CHCS Finance Policy

Budgeting Policy

Budget Process and Implementation

The Governing Board of The Chattahoochee Hills Charter School shall approve an annual operating budget for each fiscal year that will project income and expenses and will provide for programs and support services. The board will approve the annual budget prior to the start of the school year. The board authorizes the Principal to manage CHCS in accordance with the approved annual operating budget. Programmatic or operational changes that may have a significant impact on the annual budget shall be reviewed by the board between budget cycles and may lead to a budget revision.

Financial Planning

Budgeting for any fiscal period shall not deviate materially from the mission, goals, and strategies; risk fiscal jeopardy; nor fail to show a generally acceptable level of foresight. Accordingly, the Principal shall develop a budget that: * Contains enough detail to enable accurate projection of revenues and expenses, separation of capital and operational items, cash flow and subsequent audit trails, and disclosure of planning assumptions * Plans the expenditure in any fiscal year of no more funds than are available or conservatively projected to be received in that period * Maintains current assets (cash, accounts receivable, prepaid expenses, etc.) at any time to no less than 100 percent of current liabilities (accounts payable, debt due in 12 months, etc.) * Does not deviate materially from board-stated priorities and board-approved budgets (except for grant revenues received during a fiscal year and their related expenditures) without seeking board approval

Budget Objectives

The budget process is designed to provide: • A means by which spending limits are set based on expected revenue levels • A means for setting program priorities and allocating resources to those priorities • A means for comparison of actual financial results to budgeted amounts and analysis of differences from those budgeted amounts

Preparation of Budget

Prior to the end of the school year, the Principal and the Finance Committee shall review the financial activity for the prior fiscal year, including actual results of operations, mission of the organization, goals, short-term plans, and any other relevant information deemed appropriate.

Approval of Budget

After preparation of the budget for the next school/fiscal year, copies of the budget and any material proposals to reduce or increase costs shall be sent to all board members. No later than the regularly scheduled June board meeting, or the board meeting closest to the end of the fiscal year, the board shall meet to discuss and approve or reject the budget. If the budget is rejected, the board shall direct the Principal and Board Treasurer to amend the budget for changes as directed by the board.

Review of Budget

Once the budget has been set for the school/fiscal year, the budget shall be included in the school accounting system. As monthly financial statements are prepared, a comparison of actual monthly and year to date results of operations to budget figures shall also be prepared. The financial statements and budget variances (with detailed explanations for material variances) shall be reviewed by the Finance Committee and distributed to the board. When deemed necessary, the board shall revise the budget to fund additional services or make allowances for other unbudgeted revenues or expenses.

Adjustments to the Budget

During the course of the school year, the school may be faced with unbudgeted or unexpected costs, or may need to reallocate funding between program areas. The Principal and the Finance Committee shall prepare a request for allocation from the board that either allocates funds from annual surplus or reserves, or shifts funding between programming areas. This request shall be presented to the board for approval or rejection. If the request is rejected, the board shall direct the Principal and Board Treasurer to amend the request for changes as directed by the board. At no time may these adjustments allocate restricted funds towards costs that violate the terms of their grant.   ## Procurement Policy

Budget

Anticipated expenditures shall be included in the normal budgetary process, and when necessary, as part of the budget. The annual budget shall include purchase requests for all new and replacement capital assets.

Purchasing

Any equipment or services with an estimated value of $2000 or more shall be purchased through competitive bidding or comparative pricing by at least three vendors whenever possible. Comparative pricing or competitive bidding should also be used periodically for regularly purchased materials, supplies, services, and insurance.

Purchasing Process

Competitive bids should be solicited through a simple RFP process. Prior to issuing any RFP, that RFP should be authorized by the Finance committee and reconciled with the school budget. A rough estimate of the intended cost should be documented and agreed upon and calculated by the treasurer and principal prior to issuance of an RFP. That RFP process should include the basic specifications of the item or service to be required, and may be as simple as an email with a bulleted list of one-sentence requirements, sent to a minimum three vendors with a specific deadline. If the estimated contract value exceeds $5,000 annually, the contract should also be posted to the CHCS website. The principal should use sound judgment in selecting the winner of the bidding process, and should not default to lowest cost. Other factors to include in the selection of a vendor should be: 1. Local preference: businesses that are located within the Palmetto and Chattahoochee Hills area should be given a preference. Should the bids fall within a 10% range of one another, and no other determining factor is in question, the purchase should go to the local vendor. 2. Strategic interest of the school: businesses that are deemed to have the potential to provide additional, long-term value to the school’s fun operate should be given a preference. 3. Vendors with a strong-track record of delivering successful projects for the school shall be given a preference over vendors who have not worked with the school before. 4. Vendors with no track record of the school shall be given a preference over vendors with a weak track-record of delivering successful projects for the school. All contracts of greater than $100 are required to have payment terms of no less than Net 30.

Authority

The Principal shall have the authority to make purchases of goods and services that are part of the approved annual budget without additional approval from the board. This does not alleviate the Principal from the obligation of following appropriate financial controls. If establishing a new contract for services, the Principal shall seek approval before executing any contracts:

  • If the contract value is $10,000 or less, and there are no conflicts of interest with any board member with any of the vendors who have bid on the project the Finance Committee can provide approval.
  • The Governing Board must approve any contracts over $10,000.
  • All vendors relating to curriculum: substitute teachers, Early Morning and Afternoon Program curriculum expenses, supplies and materials must have approval by the full board.

Property

Purchase or sale of any long-term assets must be approved by the board. A fixed-asset inventory of office equipment, computers, and printers will be maintained by the Principal or designee.

##Financial Reporting Policy

Financial Audit

Purpose

The Chattahoochee Hills Charter School is required, under statute, to have an annual audit of its financial statements conducted. The purpose of this policy is to: * Establish the process by which the school contracts for these audit services for a fixed term * Ensure that the services provided by the external auditors are relevant to the information and fiduciary needs of the board * Ensure that the school is receiving value for money in the delivery of audit services * Ensure the independence of the auditors is maintained at the highest level, both in appearance and fact

Scope

This policy shall apply to all matters relating to the financial and accounting affairs of the school, and to any services provided by the auditors.

Policy

The agreement for the provision of audit services is between the Chattahoochee Hills Charter School board and the selected audit firm. The board will decide on the firm to be selected, with recommendations from the Finance Committee. * An audit will be conducted annually and will include such matters as are standard as well as addressing other specific issues as requested by the board. * The selection of an audit firm will be based on the fees quoted, the firm’s experience with schools, nonprofit organizations, and the ability of the firm to address any issues identified by the board. * The recommendation with respect to the selection of an audit firm will be made by the Finance Committee for approval by the board. * The appointment of auditors will be confirmed annually by the board. * The school’s auditors should not normally be engaged to perform any non–audit services unless an extraordinary circumstance exists, i.e., where a specific expertise is required that is not reasonably obtained from another vendor. In addition, the auditors shall not perform any substantial services for any board member or the Principal. * The Finance Committee shall review all non-audit services to be provided to the school by its independent auditor. With pre-approval of the Finance Committee, the independent auditor may be engaged to perform non–audit services. The organization may not engage the independent auditor to perform the following non-audit services: * Bookkeeping or other services related to the accounting records or financial statements of the school * Financial information systems design and implementation * Appraisal or valuation services * Actuarial services * Internal audit outsourcing services * Management functions or human resources * Broker or dealer, investment advisor, or investment banking services * Legal services and expert services unrelated to the audit * Any other service that the American Institute of Certified Public Accountants determines is inconsistent with the auditor’s independence

The Board Treasurer is authorized to pre-approve any audit-related or other non-audit services between Finance Committee meetings. Such interim pre-approvals shall be reviewed with the full committee at its next meeting for its ratification.

Monitoring

The Finance Committee will review this policy annually, and report on its review to the board including any recommendations for changes to the policy.

Procedures

While the Principal of the Chattahoochee Hills Charter School is involved in the selection process and is responsible for the management of the audit, the approval of an audit firm is the responsibility of the board. * When deemed prudent, the Principal will issue a Request for Proposal (RFP) from selected firms with substantial experience auditing nonprofit organizations for the provision of audit services. The RFP will include requests for information on services related to specific issues that the board wishes to address in the course of the audit. * The RFP for provision of audit services will be issued to a minimum of three (3) firms eligible to provide audit services in the State of Georgia. * The Principal, in consultation with the Board Treasurer and Finance Committee on behalf of the board, will select the audit firms to be included in the RFP. * All proposals to engage the independent auditor to perform non-audit services shall be presented to, and approved by, the Principal and Board Treasurer before the proposal is submitted to the Finance Committee for its approval. * Each non-audit service that is reviewed by the Finance Committee shall be reflected in a written engagement letter or writing specifying the services to be performed and the cost of such services.

In the event that the Fulton County School system undergoes a competitive selection process for an independent auditor, the Principal and Board Treasurer can recommend, and the board can approve, the use of an independent auditor sourced by Fulton County instead of undertaking its own auditor selection process.

Schedule

The Chattahoochee Hills Charter School shall prepare its annual audit report and submit it to the Fulton County School System by September 30. The Finance Committee shall review the report and provide recommendation to the board, based on the auditor’s analysis. The board shall review the audit and recommendations and shall ratify both items at its regularly scheduled September board meeting, or another suitable meeting such that the audit shall be provided to Fulton County on schedule.

IRS Form 990 and 990-T

The Principal shall ensure that tax payments and other government-ordered payments or filings are filed in a timely and accurate manner. The Board Treasurer shall sign and certify that the IRS Form 990 is accurate and complete. The Finance Committee shall review and approve the IRS Form 990 annual tax filing prior to submission. Consistent with the requirements of §6104(d) of the Internal Revenue Code and the regulations there under, copies of the organization’s Form 990 shall be made available, upon request, in a timely manner, and to any individuals who request it.

Board Checklist for IRS Form 990

The board shall ensure that the following steps toward public disclosure of the Chattahoochee Hills Charter School’s financial status take place: 1. Distribute, to the full board, a copy of the Form 990 in advance of filing for review and consideration. 2. File accurate, complete, timely, and in compliance with regulatory requirements Form 990 by November 15, based on fiscal year ending June 30, without extension, each year. 3. File accurate, complete, timely, and in compliance with regulatory requirements Form 990-T (Unrelated Business Income Tax) by November 15, based on fiscal year ending June 30, without extension, each year if applicable.

Financial Reporting

Standard Financial Statements of the Organization

The basic financial statements of Chattahoochee Hills Charter School shall include: * Balance Sheet * Income Statement * Budget versus Actual Report * Bank Account Balance

Frequency of Preparation

The Principal shall ensure a standard set of financial statements described in the preceding section are produced on a monthly basis, by the 15th of each month.

Review and Distribution

All financial statements and supporting schedules shall be reviewed and approved by the Finance Committee.   ## Financial Controls Policy ### General Authorization

  1. Authorization for signatures necessary on contracts, checks, and orders for payment, receipt or deposit or withdrawal of money, and access to securities of the Chattahoochee Hills Charter School shall be provided by resolution of the board.
  2. Any individual authorized to purchase goods and/or services for the organization shall follow the procedures set forth in these policies.
  3. The Principal shall be responsible for reviewing and recommending an annual budget to the board for approval.
  4. The board shall be responsible for adopting the annual budget.
  5. No expense shall be incurred in excess of the total budgetary appropriations without prior approval of the board.

Check-Signing Authority

  1. The Director of Operations, the Board Chair, and the Board Treasurer are authorized to sign checks.
  2. All checks require two signatures.
  3. Any checks payable to an authorized check signer shall be signed by someone other than the payee. ### Disbursements

1. Receipt and Records - Responsibility: Operations Manager

The Operations Manager shall maintain any contracts and invoices. They shall be marked with the date received, scanned, and entered as a new bill in the Chattahoochee Hills Charter School accounting software. An electronic copy of any contracts and invoices shall be included with the vendor’s record in the software, and with the invoice. #### 2. Approval - Responsibility: Principal The Principal shall review the invoice for appropriateness and approval, through the accounting software. Approval must only be given for actual vendor invoices; vendor “statements” or similar cannot be used for approval and payment. #### 3. Payment - Responsibility: Governing Board (Check Signers) The Director of Operations shall generate a check for all approved invoices, with record of the check number made in the accounting software. The check signers will review the approved invoice, verify amounts, and sign the check. #### 4. Reconciliation - Responsibility: Director of Operations The Director of Operations shall reconcile all bank statements against checks. This should occur at least monthly. With electronic banking, reconciliation more frequently is desired to maintain an accurate financial reports for the board. #### Review - Responsibility: Board Treasurer The Director of Operations will prepare monthly financial statements and a reconciliation report and provide it monthly to the CHCS Treasurer, by the 15th of the following month. It is the responsibility of the Treasurer to work with staff to address any errors and omissions and provide a report to the Finance Committee of any material issues that impact the financial health of the school. The Board Treasurer will also present the financial statements to the Governing Board at the monthly board meeting.

Accounts

The school shall maintain its accounts in financial institutions that are federally insured. All funds received by the school shall be deposited weekly. All nonproductive funds shall be invested in accordance with the investment policy established by the board.

Bonding

Each officer or designated signatory with authority to withdraw funds shall be bonded. The cost associated to secure the aforementioned coverage shall be that of the school. The amount of insurance coverage will be reviewed annually by the Finance Committee.

Borrowing of Funds

If it should ever become necessary for the school to borrow funds from outside sources to fund operations and expansion because of the irregularity of income from the System and/or State, donations, or due to major expansions or revisions of the school’s programs, such funds are to be borrowed only as required to meet these needs, and borrowing is to be consistent with sound fiscal and management practices. Borrowings are not intended to make up for inadequate planning or spending above budgeted levels. Borrowing funds should be done within the following guidelines: 1. Borrowing should be within appropriate limits approved by the board prior to the time of borrowing. 2. Amounts should be borrowed at the lowest available interest rates. Where borrowing from individuals can be done at lower than current commercial rates, this may be done. 3. Most borrowing will be done at short-term conditions due to the seasonal nature of income. Long-term borrowing will be done only if rates are favorable and amounts for short-term would be at the same minimum level.

Loans

No loan may be made to any officer, director, or employee of the school, except in accordance with applicable Georgia law. Any such loan may be made only pursuant to a written agreement approved by the board and reviewed and approved by legal counsel. All such loans to an employee shall be repaid through payroll withholding and shall be callable by the organization upon termination of employment. Staff shall ensure that all such loans are properly reported for employment and income tax purposes.

Credit Cards

The board has the authority to approve the establishment of a charge account in the school’s name, including the credit limit. The Principal has the responsibility to establish and enforce written procedures for the use of all open charge accounts and credit cards. The Finance Committee will review all credit card procedures on an annual basis. Employees shall follow the expense reimbursement policy whereby employees submit legitimate business expenses charged to their personal credit cards and the school shall reimburse them within 30 days of receipt. The school shall maintain a limited number of credit cards to facilitate business activities and continuity of operations. No credit cards held in the school’s name may be used for personal expenses.

Violation

Any violation of the financial control policies shall result in disciplinary action. For the Principal and staff, this action is up to and including termination. For Board members, any violation can include their immediate removal.

Allowability

It is the policy of Chattahoochee Hills Charter School to charge expenses to the appropriate category of program service or supporting activity. Expenses that serve multiple functions shall be allocated between functions whenever possible. Restricted funds shall only be budgeted, and distributions made, for expenses and activities allowed by the grantor. The Principal shall monitor all expenditures to ensure that they do not violate the provisions of any restricted funds.

Chart of Accounts and Accounting Standards

Pursuant to Georgia statutes, the Chattahoochee Hills Charter School follows a modified GAAP-based accounting standard, on an accrual basis. Revenues are recognized when received and expenses are recognized when incurred. The school’s chart of accounts shall be the Georgia Department of Education Chart of Accounts. The Chattahoochee Hills Charter School uses Net 45 terms unless favorable discounts are available with quicker payment terms (i.e. “1%/10 Net 45”). The fiscal year for the Chattahoochee Hills Charter School ends June 30.

Prepayments

The Chattahoochee Hills Charter School does not generally pre-pay invoices. It is the goal of the CHCS Board, Administration, and Finance Committee that operating funds remain in their most liquid form.

Cash and Cash Equivalents

Cash and cash equivalents (checks, money orders) must be deposited within two business days of receipt. Receipts must be issued for any cash or cash equivalent received by the school. The Principal, or designee, is the custodian and must secure the funds in a locked storage. The Board Treasurer shall review all receipts and deposit slips to verify the accounting of all deposited funds.   ## Risk Management Policy

The Chattahoochee Hills Charter School is committed to protecting its human, financial, tangible, real estate, and goodwill assets and resources through the practice of effective risk management. The school’s board and management are dedicated to safeguarding the safety and dignity of its paid and volunteer staff, its students, and anyone who has contact with the organization. To this end, the board will ensure that the organization has a risk management plan for the organization that is reviewed and updated on an annual basis.

Asset Protection

The Principal shall adequately protect and maintain from unnecessary risk all school assets. Accordingly, the Principal shall: * Insure against theft and casualty losses of tangible personal property to at least 80 percent replacement value and against liability losses to board members, staff, or the organization itself at no less than minimally acceptable prudent levels * Have sufficient employee dishonesty insurance and directors’ and officers’ liability insurance for personnel with access to material amounts of funds * Ensure office and equipment is not subjected to improper wear and tear or insufficient maintenance * Protect the organization, its board, and staff from exposure leading to claims of liability * Protect intellectual property, information, and files from loss or significant damage * Seek bids or demonstrate other prudent methods for any purchases over $2,000 and protect against conflicts of interest * Receive, process, or disburse funds under financial controls that meet the board-appointed auditor’s (or other grant) standards * Invest or hold operating funds in secure instruments, such as insured checking accounts, CDs, interest-bearing accounts (except when necessary to facilitate ease in operational transactions or where restricted by the funder) * Acquire, encumber, or dispose of real property only with board approval, with the price set on any property to be disposed of following either a formal market appraisal or analysis of comparable properties by at least two reputable realtors in that market * Not endanger the organization’s public image or credibility, particularly in ways that would hinder its accomplishment of mission.

Insurance

The school will purchase necessary policies to insure the organization against risk. Types of insurance to be purchased should include: * Insurance against employee theft and dishonesty * Indemnification * General liability (personal and property damage and punitive damage) * Commercial (for physical assets) * Nonprofit Officers’ and Directors’ Liability (also known as association professional liability) * Workers’ Compensation * Fidelity bond to cover all personnel handling cash and other financial instruments * Additional types of insurance needed to protect the organization must be approved by the board.

Investments, Reserves, and Endowments Policy

### Investments

It is the policy of the board to treat all assets of the Chattahoochee Hills Charter School, including funds that are legally unrestricted, as if held by the school in a fiduciary capacity for the sake of accomplishing its mission and purposes. These assets are held in a federally-insured financial institution. At this time, no further investment activities are undertaken or authorized by the board.

Reserves and Endowments

#### Operating Reserve The financial objective of the Chattahoochee Hills Charter School is to establish a financial reserve to provide for 1 month of operating income. The board needs to authorize any disbursements from this fund. The funds for the reserve fund will come from the surplus from operations, or the net operating excess for each fiscal year. #### Cash Flow Management The school’s designated financial officer will be responsible for managing the school’s cash flow and for communicating anticipated distributions and liquidity requirements in a timely manner to any institutions or investment advisors who are managing investments. #### Endowment Funds

Endowed funds usually require that the principal of the fund remains intact and the income is paid out. The investment objective is the preservation of principal, to allow distribution of income for designated uses. These funds shall be invested in the same manner as board-designated reserves, and paid out according to the terms of the endowment. The Chattahoochee Hills Charter School may establish an unrestricted endowment fund to support the general purposes of the organization. The principal is to be invested in a prudent manner in accordance with the investment policy as prescribed from time to time by the board, and the income (defined as total return income) is to be used to support the organization’s general purposes. The school may allow the creation of named endowments to recognize a donor and his or her wishes. The board, or its designated committee, shall retain the right to dissolve the school’s endowments and use the principal for general purposes or for the restricted purposes contained in each endowment when, in the board’s discretion, the purposes of the endowment can no longer be met or the organization’s needs may so require. The endowment fund shall annually distribute an amount equal to 5% of the fund’s average value as calculated in this paragraph. The distributions shall be made quarterly in an amount equal to 1.25% of the calculated distribution value. The distribution value is the average of the fair market value of the fund as of the close of each of the preceding 4 calendar quarters. The fund’s market value shall be based upon all assets in the fund including principal and retained income, adjusted for all gains and losses, whether realized or unrealized, and determined as of the last business day of the quarter. The distributions shall be made promptly following the close of each quarter. To the extent that it may legally do so, the organization shall interpret this policy as satisfying a gift provision that calls for retaining principal and distributing income.