FISCAL POLICIES

2019 For Board Approval September 12, 2019

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Table of Contents

Policies

Overview of Organizational Fiduciary Responsibility….……………………………………………………………………………3 Standards of Financial Business Conduct………………….………………………………………………………………………….…4 Internal Controls ……………………………………………………….………………………….………………………………………………..6 Budgets …………………………………………………………………………………………………………………………………………………11 Financial Reporting ………………………………………………………………………………………………………………….……………12 Accounting Policies..………………………………………………………………………………………………………………………………14 Billing and Cash Receipts……………………………………..……………………………………………………………………………..…18 Payroll…………………………………………………………………………………………………………………………………………………...19 Purchase Authorization and Procurement………………………………………………………………………….…………………21 Employee, Board & Community Travel..……………………..……………………….………………………….……………………26 Personnel Requisitions…………………………………………………………………………..…………………………………………..…28 Vendor Setup…………………………………………………………………………………………………………………………………………29 Purchasing Cards……………………………………………………………………………………………………………………………………30 Accounts Payable…………………………………………………………………………………………………………………………………..32 Advances..………………………………………………………………………………………………………………………………….………….35 Cash Disbursement……………………………………………………………………………………………………………………………..…36 Journal Entries……………………………………………………………………………………………………………………………………….38 Financial Risk Management……………………………………………………………………………………………………………………39

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Overview of Organizational Fiduciary Responsibility The Board of Directors (“Board”) for the Early Learning Coalition of Broward County, Inc.( “ELC” or “Coalition”) is the central decision making body for the organization. It has the ultimate responsibility and accountability for the organization’s actions. Board members are the fiduciaries who steer the organization towards a sustainable future by adopting sound, ethical, and legal governance and financial management policies, as well as making sure the nonprofit has adequate resources to advance its mission. In general, a not for profit board has three main fiduciary responsibilities: Duty of care: Board members are responsible for having the same duty of care with regard to the ELC that a prudent and ordinary person would. This means that they need to participate, remain informed about all aspects of the organization, and take appropriate actions to help the organization meet its goals and thrive. The duty of care requires them to read and understand financial reports, track spending, and participate in strategic planning. The board members are also responsible for making sure the Coalition’s records are accurate and retained in accordance with applicable law. Duty of loyalty: Board members must also be loyal to the organization itself. This means working in its best interest and not using it for personal or professional gain. If a board member has a conflict of interest, it must be disclosed in accordance with ELC Bylaws and the Code of Conduct Policy. Duty of obedience: Board members are also required to show the duty of obedience, which means they need to be aware of the laws that affect the Coalition and ensure that the organization follows them. They must fully understand and follow all of the organization's own governing documents, such as the bylaws and applicable policies and procedures, and are also responsible for helping the organization carry out its stated goals.

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Standards of Financial Business Conduct

Commitment to Customer Service:

A commitment to customer and community service lies at the heart of ELC’s financial decision-making, management and operations. The Coalition strives to use resources efficiently and effectively to provide the high quality services to the Community. Readily available, relevant and accurate financial information assists leaders in making sustainable, worthwhile financial choices and helps staff promptly answer questions for clients, vendors and community stakeholders. Qualified fiscal employees that are trained to actively listen for feedback, collaborate and see each problem through to resolution create a welcoming environment of respect and teamwork for all.

Practice of Ethical Conduct:

Each employee of the Coalition is subject to those applicable Florida Statutes as it pertains to the code of conduct of public officials and employees. The Coalition requires employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities as described in ELC Human Resource Policies. Unethical actions, or the appearance of unethical actions, are unacceptable under any conditions. Each member or employee must apply his or her own sense of personal ethics, which should extend beyond compliance with applicable laws and regulations in business situations, to govern behavior where no existing regulation provides a guideline. Each member or employee is responsible for applying common sense in business decisions where specific rules do not provide all the answers. Managers are responsible for the ethical business behavior of her or his subordinates. Managers must carefully weigh all courses of action suggested in ethical, as well as economic, terms and base their final decisions on the guidelines of this policy and their personal sense of right and wrong.

Compliance with Laws, Regulations, and Organization Policies:

Each Member and employee of the Coalition shall comply with all applicable laws, regulations and Coalition policies in their activities and decision. The Coalition does not tolerate the willful violation or circumvention of any federal, state, local or other laws; the disregard or circumvention of Coalition policy; or engagement in unscrupulous dealings. Members and employees shall not attempt to accomplish by indirect means, through agents or intermediaries, that which is directly forbidden by law or policy.

Conflict of Interest:

All employees have an obligation to: • Avoid conflicts of interest, or the appearance of conflict of interest as describe in ELC’s By

Laws and Human Resource Policies. Conflicts of interest may be financial or non-financial in nature.

• Disclose all real and apparent conflicts of interest in writing on ELC standard forms

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• Refrain from participation in any decisions on matters that involve a real conflict of interest or the appearance of a conflict.

The Office of Early Learning further requires that the Coalition Board approve and disclose any contractual relationship with a Board member or a member of their family (Related Party) by two-thirds majority vote. The contract may also require prior OEL approval, depending on the amount. (See purchasing policies in later section).

Gifts:

Employees are prohibited from giving or accepting gifts, gratuities, or entertainment to or from individuals and firms with whom ELC does business. Gifts of nominal value (less than $25) are allowed, except when the gift creates a real or perceived conflict of interest.

Mandatory Fraud Reporting and Reporting of Suspected Misconduct:

In accordance with 2 CFR 200.113 Mandatory Disclosures, ELC will disclose all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award to the Federal awarding agency in a timely manner. ELC also encourages all Board members and employees to communicate concerns about incidents of suspected misconduct or fraud in accordance with ELC Bylaws and Human Resource Policies without fear of retribution or retaliation. Suspected fraud may also be reported to the OEL Office of Inspector General by mail, fax, or email:

Office of Inspector General Office of Early Learning

250 Marriott Drive Tallahassee, FL 32399 Phone 850-717-8686

Fax: 850-921-0026 whistleblower@oel.myflorida.com or follow link to Complaint Form

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Internal Controls Internal controls are the first line of defense against errors or abuse in an organization. They promote transparency and openness in decision-making. They are essential to an organization that handles public funds. ELC uses the widely-accepted COSO1 framework to set internal control policies that appropriately divide lines of authority, segregate duties, protect physical assets and promote compliance with laws and regulations through the following policies: The ELC Organizational Structure and Specific Financial Roles:

ELC’s Board assigns lines of authority in decision-making and carrying out financial activities as follows:

Board of Directors: • Sets Fiscal Policy • Hires the CEO • Authorizes Bank Accounts • Authorizes and Oversees the Annual and Amended Budget • Approves Interim Financial Statements • Approves Annual Audit Report • Approves Annual Tax Return Form 990 • Authorizes Individual Purchases and Contracts in Excess of $35,000 • Authorizes Issuance of CEO Purchasing Card and Names Purchasing Card Administrator

Board Officers (Chair, Vice Chair, Second Vice Chair, Treasurer, Secretary)

• Bank and Cash Disbursement Signatories for ELC Operating Account • Authorize CEO Travel, Expense Reimbursement and Time & Attendance (Authorization

requests shall be made to the officers in the following order, depending on availability: Chair, First Vice Chair, Second Vice Chair, Treasurer, Secretary)

• Authorize Board Member Travel

Executive Committee • Reviews all Contracts in Excess of $35,000 and Recommends Approval to the Board and

Reviews any other Contracts that may Require Committee Review

Finance Committee • Reviews Fiscal Policy and Recommends Approval to the Board • Reviews Bank Accounts and Recommends Approval to the Board • Reviews Annual and Amended Budget and Recommends Approval to the Board • Reviews Interim Financial Statements and Recommends Approval to the Board

1 Committee of Sponsoring Organizations of the Treadway Commission

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• Reviews Purchases in Excess of $35,000 and Recommends Approval to the Board

Audit Committee • Selects Auditors and Recommends Approval to the Board • Provides Oversight to External Auditors • Reviews Annual Audit Report and Recommends Approval to the Board • Reviews Annual Tax Return Form 990 and Recommends Approval to the Board • Investigates Reports of Suspected Misconduct or Fraud and Recommends Action to the

Board

Chief Executive Officer (“CEO”) • Implements Fiscal Policies • Hires all Other Staff • Bank and Cash Disbursement Signatory for all ELC Accounts • Presents and Implements Annual and Amended Budget • Presents Interim Financial Reports • Authorizes Individual Purchases and Contracts for $35,000 or less • Authorized Purchasing Card Holder • Authorizes Issuance of Purchasing Card to Other Qualifying Employees • Authorizes Employee Travel and Expense Reimbursements • Assigns Online Cash Transfer and Payroll Transmission Access (Dual Custody)

Chief Administrative Officer (“CAO”)

• Bank and Cash Disbursement Signatory for Employee & Board Activity Account • Prepares Annual and Amended Budget • Prepares Interim Financial Reports • Reviews all Purchases and Contracts • Authorized Purchasing Card Holder • Reviews all Employee Travel and Expense Authorizations • Assigns Online Cash Transfer and Payroll Transmission Access (Dual Custody) • Assigns Financial Database and Vendor Account User Access • Authorizes External Invoicing • Oversees Accounting Functions • Oversees Contract Administration • Oversees External Audit and Monitoring Reviews • Posts Financial Transactions

Chief Information Officer (“CIO”)

• Maintains User Access Control List

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• Maintains Online Access Reassignment Capability for All Financial Systems (Dual Custody) • Maintains Inventory and Physical Access Controls

Controller

• Transmits Online Cash Disbursements (Dual Custody) • Authorizes External Invoicing • Posts Financial Transactions

Segregation of Duties

ELC requires that multiple employees perform separate parts of a single process where opportunity for profit, fraud, abuse or errors could exist if one individual had the ability to perform the entire process on his/her own. Most frequently segregation is enforced through user access and database settings.

In particular, ELC separates duties for each fiscal process that involve approving authority, transaction processing, custody & verification of assets, and reconciliation and/or monitoring. Within each function, there may be additional segregation of duties to ensure dual control for critical cash functions and quality assurance oversight to ensure accuracy for all transactions.

The Chief Administrative Officer and the Chief Information Technology Officer conduct monthly reviews of assigned user access to ensure that:

• The segregation of duties outlined above are enforced through appropriately structured user rights;

• Dual custody control is in place for cash transactions; • Key transactions are assigned to transparent group distribution emails; and • The finance access and permissions matrix is accessible for business continuity and up to

date.

Special Employment Policies for Staff with Fiduciary Responsibilities

All employees in a position of fiscal trust are required to take an annual vacation which is at least five consecutive work days in duration. ELC will make every effort to facilitate and allow the employee to comply with this requirement through cross-training, job rotation and sufficient staffing to ensure coverage. A position of fiscal trust means a position or assignment which requires an employee to receive or disburse monies; reconcile or journalize accounts, process payroll transactions or purchase goods or services on behalf of the ELC.

Additionally, such employees are required to undergo a criminal background screen on an annual basis.

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Physical Security of Assets

ELC’s main office is secured by an electronic key card system that allows ELC to track swipes control access outside of business hours and disable access when employees are terminated. ELC has also installed security cameras that monitor client and employee activity. Employees who are issued portable equipment to take to other locations such as laptops, cell phones, tablets, cameras or projectors are required to store the equipment in a secure location when not in use and protect the item from damage at all times. The IT department records the serial number of each item and maintains up to date inventory and employee assignment lists for al capitalized items as well as non-capitalized electronic devices that ELC deems at risk for loss or theft.

In the Fiscal Department, blank check stock, cash or cash receipts in transit for deposit and the Chief Administrative Officer’s purchasing card are secured in locked cabinets under the control of designated employees assigned to maintain custody. Unannounced verification of secured items is conducted periodically by the Chief Administrative Officer or the Controller.

Internal Monitoring of Risk Areas

To ensure efficiency, accuracy and good stewardship in the expenditure of public funds, ELC proactively conducts periodic internal reviews of key business activities for compliance with the laws, regulations, administrative requirements and rules of Federal, State, Local and other fund agencies. On a monthly or quarterly basis, internal monitoring testing includes, but is not limited to, the following:

• Client Eligibility Determination Testing • Provider On-Site Compliance Monitoring • Provider Post Audit Attendance Monitoring • Cost Allocation Testing • Purchasing Card Activity Review • Employee Online Access Review • Employee Time and Attendance Review • Human Resource File Compliance Review • Inventory Tracking Review

Sub Recipient Compliance Monitoring

ELC conducts periodic monitoring of each sub recipient agreement in accordance with the requirements of Federal Uniform Guidance, other funder requirements and best practices to ensure compliance and appropriate use of funds when qualifying sub awards are issued. Monitoring reviews are conducted pursuant to a formal Coalition monitoring plan that is updated annually and which includes, at a minimum, the following:

• Annual sub recipient risk assessment

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• Ongoing evaluation of the quality and results of deliverables submitted • Annual review of sub recipient audit reports, findings or corrective action activity • Quarterly financial expenditure testing (desk reviews) • Annual on-site monitoring review with a written final report

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Budgets

The ELC Board has ultimate responsibility for authorizing the ELC budget and for ensuring that the organization operates within a responsible, sustainable financial framework. ELC staff initially present the annual budget and all subsequent amendments for detailed review, discussion and approval to the Finance Committee. The Board then considers the Budget for adoption at the recommendation of the Finance Committee. ELC staff present the preliminary estimated annual budget following enactment of annual allocations by the Florida Legislature (if available), and prior to the start of the fiscal year on July 1 to ensure continuity of operations pending final awards. Subsequently, the annual budget will be amended to reflect actual funding amounts awarded after they become available and periodically thereafter, whenever a significant adjustment is required.

At a minimum, the annual budget shall differentiate between direct service, program operations and administrative expense within major functional activity or business units including at least the following elements:

• Revenue by Funding Source • Direct Service (Child Care Slot) Expenditure by Funding Source • Sub Recipient Allocation by Contractor • Total Salary and Benefits Expenditures for the overall staffing plan • Other Operating Cost Expenditures, including but not limited to, professional services,

travel, facilities, software, equipment, supplies, fees and other items. • Individual Purchases or Line Item Expenditures that require specific Board authority by

regulation, rule or policy.

In approving or amending the budget, the Board grants authority to the CEO to implement it by initiating agreements, creating, filling and changing staff positions, and making reasonable, necessary purchases to accomplish organizational goals in accordance with all applicable laws, regulations, organizational policies and funder requirements.

The Finance Committee shall monitor the organization’s budget performance by analyzing actual year to date expenditures and budget variances, and shall make recommendations to the Board to consider amendments as needed. All variances greater than 5% for direct service expenditures and 10% for operating costs must be justified and all other significant developments, factors or changes that may affect budget performance must be disclosed.

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Financial Reporting

Between audits, ELC staff shall prepare and present year-to- date interim financial statements first to the Finance Committee and then to the full Board for review and acceptance. Interim reports include, but are not limited to, a statement of financial position, statement of activities, budget to actuals and other reports needed to make decisions, monitor progress toward financial objectives and periodically update stakeholders with ELC’s financial status. ELC does not perform monthly closings and all reports are reviewed on a year-to-date basis. Accrued expenses, such as compensated absence expense, are reflected at year end only, in accordance with ELC accounting policy.

Annual Audit

The Coalition’s fiscal year financial statements shall be audited annually by a duly qualified independent certified professional accounting firm that has a significant experience conducting single audits with similar non-profit and government clients. The audit committee shall hire a firm to conduct the annual single audit and oversee its work. If the same audit firm conducts the audit for five consecutive years, the audit committee shall decide if the services need to be re-procured or if the engagement partner needs to rotate. The audit firm will not be hired to perform non–auditing services, except for tax, Form 990 or Form 5500 preparation and shall not perform substantial services for any officer or director personally. The audit firm shall be engaged to present annual audit findings to the audit committee and the board. The auditors shall report all findings; material misstatements; deficiencies in internal controls; incidences of suspected fraud; or any other matters of concern directly to the Audit Committee in writing. The Board, audit committee and or management shall respond in writing, as appropriate.

The audit committee shall review the audit and make its recommendation to the board and the board shall accept the draft audit report no later than March 15 of each year. The final audit report will be submitted to the Federal Audit Clearing House no later than March 31 of each year and submitted to each of the Coalition’s funding agencies no later than 30 days following the issuance of the finalized report.

Required Tax Return Reporting Preparation Assignments

Annual Information Return of Tax-Exempt Organizations IRS Form 990 shall be prepared by ELC’s external audit firm and submitted by staff first to the Audit Committee and then to the full Board for review and acceptance prior to the annual IRS filing deadline of March 31.

Annual Information Return for Employee Benefit Plan IRS Form 5500 shall be prepared by ELC’s external audit firm for retirement benefits and by ELC’s employee health benefits broker for cafeteria plan benefits prior to the annual IRS filing deadline of October 15.

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Annual Employee Wage and Tax Statement IRS Form W-2 shall be prepared on a calendar year cash basis by ELC’s external payroll processor and sent to employees and the IRS on or prior to the annual IRS filing deadline of January 31.

Annual Report of Non-Employee Miscellaneous Income IRS Form 1099 shall be prepared on a calendar year cash basis by ELC Staff and sent to vendors and the IRS on or prior to the annual IRS filing deadline of January 31.

Federal Payroll Tax Return Form 941 shall be prepared on a quarterly cash basis by ELC’s external payroll processor on or prior to the quarterly IRS filing deadlines of April 30, July 31, October 31 and January 31. ELC accounting staff shall reconcile the filings to the general ledger with 20 calendar days of receipt.

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Accounting Policies

Basis for Accounting

ELC uses the Accrual Basis for accounting in accordance with Generally Accepted Accounting Principles. This means that revenues are recognized when they are earned and expenses are recognized when they are incurred, regardless of when the related cash was received or disbursed. Under this approach, revenues are matched with related expenses and the complete impact of a business transaction can be seen within a single reporting period.

Funder Accounting Requirements

ELC accounting incorporates all requirements contained in 2 CFR 200 Uniform Administrative Requirements, Cost Principles and Audits for Federal Awards; Florida statutes and regulations; the Office of Early Learning Grant Agreement; other funder requirements, the directives of the ELC Board and the needs of ELC management.

Chart of Accounts

The Chief Administrative Officer maintains the ELC Chart of Accounts in consultation with the Finance Committee, management and ELC’s external auditor. The Chart of Accounts is the framework for ELCs general ledger system that forms the basis of all financial reporting analysis. ELC’s chart of accounts includes the five typical account types found in nonprofit financial reporting (assets, liabilities, net assets, revenues and expenses). It also incorporates a hierarchical segment system that captures a variety of relevant detail for management, governance, funder and community decision-making and analysis. The goal of the framework is to ensure consistent, meaningful record-keeping that provides maximum insight without excessive detail.

Revenue Recognition

• State, Federal and Local Government contract revenue, including match revenue, is recognized when earned through expenditures in accordance with the terms of the funding agreement.

• Contributed grant revenue is recognized based on the conditions set forth upon notification of award.

• Program income, fees and sponsorships are recognized when earned • Interest income accumulated in bank accounts throughout the month is recognized on the last

day of each month • Reimbursements received in advance payments are recorded as deferred revenue liability until

the revenue is earned and eligible for recognition

Expense Recognition

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• All expenses are recognized in the fiscal year period in which they are incurred. • During the fiscal year, payroll expenses are recognized on the last day of each pay period,

including when the pay period crosses months. At fiscal year-end, payroll expenses are recognized in the month they were incurred, with balances related to the following month accrued to salaries payable.

• Accrued compensated absence expense for vested employees are recorded at year end following reconciliation of accumulated time off balances using rates of pay in effect at year end.

• Pre-paid expenses in amounts totaling less than $5,000 with a future-benefit period that falls within the fiscal year are expensed in their entirety in the first month of benefit. All other prepaid expenses with a time-sensitive future benefit are recorded in the appropriate prepaid expense account and amortized in accordance with the schedule of benefits received. Examples of pre-paid expenses include, but are not limited to: rent, insurance, employee benefit premiums, employee pre-travel registrations, subscriptions, dues, and software licenses.

Capitalization of Fixed Assets

• Effective July 1, 2018 physical assets acquired with unit costs in excess of $5,000 are capitalized as fixed assets on the financial statements. Physical assets acquired prior to July 1, 2018 are capitalized as fixed assets if their unit cost exceeded $1,000.

• Assets otherwise subject to capitalization that are acquired for programs whose funding periods are less than the useful life of the asset acquired are expensed to the program in the year of acquisition with a corresponding credit to unrestricted expense, and then depreciated as normal.

• Capitalized fixed assets are accounted for at their historical cost and all such assets, except land and certain works of art and historical treasures, are subject to depreciation over their estimated useful lives.

• Contributed assets subject to capitalization are accounted for at market value at the time of donation.

Use of Estimates

• Depreciation is on a straight line basis over the useful life of the item. Estimated useful lives of fixed assets for depreciation purposes:

1. Furniture and fixtures: 7 years 2. General office equipment: 5 years 3. Computer hardware and peripherals: 3 years 4. Computer software: 3 years 5. Leased assets: Life of Lease 6. Leasehold Improvements: Remaining Lease Term

• Employee compensated absence liability is estimated using the salary rates in effect at year end

multiplied by the accumulated vacation leave balance of vested employees at year end.

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Lease Accounting

ELC records leases with a commitment of more than one year as a liability, with a corresponding asset in the statement of financial position at the value of the lease commitment. Leases are expensed in the period in which the obligation to make a lease payment is incurred.

For leases with periodic abatements, the lease expense will equal the average monthly lease payment over the entire term of the lease. Differences between the average monthly payment expense and the actual monthly amount paid will be accounted for in a liability account.

Cost Allocation

1. Expenses are directly charged to funders and activities to the extent the direct benefit to the program is traceable.

2. For expenses that are not directly traceable to a single fund source or activity code, a non-monetary method to estimate the proportionate benefit of the expense to each funder is applied in the following series of sequential allocations:

a. Expenses related to eligibility determination, enrollment and redetermination under programs that mirror Office of Early Learning (“OEL”) School Readiness program rules where funding sources may be applied interchangeably to eligible clients are distributed to program fund source and Other Cost Accumulator (“OCA”) codes based on the proportionate count of children served under each program. These programs include, but are not limited to, OEL School Readiness, OEL School Readiness Match, Children’s Services Council (“CSC”) Financially Assisted Child Care and Broward County Subsidized Child Care.

b. Expenses related to subsidized child care program support services other than eligibility determination, enrollment and redetermination are distributed to program fund source and OCA codes for each cost based on the proportionate count of children served under each program each month. Typical examples of such expenses include, but are not limited to, monthly attendance processing, provider contracting, and general subsidized child care customer service.

c. Expenses related to administrative costs are distributed to administrative fund sources and OCA codes based on the proportionate count of staff hours charged to each fund source on personnel activity reports after the distribution of the other two cost pools above is completed. Examples of such expenses include, but are not limited to, governance, executive leadership, finance, accounting, human resources, IT, outreach, communications, quality assurance and general administration.

d. Expenses related to general facilities occupancy and communications are distributed based on the proportionate count of staff hours charged to each fund source and OCA code on personnel activity reports (after the distribution of the other three cost pools

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above). Examples of such expenses include, but are not limited to, facilities rent, internet, website hosting, telephone service and insurance.

Financial Period, Annual Close

• ELC’s financial period is the fiscal year which begins July 1 and ends on June 30. • ELC’s fiscal year will be moved to closed status after all residual invoices and adjustments

related to the period are settled with OEL no later than September 20. • ELC will not accept or process residual vendor invoices or new requests for reimbursement

related to the prior fiscal year after the fiscal year status is set to “closed”. • When the annual audit is finalized, the database is locked down and no additional

transactions for the closed period are possible.

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Invoice Authorization and Recording Receivables Invoicing

The Chief Executive Officer, The Chief Administrative Officer or the Controller may certify claims due to ELC and authorize invoices submitted to outside parties. ELC accounting staff shall record all receivables as soon as reimbursable amounts are calculated and accrued, when an external party is billed, or when a contribution is committed, whichever is sooner. The controller monitors the status of all aging receivables on a monthly basis and follows up as appropriate.

Cash and Cash Equivalent Receipts

• The majority of ELC cash receipts are remitted by electronic transfer. The ELC encourages funders and other entities to remit funds directly to ELC’s bank account by Electronic Funds Transfer whenever possible and discourages the use of cash. Electronic deposit activity is monitored daily by the Chief Administrative Officer, the Controller and other accounting staff and transactions shall be recorded into the financial database within 2 business days.

• Occasional receipts delivered by check are accepted by the staff at the front desk either in person or by mail. They are immediately photocopied and stamped “for deposit only to the account of the Early Learning Coalition of Broward, Inc.” along with ELC’s banking information and placed in a secured locked box at the front desk that is under dual control by fiscal staff. The images are distributed to a group email that alerts all appropriate fiscal staff and triggers the cash receipts chain of custody. Checks shall be deposited into the ELC bank account within 2 business days.

• Occasional cash receipts delivered by cash are accepted by staff at the front desk and a 2-part receipt is issued to payer. A copy of the receipt, along with any accompanying back up is photocopied and placed together with the cash in a secured locked box at the front desk that is under dual control by fiscal staff. The images are distributed to a group email that alerts all appropriate fiscal staff and triggers the cash receipts chain of custody. Cash is deposited into the ELC bank account within 2 business days.

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Payroll Payroll Set Up and Changes

ELC operates on a bi-weekly payroll (every other Friday). All employees are paid through direct deposit once employee bank information has been independently verified and validated with a pre-note. Human Resources establishes and maintains a personnel file for all employees including supporting documentation for payroll.

• All changes to employee payroll status submitted by Human Resources, including but not limited to, the setup of new hires, terminations, salary/pay rate, or other employee status will be processed by fiscal staff only with the expressed written approval of the CEO.

• All changes to employee voluntary deductions and withholdings submitted by Human Resources will be processed by fiscal staff only with the expressed written approval of the employee.

• All involuntary liens, garnishments or court-ordered payroll deductions submitted by Human Resources will be processed by fiscal staff only with the expressed written authorization from the collecting agency.

• Manual adjustments to accrued time off balances will be processed by fiscal staff only with the expressed written approval of the CAO (or CEO if circumstances warrant it).

Time and Attendance and Personal Activity Report Tracking

• ELC uses an online time and attendance system to track actual times or total hours worked depending on the employees “Fair Labor Standards Act (“FLSA”) classification, paid time off, and overtime as described in ELC Human Resource Policies. The online time and attendance system is also used to track actual daily employee work activities as required by OEL for cost allocation and other reporting purposes.

• All employees are required to complete his/her own timesheet and in doing so certify that it is a true and accurate record of actual time worked and the activities carried out each day, after the fact. Employees who carry out more than one activity that must be tracked within a work day are required to update their timecard to reflect the change at the time it occurs. At the end of each pay period, supervisors review each employee timesheet and personal activity report and approve for processing in the online system.

• ELC calculates time worked and paid time off using 15 minute increments with 7-minute rounding threshold. Paid time off may only be requested and charged for periods of 2 hours or more, but employees may request that their schedule be adjusted to accommodate time off periods that are less than 2 hours.

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Payroll Calculation and Transmission

When the payroll batch is calculated and prepared by fiscal staff with registers and documentation supporting all changes along with a cash flow worksheet confirming availability of funds, either the Controller, the CAO or the CEO transmits the completed payroll batch for each period. Immediately following transmission, the Chief Administrative Officer reviews the payroll register; the personnel change report and the worked in cost allocations that are generated from the batch. A sealed envelope with checks for new employees pending direct deposit is delivered by the Payroll processer to the CAO for verification. Checks that must be kept overnight are secured in a locked cabinet by either the CAO or the Human Resources Manager until the Human Resources Manager distributes them to employees on pay day.

Timely Transfer of Employee Benefit Contributions

ELC staff shall prepare and either the CAO or Controller shall authorize cash transfers for employee voluntary deductions for retirement, flexible spending and charitable contributions to appropriate vendors no later than 5 business days following the date the employee contribution was deducted from payroll.

Payroll Reconciliation

All payroll related accounts, including benefit accounts and time off accruals, shall be reconciled by ELC accounting staff and reviewed by the Controller no later than the 10th business day following the last full pay period of each month. Quarterly payroll tax form 941 shall be reconciled to the general ledger no later than the 20h business day following the issuance of the form by ELC’s external payroll processor.

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Purchasing and Procurement Purchase Authorization & Vendor Procurement Overview

ELC is committed to procurement of goods and services following the guidelines of the Florida Statute, Chapter 287, which promotes fair and open competition; that such competition reduces the appearance and opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically; and that documentation of the acts taken and effective monitoring mechanisms are important means of curbing any improprieties and establishing public confidence in the process by which commodities and contractual services are procured.

In making a request for a purchase of any type, ELC staff must certify in writing that they have avoided or disclosed any real or perceived conflicts of interest, conducted themselves in an ethical manner and are in compliance with all applicable laws, regulations and policies in accordance with the standards of conduct required by ELC HR policies and as referenced in this fiscal policy manual.

All procurement transactions in any amount will be conducted in a manner to provide, to the maximum extent practical, open and free competition. The ELC will be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition. Awards will be made to the bidder whose bid is responsive to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations should clearly set forth all requirements that the bidder is required to fulfill. Any and all bids or offers may be rejected when it is in the Coalition’s interest to do so.

Purchasing Considerations: OEL and or ELC Board Prior Approval

• Individual Purchases for Goods and Services in Excess of $35,000: All individual purchases for goods or services in excess of $35,000 per vendor per fiscal year require prior approval from the Board.

• Related Party Contracts in Excess of $25,000: The ELC must obtain prior written approval from OEL for all contracts in excess of $25,000 that involve personal benefit or gain for ELC employees, governing board members or relatives of either group. Such contracts must also be approved by a two-thirds vote by the governing board. Any governing board members(s) benefitting from the contract must disclose the conflict of interest in advance of a vote and must abstain from the voting process.

• Related Party Contracts at or below $25,000 must be approved by the ELC governing board by a two-thirds vote by the governing board and the affected party must complete all necessary conflict of interest disclosure forms. The approved contract must also be reported to OEL within 30 days of the action.

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• Capital Equipment Purchases in Excess of $5,000: The ELC must obtain prior written approval from OEL to use its funds for all capital purchases in excess of $5,000 per unit.

• Memberships, Subscriptions and Professional Activities Costs: The ELC must obtain prior written approval from OEL to use its funds for costs of membership in any civic or community organization. The ELC must provide OEL with a certification from the organization that membership records are public record that are open for public inspection.

Purchasing Considerations: Allowability of Goods or Services Purchased

Proposed purchases are allowable if they are determined by ELC Board and/or CEO to be:

• Necessary • Reasonable • Allocable • In conformance with applicable laws, regulations and policies • Appropriately procured • Adequately documented • Adequately funded Certain purchases may be expressly prohibited by federal, state or other funding agencies and may only be purchased with the expressed written consent of alternate funding sources.

Purchasing Considerations: Other Requirements

• Goods or services must not be duplicative or unnecessary • Prices for goods or services are reasonable in the marketplace following a documented cost

analysis. • Goods are secured economically as determined by a lease versus purchase analyses when

appropriate • Goods are secured economically through the use of State or Federal excess and surplus

property instead of new purchases. • Goods or services are secured using common state and local inter-entity agreements when

possible • Small and minority businesses are actively considered and encouraged to submit proposals

in all cases • Goods purchased contain recycled materials • Goods are manufactured in the United States • Vendors are not debarred from receiving State or Federal Funds

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Use of Purchase Orders and Contracts Purchase Orders: All department heads or their designees shall have the authority to initiate purchases on behalf of their department, within the guidelines described herein. All ELC purchase requests in any amount require a purchase order, a cost analysis and prior approval by the CEO as listed below. Travel authorization, staff hiring and direct service (child care) payment requisitions are approved through other processes described below. Staff in the Fiscal Department shall be responsible for processing purchase orders including developing technical requirements in collaboration with the requisitioner, overseeing procurement, conducting cost analysis, ensuring compliance and evaluating available budgetary resources. Whenever possible, department heads or their designees will work with the Fiscal Department to develop Purchase Orders for annual recurring costs as part of the initial budget development process.

Amounts paid for goods and services are per vendor per fiscal year for the purpose of determining thresholds in accordance with Florida State Purchasing guidelines. Purchase requests may not be broken up to circumvent purchasing approval thresholds.

Cost Range (per Fiscal Year) Minimum Cost Analysis Required Final Approving Authority $0 to $5,000 One Written/Documented Quote CEO

$5,001 to $15,000 Two Written Quotes CEO $15,001 to $35,000 Three Written Quotes CEO

$35,001 plus Formal Procurement CEO and Board

Purchase orders are requested and processed through purchasing and procurement staff within the Fiscal Department in accordance with the most current segregation of duties matrix and process workflows. Once approved, purchase orders are provided to vendors along with links to the ELC website for detailed information on the terms and conditions that are required for purchases using Federal and State funds in accordance with 2 CFR 200 Uniform Guidance and Requirements from OEL.

Contracts: Purchases for services frequently require execution through a contract, in addition to a purchase order requisition. The type and terms required for each contract will be determined by the Contract Administrator after conducting due diligence for qualifying purchase requisitions. Typical examples of such service types include, but are not limited to:

• Vendor Services • Consulting Services • License Agreements • Lease Agreements • Sub Recipients Services

ELC maintains a system for contract administration to ensure contractor conformance with the terms, conditions and specifications of the contract and to ensure adequate and timely follow up of all purchases. In most cases, the Coalition’s compliance responsibility for vendors is only to ensure

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that the procurement, receipt and payment for goods and services comply with laws, regulations and the provisions of contracts or grant agreements. Program compliance requirements normally do not pass through to vendors. However, the Coalition is responsible for ensuring compliance for vendor transactions which are structured such that the vendor is responsible for program compliance. Also, when these vendor transactions relate to a major program, the scope of the ELC annual audit shall include determining whether these transactions are in compliance with laws, regulations, and the provisions of contracts or grant agreements.

The Coalition will include, in addition to provisions to define a sound and complete agreement, the following provisions in all contracts in accordance with 2 CFR 200 Uniform Guidance:

• Technical requirements and all other requirements the contractor must fulfill • Compliance with applicable State of Florida laws, including those governing the Early

Learning Coalition • Federal laws and regulations as applicable • Requirement to fully cooperate with the Coalition’s performance audits and financial audits,

including access to all records pertinent to the contract • Periodic financial reporting and financial invoicing requirements as well as the method of

payment • Records Retention and notice of records subject to public disclosure • Termination whether without cause, lack of funds, or breach of contract • Closeout procedures, as applicable

In event that vendor circumstances are such that the ELC has no ability to alter or negotiate the terms of an agreement for services, such as when entering into software licensing agreements with large service vendors such as Microsoft, the ELC shall document its effort to comply with the provisions of applicable state and federal law as well as OEL guidelines and the reasons for its decision to proceed without it.

Procurement

In accordance with Florida Law, the ELC must initiate one of the formal procurement methods listed below for goods or services in amounts in excess of $35,000 per fiscal year, unless one of the following exceptions applies:

1. Emergency Actions: Purchases in the event of an immediate danger to public health, safety or welfare or in the event of substantial loss to ELC are exempt from the competitive purchase processes; provided the circumstances of such emergency and the limited selection of processes employed are documented to the board at the next meeting.

2. Extensions/Renewals: Extensions/renewals approved by the ELC within the terms of an original award contract may be exempted from the competitive award processes. Contracts for goods or services may be renewed for a period that may not exceed five (5) years (where allowed) or the

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term of the original contract, whichever period is longer except for those goods noted as exception in F.S. 287.057.

3. Government Contracts: Purchases pursuant to, and on the same prices, terms and conditions of, existing government contracts are exempt from the competitive purchase processes.

4. Government Services: Purchases from other government agencies approved by the ELC may be exempt from the competitive purchase processes.

5. Single Source: Purchases available from one source are exempt from the competitive purchase processes; provided, the circumstances and the limited selection processes employed are documented and approved by the ELC.

6. Other Exclusions: Any other exceptions as authorized by Florida Law.

Methods for Soliciting Formal Proposals:

ELC will select from among the following alternative methods based upon the dollar value of the contract, the level and type of competition, the amount of administration required, and the expected time and expense required to conduct it.

• Request for Proposal (RFP) • Request for Quotation (RFQ) • Request for Letter of Interest (RLI) • Invitation to Negotiate (ITN) • Invitation to Bid (ITB) • Request for Information (RFI)

Approved Vendors:

In addition to vendors procured for specific purchases, the Fiscal Department will develop a list of approved vendors that can used be throughout the year for commonly purchased items that can be acquired from a single vendor. Examples are office supplies and classroom supplies. The approved vendor list will be reviewed annually, as part of the preliminary budget development process.

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Employee, Board & Community Travel Prior Authorization & Booking

The ELC follows the detailed travel policy issued by the Florida Department of Education” (“FDOE”)

In accordance with this policy, all employees, Board members and Community Partners must request prior authorization for all travel expenses, including for routine local mileage to attend meetings. Each travel request must include a justification for the need to travel and a description of the benefits the travel will provide to the State or other Funder. During the budget development process at the beginning of each year, the Fiscal Department will work with each Department Head to estimate the local and out of county travel needs of each staff member. The Office Coordinator will use these estimates at the beginning of each year (and thereafter) to develop and circulate for approval:

• Blanket annual local travel requests for each affected staff member • Individual out of county travel requests or training registration requests to the extent

sufficient information for upcoming events is available or known. Once prior travel authorization requests are approved, the office coordinator will book travel arrangements as needed in accordance with the FDOE travel and ELC purchasing card policies.

An Officer of the Board shall approve all CEO and Board member travel authorizations and reimbursement requests (excluding their own).

Reimbursement

While travelling, Employees, Board members and community partners are expected to use good judgment when incurring costs and ensure that all expenses are reasonable and necessary. Upon return, the traveler must submit a completed travel reimbursement request form to the Office Coordinator by the 5th business day of the month following the completion of travel, along with receipts and a copy of the training or event agenda.

Employees requesting reimbursement for routine local mileage must submit a completed mileage reimbursement request form to the Office Coordinator by the 5th business day following the last day of the month of travel.

Travel reimbursement requests that are not submitted timely may not be paid.

Employees who wish to combine personal travel with ELC business travel will be responsible for paying the proportionate share of all costs for the personal portion of the travel.

No reimbursements will be made for routine local mileage for an employee’s commute to or from work. A commute is defined as the distance from the employee’s residence to the

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employee’s assigned work location. Employees that telecommute from home or who travel directly from home to a different location in the field each day are considered to be assigned to the ELC main office location for purposes of determining a commute and will not be reimbursed for local mileage when required to commute to the main office or the equivalent distance. Mileage incurred to attend voluntary or social events will not be reimbursed.

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Personnel Requisition Policy ELC’s personnel requisition policy ensures workforce planning and proper allocation of funds by requiring the department that has the job need, Human Resources and the Fiscal Department to coordinate efforts. Recruitment activity may begin after the personnel need has been determined, the financial resources are available and have been properly allocated and all required approvals have been obtained.

A personnel requisition is created whenever a Department Head and the Head of Human Resources Agree on the need to:

1. Create and fill a new position, or 2. Refill an existing position when there is a termination of employment, or 3. Hire a temporary employee

In collaboration with the hiring department, Human Resources prepares a job description, hiring justification and assigns a pay grade to the position in accordance with ELC’s Salary Administration Policy and submits the request to the Chief Administrative Officer to confirm the position is within the overall staffing plan budget approved by the Board and that resources are available to sustainably fund the costs. The CEO reviews the justification, draft job description and financial analysis and authorizes the start of recruitment.

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Vendor Set Up Policy Since access to the Master Vendor File in ELC’s financial database provides indirect access to the Coalition’s cash accounts, all requests to set up new and modify existing vendor records must be authorized and assigned a vendor number by the Chief Administrative Officer or his/her designee. Requests to set up new vendors must include a checklist signed by the appropriate staff member confirming that procurement and vendor eligibility standards for State and Federal awards have been met. These standards include, but are not limited to, confirmation that the vendor:

• Is not debarred from receiving State or Federal awards, • Was procured competitively in accordance with all applicable laws and policies and

without real or perceived conflict of interest; • Was selected based on qualifications and cost analysis and duly approved in accordance

with ELC policy • Was selected following reasonable consideration of minority, veteran or woman-

ownership. In addition, all requests to add or update vendor direct deposit banking information shall be independently verified by ELC staff not involved in vendor set up calling the vendor using previously verified contact information to confirm both the old and the new banking information in order to demonstrate that the change was a legitimate request. On an annual basis, vendors will be asked to update their information and profiles. Vendors that have had no activity with ELC for at least 2 full fiscal years shall be inactivated.

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Purchasing Card Policy Overview

An ELC Purchasing Card (PCard) is a credit card issued by a bank through the ELC to individual employees. The PCard is issued on behalf of the ELC, with corporate liability resting with the ELC for payment of transactions. The card does not involve personal credit or an individual credit check. The Board approves issuance of a PCard to the CEO. The CEO approves issuance of PCards to any other staff. Card usage, reconciliation and payments are monitored by a designated PCard administrator that does not have a card in their name. The card issuer requires that the Board assign the role of PCard administrator to an individual ELC staff member through an approved resolution documented in meeting minutes.

Purpose and Usage of the PCard

PCards are issued to the CEO and the CAO to streamline the purchase-to-pay process and to facilitate payment for travel related expenses and small dollar purchases that cannot be made through the normal cash disbursements process. PCards are provided to reduce the use of employee expense reimbursements, travel advances, petty cash and small dollar check requests. PCards may be issued to full-time employees with significant business related travel and/or having buying responsibilities for the ELC. Generally, the PCard is used for employees that anticipate spending at least $5,000 per year on the card. Cardholders are granted a $25,000 credit limit but purchases are limited by policy to a maximum of $5,000 per day. Purchases must not be artificially split to circumvent transactional spending limits. Higher limits may be extended on a temporary or permanent basis with the approval of the Board. PCards may be used only for official ELC business that has been approved by the CEO through a duly signed purchase order or travel authorization. Cardholders shall ensure the appropriateness of transactions and compliance with all relevant laws, rules, regulations, and policies Typical purchases would include the examples provided below; however all purchases are subject to ELC’s purchasing policies

• Dues, memberships, on-line licenses, application fees • Travel and related expenses for all staff • Conference and training registrations • Books, publications, periodicals, subscriptions, newsletters, videos • Catering for meetings • Small local purchases

The following examples represent general guidelines for items that should not be purchased using the PCard:

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• Items that could otherwise be purchased by check through the normal accounts payable process.

• Any transaction that exceeds the cardholder’s daily transaction limit. • Transactions in foreign currencies that may incur foreign exchange fees • A personal purchase, even with the intent of reimbursing the ELC • A transaction whereby the ELC is required to sign any type of contract or

agreement (e.g., lease, independent contractor, and consultant). • A transaction that violates any ELC Financial Policy • Gift Cards or Cash Advances • Cell phones or accessories • Purchases that represent significant risk or liability to the ELC for items or services

with special health, safety, occupational, or environmental risks (e.g., radioactive material, animals, weapons, controlled substances)

• Applications that share payments • Donations

PCard Security The cardholder is responsible for contacting the merchant when goods purchased with the PCard are not acceptable (incorrect, damaged, defective, etc.) and for arranging a return for credit or an exchange. If merchandise is returned for credit, merchants will issue all credits directly to the individual PCard account. The credit will appear on a subsequent statement. Rebates must be payable to the ELC rather than individual employees. Cardholders are responsible for resolving any charge disputes directly with the merchant and/or Bank of America within 60 days of the transaction date. It is the cardholder’s responsibility to safeguard the PCard, the associated account number, and the PIN at all times. PCards must be kept in a secure location. No one other than the cardholder whose name is on the card is authorized to use the PCard. The cardholder may name a designee to make the purchases on their behalf however each swipe must be accompanied by a PCard transaction authorization form sign by the card holder. PCards are not transferable between individuals or departments. In order to limit exposure to fraud, the full PCard account number and PIN should never be recorded electronically or on paper. Cardholders should treat their PCard with the same level of care as one does their own personal credit and report lost or stolen cards or fraudulent transactions to the issuer immediately.

PCard Accountability All receipts must be detailed and itemized. PCard transactions must be accurately identified and allocated to ensure data can be recorded in the financial database by the required due date. Failure to reconcile PCard transactions and/or failure to submit required documentation may result in the suspension or revocation of the PCard privileges. Upon employee separation, transfer, or if a PCard account is no longer deemed necessary, the terminating employee, the CEO or the Board may request closure of a PCard as applicable. Before closing an account, cardholders are responsible for providing all necessary supporting documentation to the ELC before their departure date. Cardholders may be held personally liable for unsupported transactions.

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Accounts Payable Overview

The efficiency and effectiveness of the accounts payable function plays a critical role in ELC’s delivery of some of its core services to the community. Subsidized Child Care Reimbursements, Teacher Professional Development Stipends, and Sub Recipient Reimbursements are all generated through an accounts payable process and each of them requires the same amount of due diligence, attention to detail, customer care and timely processing that any ordinary operating invoice at the Coalition requires.

Complete and accurate accounts payable transactions are central to monthly financial statements and the analysis of ELCs overall financial performance. They are a reflection of all of ELC’s business activities, they generate the majority of ELC’s earned revenues and they are a key factor in measuring annual contract utilization.

To ensure smooth, consistent and continuous operation of this function and to safeguard the Coalition from the risk of errors, fraud or omissions in the process, ELC places a high priority on maintaining structure and controls in handling all types of invoices that go through the accounts payable workflow.

Processing standards for all Accounts Payable

Three Way Match: In order for a payable to be prepared for payment, requests and bills of all types must be matched to documentation that shows the expense is duly authorized and that the goods or services that were agreed to have been received or performed. Without a three way match, the invoice will not be processed.

• Requests for payment may include vendor invoices, employee reimbursement requests, monthly child care attendance submitted and certified in OEL’s Enhanced Field System (“EFS”), or provider stipend payment requests.

• Authorizations include signed purchase orders, signed travel authorization forms, signed contracts, written authorization for payments from funders or child care authorization certificates in EFS.

• Proof that goods or services have been received or performed included packing lists or delivery receipts verified by reception staff; contract deliverables or reports, verified by the contract supervisor or administrator; or certificates of completion or evidence of attendance at trainings verified by the trainer. Child care sign in/out records completed by parents complete the three-way match for provider reimbursements but they are sampled after the fact monthly or during on-site monitoring reviews in accordance with OEL guidance. Retroactive reimbursement adjustments are processed if differences are found.

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Segregation of Duties: Accounts payable activities are separated according to the most current segregation of duties matrix and accounts payable workflow so that no one person is able to complete the entire process alone. This prevents fraud and processing errors.

Transparency: In order to prevent invoice processing from being overlooked or affected by staff absences, all vendor billings received electronically are routed to an email address that is distributed to all participants in the purchasing and accounts payable process. Child care attendance through EFS is available to all members of the provider reimbursement team when providers submit them. All supporting documentation collected in the three-way match are scanned along with payment voucher forms and filed electronically in an online archive available to all fiscal staff for reference at any time.

Redundancy (Cross Training and Cross Checking): In order to prevent gaps in accounts payable processing due to staff changes or absences, ELC trains at least two staff members in all aspects of the accounts payable function to ensure seamless coverage under a wide variety of circumstances and widely shares accounts payable related information with all fiscal staff. All accounts payable processes and checklists are documented and stored in an online archive available to all fiscal staff for reference at any time.

Periodically and no less than once per year, accounts payable and purchasing-related job roles are rotated to ensure that back up staff stay current on procedures and maintain their skills. Prior to completing each cycle, accounts Payable Specialist or Provider Reimbursement Specialists review monthly vendor activity reports to identify any expected invoices that were not received in a given month and follows up as appropriate. The Contract Administrator, Purchasing and Procurement Specialist, Payroll Manager, Office Coordinator, the Provider Reimbursement Director and the Controller cross check sub-lists of expected invoices against actuals received monthly and take appropriate follow up action when gaps are found.

Calendar of Events:

• All general operating invoices are due to the ELC by the 10th day the month following services.

• Child Care Attendance Submissions in EFS are due on the 3rd business day of the month following services.

• Provider reimbursements are issued monthly on the last business day on or before the 19th of each month and no later than the 21st of each month.

• Operating expense payments and employee reimbursements are issued weekly on Wednesdays.

• Special batches or error corrections are issued as needed, depending on the type of transaction, cash resources available and banking signatory availability.

• In case of approaching weather or other significant force majeure even that could require ELC closure for a period of time when vendor payments are due, ELC will make every effort to process provider payment and/or vendor batches early in accordance

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with the ELC Continuity of Operations Plan (“COOP”) as long as a reasonable determination of amounts due is possible and cash resources are available, as determined by ELC.

Batch Analytics and Reconciliation: Before and after each provider payment or other operating expense payable batch is processed, the CAO, CIO, the Controller, the Director of Provider Reimbursements, the Financial Analyst and the Accounting Manager will review batch analytics for anomalies, including, but not limited to:

• Duplicate Payments • Unexpectedly High or Low Payments • New Vendor Activity • Calculation Errors • Allocation Errors • Period Matching Errors • Contract Utilization Issues • Suspected Fraud • Other Unusual or Unexpected Activity

No later than the 25th calendar day following the end of the month, the Accounting Manager and the Payroll Manager will submit reconciliation reports of all Liability Accounts to the Controller for review and approval.

The following invoices will be withheld from processing by ELC:

• Invoices from vendors in the process of being sold, merged or closed that have not yet submitted all documentation requested by ELC as required by law, regulation, contract or policy

• Invoices from vendors that have not submitted documentation required by ELC to verify their eligibility to receive payments as required by law, regulation, contract or policy.

• Invoices subject to duly authorized liens, holds or garnishments. • Invoices from vendors where fraud is suspected. • Invoices for purchases that were not authorized by ELC Invoices withheld will be released for processing in the next scheduled batch when all outstanding problems or document requirements have been resolved.

Replacement checks for child care services: Providers who opt to receive their child care reimbursement payments via check must pay a $15 stop payment fee to receive a replacement check. The $15 fee will be waived if the child care provider subsequently signs up for ACH payments going forward.

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Advances Advances to Providers Required by Statute for Voluntary Pre-Kindergarten (“VPK”) Child Care Services

• A private VPK program provider or school district may choose to receive monthly advance payments for each VPK class instead of receiving payments in accordance with ELC’s uniform attendance policy. The private VPK provider or school district shall notify ELC in writing at the time the provider enters into a VPK Provider Agreement with the coalition regarding whether it has or has not chosen to receive advance payments for its VPK classes. ELC will calculate the advance in accordance with OEL requirements and issue monthly VPK advances concurrently with all other scheduled provider reimbursements; and no later than the last day of the month prior to the month of services that that the advance applies to.

• Providers that request to opt in for VPK advances after entering into a VPK Provider Agreement outside of the normal fiscal year contracting schedule (such as for a summer program only) will receive their first advance in the first regularly scheduled reimbursement cycle in the month following the execution date of the contract.

• ELC will withhold VPK advances upon notification of sale or pending sale of a child care facility until the new owner becomes licensed for Child Care Services and enters into its own VPK Provider Agreement with ELC.

• ELC will reconcile VPK advances in the first regularly scheduled reimbursement cycle following the month of services. ELC will apply any under or over payment to the next scheduled advance calculation or to other non-VPK program reimbursements in the event there is no VPK advance scheduled. If there is an overpayment on a VPK advance and ELC is not able to deduct the unreconciled balance from the next month’s advance or other reimbursement, ELC will contact the provider for repayment in accordance with OEL guidelines. If ELC is unable to collect repayment from the provider, ELC will refer the matter to OEL for further action.

Travel Advances

ELC will issue travel advances to employees upon request for ELC business travel for up to 80% of the estimated costs in accordance with the Florida Department of Education travel policy. Employees who have an ELC-issued purchasing card may not receive a travel advance.

Prohibited Advances

ELC prohibits all other advances and/or loans unless they are specifically required by a funding agency or program.

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Cash Disbursements via Check and Electronic Funds Transfer (“EFT”) Cash Disbursements Drawn from ELC’s Operating Account:

• ELC disburses cash only for expenditures that are documented with fully supported vouchers and duly authorized as required by ELC fiscal policy.

• ELC issues checks and EFT payments on a weekly basis and in accordance with accounts payable policies and the most current segregation of duties matrix and workflows.

• The Controller reviews and posts each voucher prepared by accounts payable and prepares checks, EFT vouchers and a cash flow analysis for all items to be included in each scheduled batch.

• The CAO reviews the prepared batch and countersigns each individual voucher and forwards the batch to the CEO with a summary batch voucher for final approval.

• Individual Checks or EFT transfers over $35,000 must be countersigned by a Board Officer. • When the batch is completed the CAO transmits the EFT batch and implements Positive Pay2

authorization for the signed checks to ELC’s Bank. • The Office Coordinator receives the signed checks directly from the CEO, prepares them in

envelopes and mails them. Checks shall not be mailed or returned to the individuals or departments that authorized the expenditures.

• The backup documentation, along with a copy of each check stub is returned to the Accounts Payable Specialist to be scanned and filed.

• If the Controller is not available to issue cash disbursements, the CAO performs this task and either the CEO or the COO reviews and countersigns each voucher before the CEO signs the checks.

• If the CEO is not available to sign checks, a Board Officer will sign the checks. • Stop payments are processed as needed by the Controller with automatic notice to CAO, who

reviews the item online Check Stock Controls

• ELC check stock is pre-numbered, used in numerical order and accounted for monthly by the Controller.

• Void or spoiled checks are marked and retained in sequential order by the Controller. • Check stock is stored in a secure location accessible to the Controller or the CAO. • Checks are never made payable to “cash” or “bearer”.

2 Positive Pay is an antifraud security measure that electronically alerts ELC’s operating bank when valid checks are issued. When ELC’s bank encounters check numbers, amounts or payees that do not match the information sent to Positive Pay by ELC, a Positive Pay exception occurs which requires the CAO or the Controller to electronically validate the item within 5 hours before the bank will cash it.

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• Checks are never signed as a blank check or by using a signature stamp.

• Checks that are not cashed after 180 days are voided and ELC will attempt to contact the payee for updated information and reissue the check. If the reissued check is also not cashed, the item will be reported as unclaimed property.

EFT Transmission Dual Custody

• The CAO, COO or CEO may initiate a request to assign permission to a staff member to process EFT transactions in ELC’s operating account, and any of these three can approve a request submitted by the other. No one may act alone in granting such permission.

• The Provider Reimbursement Director, the Controller or the CAO may initiate an EFT transaction in ELC’s bank account and Either the CAO, COO or the CEO may approve the transaction. No one may act alone in transmitting an EFT transaction.

Bank Reconciliation

Bank statements are available online after the close of the month. The Financial Analyst reconciles ELC’s Operating Account no later than the 20th calendar day following the month being reconciled. The Controller reviews the reconciliation and posts any required adjustments, such as interest and fees. The CAO reviews the finalized report and approves it. The Treasurer reviews the report periodically upon request. Monthly operating disbursements in amounts between $1,000 and $35,000 shall be disclosed to the Finance Committee and the Board.

Compact discs containing monthly transaction data are sent by the bank to ELC in a tamper-proof envelope and stored unopened by the CAO in a secured cabinet.

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Journal Entries The following transaction types may be recorded as journal entries by ELC Staff:

Recurring

• Payroll Entries • Depreciation • Amortization of Prepaid Expenses • Compensated Absence Expense Estimates • Monthly Cost Pool Allocations • Bank Interest and Fees • Automatic Debits for Benefits Contributions • Automatic Debits for Merchant Account Fees

Non-recurring

• Error Corrections not affecting sub-ledger balances • Approved Write Offs • Other adjustments requested by Auditors

In order to detect incorrect or inappropriate journal entries that may be recorded, all manual entries to the General Ledger must be reviewed and approved by the Controller or the CAO as appropriate.

Supporting documentation for all journal entries must be adequate and sufficient to allow a third party to re-perform the journal entry solely based on the supporting documentation. All journal entries must be processed timely as part of the month end reconciliation process.

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Financial Risk Management Cash Management

ELC monitors cash position on a daily basis in order to prevent accidental comingling of funds among programs and to ensure that ELC has sufficient cash on hand to meet its obligations at all times.

• The Financial Analyst maintains a detailed cash flow forecast that projects cash needs on a weekly basis for a full year.

• The CAO, Controller, Financial Analyst and Accounting Manager work collaboratively to adjust the timing of scheduled cash outflows and inflows, as well as the pace of OEL advance returns at year end to maintain safe cash margins in ELC’s operating accounts, particularly near the end of each fiscal year.

• The fiscal team strives to complete and submit invoices for reimbursement as quickly as possible after expenses are posted to ensure cash received from funders arrives before or very close to the day when the cash outlays to providers, sub-recipients or other vendors are due.

• Aged receivables reports are monitored by the Accounting Manager and the Controller and follow actions are taken, as appropriate.

• At year end, when cash timing challenges are most acute because of the need to return OEL advances, expenses associated with employee payroll and benefits are prioritized for payment above all others when payment delays are necessary.

Retirement Accounts

• The Chief Administrative Officer, in collaboration with the Human Resources Department, is the Plan Administrator for ELC’s 403B Retirement Plan

• 403B Plan Document will be reviewed annually by the CAO for compliance or other needed updates

• At least once every five fiscal years, ELC shall consider re-procurement for a Third Party Administrator to manage transactions, maintain plan records, hold custody of the plan assets and offer investment advisory services to Employees.

Operating Bank

• At least once every five fiscal years, ELC shall consider re-procurement for Banking Services Operating Reserve & Unrestricted Funding

Like all nonprofits, ELC needs access to a stable financial base of accessible, relatively liquid resources that can be tapped as needed for meeting day-to-day cash needs, weathering financial downturns, and investing in new opportunities. However, because ELC was created by statute to primarily administer government programs, there has been little to no opportunity for putting aside reserve funds for a rainy day because of restrictions on the use State and Federal funds. This has left ELC with very narrow financial margins despite large revenue contracts and very little room for error as a consequence.

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To remedy this problem and strengthen the ELC financial position for the long term, ELC shall actively take steps each year to raise and accumulate funds that may be put aside for an operating reserve. ELC’s goal is to accumulate a balance of unrestricted funds equivalent to two months of operating costs.

In the meantime, while ELC is in the process of building this reserve, the use of any accumulation of unrestricted funds will be subject to the following criteria:

Emergencies Required Compliance or Error Correction

Business Continuity for Financial Operations

In order to safeguard the assets, data and operations of the ELC and prevent any single ELC employee from accumulating sole authority to control the access of others, the CAO, the Chief Operating Officer (“COO”) and the CIO maintain the master list of financial and IT administrator access to ELC’s key business systems under dual custody. This master list is updated and reviewed by all three Executives at least quarterly in order to ensure the seamless transfer of access in the event any member of the executive leadership team becomes incapacitated, resigns or is removed unexpectedly.

Insurance

ELC has competitively procured a risk management brokerage service that understands ELC’s particular risk exposures and has access to insurance markets appropriate to our business. The finance committee reviews and approves ELC’s Commercial Insurance Coverage Plan annually.

Records Retention and Destruction

ELC shall retain all records in accordance with State and Federal Law, and shall dispose of records in accordance with the State of Florida records retention schedule GS-1 as applicable.