300 saw pa accounting manual

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Accounting Policies, Procedures and Forms SAWPA

300 Accounting Manual page 1 of 52

Santa Ana Watershed Project

Authority

ACCOUNTING

MANUALJuly 1, 2005

Approved by:______________________________________ Date:____________Chief Financial Officer

2005 Santa Ana Watershed Project Authority


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Accounting Manual

Table of Contents

1.0 Purpose .................................................................................................................9

2.0 Scope ..................................................................................................................112.1 Responsibility ....................................................................................................112.2 Exclusions ..........................................................................................................11

2.2.1 Internal Auditing ................................................................................... 112.2.2 Information Systems ............................................................................. 112.2.3 Security Planning .................................................................................. 112.2.4 Disaster Recovery ................................................................................. 11

3.0 Management Responsibility...............................................................................133.1 Finance Organization .........................................................................................13

3.1.1 Finance Department Organization Chart .............................................. 133.1.2 Chief Financial Officer Responsibilities ............................................... 143.1.3 Controller Responsibilities.................................................................... 153.1.4 Accounting Staff Responsibilities......................................................... 15

3.2 Management Commitment.................................................................................163.3 Management Accounting Policy ........................................................................163.4 Planning .............................................................................................................17

3.4.1 Accounting Objectives .......................................................................... 173.4.2 Accounting System Planning ................................................................ 17

3.5 Responsibility, Authority, and Communication ................................................173.5.1 Responsibility and Authority ................................................................ 173.5.2 Management Representative ................................................................. 173.5.3 Internal Communication ....................................................................... 183.5.4 Referenced Procedures: ........................................................................ 18

3.6 Management Reporting ......................................................................................183.6.1 General .................................................................................................. 183.6.2 Review Input ......................................................................................... 183.6.3 Review Output ...................................................................................... 183.6.4 Referenced Procedures: ........................................................................ 19

3.7 Business Conduct ...............................................................................................19

4.0 Accounting Management System ......................................................................204.1 Objectives ..........................................................................................................204.2 Requirements .....................................................................................................20

4.2.1 Overview ............................................................................................... 204.2.2 Internal Controls ................................................................................... 204.2.3 Audit Findings ...................................................................................... 21


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4.3 Transactions .......................................................................................................214.3.1 Authorization ........................................................................................ 214.3.2 Timing ................................................................................................... 214.3.3 Amounts ................................................................................................ 214.3.4 Accuracy ............................................................................................... 21

4.3.5 Referenced Procedures: ........................................................................ 224.4 Documentation ...................................................................................................224.4.1 Accounting Manual ............................................................................... 224.4.2 Control of Documents ........................................................................... 224.4.3 Control of Records ................................................................................ 234.4.4 Accounting Transactions ...................................................................... 234.4.5 Referenced Procedures: ........................................................................ 23

4.5 Security ..............................................................................................................234.5.1 Physical Security ................................................................................... 234.5.2 Disaster Recovery ................................................................................. 244.5.3 Information Security ............................................................................. 24

4.6 Basis of Accounting ...........................................................................................245.0 Processes and Controls ......................................................................................255.1 General & Administrative ..................................................................................27

5.1.1 Chart of Accounts ................................................................................. 285.1.2 Project Accounting ................................................................................ 285.1.3 Files and Records Management ............................................................ 285.1.4 Employee Travel ................................................................................... 285.1.5 Management and Project Reports ......................................................... 285.1.6 FPPC Reporting .................................................................................... 295.1.7 Period-End Review & Closing.............................................................. 295.1.8 Controlling Legal Costs ........................................................................ 29

5.1.9 Insurance ............................................................................................... 295.1.10 Confidential Information Release ......................................................... 295.1.11 Referenced Procedures: ........................................................................ 29

5.2 Fund Types.........................................................................................................315.2.1 General Funds ....................................................................................... 345.2.2 Special Revenue Funds ......................................................................... 345.2.3 Capital Project Funds ............................................................................ 345.2.4 Planning Project Funds ......................................................................... 345.2.5 Enterprise Funds ................................................................................... 345.2.6 Fiduciary Funds .................................................................................... 345.2.7 Referenced Procedures: ........................................................................ 34

5.3 Cash....................................................................................................................315.3.1 Petty Cash and Postage ......................................................................... 345.3.2 Cash Receipts and Deposits .................................................................. 345.3.3 Problem Checks .................................................................................... 345.3.4 Wire Transfers ...................................................................................... 345.3.5 Check Signing Authority ...................................................................... 345.3.6 Check Requests ..................................................................................... 345.3.7 Bank Account Reconciliations .............................................................. 35


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5.3.8 Referenced Procedures: ........................................................................ 355.4 Finance & Investments ......................................................................................37

5.4.1 Capital ................................................................................................... 385.4.2 Capacity Notes ...................................................................................... 385.4.3 Debt Service .......................................................................................... 38

5.4.4 Fund Balances ....................................................................................... 385.4.5 Reserve Accounts .................................................................................. 385.4.6 Investment Purchases ............................................................................ 385.4.7 Investment Valuation ............................................................................ 385.4.8 Referenced Procedures: ........................................................................ 38

5.5 Fixed Assets .......................................................................................................395.5.1 Fixed Asset Control .............................................................................. 395.5.2 Fixed Asset Capitalization & Depreciation .......................................... 405.5.3 Capital Improvements/Repair & Maintenance ..................................... 405.5.4 Intangible Asset Capitalization & Amortization ................................... 405.5.5 Referenced Procedures: ........................................................................ 40

5.6 Revenue..............................................................................................................415.6.1 Enterprise Operations............................................................................ 425.6.2 Grant Contracts ..................................................................................... 425.6.3 Member and Other Agency Contributions ............................................ 425.6.4 Interest Income ...................................................................................... 425.6.5 Other Revenue Sources ......................................................................... 425.6.6 Invoicing and Accounts Receivable ...................................................... 425.6.7 Account Collections .............................................................................. 425.6.8 Referenced Procedures: ........................................................................ 42

5.7 Procurement .......................................................................................................435.7.1 Vendor Selection ................................................................................... 445.7.2 General Procurement ............................................................................ 445.7.3 Project Procurement .............................................................................. 445.7.4 Receiving and Inspection ...................................................................... 445.7.5 Accounts Payable and Cash Disbursements ......................................... 455.7.6 Referenced Procedures: ........................................................................ 45

5.8 Payroll & Benefits..............................................................................................435.8.1 Timesheet Processing............................................................................ 475.8.2 Payroll Processing ................................................................................. 485.8.3 Employee Set-up ................................................................................... 485.8.4 Benefits ................................................................................................. 485.8.5 Referenced Procedures: ........................................................................ 48

5.9 Budget ................................................................................................................495.9.1 Budget Process ...................................................................................... 505.9.2 Referenced Procedures: ........................................................................ 50

6.0 Resource Management .......................................................................................516.1 Provision of Resources ......................................................................................516.2 Human Resources ..............................................................................................51

6.2.1 Accounting Staff ................................................................................... 516.2.2 Competence, Awareness, and Training ................................................ 51


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6.2.3 Separation and Supervision of Duties ................................................... 526.3 Infrastructure ......................................................................................................526.4 Work Environment.............................................................................................52

Table of Figures

Fig 1. Finance Department Organization

Fig 2. Accounting Management System Processes and Controls

Fig 3. General & Administrative Procedures

Fig 4. Fund Type Procedures

Fig 5. Cash Procedures

Fig 6. Finance & Investment Procedures

Fig 7. Fixed Asset Procedures

Fig 8. Revenue Procedures

Fig 9. Procurement Procedures

Fig 10. Payroll & Benefit Procedures

Fig 11. Budget Process Procedures


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List of Referenced Procedures

Cash

1. CSH101 Petty Cash

2. CSH102 Postage3. CSH103 Cash Receipts and Deposits4. CSH104 Problem Checks5. CSH105 Wire Transfers6. CSH106 Check Signing Authority7. CSH107 Check Requests8. CSH108 Bank Account Reconciliations

Budget

9. BUD101 Budget Preparation10.BUD102 Budget Adoption11.BUD103 Budget Implementation

12.BUD104 Budget ReportingFinance & Investments

13.F&I101 Capital14.F&I102 Capacity Notes15.F&I103 Debt Service16.F&I104 Fund Balances17.F&I105 Reserve Accounts18.F&I106 Investment Purchases19.F&I107 Investment Valuation

Fixed Assets

20.FA101 Fixed Asset Control21.FA102 Fixed Asset Capitalization & Depreciation22.FA103 Intangible Asset Capitalization & Amortization

Fund Types

23.FT101 Accounting Fund Structure

General & Administrative

24.G&A101 Chart of Accounts25.G&A102 Project Accounting26.G&A103 Files and Records Management27.G&A104 Employee Travel

28.G&A105 Management and Project Reports29.G&A106 FPPC Reporting30.G&A107 Period-End Review & Closing31.G&A108 Controlling Legal Costs32.G&A109 Insurance33.G&A110 Confidential Information Release

Payroll & Benefits

34.P&B101 Timesheet Processing


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35.P&B102 Payroll Processing36.P&B103 Employee Set-up37.P&B104 Benefits

Procurement

38.PRO101 Vendor Selection

39.PRO102 General Procurement40.PRO103 Project Procurement41.PRO104 Credit Card Purchases42.PRO105 Purchase Orders43.PRO106 Work Orders44.PRO107 Task Orders45.PRO108 Receiving and Inspection46.PRO109 Accounts Payable and Cash Disbursements

Revenue

47.REV101 Arlington Enterprise Billing48.REV102 SARI Enterprise Billing49.REV103 Grant Contract Billing50.REV104 Member and Other Agency Contributions51.REV105 Expense Reimbursement Billing52.REV106 Mitigation Credit Sales53.REV107 Interest Income54.REV108 Employee Receivables55.REV109 Miscellaneous Revenue56.REV110 Invoicing and Accounts Receivable57.REV111 Account Collections


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1.0 PURPOSE

The purpose of this Accounting manual is to document the principles and policiesgoverning our agencys accounting practices.

The principles and policies provide:

o A foundation for a system of internal controls

o Guidance in current financial activities

o Criteria for decisions on appropriate accounting treatment

o Accounting officers with direction and guidance in connection with thoseaccounting transactions, procedures, and reports that should be uniformthroughout the Agency.

When consistently applied throughout the agency, these principles and policiesassure that the various financial statements issued by the agency accurately reflectthe results of the agencys operations.

Internal controls provide a system of checks and balances intended to identifyirregularities, prevent waste, fraud and abuse from occurring, and assist inresolving discrepancies that are accidentally introduced in the operations of theenterprise.

All additional departmental or functional policies and procedures written shouldconform to and parallel the policies in this manual. All changes to policies andprocedures are required to be reviewed to ensure that there are no conflicts withthe policies stated in this Accounting Manual.


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2.0 SCOPE

The Accounting Manual is an official directive of the General Manager. It ispublished and maintained by the Chief Financial Officer as part of the generalresponsibility for agency accounting policy assigned to the Finance department.

2.1 RESPONSIBILITY

The policies stated in this manual apply to all operations and activities at ouragency. It is the responsibility of all department managers to help implement andmaintain the procedures required by this manual and to ensure all processesconform to these requirements.

It is the responsibility of all employees to follow procedures that implement thesepolicies and to help strive for continuous improvement in all activities andprocesses of our agency.

The goal is to make the Manual as clear and useful as possible. All users areencouraged to contact the agency Chief Financial Officer with any suggestions forrevising or improving the Manual.

2.2 EXCLUSIONS

2.2.1 Internal Auditing

Internal Auditing is not covered in this accounting manual but it is an importantfunction required in larger agencies.

2.2.2 Information Systems

Information Systems functions are included as part of Information Systems

Policy.2.2.3 Security Planning

Security Planning functions are included as part of the Information SystemsPolicy.

2.2.4 Disaster Recovery

Disaster Recovery functions are included as part of the Disaster Recovery Policy.


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3.0 MANAGEMENT RESPONSIBILITY

The finance department is headed by the Chief Financial Officer (CFO).

3.1 FINANCE ORGANIZATION

The finance department is organized into three main responsibilities: Finance andTreasury, Accounting, and Payroll/Human Resources.

3.1.1 Finance Department Organization Chart

The agencys organizational framework provides the foundation for coordinatingand administrating the accounting management system. A description of the rolesand responsibilities applicable to the accounting staff is provided.Responsibilities specific to certain procedures or tasks are presented in the relatedprocedures.


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3.1.2 Chief Financial Officer Responsibilities

The CFO responsibilities are focused on raising capital, debt and or equityappropriations, cash management, Treasury investments, fund balances, andmanagement activities.

The CFO is responsible to the General Manager for all long-range financialmatters and to establish agency-wide financial and administrative objectives,policies, programs, and practices, which insure the agency of a continuouslysound financial structure.

The CFO controls the flow of cash through the organization and maintains theintegrity of funds, securities and other valuable documents.

Major Duties and Responsibilities:

o Financial management responsibility for all agency activities.

o Direct responsibility for finance, purchasing, budgeting, accounting, debt andproject management, reserve policy and treasury.

o Manage the development and implementation of Finance Department goals,objectives, policies and priorities for each assigned service area; establishpolicy, appropriate service and staffing levels; allocate resources accordingly.

o Plan and continuously monitor and evaluate the efficiency and effectivenessof service delivery methods and procedures; assess and monitor work load,administrative and support systems and internal reporting relationships;identify opportunities for improvement; direct the implementation of changes.

o Represent the Finance Department to other agency departments, electedofficials and outside agencies; explain and interpret Finance Departmentprograms, policies and activities; negotiate and resolve sensitive, significantand controversial issues.

o Select, train, motivate and evaluate Finance Department personnel; provide orcoordinate staff training; work with employees to correct deficiencies;implement discipline and termination procedures.

o Plan, direct and coordinate, through subordinate level managers, the FinanceDepartments work plan; meet with management staff to identify and resolveproblems; assign projects and programmatic areas of responsibility; reviewand evaluate work methods and procedures.

o Manage and participate in the development and administration of the Agencybudget; direct the forecast of additional funds needed for staffing, equipment,materials and supplies; direct the monitoring of and approve expenditures;

direct the preparation of and implement budgetary adjustments as necessary.o Oversee the preparation of the agency budget; pre-audit projected budget;

provide coordination of fiscal and budgetary matters.

o Establish, direct and coordinate the agencies budgeting, accounting andfinancial reporting practices; develop and establish controls necessary toassure the accuracy and security of all records and funds; evaluateperformance of accounting procedures and financial controls; identify


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variances from approved or authorized practice and initiate action to ensureestablished controls are maintained; oversee the complete, accurate and timelypreparation of annual and interim financial reports and statements.

o Coordinate Finance Department activities with those of other departments andoutside agencies and organizations; provide staff assistance to the General

Manager; prepare and present staff reports and other necessarycorrespondence.

o Conduct a variety of organizational studies, investigations and operationalstudies; recommend modifications to Finance Department programs, policiesand procedures as appropriate.

o Participate on a variety of committees; attend and participate in professionalgroup meetings; stay abreast of new trends and innovations in the fields offinance, purchasing and related fields.

o Assume responsibility for the development and implementation of theagencies investment policies.

o

Respond to and resolve difficult and sensitive inquires and complaints.o Ensure program funding completion of State and Federal funding sources such

as Proposition 13 and other programs.

3.1.3 Controller Responsibilities

The Controller directs the accounting and control functions, reporting the resultsof operations and provides chronological systems. The Controller is accountableto the CFO and supervises the accounting staff. If the Controller position isunfilled these duties fall to the CFO.

Major Duties and Responsibilities:

o Develops and implements accounting policies, coordinates systems andprocedures, and prepares operating data and special reports as required,including interim and year-end financial statements. Maintains the agencyssystem of accounts and keeps books and records on all agency transactionsand assets.

o In conjunction with the General Manager and CFO, coordinates reviews andendorses budget proposals, discusses proposed changes and significantchanges.

o Compares performance with operating plans and standards, and reports andinterprets the results of operations to all levels of management.

o Provides for the control and editing of all agency orders, to insure conformityto established policies and procedures, and to facilitate data control andretrieval of records generated by these orders.

o Supervises or coordinates the preparation of reports to government agencies.

o Provides other managers and departments with information required by themto carry out their assigned responsibilities.


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o Assists the CFO and Engineering Manager in establishing and maintainingenterprise rate policies.

3.1.4 Accounting Staff Responsibilities

Accounting staff responsibilities are focused on accurately documenting theagencys operations, collecting all money owed to the agency, and responsibly

disbursing money owed to vendors.

The accounting staff consists of the following positions:

o Senior Accounting Technician. Responsible for accounts payable and cashdisbursements, petty cash, employee receivables, cash receipts function,proposition 13 administration grant funding billing, SARIprotection/relocation billing to Orange County Sanitation District (OCSD),and prepares FPPC report. Reports directly to the Controller. Coordinatesactivities with all departments; works closely with Engineering, Planning andAdministration.

o Senior Accounting Technician. Responsible for creating all purchase, workand task orders for procurement of goods and services, project billing forLESJWA and Chino TMDL grant funding contracts, deposit preparation,performs payroll function including quarterly and annual tax filings, andadministers employee benefits, new hires, terminations, COBRA andpersonnel files. Reports to the Controller. Coordinates activities with alldepartments; works closely with Engineering, Planning and Administration.

o Intern. Responsible for various tasks and assignments within the accountingdepartment.

3.2 MANAGEMENT COMMITMENT

Executive Management at our agency shows its commitment to the accountingmanagement system through the development and implementation of thisaccounting manual. Additionally, management commitment is demonstratedthrough the Agency Accounting Policy, the specific objectives that are set andreviewed during Management Review Meetings and by providing the resourcesrequired to meet our objectives for continually improving the effectiveness of ouroperations and accounting system.

The management team consisting of the General Manager and all departmentmanagers is chartered with ensuring our accounting management system meetscustomer as well as statutory and regulatory requirements

3.3 MANAGEMENT ACCOUNTING POLICY

Our agency has established an Accounting Manual that we feel is appropriate toour organization and meets the practices set forth in Generally AcceptedAccounting Principles (GAAP). This policy is communicated throughout theagency. Department managers and supervisors are responsible for ensuring allemployees understand the policy. To ensure our policy remains appropriate, it isreviewed at least annually at one of our Management Review meetings.


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The Agency Accounting Policy:

It is the policy of our agency to design and produce financial statements inkeeping with GAAP, Governmental Accounting Standards Board (GASB)Statements of Financial Accounting Concepts and comply with all statutoryand regulatory requirements. We accomplish this by adhering to ourAccounting Management System and use operational methods as documentedin our Accounting Manual.

We strive to continually improve the effectiveness of our AccountingManagement System by monitoring our performance against our establishedobjectives and through leadership that promotes employee involvement. Thisconcept represents our agencys commitment to quality accounting and theincreasing need to better serve our customers, commissioners, and employees.

3.4 PLANNING

3.4.1 Accounting Objectives

Our agency shall establish objectives on an annual basis. These objectives shallbe measurable and consistent with the Accounting Policy, and reviewed at leastannually at Management Review meetings.

3.4.2 Accounting System Planning

As part of annual strategic planning meetings, our agency establishes strategicobjectives and goals for revenue, profit, and expenses. These objectives aresupported by specific measures that track performance against those objectivesusing the budgeting process. Department managers in turn set departmentalobjectives with specific performance measures and targets that support the agencyobjectives.

As situations arise that demand changes to the accounting management system,either to meet objectives or because of changing business conditions, all changeswill be reviewed by the management team to ensure the integrity of theaccounting system is maintained.

3.5 RESPONSIBILITY, AUTHORITY, AND COMMUNICATION

3.5.1 Responsibility and Authority

Responsibilities and authorities at our agency are defined in each Job Description.Job Descriptions are listed in the employee manual and are also used duringannual performance reviews.

3.5.2 Management Representative

The General Manager has appointed the CFO as the Management Representativewith the responsibility and authority to:

a) Ensure that processes needed for the Accounting Management System areestablished, implemented and maintained.


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b) Report to the General Manager on the performance of the AccountingManagement System and any need for improvement.

c) Ensure the promotion of awareness of accounting requirements throughout theorganization.

d)

Serve as the liaison with external parties on matters relating to the AccountingManagement System.

3.5.3 Internal Communication

In line with our agencys policy of leadership through employee involvement, ouragencys personnel policies have established open communication throughout theorganization.

The effectiveness of our Accounting Management System is evident through theIndependent Audit results, Management Reports, and the departmentalperformance measures.

3.5.4 Referenced Procedures:

G&A104 Management Reports

3.6 MANAGEMENT REPORTING

3.6.1 General

The General Manager and management team shall review the agencysAccounting Management System, on an annual basis and more frequently ifneeded, to ensure its continuing suitability, adequacy and effectiveness. Thisreview shall include assessing opportunities for improvement and the need forchanges to the Accounting Management System, including the accounting policyand objectives.

The CFO is responsible for maintaining records from management reviews.

3.6.2 Review Input

The CFO and department managers provide the following information forManagement Review meetings:

a) Results of audits

b) Employee feedback

c) Process performance

d) Follow-up actions from previous management reviews

e) Changes that could affect the Accounting Management System

f) Recommendations for improvement

3.6.3 Review Output

Records shall include the output from the management review and shall includeany decisions and actions related to:


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a) Improvement of the effectiveness of the Accounting Management System andits processes

b) Improvement of processes related to accounting requirements

c) Resource needs

3.6.4 Referenced Procedures:G&A104 Management Reports

3.7 BUSINESS CONDUCT

Unethical business conduct, actions or even the appearance of unethical behavioris unacceptable under any conditions. The reputation of the agency depends oneach employee applying common sense in situations where specific rules ofconduct are insufficient to provide clear direction. A strong sense of personalethics, which should extend beyond compliance with applicable laws, is necessaryto guide the behavior of all employees.

All employees should comply with the ethical standards of the agency as set forthin this manual. If a situation feels awkward, then the employees should askthemselves:

o Is my action legal and ethical?

o Does my action comply with agency policy?

o Is my action appropriate in the situation?

o Would my action be an embarrassment to the agency, if known?

o Does my action agree with my personal ethics or behavior?

An employee should be able to answer yes to all of these questions before

taking action or compromising themselves in the situation.

All Managers are responsible for the ethical business conduct and behavior oftheir employees. Managers should consider the appropriate courses of action interms of both ethical and economic factors. Each decision should be based on theguidelines provided in this Accounting Manual as well as their own personalbeliefs of whats right and wrong.


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4.0 ACCOUNTING MANAGEMENT SYSTEM

4.1 OBJECTIVES

Through this manual and associated procedures and documents, our agency hasestablished, documented, and implemented an Accounting Management System.The system is designed to result in improving the effectiveness of our accountingoperations and in our ability to satisfy auditor requirements.

4.2 REQUIREMENTS

Maintenance of the Accounting Management System is the responsibility of theCFO in conjunction with the Finance Department.

4.2.1 Overview

The Controller maintains all documents that identify the sequence of accountingprocesses and, in conjunction with the appropriate department managers, definesthe interactions of the processes within the procedures defining these processes.

Processes for management activities, provision of resources, and measurementreporting are included. Procedures shall include the methods needed to ensurethat the accountability and control of processes are effective.

Executive Management will ensure the availability of resources to support theoperation and monitoring of processes through regular interaction withdepartment managers and through review activities at Management Reviewmeetings.

Department Managers and the CFO will monitor, measure and analyze processesand implement any actions necessary to achieve intended results and continualimprovement of the processes. These results will also be monitored atManagement Review meetings.

Any processes that are outsourced that may affect our agencys conformity torequirements shall be controlled. The CFO and appropriate departmentmanager(s) are responsible for defining the methods to control outsourcedprocesses and procedures.

4.2.2 Internal Controls

Internal controls, procedures, and practices will be utilized to ensure that:

o Obligations and costs comply with applicable laws.

o All assets are safeguarded against waste, fraud, loss, unauthorized use, andmisappropriation.

o Revenues and expenditures applicable to agency operations are recorded andaccounted for properly so that accounts and reliable financial and statisticalreports may be prepared and accountability of the assets may be maintained.


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o Programs are efficiently and effectively carried out in accordance withapplicable laws and management policy.

4.2.3 Audit Findings

Managers are to promptly evaluate findings and recommendations reported byauditors and then determine proper actions in response to audit findings andrecommendations (e.g., develop corrective actions). Managers should complete,within established time frames, all actions that correct or otherwise resolve thematters brought to management's attention.

The audit resolution process begins when the results of an audit are reported tomanagement, and is completed only after actions have been taken that correctidentified deficiencies, produce improvements, or demonstrate the audit findingsand recommendations are either invalid or do not warrant management actions.

4.3 TRANSACTIONS

All transactions recorded or posted into the Accounting Management System

should be properly authorized and accurately represent the activity beingdocumented. Both the timing and amount of the transaction should be inaccordance with agency accounting policies defined in this manual.

4.3.1 Authorization

Transactions and other significant events are to be authorized and executed onlyby persons acting within the scope of their authority. It is the principal means ofassuring that only valid transactions and other events are entered into.Modification or adjustment to previously recorded transactions requiresauthorization.

4.3.2 Timing

All transaction dates recorded in the agency accounting system should accuratelyreflect the date the transaction occurred. Revenues should be recognized whenearned and expenses when incurred. Processing, cutoff and period-end closingschedules and procedures should be documented.

4.3.3 Amounts

Prior or related transactions should be checked for conformity with the transactionbeing recorded (e.g., match invoice to purchase order). Amount of postedtransactions should be checked against source documents. Balances with thirdparties should be verified as appropriate (i.e. debtors, creditors, or custodians of

investments). Transactions should be recorded in conformity with documentedpolicies in this manual.

4.3.4 Accuracy

Transactions should be recorded in the accounting system accurately. Anapproved set of general ledger and subsidiary accounts are maintained for assets,liabilities, revenues, expenses, budgetary accounts, and other accounts.


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All transactions should be supported by documentary evidence, which becomespart of the accounting records. Error transactions should be reviewed, resolved,and cleared in a timely fashion. Manually determined control totals should bereconciled with recorded results.

The Accounting Management System utilizes standard forms and provides control

and accountability over these forms. Supervisors should review postedaccounting transactions with source documents and processing documents.

Referenced Procedures:

G&A101 Chart of AccountsG&A104 Management and Project ReportsG&A107 Period-End Review & ClosingCSH101 Petty CashCSH102 PostageCSH103 Cash Receipts and DepositsREV110 Invoicing and Accounts Receivable

CSH108 Bank Account ReconciliationsPRO109 Accounts Payable and Cash Disbursements

4.4 DOCUMENTATION

This Accounting Manual and the associated procedures are intended to satisfy thedocumentation requirements for an Accounting Management System.Department managers and supervisors are responsible for identifying anyadditional documents needed to ensure the effective planning, operation andcontrol of processes.

Procedures may vary in detail based on the size of the department or organizationinvolved and the type of activity performed. Procedure developers shall consider

this as well as the complexity of the processes and interactions, and thecompetence of the personnel involved.

Documents may be any medium including: software programs, electronic textfiles, or hardcopy documents for example.

4.4.1 Accounting Manual

This Accounting Manual provides the top-level organizational document for theAccounting Management System. The Accounting Manual defines the scope,policies and processes of our agencys Accounting Management system as well asManagements responsibility for the system.

4.4.2 Control of DocumentsAll Documents required by the Accounting Management System shall becontrolled. The Document Control Procedure defines the controls needed to:

a) Approve documents for adequacy prior to issue.

b) Review and update as necessary and re-approve documents.

c) Ensure that changes and the current revision status of documents areidentified.


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d) Ensure that relevant versions of applicable documents are available at pointsof use.

e) Ensure that documents remain legible and readily identifiable.

f) Ensure that documents of external origin are identified and their distribution

controlled.g) Prevent the unintended use of obsolete documents, and apply suitable

identification to them if they are retained for any purpose.

4.4.3 Control of Records

Procedures define appropriate records to be maintained for the effective operationof the Accounting Management System, including evidence of conformity torequirements. Records shall remain legible, readily identifiable and retrievable.The Files and Records Management Procedure defines the controls needed for theidentification, storage, protection, retrieval, retention time and disposition ofrecords.

4.4.4 Accounting Transactions

All transactions and other significant events should be clearly documented,properly classified and readily available for examination.

This standard applies to:

o The entire process or life cycle of a transaction or event and includes theinitiation and authorization

o All aspects of the transaction while in process

o Its final classification in summary records.

Referenced Procedures:G&A103 Files and Records ManagementG&A1110 Document Control

4.5 SECURITY

Access to resources and records should be limited to authorized personnel only.Accountability for the custody and use of resources should be assigned andmaintained as well. Periodic comparisons should be made of the resources withthe recorded accountability to determine whether the two agree. The frequency ofthe comparison shall be a function of the vulnerability of the asset. Restrictions ofaccess to resources shall also depend upon the vulnerability of the resource as

well as the perceived risk of loss, both of which shall be periodically assessed.

4.5.1 Physical Security

Physical security measures should be adopted to protect the assets and employeesof the Agency from abuse, fraud, theft, or damage. Security procedures for theprotection of assets and employees are addressed within the agencys SecurityPolicy.


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4.5.2 Disaster Recovery

Disaster recovery measures should be adopted to enable the agency to continuethe operations of the Accounting Management System with limited interruption.Disaster procedures for operations recovery are addressed within the agencysDisaster Recovery Policy.

4.5.3 Information Security

Information security measures should be adopted to protect the agencysinformation assets from unauthorized access, abuse, tampering, theft, or use.Information security procedures for the protection and authorized use of computerand network assets are addressed within the Agencys Information SystemsPolicy.

4.6 BASIS OF ACCOUNTING

There are two fundamental methodologies of accounting, each with assumptions,constraints and theories, which guide all financial recording, reporting, and

measurement activities: Cash and Accrual.

o Cash basis accounting records financial events only when cash actuallychanges hands in an arms-length transaction.

o Accrual basis accounting records revenues when earned and expenses thecosts associated with the revenue earned when incurred.

The agency requires the use of the accrual basis of accounting for financialtransactions unless otherwise stated in this manual.


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5.0 PROCESSES AND CONTROLS

The agency has planned and developed the processes needed to properlydocument, track and control transactions for revenues, expenses, assets, liabilities,

and fund balances. The results of this planning are the processes and proceduresdefined in our Accounting Management System documentation.

These processes and procedures include the accounting objectives andrequirements for our agency, the required verification, validation, and inspectionactivities specific to our agency and the criteria for order acceptance verification.The records needed to provide evidence that these processes meet GenerallyAccepted Accounting Practices (GAAP) are defined in the procedures.

Consideration is given for the need to establish processes, documents, and obtainresources specific to new orders as they are developed or during contract or orderreview.

400 General &Administrative Procedures

430 Finance &Investment Procedures

450 RevenueProcedures

420 CashProcedures

460 Procurement

Procedures

Fig 2. AccountingManagement

System Processesand Controls

410 Fund TypeProcedures

440 Fixed AssetProcedures

470 Payroll & BenefitsProcedures

480 BudgetProcedures


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5.1 GENERAL & ADMINISTRATIVE

The General and Administrative procedures encompass a wide range ofmiscellaneous activities from defining the chart of accounts, maintaining files andrecords, to Period-End Review & Closing, Insurance, and producing Managementand Project Reports. The following General and Administrative Proceduresshould be utilized to control the agencys miscellaneous accounting activities.

G&A101 Chart of Accounts

G&A104 Employee Travel

G&A105 Management andProject Reports

G&A102 ProjectAccounting

G&A107 Period-EndReview & Closing

G&A108 Controlling

Legal Costs

G&A110 Confidential

Information Release

G&A109 Insurance

Fig 3. General &AdministrativeProcedures

G&A103 Files and Records

Management

G&A106 FPPCReporting


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5.1.1 Chart of Accounts

To facilitate the record keeping process for accounting, all ledger accounts shouldbe assigned a descriptive account title and account number, also known as a Chartof Accounts. The Chart of Accounts provides the organization or method forassignment and maintenance of the agencys ledger accounts, in order to produce

meaningful financial data for the agency.

5.1.2 Project Accounting

The agency maintains a project accounting system within the AccountingInformation System. The system is used to set up, enter and maintain projectrecords and transaction for both capital and planning projects.

5.1.3 Files and Records Management

The agency will retain records in an orderly fashion for time periods that complywith legal and governmental requirements and as needed for general businessrequirements. To accomplish this policy, the agency should outline the methods

for filing, retaining and disposing of all business documentation generated by theagency. However, this does not necessarily cover internal or certain day-to-daybusiness correspondence.

5.1.4 Employee Travel

The agency should provide guidelines for travel expenses, account for alladvances promptly and accurately and to communicate the procedures forreimbursement. This applies to all departments and individuals who travel for theagency.

The agency recognizes that employees who travel far from home to represent theagencys business interests must forego their living accommodations and may

forfeit personal time. Accordingly, the agency will make efforts to providecomfortable and secure accommodations for lodging, meals and travel foremployees. However, these items are not intended to be perquisites and theagency reserves the right to deny reimbursement of expenses that are consideredlavish or extravagant.

All reservations required for business travel and entertainment should beapproved by the General Manager. Expenses are to be within established agencyguidelines and will be reimbursed with proper documentation. Employees areexpected to spend the agencys money as carefully and judiciously as they wouldtheir own.

5.1.5 Management and Project Reports

The agency should provide the format and content requirements for preparation ofthe Financial and Project Reports. Reports are to be prepared in brevity and are tosupplement detailed monthly and quarterly financial reports and are to be used fortimely "hands-on" management.


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5.1.6 FPPC Reporting

The agency is required by the Fair Political Practices Commission (FPPC) toreport all expenses incurred as a lobbyist employer on a quarterly basis. to reportquarterly The FPPC requires that lobbying disclosure reports; provide the publicwith the identity of persons who make payments for the purpose of influencing

the actions of the California State Legislature, the actions of the Governor inapproving or vetoing legislation, and quasi-legislative actions of California stateagencies.

5.1.7 Period-End Review & Closing

An orderly, timely and comprehensive review of all general ledger accountsshould be performed or directed by the Controller or CFO to ensure an accuraterepresentation of the agencys financial statements. These practices are aimed atproving that the financial accounts are accurate, and if not, are properly adjustedto make them accurate, prior to closing.

The agency should provide a general overview of the process to be completed forreviewing the accounting records at year-end or any particular month-end prior toclosing. These practices apply to all accounts. Typically, all financial accountsare reviewed and then closed out as of the agencys year-end.

5.1.8 Controlling Legal Costs

All individuals with the responsibility for contracting legal services and/orapproving agreements, contracts, or any other legally associated transactionsshould employ various methods to manage and, whenever possible, minimizelegal expenses.

5.1.9 Insurance

The agency is required to have the minimum limits of insurance to protect theagency including automobile, real and personal property and liability coverage.

5.1.10 Confidential Information Release

The release of financial, statistical or other information that may be of aconfidential nature to the agency should be controlled. Individual requests shouldbe referred to the Chief Financial Officer, Controller, or appropriate manager fordisposition.

The agency should provide a means for the control of information to banks,investors, investment houses, media, credit bureaus, or other agencies andorganizations. All requests by an outsider to an employee regarding financial,sales, marketing, customers, personnel, vendors, or other agency confidentialinformation. If in doubt, verify with the Chief Financial Officer or Controller.


G&A101 Chart of AccountsG&A102 Project AccountingG&A103 Files and Records ManagementG&A104 Employee Travel


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G&A105 Management and Project ReportsG&A106 FPPC ReportingG&A107 Period-End Review & ClosingG&A108 Controlling Legal CostsG&A109 Insurance

G&A110 Confidential Information Release


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5.2 FUND TYPES

The agency is a special district that utilizes a Fund Accounting System. Theaccounts are organized on the basis of funds, each of which is considered aseparate accounting entity. The operations of each fund are accounted for with aseparate set of self-balancing accounts that comprise its assets, liabilities, fundequity, revenue and expenses. The agencys various funds are grouped intogovernmental, proprietary and fiduciary funds.

FT101 Fund Types

Special Revenue Funds

Capital Project Funds

General Funds

Planning Project Funds

Enterprise Funds

Fig 4. Fund TypeProcedures

Fiduciary Funds


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5.2.1 General Funds

The general fund is the largest and most important of the governmental funds, andis the primary operating fund of the agency. Any transaction that cannot beaccounted for in another fund must be recorded in the general fund.

5.2.2 Special Revenue Funds

The special revenue funds are governmental funds used to account for grants usedfor operating purposes. The agency uses these funds for various propositionadministration and project funding.

5.2.3 Capital Project Funds

The capital project fund is a governmental fund used to construct or acquirecapital facilities. Once the project is complete, the fund is closed and theremaining balance is transferred into a fixed asset account. Capital project fundshelp not only to account for, but also to control, the cost of large capital projects.

5.2.4 Planning Project Funds

Planning project funds are a governmental fund used to account for long-termplanning projects. This fund receives grant funding and contributions frommember and other agencies.

5.2.5 Enterprise Funds

Enterprise funds are proprietary funds that derive a substantial portion of theirincome from user charges. Accounting for enterprises in separate funds makes iteasier to see whether those enterprises are bringing in enough revenue to cover allof their costs. The agency has one enterprise funds, the SARI Enterprise.

5.2.6 Fiduciary Funds

Fiduciary funds account for monies held on behalf of others in a fiduciarycapacity. The agency has one fiduciary fund.


FT101 Accounting Fund Structure


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5.3 CASH

Adequate control over all cash receipts and disbursement are a vital element ofthe agencys internal accounting controls. The following Cash Procedures shouldbe utilized to control the flow of cash through the agency.

CSH101 Petty Cash

CSH104 ProblemChecks

CSH105 Wire Transfers

CSH102 Postage

CSH106 Check SigningAuthority

CSH107 Check Requests

Fig 5. CashProcedures

CSH108 Bank Account

Reconciliations

CSH103 Cash Receiptsand Deposits


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5.3.1 Petty Cash and Postage

Proper internal control should be maintained over petty cash and postage funds atall times. The agency should identify the practices for petty cash and postageusage, including cash receipts, cash payouts, postage sales and purchases andmonthly reconciliation.

5.3.2 Cash Receipts and Deposits

The agency should establish the methods to be followed for receiving, applyingand depositing cash receipts. This applies to all cash receipts received by theagency. Accurate internal control of cash receipts and deposits should bemaintained at all times. For example, Cash deposits should be made on the nextscheduled deposit pickup.

5.3.3 Problem Checks

The agency should describe how problem checks should be handled beforedepositing, in order to save time in returning and following-up on unsigned

checks, checks marked "payment in full", or those returned by the bank. Thisapplies to all checks received by the agency.

5.3.4 Wire Transfers

The agency should provide additional payment options to customers and vendorsin order to make funds immediately available to the receiving party. Wiretransfers should be treated with special care and accuracy to prevent loss to theagency or the customer.

The agency should explain the steps necessary to ensure proper procedures arefollowed when processing wire transfer requests. This applies to customers whoare sending or receiving wire transfers and the financial institutions, which

process these requests.5.3.5 Check Signing Authority

The agency should outline "dollar limits", the check signing authority process,and limit the number of employees authorized to sign checks, while ensuring thatthere should be no fewer than three individuals at all times.

While a hired accountant or accounting technician may be responsible forentering bills, paying bills, and printing out checks, all printed checks and relateddocumentation should be presented to a second individual for signing. No oneperson or employee should be allowed to enter invoices, select invoices forpayment, then print and sign checks. At a minimum, this process requires at least

two individuals to ensure the integrity of the accounting system remains intact.This applies to all regular bank checking accounts of the agency.

5.3.6 Check Requests

The agency should describe the process for completing a check request form toensure the efficient processing and record keeping of all manual check requests.


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5.3.7 Bank Account Reconciliations

The agency should outline the practices for preparation of a monthly bankreconciliation and ensure the accuracy of the agencys bank account records byproving the monthly balance shown in the banks Account Register. This appliesto all bank accounts maintained by the agency.


CSH101 Petty CashCSH102 PostageCSH103 Cash Receipts and DepositsCSH104 Problem ChecksCSH105 Wire TransfersCSH106 Check Signing AuthorityCSH107 Check RequestsCSH108 Bank Account Reconciliations


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5.4 FINANCE & INVESTMENTS

Finance and investment responsibilities are focused on raising capital, debt and orequity appropriations, cash management, Treasury investments, fund balances,and management activities.

F&I101 Capital

F&I103 Debt Service

F&I104 FundBalances

F&I102 Capacity Notes

F&I105 ReserveAccounts

Fig 6. Finance &Investments Procedures

F&I107 Investment

Valuation

F&I106 InvestmentPurchases


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5.4.1 Capital

The agency should have a capital program plan that allows for the financing ofcapital improvement or capital projects through various approved means.

5.4.2 Capacity Notes

The agency has capacity notes due from member agencies for purchase ofpipeline and treatment capacity in the SARI line. Capacity notes were issued toconstruct the line.

5.4.3 Debt Service

Debt service consists primarily of principal and interest payable on debt,broadly defined to include revenue bonds, revenue warrants, leases, installmentsale agreements and similar obligations. The agency currently has outstandingSRF loans for the construction on the SARI, TVRI and WRCWRA.

5.4.4 Fund Balances

The agency uses many different funds in its operations. Each fund should accountfor the revenues, expenditures and transfer, and changes in fund balance of eachfund and report the fund balance for each.

5.4.5 Reserve Accounts

The agency should follow the reserve policy for reserve levels and contributionsthat earmark a portion of the fund balance for a specific purpose in those fundswhere reserves are kept.

5.4.6 Investment Purchases

The agency should follow the Statement of Investment Policy guidelines for theprudent investment of temporary idle cash to maximize the effectiveness and

efficiency of the agencys cash management system.5.4.7 Investment Valuation

All investments shall be valued at the market value as of the end of the fiscal yearin accordance with GAAP.


F&I101 CapitalF&I102 Capacity NotesF&I103 Debt ServiceF&I104 Fund BalancesF&I105 Reserve AccountsF&I106 Investment PurchasesF&I107 Investment Valuation


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5.5 FIXED ASSETS

Accurate reporting, classification and valuation of assets are critical elements ofinternal controls because any changes in assets can have a dramatic and materialimpact on the balance sheet and income statement. The following AssetProcedures should be utilized to account for and control all of the agencys

various assets.

5.5.1 Fixed Asset ControlProper control procedures will be followed for all capital asset acquisitions,transfers and dispositions in order to provide internal control of capital equipmentand to assist in reporting. The agency should outline the procedures for acquiring,disposing and maintaining control of capital assets. This applies to all capitalequipment with a value of $5,000 or more and with a useful life greater than oneyear.

FA101 Fixed AssetControl

FA102 Fixed AssetCapitalization & Depreciation

Fig 7. Fixed Assets

Procedures

FA103 Intangible AssetCapitalization & Amortization


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5.5.2 Fixed Asset Capitalization & Depreciation

Asset acquisitions with a useful life expectancy of greater than one year and witha minimum threshold amount as specified by the CFO should be capitalized bythe agency and depreciated.

The agency should delineate the capitalization and depreciation methods forvarious asset groups. This applies to all acquisitions of capital assets for theagency.

5.5.3 Intangible Asset Capitalization & Amortization

Intangible asset acquisitions with a minimum threshold amount as specified bythe CFO should be capitalized by the agency and amortized.

The agency should delineate the capitalization and amortization methods forvarious asset groups. This applies to all acquisitions of capital assets for theagency.


FA101 Fixed Asset ControlFA102 Fixed Asset Capitalization & DepreciationFA103 Intangible Asset Capitalization & Amortization


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5.6 REVENUE

The proper identification and acceptance of all revenue is an important element ofcontrol for the income statement and represents the primary source of operationalcash flow. The following Revenue Procedures should be utilized to account forand recognize all revenue of the agency.

REV 101 Arlington EnterpriseBilling

REV 103 Grant Contract

BIlling

REV104 Member and OtherAgency Contributions

REV 102 SARI Enterprise

Billing

REV105 ExpenseReimbursement Billing

REV106 Mitigation CreditSales

REV108 EmployeeReceivables

REV109 MiscellaneousRevenue

REV107 Interest Income

Fig 8. RevenueProcedures

REV111 AccountCollections

REV110 Invoicing andAccounts Receivable


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5.6.1 Enterprise Operations

Revenues for the enterprise funds consist primarily of the income from the basicrevenue sources on the enterprise (i.e., rates and charges, connection fees, andother charges)

5.6.2 Grant Contracts

Revenues for grant contracts consist primarily of Federal, State or Localgovernment grants received.

5.6.3 Member and Other Agency Contributions

Contributions received from member and other agencies.

5.6.4 Interest Income

Income received from investments made and various accounts held by the agencyas well as installment capacity note interest.

5.6.5 Other Revenue Sources

All other revenues received by the agency include expense reimbursements frommember or other agencies, mitigation credit sales, employee receivables, andother miscellaneous revenues.

5.6.6 Invoicing and Accounts Receivable

Accounting is responsible for the timely preparation and distribution of invoicesto optimize cash flow and customer payments. Accounting should also maintainaccurate records over Accounts Receivable and abide by proper internal controls.

The agency should explain the methods for the preparation of invoices andaccounts receivable records processing. This applies to all product sales andservices provided by the agency.

5.6.7 Account Collections

All open accounts receivable with late or delinquent payment activity will behandled in a timely and effective manner to ensure maximum collections and anoptimum accounts receivable turnover ratio.


REV101 Arlington Enterprise BillingREV102 SARI Enterprise BillingREV103 Grant Contract BillingREV104 Member and Other Agency Contributions

REV105 Expense Reimbursement BillingREV106 Mitigation Credit SalesREV107 Interest IncomeREV108 Employee ReceivablesREV109 Miscellaneous RevenueREV110 Invoicing and Accounts ReceivableREV111 Account Collections


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5.7 PROCUREMENT

Proper vendor selection and utilization assist in controlling expenses and providequality inputs to the agency. The following Procurement Procedures should beutilized to account for and control all purchases and acquisitions of the agency.

PRO101 VendorSelection

PRO103 ProjectProcurement

PRO107 TaskOrders

PRO102 General

Procurement

PRO108 Receiving andInspection

PRO109 Accounts

Payable and CashDisbursements

Fig 9. ProcurementProcedures

PRO104 Credit Card

Purchases

PRO106 WorkOrders

PRO105 PurchaseOrders


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5.7.1 Vendor Selection

The agency ensures purchased products and services conform to specifiedrequirements. This starts with selection of appropriate suppliers that have thecapability and systems to supply products, materials and services to the agencysspecified requirements.

The agency should strive to validate the performance capabilities of all vendorsand maintain the internal controls of the purchasing functions. Suppliers arecontrolled to the extent necessary based on the effect of the purchased items onthe quality of the agencys products and services.

The agency should provide the methods for determining, documenting and, whenapplicable, inspecting vendors for compliance with agency policies and contractpurchasing requirements. This applies to all vendors of products, materials, andservices that directly affect the quality of the agencys products and services.

5.7.2 General Procurement

The investment in services, materials, equipment or supplies will be facilitated bythe Department Manager, maintained at the lowest effective level and supervisedconsistent with a common set of procedures and controls as required by allregulatory and customer contract requirements.

To outline the actions to be taken for 1) the procurement of all services, materials,equipment or supplies, 2) the continuous analysis of the approved budget, 3) thecompletion of related documents.

This applies to the purchase of all services, materials, equipment or supplies forall departments within the agency.

5.7.3 Project Procurement

The agencys Project Manager is responsible for obtaining a Request forQuotation on services and materials in correct quantities in a timely fashion, sothat the flow of construction is not interrupted or impeded.

The agency should describe the procedures involved in maintaining the ordering,purchasing and receiving functions needed for projects in the field. This appliesto the purchase of all materials, services, tools, supplies, equipment andequipment rental for all development or construction projects.

5.7.4 Receiving and Inspection

All parts, components, goods and materials should be received in an organizedmanner and inspected for conformance. Any items or shipments rejected will beproperly quarantined from other items until returned.

The agency should outline the steps for the receiving and inspection of materials,components, parts, finished goods, etc., and the stocking of these items or thedisposition of rejected items.


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5.7.5 Accounts Payable and Cash Disbursements

Internal controls are required to ensure that only valid and authorized payables arerecorded and paid. Accounting procedures should be implemented to ensure theaccuracy of amounts, coding of general ledger accounts and appropriate timing ofpayments.

The agency should explain the practices for documenting, recording and issuingpayments for accounts payable transactions. This applies to all purchasesincluding, merchandise and non-merchandise purchases.


PRO101 Vendor SelectionPRO102 General ProcurementPRO103 Project ProcurementPRO104 Credit Card PurchasesPRO105 Purchase OrdersPRO106 Work Orders

PRO107 Task OrdersPRO108 Receiving and InspectionPRO109 Accounts Payable and Cash Disbursements


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5.8 PAYROLL & BENEFITS

The finance department is responsible for accurately accounting for and reportingpayroll, related taxes and employee benefits in accordance with State and Federallaws and regulations. The agencies accounting information system includes ahuman resources and payroll module to account for payroll and benefits.

P&B101 TimesheetProcessing

P&B103 EmployeeSet-up

P&B102 PayrollProcessing

Fig 10. Payroll &Benefits

Procedures

P&B104 B enefits


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5.8.1 Timesheet Processing

Each employee shall maintain time sheets on an electronic form provided by theagency. A timesheet is the source document for recording work, vacation andother leave history for each pay period. It also documents the distribution of timeto various agency projects. Each employees time sheet shall be accurately

completed and shall be reviewed and verified by the employees supervisor.Timesheets are processed on a weekly basis.

5.8.2 Payroll Processing

The agencys pay period are bi-weekly, ending Friday noon, and shall processpayroll in accordance with the agencies policy. Payroll should be processed onceall time sheets for the period are completed and approved by the employeessupervisor. The agency uses the accounting information system in processingpayroll.

5.8.3 Employee Set-up

Time sheet and payroll processing take place within the project module of theagencys accounting information system. Employee must be set up in the project,human resources and payroll modules. To ensure proper reporting of payrollinformation, new employees shall be correctly set-up in the accountinginformation system according to policy.

5.8.4 Benefits

The finance department is responsible for the administration of all agencybenefits. This includes the processing of payments for benefits, properdocumentation for employees participating in those benefits and accounting forbenefit costs within the accounting information system.

5.8.5 Referenced Procedures:P&B101 Timesheet ProcessingP&B102 Payroll ProcessingP&B103 Employee Set-upP&B104 Benefits


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5.9 BUDGET

A budget is a spending plan that balances revenues and expenditures over a fixedperiod of time usually a year and that includes, at least by implication, a workplan. Local governments often use the budget as a financial plan, an operationsguide and a communication tools. The agency should follow the budget processin preparing a zero-based budget.

BUD101 Budget Preparation

Fig 11. BudgetProcedures

BUD102 Budget Adoption

BUD103 BudgetImplementation

BUD104 Budget Re porting


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5.9.1 Budget Process

The budget process shapes decision making throughout the budget cycle. Thefour main stages of the budget cycle are preparation of budget requests, approvalof the budget, budget implementation and summary reporting on actual budgettransactions.

The agency should first decide what they want the budget process to accomplish,and then design a process to accomplish the selected goals.


BUD101 Budget PreparationBUD102 Budget AdoptionBUD103 Budget ImplementationBUD104 Budget Reporting


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6.0 RESOURCE MANAGEMENT

6.1 PROVISION OF RESOURCES

During planning and budgeting processes, and as needed throughout the year, theGeneral Manager and management team determine and ensure that theappropriate resources are available to implement and maintain the AccountingManagement System and continually improve its effectiveness.

6.2 HUMAN RESOURCES

6.2.1 Accounting Staff

Managers and employees are to have personal and professional integrity and areto maintain a level of competence that allows them to accomplish their assignedduties, as well as understand the importance of developing and implementing

good internal controls.This requires managers and their staff to maintain and demonstrate at all times:

o Personal and professional integrity

o A level of skill necessary to help ensure effective performance

o An understanding of internal controls sufficient to effectively dischargetheir responsibilities

6.2.2 Competence, Awareness, and Training

Accounting personnel shall be competent based on appropriate education,training, skills and experience. The minimum competencies required for each

position at our company are defined in each position's Job Description. HumanResources, department managers and supervisors are responsible for ensuring jobdescriptions are current and adequate.

Where otherwise qualified personnel require additional training or other action tomeet the minimum competency requirements, these needs are identified. Thedepartment provides task-specific training. General training or education isprovided or coordinated by Human Resources. The department should evaluatethe effectiveness of training or other actions taken as appropriate.

The department generates records of task-specific training. Human Resourcesmaintain records of all training and education, skills and experience in accordance

with Human Resources Policies and Procedures and Computer and NetworkPolicies and Procedures.

Department managers are responsible for ensuring their employees are aware ofthe relevance and importance of their activities and how they contribute to theachievement of the accounting objectives.


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6.2.3 Separation and Supervision of Duties

Key duties and responsibilities should be separated among individuals. Dutiesand responsibilities shall be assigned systematically to a number of individuals toensure that effective checks and balances exist. Key duties include authorizing,approving, and recording transactions; issuing and receiving assets; making

payments; and reviewing or auditing transactions.

Qualified and continuous supervision is to be provided to ensure that internalcontrol objectives are achieved. This standard requires supervisors tocontinuously review and approve the assigned work of their staffs as well asprovide the necessary guidance and training to ensure that errors, waste, andwrongful acts are minimized and that specific management directives arefollowed.

6.3 INFRASTRUCTURE

Our agency provides the infrastructure necessary to achieve conformity to

accounting standards and requirements. During the annual budgeting andstrategic planning processes, buildings, workspace, and associated utilities areevaluated and provided. When new personnel are added, Human Resourcescoordinates activities to ensure appropriate process equipment including hardwareand software, if required, and supporting services such as telephones etc., areavailable based on information provided on the Personnel Requisition.

6.4 WORK ENVIRONMENT

The management team and General Manager determine and manage the workenvironment to ensure our agency provides a safe and desirable place to work.They ensure the environment is appropriate for achieving conformity to product

requirements.

Accounting Manual - Revision History

Revision Date Description of changes Requested By

0 07/01/05 Initial Release