, the check will be made

payable directly to the business or hotel once the advance has been

approved. Until the requestor either returns proper receipts for the advance

and/or the remaining advance funds, the requestor will continue to be

responsible and accountable for the money that was advanced, even though

such check was made payable to a third party. As with other types of

advances, AAMA and G.I.S. require that all receipts be submitted to

Accounting immediately after the event has occurred for which the advance

was issued.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 49 of 80

2.4 If a request is submitted to Accounting to issue an advance check for business

or school travel and/or other expenses, the check will be made payable to the

requestor personally. Once the advance has been approved, the requestor

will be held responsible and accountable for the money that is advanced until

either the proper receipts for the advance and/or the remaining advanced

funds are returned. Once Accounting receives the proper receipts and/or

remaining advance funds, the requestor will no longer be responsible for such

advanced funds. Just as a reminder, AAMA and G.I.S. require that all receipts

be submitted to Accounting immediately after the event has occurred for

which the advance was issued. If this requirement is not met, unjustified

funds will be reported to the IRS in the requestor’s Form W-2 at the end of

the calendar year.

(See INTRANET for Program designed Check Request Forms)

2.2 Positive Pay procedures have been implemented for check writing security

and fraud prevention. Procedures include forwarding to the bank a .csv file

with check numbers, check date, amounts and payees for the bank to clear

only those checks listed. This file is sent after checks have been signed and

approved by an authorized check signer. The file is initiated by the

AP/Purchasing Supervisor and released by the Financial Analyst.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 50 of 80

Title: CAFETERIA INVOICES

Policy: To promote efficient processing of all Cafeteria invoice payments.

Purpose: To set forth guidelines in regards to the process of submitting all Cafeteria

invoices to Accounts Payable for timely processing of payment.

Scope: Applies to all Cafeteria vendor invoices.

Procedure:

1.0 ORIGINATION

1.1 When products are ordered and delivered to the Cafeteria, vendors will also

deliver an Invoice / Receiving Document. These documents should be

reviewed and compared with what is being delivered and signed as received

by the designated Food Service Worker or by the Food Service Manager.

2.0 PROCESSING

2.1 The designated Food Service Worker and/or the Food Service Manager will

scan and email the Invoice / Receiving Document to Accounts Payable. This

should be done the same day as the items are received in the Cafeteria.

2.2 Once the Invoice / Receiving Document has been received, the Accounts

Payable / Purchasing Supervisor will “control” the invoice to ensure prompt

payment. The AP / Purchasing Supervisor will notify the designated Food

Service Worker and/or the Food Service Manager of the date the invoice

should be processed into the Electronic Requisitions Module for coding and

submitted for approval. Processing invoices into the Electronic Requisitions

Module would eliminate the need for preparing a check request and would

ensure that proper tracking is recorded electronically.

2.3 Once the Electronic Requisition has been approved by the VP of School

Operations/Superintendent, a Purchase Order will be created by the AP /

Purchasing Supervisor and attached to the Invoice / Receiving Document. The

issued Purchase Order will only be used internally and not distributed to

vendors. The purpose of the issued Purchase Order is to ensure that the

Invoice / Receiving Document is encumbered.

2.4 The Accounts Payable / Purchasing Supervisor will follow up with the

designated Food Service Worker and/or the Food Service Manager in the

event that the Invoice / Receiving Document has not been processed into the

Electronic Requisitions Module for coding and submitted for approval.

2.5 In the event that the follow up request is unsuccessful, Accounts Payable will

notify the VP of School Operations/Superintendent for assistance.

2.6 With respect to Borden Milk, each Borden Milk Invoice should be scanned and

emailed to Accounts Payable. The same process listed above should be

followed. At the end of the month when Borden milk sends the Summary

Invoice, that should be scanned and emailed to Accounts Payable for

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 51 of 80

comparison with the individual invoices paid throughout the month. Any

differences will be adjusted.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 52 of 80

Title: VOID CHECK(S)

Policy: The organization's policy prohibits the practice of voiding checks, and instead

promotes the process of invoice expense and reporting. This policy is to

ensure that proper payments to vendors and reimbursements to employees

occur in an accurate and timely basis.

Procedures:

1.0 A check request is completed after the invoice has been approved by the

Program Manager and the amount has been verified.

2.0 Check requests are submitted to the Accounting Department for payment to

the vendor for supplies or for professional services rendered.

3.0 If an error occurs in the processing of payment, the printed check may need

to be voided due to an error.

An error may occur when:

 The amount is greater than the amount owed which will result in

overpayment,

 Reimbursement from funding source has not been received, or the

amount and items are not budgeted or approved by the funding source.

 Multiple invoices paid to vendor in error, when each site requests

individual checks.

4.0 If and when there is sufficient information to justify voiding a check, the

check will be voided through the accounting system and in most cases original

voided check will be filed with bank statement along with bank reconciliations.

The Controller verifies all voided checks.

5.0 The organization promotes accuracy and consistency in reviewing and

approving check processing.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 53 of 80

Title: EMPLOYEE TRAVEL

Policy: It is the policy of the organization to reimburse employees for business travel

expenses and use of personal vehicles. Expenses for transportation, lodging,

meals, and related items are allowable when they are incurred by an

employee, or volunteer on official business which is directly attributable to the

contract or required for administration of the organization. Advances for

airfare and hotel are allowable when submitted with supporting

documentation and proper approval.

Purpose: To describe the process for completing a properly documented reimbursement

request form for mileage and travel related expenses.

Scope: Mileage and travel related expenses

1.0 Request and Reimbursement Procedures

1.1 Lodging and subsistence. Costs incurred by employees and officers for travel,

including costs of lodging, other subsistence, and incidental expenses, must

be considered reasonable and necessary, approved by the employee’s

supervisor and otherwise allowable only to the extent such costs do not

exceed charges normally allowed by AAMA’s written travel policy. Generally, if

any approved travel costs are in excess of those established by the Texas

Comptroller of Public Accounts from time-to-time, such excess costs must be

paid for out of appropriate non-grant funds. In addition, if approved travel

costs are charged directly to the Federal award documentation must specify

that or provide for:

a. Participation of the individual is necessary to the Federal award; and

b. The costs are reasonable and consistent with AAMA’s established travel

policy.

c. Commercial air travel. Airfare costs in excess of the basic least expensive

unrestricted accommodations class offered by commercial airlines are

unallowable except when such accommodations would

 Require circuitous routing

 Require travel during unreasonable hours

 Excessively prolong travel

 Result in additional costs that would offset the transportation savings

 Offer accommodations not reasonably adequate for the traveler's

medical needs. AAMA must justify and document those conditions on a

case-by-case basis in order for the use of first-class or business-class

airfare to be allowable in such cases.

d. Temporary dependent care costs are not reimbursable by AAMA.

2.0 General Requirements

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 54 of 80

2.1 Employees whose jobs require regular driving for business must be able to

meet the driver approval standards of this policy at all times. In addition,

employees holding those jobs must inform their supervisors of any changes

that may affect their ability to meet the standards of this policy. For

example, employees who lose their license must report this within 24 hours

to their immediate supervisor.

2.2 A Mileage Log / Reimbursement Form must be submitted to supervisor in

advance for preapproval of an employees’ travel. This includes travel for

program related activities, and to attend conferences, seminars, and

community meetings and to conduct planned events.

2.3 Employees should provide their supervisor with the required and completed

Mileage Log / Reimbursement Form by the first of each month, requesting

approval for mileage reimbursement.

2.4 Employee's expenses for approved travel are reimbursed when properly

documented by the employee and approved by the supervisor. A properly

completed check request for reimbursement includes a completed Mileage Log

/ Reimbursement Form, itemized receipts for travel expenses, and travel

agendas to support travel expenses. Incomplete requests submitted to

Accounting will be returned to the requestor for revisions.

2.5 Processing of all reimbursements requests should be submitted to Accounting

on a monthly basis. Expenses over 90 days will not be processed unless

approved by the Chief Executive Officer. Employees are required to follow this

90-day rule.

2.6 Travel mileage is reimbursed at 48 cents per mile not to exceed IRS and the

Texas Comptroller of Public Accounts published rates per mile. The mileage

rate is consistent with the Federal and State guidelines.

a. Employees are required to calculate mileage by using an electronic

mapping source (such as Google Maps or any other online mapping

service). The employee must print out the driving directions provided

by the online mapping site and attach to the reimbursement request

along with all other supporting documents.

b. Employees are required to select the shortest and economical route.

The selection of another may be justified if it was chosen for safety

reasons.

2.7 Travel reimbursement request must be properly documented to be

reimbursable. Travel reimbursement requests should include itemized original

receipts for expenses incurred. For example, the reimbursement for meals

should contain the receipt from the restaurant detailing the items ordered.

Copies of receipts will not be accepted by the Accounts Payable Department.

a. Employees requesting travel reimbursement must document all travel

costs in the Mileage Log / Reimbursement Form. The following must be

included in a properly completed reimbursement request:

 Name of employee requesting travel reimbursement

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 55 of 80

 Destination and purpose of trip (include report or copy of agenda)

 Dates of travel (if traveling with others, names must be listed)

 Mileage (physical address for start / end point calculated using an

electronic mapping source; print directions and attach to

reimbursement request)

 Actual amount expended on lodging per day (include hotel folio)

 Actual amount expended on meals per day (include itemized

receipts; not to exceed the maximum allowable of $25/day;

(tips and gratuities not allowable by TEA and will be charged to the

appropriate departments fundraising account)

 Actual amount expended on public transportation (taxis, buses,

shuttles, etc.)

 Actual amount expended on a rental car, with receipt attached

(mileage is not reimbursed for a rental car – only the cost of gas is

reimbursed)

 Actual amount expended on incidentals (copying of materials,

supplies, etc.)

2.8 Meals will not be reimbursed for travel within the city or town in which an

employee’s place of employment is located. For example, if an employee’s

place of employment is in Houston and is attending a conference in Houston,

meals will not be reimbursed for attending the conference.

Please note that alcoholic beverages are not an allowable reimbursement

under any circumstances.

2.9 Employees requesting advances for airfare and lodging should submit the

following to the Accounts Payable department at least 3 business days prior to

due date:

 Check request with proper approvals and general ledger

account coding.

 Supporting documentation (pre-approval of travel, hotel /

airfare reservation, purpose of trip, copy of agenda, etc.)

 Original receipts and any unused funds must be returned to the

Accounts Payable Department upon returning to work from the

trip.

2.10 Employees may not drive program vehicles without prior approval of their

supervisor.

2.11 For all other jobs, driving is considered only an incidental function of the

position.

3.0 Procedure

3.1 All employee reimbursements are to be processed through Accounts Payable

twice a week on Tuesdays and Thursdays

3.2 Accounts Payable will review travel documentation, verify coding/amounts

and authorization signatures for all approved reimbursement requests

submitted to Accounting. After all signatures, payment amount and coding

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 56 of 80

have been reviewed and verified, the reimbursement request will be

processed into the Account Payable system and processed for payment.

3.3 If Accounts Payable makes any corrections to the reimbursement request, the

amount of additions and/or deductions (and the reason(s) for same) will be

communicated via e-mail to the employee.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 57 of 80

Title: PAYROLL PROCESSING

Policy: Payroll is processed ensuring accuracy, validity of transactions and proper

internal control procedures are maintained to ensure that disbursements are

for valid services performed.

Purpose: To outline the steps for payroll processing activities.

Scope: This procedure applies to all Accounting and Human Resources personnel

involved with payroll processing.

Procedure:

1.0 PERSONNEL RECORDS, MANAGEMENT AND CHANGES

1.1 Personnel records for hiring, classification, benefits, rate changes, and

termination are performed by Human Resources Department. Payroll

processing is performed in conjunction with the following related procedures

performed by the Human Resources and approved by department managers

and the CEO/CFO.

 Employee Hiring and New Employee Orientation

 Job Descriptions

 Payroll Funding Source or Allocation

 Paid and Unpaid Time Off

 Pay and Payroll Matters

 Performance Appraisals and Salary Adjustments

 Disciplinary actions

 Resignations and Terminations

2.0 PAYROLL PROCESSING

2.1 Payroll processes paper/electronic timesheets approved by managers.

2.2 Once paper/electronic timesheets are approved, the Payroll specialist reviews

for completeness and approvals by department managers then performs

calculations for payroll salaries and payroll deductions. The Payroll Specialist

then transfers data in the Payroll system and prepares payroll reports and

present along with supporting documentation to the Human Resources Staff

and the Controller for review and approval.

2.3 Once the summary has been approved, the Payroll Specialist processes

payroll disbursements and transfers data to the Accounting system General

Ledger. Reports are then generated and used as back up to transfer funds by

the financial analyst to the Payroll bank account authorized by the Controller.

Check Register is reviewed by the Human Resources Manager and the

Controller for accuracy and validity before transmitting to bank.

2.4 Direct Deposit is available to employees. Employees wishing to have their

payroll deposited directly into their bank account must sign up for Direct

Deposit with Human Resources. Banking information required includes:

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 58 of 80

Employee’s Name, Bank’s Name and Routing number, and Employee’s Bank

Account number. (Form available in the Intranet)

Direct Deposits are processed following the Payroll Processing Policy. All direct

deposit vouchers must be verified and authorized by Human Resources and

the Controller before transmitting ACH file to bank. A voucher register will be

presented to the Human Resources Staff and the Controller for verification

and validity. The file is initiated and submitted by the Payroll Specialist and

approved and released by the Financial Analyst.

2.5 Positive Pay procedures have been implemented for check writing security

and fraud prevention. Procedures include forwarding to the bank a .csv file

with check numbers, check date, amounts, and payees for the bank to clear

only those checks listed. This file is sent after checks have been signed and

approved by an authorized check signer. The file is initiated by the Payroll

Specialist and uploaded by the Financial Analyst.

2.6 Validated payroll checks are then presented to payroll coordinators for

distribution to staff.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 59 of 80

Title: TIMESHEETS/ELECTRONIC TIMESHEETS

Policy: The organization’s employees maintain daily records and timesheets to reflect

an after-the fact documentation of time spend on each program.

Procedure:

1. Semi-monthly Time Allocation Sheet are maintained by all staff, both

professional and non-professional, who spent time working for more than one

funding source, i.e., prevention, intervention, city, state, etc.

2. It is the employee’s responsibility to accurately account for and record time

daily using the identified method for each program. This applies whether

using a time clock, hand written records, or any other type of time recording

device.

3. Holiday, vacation, sick, and compensation days should be accounted for only

in its perspective column and will be proportionally charged to the appropriate

cost center(s).

4. The Time allocation sheet is submitted to the immediate supervisor for

verification and approval.

5. Employee’s time allocations are maintained until her/his supervisor makes

allocation changes to meet program’s needs and budgetary requirements.

When a supervisor makes allocation changes for an employee’s salary, a

Personnel Activity Form must be completed and provided to Human Resources

Department for approval. After Human Resources approves this change, a

copy of that PAF is provided to Payroll department for processing and data

changes in the system.

6. Employee’s Paper Timesheet require both the employee’s and supervisor's

signature.

(See Intranet for Timesheet template)

7. Employee’s Electronic Timesheets must be approved by the supervisor before

payroll is processed.

(See Intranet for Payroll Processing dates)

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 60 of 80

Title: Administrative Cost Allocation Procedures

Policy: To establish and document the procedure for allocating administrative salaries

and other costs to the various AAMA programs in a consistent method.

Purpose: To consistently determine the charge to each program for administrative

personnel and other costs related to the various segments of the overall

organization functions.

Scope: These procedures apply to those administrative costs which are affected by

this specific policy.

Procedure:

1.0 PERSONNEL AFFECTED AND OTHER COSTS TO BE ALLOCATED

1.1 Personnel to be charged through the Administrative Cost Allocation include:

A. HHS, GIS, Adelante, Development and Properties Administrative

employees (i.e. Director, Quality Control Manager, Office Manager,

Billing Clerk, etc.)

B. Accounting Personnel (i.e. CFO, Controller, Financial Analyst, Accounts

Receivable Specialist, Accounts Payable Specialist, Payroll Specialist,

etc.)

C. AAMA Administrative Personnel (President/CEO, HR Manager,

Administrative Assistant, etc.)

1.2 Other costs to be charged through the Administrative Cost Allocation include

all non-employee, administrative related costs which are subject to these

Procedures.

1.3 The totals for the groupings noted in Sections 1.1 through 1.2 should be

evaluated periodically for the allocation process.

2.0 METHODOLOGY USED FOR ALLOCATION

2.1

AAMA Cost Allocation Plan

Direct Expenses

A. Salaries

Salaries are allocated to the program which receives the benefit of work

performed.

Compensation charged to federal awards will be made in accordance with

§200.430(c) and §200.413 as applicable.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 61 of 80

The various Program Directors periodically determine direct salary

allocations of personnel to the organization’s various programs. Changes

to such allocations are made on an approved Personnel Allocation Form

(PAF) and are generally based on the approximate time spent by such

personnel on such program.

B. Fringe Benefits

 Fringe Benefits allocated to the program which receives the benefit of

work performed.

 Fringe Benefits charged to federal awards will be made in accordance

with §200.430(c) and §200.413 as applicable.

 Payroll taxes are calculated based on actual applicable rates and are

allocated to program areas using direct salary percentages.

 Remaining fringe benefits (medical, life, etc.) are allocated using the

same basis and methodology as the direct salary percentages method.

C. Supplies

Supplies purchased for the programs are charged to each program

actually benefiting from the activity performed.

D. Travel

All travel expenses are directly charged to the programs using the same

basis as salaries.

E. Equipment

All equipment purchases are directly charged to the program for which the

activity benefits.

F. Copier Costs

Copier costs are directly charged to the program for which it benefits.

G. Telecommunications (telephone, fax, Internet connections)

Telecommunications costs are charged directly to the program to which it

benefits, generally based on the applicable numbers of lines used by each

program.

H. Vehicle Insurance

Vehicle insurance costs are charged directly to the programs based upon

the allocation percentage of the vehicle’s cost to the specific program.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 62 of 80

I. Other Overhead (Liability Insurance, etc.)

 Property and General Liability Insurance premiums are generally

allocated based upon the square footage used by each program or any

other method as may reasonably be determined by the CFO and/or

Controller which will produce an accurate allocation of costs.

 Professional Liability Insurance premiums are allocated based on direct

salary percentages.

 Directors and Officers and Crime Insurance premiums are allocated

using the Administrative Cost Allocation.

 Other insurance policy premiums are allocated to those programs

which will receive benefit of such policies, with the methodology of

such allocations to be determined on a case-by-case basis as is needed

to properly allocate costs.

J. Professional Fees

Professional fees are directly charged to the programs receiving the

benefit of such fees.

K. Food Expense, Uniforms, Extra-curricular Activities

Food, uniforms and expenses for extra-curricular activities are directly

charged to the programs receiving the benefit of such costs.

L. Equipment Maintenance

Equipment maintenance expenses are allocated to each program directly

benefiting from use of the equipment.

M. Consultants

Consultant expenses are charged to the programs which benefit from such

consulting work.

Indirect Expenses

A. Facilities Costs

Facilities costs will be charged as Rental Expenses and will be based on

the following methodology:

 Houston programs will generally be charged rent based on square

footage utilized by the various programs and the type of buildings in

which the programs operate.

 Out-of-City locations will be charged rent based upon third party lease

agreements that cover their operations.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 63 of 80

 Administration’s rent is charged based on revenue percentages among

the major divisions (GIS, Adelante, HHS and Development).

B. Administrative, Accounting & Auditing Expenses

 All administrative, accounting, tax and audit costs will be allocated

based on revenue percentages among the major divisions (GIS,

Adelante, HHS and Development).

 Allocations are generally revised annually. If Program specific grants

or foundation funding changes during the fiscal year, the allocation

may be revised mid-year to better reflect the time administration

spends on management of the specific Programs. An example of the

administration allocation is as follows:

Division

Percentage

(based on

Revenue)

GIS – Houston 60.72%

Adelante 8.04%

HHS 25.08%

General Administrative

(Development) 6.16%

Total 100%

 These costs will be further distributed to the programs based on the total

program revenue for each program where allocations of administrative

costs are allowable by the funding agency.

 These costs will be further distributed to the programs based on the total

program cost for each program where allocations of administrative costs

are allowable by the funding agency.

 In accordance with §200.414 AAMA may elect to charge a de minimis rate

of 10% of modified total direct costs (MTDC) which may be used

indefinitely. As described in §200.403 Factors affecting allowability of

costs, costs must be consistently charged as either indirect or direct costs,

but may not be double charged or inconsistently charged as both. If

chosen, this methodology once elected must be used consistently for all

Federal awards until such time as a non-Federal entity chooses to

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 64 of 80

negotiate for a rate, which the non-Federal entity may apply to do at any

time.

3.0 GENERAL LEDGER REVIEW

3.1 Annually, Financial Analyst performs a review of the allocation of

administrative costs to the programs. If major changes occur during the

fiscal year, the allocation plan will be reviewed and updated.

3.2 The Controller verifies that all adjusting entries are prepared and processed

through the general ledger system.

3.3 The financial statements are reviewed by the Controller / CFO to determine

that the adjustments processed appear proper and reasonable.

3.4 The Financial Analyst compiles the DSHS FSR report and ensures that all

allocations are appropriate and reasonable.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 65 of 80

Title: FIXED ASSET CONTROL

Policy: Proper control procedures are followed for all capital asset acquisitions,

transfers and dispositions in order to provide internal control of capital

equipment and to assist in reporting. Department managers are responsible

and accountable for furniture, equipment, machinery and any other capital

assets in their departments and maintain some type of control over capital

assets. Accounting assists and evaluates any department's capital asset

control procedures.

Purpose: To outline the procedures for acquiring, disposing and maintaining control of

capital assets. To comply with published federal (2 CFR Part 225, OMB A-87)

and state (TEA Resource Guide Section 1.2.4.1 and 1.2.4.2) guidelines for

capitalization of equipment purchases of $5,000 cost per unit or more and a

useful life of more than one year.

Scope: This procedure applies to all capital equipment with a value of $5,000 or more

and with a useful life greater than one year. This procedure also applies to IT

purchases of of $5,000 cost per unit or more and a useful life of more than

one year.

Procedure:

1.0 ACQUISITIONS

1.1 Purchases of assets require the approval of the President & CEO, except for

those purchases costing less than $3,000 and acquired by the GIS School

Superintendent or Director of Health and Human Services.

Department managers may source the vendor for purchase of the capital

assets.

1.2 Any internally constructed or donated equipment will be reported to

accounting if the item cost or has a value of $1,000or more. A complete

description of the property, date manufactured or received, number of items,

cost or estimated value and a statement whether it was internally constructed

or donated will be included in the report.

1.3 To maintain proper segregation and control upon termination of any

employees, any employee owned tools, equipment or furniture brought on the

organization’s premises will be reported to the department manager. The

report should include the employee's name, description of items, identification

numbers if any and reason for using the asset.

2.0 DISPOSITIONS

2.1 Capital assets may be sold or traded-in on new equipment. An Asset

Disposition form (Attachment 1) is to be completed and approved by the

department manager. Any assets with an original value greater than $5,000

and previously capitalized will also require the CEO’s approval.

Upon approval, the department may advertise the property for sale or submit

a list of items to Accounting for sale and disposition.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 66 of 80

After completion of the sale, the Asset Disposition form will be submitted to

Accounting. Accounting will delete the item from the asset records and record

any gain or loss on the disposition.

2.2 Worn-out or obsolete property with no cash value will be reported to

Accounting on the Asset Disposition form with the description, serial number

and condition. The asset will then be removed from the asset records.

2.3 Any asset that is missing or has been stolen will be reported in writing to the

department manager and Accounting as soon as possible. The description,

serial number, and other information about the lost item should be included in

the report.

Accounting along with the President/CEO will determine the proper course of

action and will notify the organization's insurance carrier and any outside

authorities if deemed appropriate. If not recovered, the asset will then be

removed from the asset records.

2.4 Interdepartmental transfers of assets will be reported to Accounting in writing

including the description, serial number and the name of the department to

receive the property.

The department manager to whom the item was assigned originally will be

held accountable until accounting is notified of the transfer. After being

notified, the department manager acquiring the property assumes

responsibility. Accounting will then record the departmental transfer on the

asset records.

3.0 ASSET RECORDS

3.1 Upon any asset acquisition, the department manager is responsible for

assigning and attaching asset number tags to the property where it can be

readily located.

Accounting will then maintain a detailed listing of each capital asset item

along with depreciation records which will include the description, date

acquired, vendor, cost basis, assigned department, depreciation method/life

and accumulated depreciation and net book value.

3.2 On an annual basis, accounting will furnish each department a report showing

a listing of assets assigned to that department and any acquisitions, disposals

and transfers during the past year. Any discrepancies noted by the

department should notify the Accounting Department as soon as possible.

This report should be filed by the department manager for reference and later

use.

3.3 Each department will be responsible for locating assets with its number tag

attached that are recorded as assigned to their department whenever

requested by Accounting, a county property tax auditor or the organization’s

external auditors.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 67 of 80

3.4 Whenever a change in department manager occurs, all items should be

accounted for by the outgoing department manager. The incoming

department manager will accept the responsibility and accountability for the

departmental asset listing upon assuming the position. Accounting can assist

with this audit if requested.

(Attachment 1 - Asset Disposition Form)

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 68 of 80

Title: CAPITALIZATION & DEPRECIATION OF FIXED ASSETS

Policy: Asset acquisitions with a useful life expectancy of more than one year and

with a $5,000 cost per unit or more will be capitalized by the organization and

depreciated.

Purpose: The purpose of this procedure is to delineate the capitalization and

depreciation methods for various asset groups; as well as to comply with

published federal (2 CFR Part 225, OMB A-87) and state (TEA Resource Guide

Section 1.2.4.1 and 1.2.4.2) guidelines for capitalization of equipment

purchases of $5,000 per unit or more and a useful life of more than one year.

Scope: All acquisitions of capital assets for the organization.

Definitions: Capitalization - Capitalization is the process of recording the purchase of a

fixed asset that is generally recorded individually on an asset schedule.

Examples of capital expenditures are purchases of land, buildings, machinery,

office equipment, leasehold improvements and vehicles.

Depreciation - Depreciation represents the write-down or write-off of the cost

of the asset over its estimated useful life.

Procedure:

1.0 CAPITALIZATION

1.1 All assets with a useful life of more than one year and costing $5,000 per unit

or more will be capitalized and will be recorded in the depreciation records.

Any asset that does not meet the above criteria will be expensed such as

small tools and equipment or repairs and maintenance.

1.2 The cost basis of furniture and equipment assets will include all charges

relating to the purchase of the asset including the purchase price, freight

charges and installation, if applicable.

1.3 Leasehold improvements including painting are to be capitalized if they relate

to the occupancy of a new office or a major renovation of an existing office.

Expenditures incurred in connection with maintaining an existing facility in

good working order should be expensed as a repair.

1.4 The cost of buildings should include all expenditures related directly to their

acquisition or construction. These costs include materials, labor and overhead

incurred during construction and fees, such as attorney's and architect's and

building permits.

2.0 DEPRECIATION

2.1 In general, the depreciation method/life for assets should be selected for

consistent financial reporting and tax purposes.

The following depreciation method and useful life should be used for the

following asset classifications for financial reporting purposes:

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 69 of 80

Asset Class

Useful Life Method

Vehicles 3 years Straight Line

Office Equipment and

Computers / Software

3 years Straight Line

Furniture and Machinery 7 years Straight Line

Leasehold Improvements

Remaining life of Lease term

including option renewals

Straight Line

Buildings 30 years Straight Line

2.2 The lowest life permitted by tax regulations for asset classes should be

selected to optimize depreciation deductions.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 70 of 80

Title: PREPAID EXPENSES

Policy: Procedures are followed to ensure that prepaid expense amounts are properly

identified and recorded in the general ledger.

Purpose: To outline the steps for recording prepaid expenses and ensure recording of

expense in the proper period.

Procedure:

1.0 IDENTIFICATION OF PREPAID EXPENSES

1.1 Prepaid expenses represent amounts that have been paid but the related

service or benefit due the organization has not yet been received. Types of

these expenses may include:

 Deposits

 Insurance Premiums

 Lease Payments

 Rent

2.0 RECORDING OF PREPAID EXPENSES

2.1 The Financial Analyst is responsible for identifying and preparing records of

prepaid expense amounts. After properly identifying prepaid amounts, the

Financial Analyst determines the portion of the amount paid that is prepaid.

For example, if the organization pays twelve months of insurance premiums

in advance, the amount recorded as prepaid after the first month would be

eleven/twelveths of the total premium.

2.2 Prepaid expense amounts are properly recorded in the ledger. Information

includes the description of the type of service or benefit, vendor, benefit

period, amount paid, amortization amount and any other pertinent

information. The prepaid expense amounts is then properly coded and

recorded in the general ledger via a journal entry.

2.3 The Financial Analyst also reviews schedules of existing prepaid expense

amounts monthly for any changes that may alter the amortization or recorded

amounts.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 71 of 80

Title: LONG TERM DEBT

Policy: The accounting department works in conjunction with the Board of Directors

and the President/CEO in securing new debt on behalf of the organization.

Further, procedures are implemented to ensure that the debt transactions are

properly recorded paid and that the terms of debt agreements are kept in

compliance.

Purpose: To describe the steps for authorizing, recording and handling of long term

debt transactions.

Scope: This procedure applies to the handling of all long term debt including notes

payable, lease transactions or other financing arrangements.

Procedure:

1.0 AUTHORIZATION AND REVIEW OF NEW DEBT

1.1 Before new transactions are completed, the CFO/Controller ensures that the

following authorization procedures are implemented.

 Review of terms: The terms of the agreement (e.g. interest rates,

penalties, payback periods, etc.) are reviewed for reasonableness and

the ability of the organization to comply with these terms.

 All debt covenants and collateral agreements are reviewed to ensure

that there not conflicts with existing agreements or operations of the

organization.

 The Board of Directors authorizes the issuance of new debt and

prepares a written resolution indicating their approval.

2.0 RECORDING NEW DEBT

2.1 The issuance of new or amended debt agreements are properly documented

and recorded in the general ledger.

2.2 A detail file is maintained for each debt arrangement. The information may

include:

 Copy of debt agreement and Board of Directors resolution

 Summary of debt covenants

 List of assets used as collateral

3.0 DEBT SUMMARIES AND TRANSACTIONS

3.1 A detailed summary of current and long-term debt including acquisitions of

debt, repayments, current balances due along with accrued interest and

interest expense is prepared. This summary is used to reconcile debt

balances, accrued interest and interest expense with the general ledger.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 72 of 80

3.2 Interest accruals are computed on long-term debt according to the terms of

the agreement and are recorded on a monthly basis.

3.3 Debt payments made by the organization are recorded to ensure that

payments are properly allocated to interest and principal amounts. These

amounts are then used to record to the appropriate general ledger account.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 73 of 80

Title: RELEASE OF FINANCIAL OR CONFIDENTIAL INFORMATION

Policy: The releases of financial, statistical or other information that may be of a

confidential nature to the organization are controlled and every request is

referred to CFO/Controller, Director of Human Resources or President/CEO.

Purpose: To provide a means for the control of information to banks, investors,

investment houses, media, credit bureaus, or other agencies and

organizations.

Scope: Any requests by an organization or individual regarding the organization’s

financial, employee or client information.

Procedure:

1.0 WRITTEN REQUESTS

1.1 Typical requests are for additional information concerning details of the

published financial statements, insurance coverage, names of donors, etc.

If the request is by letter or other written correspondence, the material is

forwarded to the Controller, CFO or President/CEO who will decide what

information may be released or routed to the appropriate person who is

authorized to reply.

2.0 TELEPHONE/PERSONAL REQUESTS

2.1 If the request is by telephone or a personal visit to our office, the requester is

referred to the CFO/Controller or President/CEO. If either one is unavailable,

the requester is asked to provide their name, company, telephone number

and address, if possible. Also they are asked the reason for the request and a

brief description of the information desired. This information is written down

and forwarded to the CFO/Controller for follow-up.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 74 of 80

Title: PROPERTY TAX ASSESSMENTS

Policy: All property tax assessments are reviewed for accuracy and proper assessed

valuations to ensure minimum property tax costs to the organization.

Purpose: To outline the areas for review in assessments and methods for appealing

overstated assessments. AAMA is currently exempt under section 501 (c) (3)

of the Internal Revenue Code.

Scope: This statement applies to the Accounting Department for property tax

assessments for all sites owned by the organization.

Procedures:

1.0 REVIEW OF ASSESSMENTS

1.1 All assessments are to be promptly reviewed. Many jurisdictions only allow a

challenge to an assessment within 30 days after the annual notice of assessed

value is sent. If the Accounting Department misses the deadline, the

organization loses the chance to reduce the year's property taxes. There are

normally no refunds for prior years' property taxes.

1.2 When reviewing an assessment, the first step is to find out how the property

was assessed. Ask for a full explanation of how the assessed value was

derived. 1.3 Upon receipt of the basis for assessment, the following factors

are reviewed:

 Research Similar Properties: Tax assessments are part of the public

record. Assessments of similar properties to the organization's should

be looked up to see that the organization's assessment is in line. The

objective is to find assessed values for similar properties that are far

lower than the organization's. Review Property Descriptions and

Accuracy of Records: Review records for possible clerical errors.

Ensure that property descriptions are correct and the building size

(total square footage) is not overstated. Ensure that all dates are

correct and that all calculations are properly computed.

 Deflate Property Valuations: Tax assessors generally value property on

the basis of historical cost and the recent sales prices of other

properties in the area. When figuring local property taxes, numbers

reported on the federal tax return are used. Depreciable assets are

valued at cost on the federal return when figuring depreciation

deductions.Instead of performing actual physical inspections or

assessments of properties every year, local assessors use "equalization

ratios" to adjust the annual assessment. The equalization ratio is a

type of an inflation adjustment meant to reflect the current general

trend in property values. However, the current trend in property

values may not apply to the organization's property.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 75 of 80

1.4 If the organization can provide solid reasons for using different measures to

value property, it may be able to receive a reduction in property taxes.

Possible valuation methods can include:

 Income Production: Measure the current value of the cash flow stream

generated by the property which may be substantially lowered during

a recession.

 Replacement or Reproduction Cost: How much it would cost to replace

or reproduce the property should be determined. For example, if the

construction industry is in a downturn, the cost to replace the property

may be less than what the organization paid for the property.

 Also the organization should evaluate if it incurred any construction

cost overruns due to bad weather, labor disturbances, material

shortages, etc., that may have increased the cost of a new building

without adding to its value. Decorative features may also add much

less value than their actual cost.

 Market Prices: The actual recent sales of similar properties may show

that the organization's property is over-assessed.

Unique Features or Business Obsolescence: Changes to the characteristics of

the property or features specific to the organization's business may reduce its

value.

2.0 APPEALING OF ASSESSMENTS

2.1 If upon review of the assessment and all other factors, the Accounting

Department and the President/CEO believe a downward adjustment to the

property assessment is appropriate, an appeal is prepared. Experience has

shown that if an organization presents a sound argument for challenging an

assessment, the organization has an excellent chance of receiving some type

of tax reducing adjustment even if it is less than the organization had

requested.

2.2 The appeal case includes documentation of the above findings. It is important

to keep in mind that the property tax assessor may not be familiar with the

details of the organization's business or industry, so the organization must

prepare to explain how such factors may affect a property's value.

2.3 Once a sound case is prepared, an appeal can be sought by simply calling the

local assessor's office and asking for an appointment to discuss the

assessment. The meeting with the local assessor will generally be informal. It

is important to not be adversarial with the assessor but to present the

attitude that the organization is helping the assessor to reach a more

accurate valuation for the property by presenting additional information.

2.4 If the organization does not receive any or a large enough adjustment, an

appeal may be made with the local Board of Appeals. These meetings will

probably be more formal and the organization may wish to provide expert

testimony or obtain an independent appraisal of the property to present to

the Board of Appeals.

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 76 of 80

More assistance with property tax problems may be obtained by contacting

the:

Institute of Property Taxation

888 17th St. NW

Washington, DC 20006

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 77 of 80

Title: RECORDS SECURITY AND RETENTION

Policy: The organization protects: Client/student records, financial records, bank

statements, payroll records and other client identifying information from loss,

tampering, and unauthorized access or disclosure and required retention

timeframes. In accordance with EDGAR §200.333

Procedure:

1. When records are computerized, the facility protects the files from unauthorized or

accidental access by issuing User ID’s and Passwords to authorized users only.

These computerized records have a daily backup system in place.

2. The organization has a tracking system and an assigned person to ensure that

records are returned to the centralized file system at the end of the day.

3. An authorized person is continuously present in the immediate area.

4. Client records and all financial records are retained at least seven years plus current

fiscal year.

5. Records of adolescent clients are kept for at least five years until the client turns 18.

6. If records are scanned, or destroyed, the facility takes steps to protect

confidentiality.

7. Financial and client records remain in the "active" files system until the Independent

Auditors have completed the required Annual Audit for the previous year(s).

8. Thereafter, financial and client/student records are placed in the storage offices

under lock and key. Only the HHS Division Regional Office Manager, GIS PEIMS

coordinator, Human Resources and the Controller and/or their designees have keys

to this area.

9. In accordance with §200.335 AAMA will store Federal award-related information

whenever practical in open and machine readable formats.

10. In accordance with §200.336 AAMA shall provide documents, papers, or other

records to the appropriate authority

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 78 of 80

Title: NEPOTISM/CONFLICT OF INTEREST

Policy: The Association for the Advancement of Mexican Americans (AAMA, Inc.)

Board of Directors, in fairness to the community, other providers, and

contractors adopts a policy that prohibits nepotism. Adherence to this policy is

documented by a written attestation of all members of the AAMA Board of

Directors.

Procedure:

1. Procedurally "nepotism" shall be defined as: activities which constitute or present the

appearance of personal or organizational conflict of interest, which might result in

unusual gain (either actual or potential) for Board of Director members or their

relatives, (by blood, marriage or whose relationship with the board member is similar

to that of persons who are related by blood or marriage), or for firms related to any

of the above mentioned persons.

2. Documentation is recorded on the Annual Governance Form which shall remain on

file at the AAMA Corporate Office, 6001 Gulf Freeway, Houston, TX 77023.

Responsible Staff: All Board Members and Officers

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 79 of 80

AAMA

BOARD OF DIRECTORS

CONFLICT OF INTEREST STATEMENT

I, the undersigned, as a Director of the Board of Directors of AAMA, agree to the following:

(1) I recognize that a conflict of interest as referred to in the AAMA Bylaws, shall

include but shall not be limited to, any transaction by or with the Corporation in

which a Director has a direct or indirect personal interest, or any transaction in which

a Director is unable to exercise impartial judgment or otherwise act in the best

interests of the Corporation. (Article IV, Section 15, (a))

(2) I agree that as a Director I will not cast a vote, or take part in the final deliberation in

any matter in which I, members of my immediate family, or any organization to

which I have allegiance, has a personal interest that may be seen as competing with

the interest of the Corporation. (Article IV, Section 15, (b))

(2) I understand that the Corporation may not make any loan to a director, officer or

committee member and may not borrow money from or otherwise transact business

with a director, officer, or committee member of the Corporation. This section does

not prohibit a director, officer or committee member from providing goods or

services to the Corporation without financial remuneration. (Article VII, Section 2)

(3) I agree that if I believe I may have a conflict of interest as described above, I will

notify the Board prior to deliberation on the matter in question, and the Board shall

make the final determination as to whether any Director has a conflict of interest in

any matter. The minutes of the Board meeting shall reflect disclosure of any conflict

of interest and the recusal of the interested Director. (Article IV, Section 15, (b))

Signature Date

January, 2016, As Updated for 2 CFR Part 200 [New EDGAR Standards]) Page 80 of 80

AAMA, Inc.

Asset Disposition Form

Attachment (1)

Date:_______________________________

Requested By:________________________

Department:__________________________

Reasons for

Disposition:________________________________________________________________

_________________________________________________________________________

Description

Serial

Number

Date

Purchased

Original

Cost

Net Book

Value

Expected

or Actual

Proceeds

Gain or

Loss

Department Manager:____________________________ Date:_________________

Controller:_____________________________________ Date:_________________