Accounting Policies & Procedures
Manual
Updated and Approved: November 6, 2014
1
CAWST
Accounting Policies & Procedures
Index
1. Accounting Policies
APL100 – Financial statement concepts and accountability
APL210 – Cash and cash equivalents
APL220 – Investments
APL230 – Accounts receivable
APL240 – Prepaid expenses
APL250 – Capital assets
APL260 – Liabilities
APL265 – Deferred revenue
APL300 – Revenue recognition
2. Accounting Procedures
APR100 – Overview
APR210 – Cash and cash equivalents
APR220 – Investments
APR230 – Accounts receivable
APR240 – Prepaid expenses
APR250 – Capital assets
APR260 – Liabilities
APR265 – Deferred revenue
APR300 – Revenue recording
APR310 – Expenses – accounts payable and accruals
APR320 – Expenses – expense reports
APR330 – Payroll
Updated and Approved: November 6, 2014
2
Accounting Policy: Financial Accounting
APL 100
Concepts and Accountability
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
The management of CAWST is responsible for the preparation and presentation of the
organization’s financial statements. The statements will be prepared in accordance with Canadian
Generally Accepted Accounting Principles1 and as applicable, Canadian Generally Accepted
Accounting Principles applicable to not-for-profit organizations. As such, CAWST uses the
accrual basis of accounting whereby all revenue is recorded when earned and collection is
reasonably assured and expenses are recorded when incurred.
CAWST uses fund accounting and currently has only one fund2, the Operating Fund which is
unrestricted and accounts for CAWST’s program delivery and administrative activities. If
additional funds are added in the future, a brief description of the purpose of each fund in the
financial statements shall be provided.
The accounting records and the financial statements based upon them include certain amounts that
have been based on estimates and judgments relating to matters not concluded by a period end.
Actual results could materially differ from the estimates.
Financial information presented in other documents, such as an annual report, periodic reports,
and fund raising documents will be consistent with the information contained within the financial
statements.
The statements are prepared within reasonable limits of materiality3 and within the framework of
the accounting policies deemed appropriate and adopted by management. Management will
endeavour to ensure that the information contained within the financial statements have the
qualitative characteristics of understandability, relevance, reliability and comparability.
1
Generally accepted accounting principles – The term used to describe the basis on which financial statements
are prepared. The term encompasses not only specific rules, practices and procedures but also broad principles and
conventions of general application.
2
Fund Accounting - Fund accounting comprises the collective accounting procedures resulting in a self-balancing
set of accounts for each fund established by legal, contractual or voluntary actions. Elements of a fund can include
assets, liabilities, net assets, revenues and expenses (and gains and losses, where appropriate). Fund accounting
involves an accounting segregation, although not necessarily a physical segregation, of resources.
3
Materiality – Materiality should be judged in relation to the significance of financial statement information to
decision makers. An item of information, or an aggregate of items, is material if it is probable that its omission or
misstatement would influence or change a decision.
Updated and Approved: November 6, 2014
3
As part of its accountability for the achievement of the organization’s objectives, management will
put in place policies and procedures to assist in achieving the objective of ensuring, as far as
practical, the orderly and efficient conduct of CAWST’s Business. Policies and procedures are
guidelines to CAWST decision making and courses of action established and maintained to meet
internal control objectives. The responsibility for ensuring adequate internal control is part of
management’s overall accountability for the ongoing activities of CAWST.
As part of its accountability for adequate internal control, management, recognizing there are
limitations within a small organization, will endeavour to ensure that through an appropriate
control environment and control systems, that controls support the reliable achievement of
CAWST’s objectives.
CAWST’s control environment should reflect the collective effect of various factors on
establishing, enhancing, or reducing the effectiveness of specific policies and procedures. For
example, given the size of CAWST and limitations or the absence of certain control systems, it is
expected that the CEO, along with the Board of Directors, will have an increased level of
awareness and involvement in CAWST’s activities. Their level of involvement would be expected
to be reduced in time as the organization growths in the number of staff, systems, and processes,
thereby enhancing the control systems environment.
Control systems will be established to collect, record, and process data and report the resulting
information.
From a Board of Directors’ perspective, control will be viewed as effective to the extent that it
provides reasonable assurance that CAWST will achieve its objectives reliably. Or, stated another
way, control is effective to the extent that the remaining (uncontrolled) risks of CAWST failing to
achieve its objectives are deemed acceptable.
On an annual basis, management will engage independent external auditors4 who will consider
internal controls to determine the nature, extent, and timing of their work. Their audit opinion is
based on the reasonability of financial statements, not internal controls reliability.
On an annual basis, management will review these policies and procedures to determine what, if
any, changes may be required. The Board of Directors shall approve any changes.
4
Audit – An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.
Updated and Approved: November 6, 2014
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Accounting Policy: Cash and cash equivalents
APL 210
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
Cash for reporting purposes will include cash in the bank and any petty cash.
Cash equivalents – to be included on the cash line in the financial statements - will consist
primarily of term deposits, certificates of deposit, and all other highly liquid investments with a
maturity of twelve months or less. Cash equivalents are stated at cost.
The following should be excluded from the cash and cash equivalents line in the financial
statements reported in current assets:
a)
Cash subject to restrictions that prevent its use within the next year; and
b)
Cash appropriated for other than current purposes unless such cash offsets a current
liability
Updated and Approved: November 6, 2014
5
Accounting Policy: Investments
APL 220
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
Cash that is excess to current needs shall be invested and treated as short-term investments for
internal and external financial reporting purposes. Short-term investments have a maturity of
greater than three months but less than one year.
Such investments are stated at cost and reported as part of current assets only if capable of
reasonably prompt liquidation. Where such investments have a maturity beyond one year they will
be recorded and reported as non-current assets and treated as long-term investments for reporting
purposes.
If any investments consist of marketable securities, their quoted market value as well as the
carrying value shall be disclosed. If the market value of any investments treated as current assets
have declined below the carrying value, they should be reduced to market values. Refer to
CAWST’s Investment Policy.
Investments with a maturity longer than one year should be held at Fair Market Value. The
investment should be written down based on whether the value has gone up or declined in the
Statement of Operations.
Income from investments should be recorded and reported separately in the accounting records
and financial statements.
Updated and Approved: November 6, 2014
6
Accounting Policy: Accounts receivable
Policy is Responsibility of: Board of Directors or
delegate
APL 230
Date Initially Prepared:
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
All revenue shall be invoiced and recorded when the service and/or materials have been provided.
All customer invoices shall be recorded as accounts receivable if payment is expected within the
next year.
If circumstances should dictate that the payment will not be received for a period greater than 12months, such receivables shall be segregated and treated as a non-current receivable for recording
and reporting purposes.
Because there are always some customers who cannot pay their debts, selling on credit necessarily
involves credit losses and may require the recording of an allowance for doubtful accounts or the
removal of the receivable from the accounting records completely if there is the belief that the
receivable will not be collected, such as if the customer is bankrupt. The amount of the allowance
for doubtful accounts at the end of a financial period should be calculated by reference to the
accounts outstanding at the end of the financial period after taking into consideration all
circumstances known at the date of review. The allowance for doubtful accounts shown in the
Statement of Financial Position should be netted with the accounts receivable balance and the
resulting number shown net in the financial statements.
Where it is determined that a receivable is wholly or partially uncollectible, an allowance for
doubtful accounts should be recorded. Managements’ assessment of individual accounts will
determine the magnitude of the allowance.
If there are many accounts of a like nature, an allowance could be determined based upon the
aging of such accounts and applying to the totals so determined by percentages based upon past
experience.
The allowance should be reviewed periodically and updated as necessary.
The allowance for doubtful accounts should be shown in the Balance Sheet as part of the Accounts
Receivable line i.e. Accounts Receivable (2004 -net of $xx for doubtful accounts; 2003 – net of
$xx for doubtful accounts). Any disclosure will be based on the materiality of any allowances.
If it is determined that the account will not be collected, the receivable should be removed from
the books along with the allowance that was set up. Amounts subsequently recovered from
accounts previously considered uncollectible and written off should be recorded and credited to
the Statement of Operations in the period of recovery.
Updated and Approved: November 6, 2014
7
Accounting Policy: Prepaid expenses
APL 240
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
Prepaid expenses are cash paid amounts that represent costs incurred from which a service or
benefit is expected to be derived in the future.
The future write-off period of the incurred cost will normally be determined by the period of
benefit covered by the prepayment. When the period arrives to which a prepaid cost relates the
costs will be treated as a period cost for the period in question. Normally such prepaid costs will
be written off based on the elapse of time.
Prepaid expenses should be classified as current assets unless a portion of the prepayment covers a
period longer than 12-months. If they are prepayment costs with a benefit beyond 12-months, they
should be classified as deferred charges in the Statement of Financial Position.
When payments may be accounted for as prepaid expenses but the payment will be amortized
within the current fiscal period and is not considered material to the presentation of CAWST’s
financial position, such payments may be expensed in the month the payment is made. This
treatment will still ensure that the expense is properly accounted for in the fiscal period and yet
there are not excess accounting entries within the fiscal period.
Updated and Approved: November 6, 2014
8
Accounting Policy: Capital assets
APL 250
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
COST:
Capital assets will be primarily comprised of office furniture, fixtures, equipment, computer
hardware, and software. As well, there may be leasehold improvements.
Such assets will be recorded at cost. The cost of a capital asset includes the purchase price and
other acquisition costs such as installation costs, the 50% of the GST not recoverable from the
government, legal fees, freight charges, transportation, and insurance costs. For a contributed
capital asset, cost is considered to be fair value5 at the date of contribution. In unusual
circumstances, when fair value cannot be reasonably determined, while the capital asset could be
recorded at a nominal value of $1, it is felt that in such circumstances that the asset is likely of
nominal value and hence should not be recorded, even at a nominal value of $1. For capitalization
purposes, capital assets should have a useful life of greater than one year and meet the following
capitalization thresholds:
Asset Description
Equipment
Computer hardware
Computer software
Office furniture
Leasehold improvements
Capitalization Threshold
$1,000
$1,000
$1,000
$1,000
$1,000
Subject to materiality, the nature and amount of contributed capital assets received in the period
and recognized in the financial statements should be disclosed.
Any capital asset purchased from a donor at substantially below fair value would also be
recognized at its fair value with the difference between the consideration paid for the capital asset
and fair value reported as a donation contribution.
The cost incurred to enhance the service potential of a capital asset is a betterment. Service
potential may be enhanced when there is an increase in the previously assessed service capacity,
associated operating costs are lowered, the useful life is extended, or the quality of output is
5
Fair value - The amount of the consideration that would be agreed upon in an arm's length transaction between
knowledgeable, willing parties who are under no compulsion to act.
Updated and Approved: November 6, 2014
9
improved. The cost incurred in the maintenance of the service potential of a capital asset is a
repair, not a betterment. If a cost has the attributes of both a repair and a betterment, the portion
considered to be a betterment is included in the cost of the capital asset.
When a capital asset no longer has any long-term service potential, the excess of its net carrying
amount over any residual value should be recognized as a depreciation and amortization expense
in the Statement of Operations. A write-down cannot be reversed.
If an asset is sold, any gain or loss on sale should be recorded as such in the general ledger. Where
assets are no longer in use and effectively scrapped or otherwise disposed of, the remaining book
value should be written off to the depreciation and amortization expense account and the asset in
question removed from the books.
Where assets are fully written off but remain in use, the asset shall continue to be carried on the
books. When an asset has been fully depreciated but has been disposed of, the asset shall be
removed from the listing.
DEPRECIATION and AMORTIZATION:
The cost, less any residual value6, of capital assets with a limited life will be amortized using the
straight-line method over the following estimated useful lives:
Asset Description
Equipment
Computer hardware and software
Computer software
Office furniture
Leasehold improvements
Useful Life
5 years
3 years
3 years
10 years
Term of lease
Periodically, assets may be acquired e.g. a used computer whose useful life may be less than that
stated above. In that case, a period less than the stated policy may be selected as the depreciation
and amortization period.
Depreciation and amortization will be recorded commencing in the month of acquisition.
Depreciation and amortization will be recognized as an expense in the Statement of Operations
and Accumulated Depreciation and Amortization will be netted with the capital asset cost for
presentation in the Statement of Financial Position.
The amortization method and the estimate of the useful life of a capital asset will be reviewed
annually.
6
Residual value -The estimated net realizable value of a capital asset at the end of its useful life. In most cases it is
expected that residual will be negligible and will be ignored for purposes of determining depreciation and
amortization.
Updated and Approved: November 6, 2014
10
Accounting Policy: Liabilities
APL 260
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
As part of the process of maintaining the accounting records in conformity with Canadian
Generally Accepted Accounting Principles, once a transaction or event obligating CAWST has
taken place, the liability shall be recorded in the accounting records. This will normally occur
upon the receipt of the invoice. However in order to prepare the monthly accounting records and
financial statements on a timely basis, it will be necessary to accrue for obligations where invoices
are not been received from the supplier of the goods or services during the monthly preparation of
the accounting records and financial statements. However, materiality shall be considered in the
month end accrual process in order not to accrue trivial amounts. As such, in the month end
process, where amounts to be accrued are in total estimated at less than $1,000, an accrual entry
need not be prepared.
A contingent liability7 is distinguished from recorded liabilities by the fact that the probability of
payment being required on the contingent liability is not determinable or if there is the likelihood
of a liability, the liability cannot be estimated with any reasonable degree of accuracy.
However, the amount of a contingent loss should be accrued in the financial statements by a
charge to income when both of the following conditions are met:
a)
It is likely that a future event will confirm that an asset had been impaired or a liability
incurred at the date of the financial statements; and
b)
The amount of the loss can be reasonably estimated.
7
Contingency - A contingency is defined as an existing condition or situation involving uncertainty as to possible
gain or loss that will ultimately be resolved when one or more future events occur or fail to occur. Resolution of the
uncertainty may confirm the acquisition of an asset or the reduction of a liability or the loss or impairment of an
asset or the incurrence of a liability.
Updated and Approved: November 6, 2014
11
Accounting Policy: Deferred revenue
APL 265
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
Periodically, donations received may be restricted as to when the money should be used or its use
maybe restricted to a specific project. In order to ensure that the cash received is properly matched
with the applicable time period or project, some or all of the cash received will be treated as
deferred revenue.
Where the deferred revenue relates to activity in the next 12 month period, such deferred revenue
will be included with current liabilities. Where the use of the funds will be restricted beyond the
next 12 month period, the deferred revenue should be treated as a non-current liability.
See APL 300 revenue recognition for a further discussion relative to restricted contributions.
Updated and Approved: November 6, 2014
12
Accounting Policy: Revenue recognition
APL 300
Policy is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Policy No.
Date Last Updated:
November 6, 2014
CAWST’s primary sources of revenue will be from donations8 from individuals, corporations, or
government agencies. Other sources of revenue include project funding, fees for services provided
(for example, training courses and consulting services), and net investment income.
Donations and Project Funding:
CAWST shall follow the deferral method of accounting for project funding. If the amount to be
received can be reasonably estimated and collection is reasonably assured, revenue is recognized.
However, donations are recorded at the time of receipt and not when pledged – see APR 300.
There are three types of contributions that CAWST may receive that will have recognition,
measurement, presentation, and disclosure implications for purposes of this policy.
a) A restricted contribution is one subject to externally imposed stipulations that specify the
purpose or time period for which the donated asset is to be used. A donation restricted for the
purchase of a capital asset or a donation of the capital asset itself is a type of restricted donation.
b) An endowment contribution is a type of restricted donation subject to externally imposed
stipulations specifying that the donation be maintained permanently, although the constituent
assets may change from time to time.
c) An unrestricted contribution is a donation that is neither a restricted donation nor an
endowment donation.
Restrictions are stipulations imposed that specify how resources must be used. External
restrictions are imposed from outside the organization, usually by the contributor of the resources.
Internal restrictions are imposed in a formal manner by the organization itself, usually by
resolution of the Board of Directors. Restrictions on donations may only be externally imposed.
Net assets or fund balances may be internally or externally restricted. Any internally restricted net
assets or fund balances will be referred to as reserves or appropriations.
Under the deferral method of accounting for contributions:
8
Donation - A non-reciprocal transfer of cash or other assets or a non-reciprocal settlement or cancellation of its
liabilities. Government funding provided is considered to be a donation. Note: The word donation may be used
interchangeably with the word contribution.
Updated and Approved: November 6, 2014
13
a) Externally restricted contributions related to general operation expenses of future periods
should be deferred in the Statement of Financial Position and recognized in the Statement of
Operations as revenue in the period in which the related expenses are recognized.
The assessment of whether government funding contributions in a particular situation represents a
restricted or an unrestricted contribution depends on the characteristics of the contribution.
Restrictions may be indicated by such factors as the fact that the funding is provided based on the
organization's approved operating budget or more closely relates to time periods than the incurring
of specific expenses. For example, a funder may contribute funds for a particular period without
specifically identifying the expenses towards which the contribution is to be applied. Such
contributions, when received in advance of the period that is being funded, are in effect restricted
contributions related to expenses of the future period being funded. Such funds should not be
recognized in the Statement of Operations immediately but rather deferred and recognized in the
appropriate period.
That the funding is restricted may be a requirement to report to the funder as to how the resources
were actually used. Sometimes restricted government funding left over at the end of the period
must be returned to the funder. If this is the case, such funds would not be accounted for as
deferred but rather as a liability in the Statement of Financial Position.
Restricted contributions for the purchase of capital assets that will be amortized should be deferred
and recognized as revenue on the same basis as the depreciation and amortization expense related
to the acquired capital assets.
Restricted contributions for the purchase of capital assets that will not be amortized should be
recognized as direct increases in net assets.
Restricted contributions for the repayment of debt that was incurred to fund expenses of one or
more future periods should be deferred and recognized as revenue in the same period or periods as
the related expenses are recognized.
Restricted contributions for the repayment of debt that was incurred to fund the purchase of a
capital asset that will not be amortized should be recognized as direct increases in net assets.
Restricted contributions for the repayment of debt that was incurred for purposes other than those
described in the preceding two paragraphs should be recognized as revenue in the current period.
b) Endowment contributions are reported as direct increases in net assets. Under the deferral
method, any endowment contributions are not recognized as revenue in the Statement of
Operations at all since they must be maintained permanently.
c) Unrestricted contributions are recognized as revenue of the Statement of Operations in the year
received or receivable.
Periodically CAWST will receive contributions of materials and services. Material contributions
Updated and Approved: November 6, 2014
14
will be recorded in the financial statements at fair market value when fair market value can be
reasonably estimated. Volunteers contribute substantial donated time and services to assist
CAWST in carrying out its activities. Because of the difficulty of determining fair market value of
these donated services, they are not recorded in the financial statements.
Fees for Services:
Revenue related to fees for services are recorded when the service is provided, all contractual
commitments (whether verbal or written) have been met, and collection is reasonably assured.
Net Investment Income:
CAWST will recognize:
a) Net investment income that is not externally restricted in the Statement of Operations;
b) Externally restricted net investment income that must be added to the principal amount of
resources held for endowment as direct increases, or decreases, in net assets; and
c) Other externally restricted net investment income in the Statement of Operations, in the
appropriate deferred contributions balance or in net assets, depending on the nature of restrictions,
on the same basis as described in paragraph (a) above.
Other:
The invoicing done to record services and/or goods provided should be done as soon as is possible
after it is determined that CAWST is legally able to invoice for the service and/or goods provided.
While the service and/or goods provided will normally occur in a short period of time i.e. a month
or two, in some situations the service and/or goods may be provided over a protracted period of
time. In these situations, a number of interim invoices maybe required to be issued. The interim
invoicing will ensure that the accounting records and financial statements will appropriately
reflect the activity related to the project and ensure that there is no unfavourable cash flow impact
from not doing interim project billings.
Updated and Approved: November 6, 2014
15
Accounting Procedures: Overview
Procedure is Responsibility of: Board of
Directors or delegate
APR 100
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
The day-to-day accounting is undertaken to capture and record the activities of CAWST and allow
management and members and the Board of Directors to be aware of the financial condition and
financial results of the activities of the organization as presented in the financial statements.
This information will be captured not only in the accounting records and the financial statements
derived from such records, but also used in the determination of some of the key performance
indicators of the organization and used as necessary in such other documents as the annual report,
grant submissions, and other documents and reports as determined from time to time.
In carrying out the various accounting procedures, attention should always be given to the fact that
some of the information maybe of a confidential and private nature and as such the privacy and
security of such information is important. While obvious examples of such information are
payroll, donor and member information, all other information should only be shared and provided
to internal and external people and/or organizations on a “need to know” basis.
In carrying out the various record keeping, accounting and financial statement preparation work, it
is desirable that from a control perspective, and to add to the integrity of information, that other
individuals be involved where possible, resulting in a segregation of duties between the preparer
of the accounts and the reviewer. This “second set of eyes” approach can help to ensure that any
human errors are caught, invoicing is done on a timely basis, and supplier bills are all paid as and
when required. While there can be no assurance of error free work, this approach can help to
provide reasonable assurance of adequate stewardship of the organization.
It is recognized that given the size of the organization and the practical need to get work done in a
cost effective and timely manner, that there will be judgment exercised that will at times preclude
the ideal control environment.
The timely preparation of information is critical for all organizations and this reality will at times
dictate that not all functions can be controlled in an ideal manner, even in an organization as small
as CAWST.
On a monthly basis, all balance sheet accounts need to be reconciled so that the components of the
account balance are fully identified and listed and that the item(s) comprising the account balance
are correct. This will entail ensuring what is recorded is correct and ensuring that no amounts have
been excluded from the account balance. This may be the case where items have been recognized
in the income statement prematurely.
Updated and Approved: November 6, 2014
16
The individual preparing the reconciliation should initial and date the reconciliation evidencing
when the reconciliation was prepared.
Someone other than the preparer of the reconciliation should review and then initial all balance
sheet reconciliation accounts on a monthly basis, noting where necessary, adjustments that may
need to be recorded in the subsequent period.
Updated and Approved: November 6, 2014
17
Accounting Procedure: Cash and cash equivalents APR 210
Procedure is Responsibility of: Board of
Date Initially Prepared:
Directors or delegate
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Business Services has primary responsibility for the ensuring that timely bank deposits are made,
that suppliers and employees are paid on their due dates, and that such information is recorded in
the accounting records on a timely basis. Amounts received or paid should be entered in the
accounting records as soon as possible, which may be before a deposit is made or a cheque mailed.
This will ensure that at any point in time the accounting records present the current status of the
financial position of CAWST.
Receipts:
Upon receipt of cheques, Business Services will determine if the cheque represents a donation (see
Appendix A to this Procedure) or a payment with respect to training revenue or project funding:
i.e. an invoice.
All deposits must be made within five business days from receipt.
As a general principle, sufficient information should be recorded with respect to any receipt in
order that the appropriate allocation for accounting purposes may be made and/or tax receipts
issued if the funds represent a donation. See below for more specific comments.
Donations:
The donation information will be captured in a database and reconciled by Business Services and
Fund Development. This database will serve as the backup for the monthly cash entry for the
Donations Cash Receipts.
The database should capture all the information with respect to the donor – name, address,
telephone number and email if applicable, as well as the date of the donation, the amount and if
any of the funds are restricted and if so how much. This will ensure that all information is
available to prepare the tax receipt for the donation. At year end, where donations are received by
December 31 but the amounts are not deposited until the following year, such donations will be
treated as a previous year (December 31) donation and a tax receipt will be issued. Donations will
be recorded in the accounting records in the month received, irrespective of the month the
donation is deposited.
Updated and Approved: November 6, 2014
18
Donations may also be made on-line at Canadahelps.org or through other payment processors,
such as PayPal. This information is retrieved by Business Services or Fund Development. The
gross amount of the donation (by donor) should be shown in the database. However, since
CAWST will pay a fee to the payment processor, an entry will need to be made to expense the
service fee and reduce the cash. Assuming a $100 donation and a $2 service fee the entry would
be:
Debit Miscellaneous Expense: $2
Credit Donations:
$2
A copy of the donor’s cheque will be photocopied and retained and attached to the deposit slip.
Donations received in cash should be received using a “Receipt of Cash form,” which forces the
donation to be received by two people. In the case where the donation is received from an
individual, a pledge card should also be filled out, where possible, in order to capture the actual
and specific amount of cash they meant to give.
Donations not deposited in the month received will be shown as an outstanding deposit in the
preparation of the bank reconciliation. But even though not deposited, such amounts must still
show as a donation receipt in the month.
All envelopes need to be kept on file for any donations received after December 31, which will
determine if the donation is a current year donation vs. previous. If an envelope is post marked on
or before December 31, then the revenue is recorded as a previous year donation. If the envelope
is post marked on or after January 1, then the revenue is recorded as a current year donation.
The database will also indicate whether a tax receipt has been issued. It should be noted that
monthly donors will receive one tax receipt with all of their donation information for the year after
the year end..
For donations received through an online payment processor, tax receipts may be issued
immediately. For all other donations, prior to issuing the tax receipts the Director, Business
Services or Manager, Accounting must review and approve all donations and tax receipts,
including the determination if some of the donations have been restricted. The approval should be
tracked in the database.
For donations not mailed in but rather hand delivered to an employee, the employee will initial
confirmation of receipt of the cheque before giving the cheque to Business Services to make the
deposit. If a donor provides a cash donation the recipient should confirm the amount of the cash
with the donor and obtain all necessary information in order to be able to provide an income tax
receipt.
Cheque(s) received will be added to deposit slip for the day in question.
Note: Given the personal nature of donations, this database should be treated as confidential and
should only be shared with others on a “need to know” basis.
Updated and Approved: November 6, 2014
19
Cash held at the office:
Cash kept at the office must be stored in the safe and a secured office.
Training Revenue:
Cheque (s) received are added to the deposit slip – A photocopy of the cheque received will be
made for future reference purposes.
Training receipts will usually be issued on the first day of training if the cheque has been cleared
through the bank.
If a cheque is received during a workshop and does not clear through the bank within the
workshop period, then an acknowledgement letter will be given to the trainee and a training
receipt will be mailed.
Project Funding:
Cheque(s) received are added to the deposit slip – A photocopy of the cheque received can be
made if it is felt necessary to have for future reference purposes.
Business Services ensures that sufficient information is captured in order that the accounts
receivable records may be updated and determine if there is an over or underpayment of the
outstanding invoice. If such is the case, reference should be made to APR 230 – Accounts
Receivable.
Disbursements:
All cheques require the signature of any two of the cheque signing individuals once the expense
has been approved.
All direct payments, except for payroll and expense reimbursements, require the signature of any
two of the authorized signing individuals. Payroll and expense reimbursements require one
signature.
To the extent changes need to be made to the signatories, Business Services will prepare the paper
work for the bank to request for an addition or deletion and present to the CEO for approval. Once
approved, the necessary paper work will be forwarded to the bank.
Business Services will determine when a cheque run is required and if so, prepare a cheque run
and present the approved supporting invoices and/or employee expense reports along with the
accompanying cheque to be signed.
In some cases an employee travel advance maybe requested. Approval, based on the Grants of
Authority, is required for employee travel advances.
Updated and Approved: November 6, 2014
20
The supply of cheques is maintained under the locked control of Business Services.
Bank Reconciliation:
On a monthly basis, Business Services prepares the bank reconciliation.
As part of the bank reconciliation, Business Services should agree total deposits on the bank
statement to the amounts recorded in the various general ledger accounts. To the extent the bank
statement does not reflect a deposit, the missing deposit should be treated as an outstanding
deposit for purposes of reconciling the bank statement and agreeing it to the general ledger
account for the bank. There could also be an outstanding deposit from the prior month that will
show as a deposit on the bank statement in the current month.
For cheques issued in the month and that have not cleared the bank, they should be treated as part
of the bank reconciliation i.e. outstanding cheques. In addition, outstanding cheques from prior
periods that have still not cleared the bank should remain on the outstanding cheque list.
All reconciling items should be individually listed and reviewed to confirm that they are in fact
still reconciling items. Where such reconciling items are not current month’s transactions, it
should be determined why they remain reconciling items.
Below is a sample format for the bank reconciliation:
Bank Reconciliation for the Month Ending:
Bank statement balance as at the end of the month
Add – Outstanding deposits:
Date
Deduct – Outstanding cheques (listed individually):
Date
Cheque No.
Amount
$xxx
$xxx
Total Outstanding
$xxx
cheques
Add/(Deduct) Other reconciling items and describe fully
Balance per general ledger – must agree to general ledger closing
balance
$xxx
$xxx
($xxx)
$xxx/($xxx)
$xxx
====
The bank reconciliation is to be reviewed and initialed by the Director of Business Services or
another person so designated.
Updated and Approved: November 6, 2014
21
Appendix A
There are three qualifying rules that must be met before a tax receipt can be issued for a donation:
1. Some property – usually cash – is transferred by the donor
2. The transfer is voluntary
3. The transfer is made without an expectation of a return. No benefit of any kind may be
provided to the donor or to anyone designated by the donor, except where the benefit is of
nominal value
For gifts in kind, the fair market value at the time of the donation will be used for purposes of
determining the value for the tax receipt.
Reference should also be made to Canada Customs and Revenue Agency (CCRA) Interpretation
Bulletin (IT-110R3).
Updated and Approved: November 6, 2014
22
Accounting Procedure: Investments
Procedure is Responsibility of: Board of
Directors or delegate
APR 220
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
The ‘burn rate’ is a monthly forecasted expenditures figure. This forecast will be used to help
ascertain if excess funds can be invested for a short period of time. If it is determined that there are
excess funds, then they shall be invested. The investments shall follow CAWST’s Investment
Policy.
Investment:
Business Services will ensure that the necessary accounting entries are recorded to reflect the
investment(s) made. The appropriate amount of interest should be accrued if the GIC is
outstanding over a year-end.
Updated and Approved: November 6, 2014
23
Accounting Procedure: Accounts receivable
Procedure is Responsibility of: Board of
Directors or delegate
APR 230
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
Invoicing:
Before closing the books for the month, Business Services should ensure that all invoices have
been prepared and entered into the system. Also refer to APR 300.
Invoices are prepared by Business Services using the accounting system.
Where an invoice is not prepared, an accrual should be recorded with entries booked to
receivables and the appropriate revenue account.
Cash Receipts:
At the time of the preparation of bank deposit, it should be determined if there has been an over or
under payment of the invoice being paid or if the invoice reference number on the cheque is
different than CAWST’s records. If any of these situations exist, the following steps should be
taken by Business Services. Unless otherwise noted, the relationship manager will be the initial
contact with the customer to resolve invoice discrepancies. Where deemed necessary Business
Services and/or the CEO will be advised of material discrepancies and work with the client to
resolve the discrepancy.
Adjustments:
Once all invoicing and cash receipts are posted for the month, Business Services, in discussion
with the CEO, should determine if any adjustments are required for amounts that are not expected
to be collected. If the balance owing is still being pursued, an allowance for doubtful accounts will
be recorded, if deemed necessary. Such an entry will not impact the accounts receivable subledger or general ledger control account. Such an allowance should be recorded in a balance sheet
account called Allowance for Doubtful Accounts.
If it is determined that an invoice is not collectible – in whole or in part- and the amount has not
been provided for (Allowance for Doubtful Accounts), then the balance owing should be written
off through an adjustment recorded in the records in such a way that the balance in the sub-ledger
is removed and the corresponding balance in the control account.
Where the amount to be written off has previously been provided for, an entry should be
processed to remove both the provision and the receivable amount in the books in such a way that
that the balance in the sub-ledger is removed and the corresponding balance in the control account.
Updated and Approved: November 6, 2014
24
Entry:
Debit Allowance for Doubtful Accounts
Credit Accounts Receivable.
For customers slow in paying the balance owing on an invoice, the CEO will determine if a late
charge will apply to such invoice. If a late charge is to be applied it shall be at a rate of the Bank
of Canada prime + 5% from a date 45-days after the original invoice date. A separate invoice
shall by prepared by Business Services for such charge and approved by the CEO before mailing.
The entry should be recorded as follows:
Debit Accounts Receivable (posted to the control and sub-ledger)
Credit Interest income
All adjustments are to be approved in writing by the CEO.
Month End:
Once all transactions have been posted for the month – invoicing, cash receipts and any
adjustments - Business Services should prepare the aged accounts receivable report from the
accounting system sub-ledger.
The balance in the aged sub-ledger (accounts receivable) should be reconciled to the general
ledger control account. To the extent that any accruals were made but the customer not invoiced,
such an accrual will be a reconciling item as it would not be recorded in the sub-ledger but only
recorded in the general ledger control account.
If differences exist between the sub-ledger and control account (excluding accruals) all such
differences must be resolved as soon as possible by Business Services.
Once the accounts receivable reconciliation is prepared, it and the aged trial balance should be
reviewed with the CEO. Both these reports should be initialed and dated by the preparer and
reviewer.
Any follow-up calls to customers should be made as soon as possible after this review where there
are balances owing that are past due. Whether the CEO or Business Services makes the call will
be determined after discussion of the account.
It may be necessary to work with a customer to arrange for a series of payments if the full balance
owing cannot be paid immediately.
If after repeated efforts to collect outstanding funds, consideration will need to be given as to
whether the account in question should be sent to a collection agency.
As past due balances are reviewed and worked on, consideration will need to be given as to
Updated and Approved: November 6, 2014
25
whether an allowance for the uncollectible balance is required or a complete write-off due to the
uncollectibility of the balance. See Adjustments section above.
Updated and Approved: November 6, 2014
26
Accounting Procedure: Prepaid expenses
Procedure is Responsibility of: Board of
Directors or delegate
APR 240
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Business Services will determine from a review of invoices if costs incurred represent a benefit
that is expected to be derived in the next 12-months. An example would be an insurance premium
that covers a 12 month period. Due to a future benefit, the cost should be treated as a prepaid
expense with the cost to be written off over the next 12-months.
However, as noted in APL 240, to minimize the accounting for amounts within a fiscal period,
such amounts may be treated as an expense in the month the liability is incurred.
If amounts are treated as prepaid expenses, on a monthly basis Business Services will analyze the
balance in the prepaid expense(s) account and ascertain that the balance is correct. This
reconciliation and analysis will include confirming that the write-off period is still appropriate. A
schedule should be developed to aid in this continuity reconciliation and analysis. This
reconciliation should be initialled and dated by both the preparer and the reviewer.
Below is a suggested example of how such an Excel spreadsheet should be set up:
Nature of the
Balance at
Additions in Write-off
Year-to-Date Balance at
Prepayment/Supplier Beginning of the Current Period for
Write-Off End of Period
name
Year –
Year
Opening
– December
January 1,
Balance/Write31, 20xx
20xx
Off Period for
(C)
(B)
Additions (if
(A+B)-C
(A)
different)
Prepaid Insurance:
Directors & Officers
– ABC Insurance
Company
Prepaid Insurance:
Other – ABC
Insurance Company
Prepaid other – XYZ
Company
$xxx
$xxx
Jan –Dec
$xxx
$xxx
$xxx
$xxx
Jan –Dec
$xxx
$xxx
$xxx
$xxx
$xxx
$xxx
Total
$xxx
$xxx
$xxx(1)
$xxx
(1) – The total in the write-off column (C) should agree to the applicable expense account either in total or
by individual write-off category if there are separate general ledger expense accounts.
Updated and Approved: November 6, 2014
27
Accounting Procedure: Capital assets
Procedure is Responsibility of: Board of
Directors or delegate
General:
APR 250
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
Capital assets will only be acquired once the approval is obtained, based on the Grants of
Authority Policy. This approval should be maintained by Business Services. Business Services
should confirm that the asset being acquired is in fact a capital asset i.e. it meets the capitalization
criteria of a cost of equal to or greater than $1,000 and will have a useful life longer than one year.
For the purpose of setting up such assets in the general ledger (and tracking capital assets and
determining depreciation and amortization), the costs should be grouped. For example the
acquisition of a desk might include the cost of the desk ($950), any freight charges ($25), any
assembly charges ($25), the 50% of the GST ($35.00) that is not refundable from the government
for a total cost of $1,035.00. In recording the $1,035.00 cost for the desk, one asset should be set
up in the records and not the four components.
An “asset” can be made up of a number of “components” for the asset to function. For example a
computer will cost say $2000, a key board $175, a monitor $225, a mouse $30 and a printer for
$225. For the “asset” to function, one needs all the components and as such all items in this
example would be capitalized and shown in the records. As another example, CAWST buys a
desk for $1,000 and the chair costs $200. While the desk meets the capitalization threshold the
chair on a standalone basis does not. However for the “asset” to be functional, one needs both
components. As such in this example, one would capitalize the total asset i.e. the desk and chair
(and the applicable GST) and show the items in the records. While there are other examples, one’s
judgment will need to be applied in different situations as to the appropriate accounting and
recording of various transactions.
Where capital assets have been donated to CAWST and the fair value is obtained, such assets will
be recorded at that value, assuming it meets the capitalization threshold of $1,000.
Business Services will ensure that the invoice for the capital assets is coded to the correct general
ledger account upon receipt of the invoice. Where the invoice is not received at the time of the
receipt of the capital asset, the cost shall be accrued.
Depreciation:
On a monthly basis depreciation and amortization will be calculated.
Before the depreciation is calculated, agree the total of assets to the general ledger capital assets
sub-ledger.
Updated and Approved: November 6, 2014
28
Prepare a journal entry to post the depreciation and amortization for the month.
Monthly:
On a monthly basis, Business Services will reconcile the capital asset sub-ledger to the general
ledger control account. This will be initialled and dated by both the preparer and approver of the
reconciliation. As part of this reconciliation, Business Services will prepare a continuity
reconciliation showing activity in both the asset and related accumulated depreciation and
amortization accounts.
Updated and Approved: November 6, 2014
29
Accounting Procedure: Liabilities
Procedure is Responsibility of: Board of
Directors or delegate
APR 260
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Accounts Payable:
Business Services should ensure that all invoices for goods and services provided including
employee/contractor expense reports are approved and entered into the general ledger as soon as
possible. Business Services will enter an accrual for any expected expenses where invoices have
yet to be received. Where there could be a delay in entering invoices into the system due to the
absence of the approver, such invoices should be entered into the system and the approval
received subsequently. Business Services shall ensure that all invoices are approved as
expeditiously as possible. Invoices are only paid when due and approved.
This will ensure that the general ledger is current and reflects on a timely basis all transactions and
that suppliers will be paid in a timely fashion.
Where there is a discrepancy with the charge(s) on the invoice, the individual who approves the
invoice or their delegate should contact the supplier immediately. If an adjustment is required to
the invoice, the supplier should ideally send a credit adjustment invoice that can then be entered
into the system. The net of the two invoices is what CAWST will pay.
Cheque runs are normally done on a bi-weekly basis though cheques can be prepared on as “as
needed basis”.
There will be other liability accounts besides accounts payable e.g. accrued audit fees, accrued
legal fees, accrued vacation pay, miscellaneous accruals, taxes payable, payroll deductions etc.
Some of these liabilities will be determined by the accounting system e.g. payroll related
deductions while others will need to be reviewed to determine what the liability is.
Other:
In some cases, there may be costs that are invoiced infrequently (e.g. audit fees, legal fees etc.)
that could be accrued on a monthly basis since the service provided covers the whole year. Where
such costs are viewed as material, – audit fees would be treated as such – then a monthly journal
entry should be prepared and entered into the system. This will ensure that the financial statements
capture such costs.
All other liability accounts need to be reviewed at every month end to ascertain if entries are
Updated and Approved: November 6, 2014
30
required with respect to other liabilities e.g. vacation pay
Month End & Account Reconciliations:
Accounts Payable:
At month end, where goods or services have been provided but no invoice received and there is a
desire to quickly close the books to prepare financial statements, an accrual journal entry should
be recorded for this charge where the total accrual would exceed $1,000. Refer to APL 260. This
accrual should be reversed in the next period, assuming that the invoice has been received.
A reconciliation should be prepared by Business Services of the Accounts Payable sub-ledger
details and agreed to the general ledger control account. Where there are reconciling items, they
should be shown individually. Old reconciling items should be promptly investigated and
resolved. Once completed, the reconciliation should be initialed and dated by the preparer and
reviewed by the reviewer.
Other - Payroll:
All employees are paid semi-monthly therefore no necessary payroll accruals need to be made at
the end of the month.
The vacation pay accrual is tracked by Business Services. The liability should be agreed to the
general ledger account as part of the monthly reconciliation of the payroll liability accounts.
At the month end, a reconciliation of the payroll accrual and all payroll deductions recorded in the
general ledger should be reconciled to the payroll register. It is anticipated that the balances in the
payroll liability accounts should only reflect the current month payroll activity. All employees
who leave or who take their vacation is at the current rate of pay.
At the end of the year the vacation pay accrual should be approved by the CEO. Refer to the HR
Policy for further details about the vacation policy.
No accrual is recorded for employee overtime, though overtime hours are tracked by Business
Services. Refer to the HR Policy for further details about the overtime policy.
Also refer to Accounting Procedure 330, Appendix A for comments on vacations and
statutory/general holidays and overtime
Other – Audit, Legal and Any Other Accruals
Any balance in the audit and legal accrual accounts (or any other accrual accounts) should be
reconciled monthly.
Other – Suspense Account:
The general ledger has an account set up called suspense account. Prior to closing the books every
Updated and Approved: November 6, 2014
31
month, Business Services must ensure that the balance in this account is cleared.
Updated and Approved: November 6, 2014
32
Accounting Procedure: Deferred revenue
Procedure is Responsibility of: Board of
Directors or delegate
APR 265
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Due to the possibility that future donations may be restricted – either for a number of accounting
periods and or for different uses e.g. to cover operating expenses, for capital expenditures or
possibly for use in a specific country, the receipt of donations will need to be carefully reviewed
and analyzed to ensure that restricted donations are clearly understood by the organization.
Failure to spend donations as requested could require repayment so the identification of such
limitations will require a monthly analysis by Business Services and a review with the CEO.
It is expected that if there are significant restricted funds that the Board should be advised of how
specific programs are doing in meeting objectives and the status of the restricted funds.
Reference should also be made to APR 300.
The reconciliation should be dated and initialed by the preparer and reviewer.
Updated and Approved: November 6, 2014
33
Accounting Procedure: Revenue recording
Procedure is Responsibility of: Board of
Directors or delegate
APR 300
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Donations:
Due to the unpredictable nature of donations, donations are recorded at the time of receipt and not
when pledged.
Business Services must ensure that the funds received should in fact be treated as a donation that
will qualify for the issuance of a tax receipt. The three qualifying rules are:
1. Some property – usually cash – is transferred by a donor;
2. The transfer is voluntary; and
3. The transfer is made without expectation of return. No benefit of any kind may be
provided to the donor or to anyone designated by the donor, except where the benefit is of
nominal value.
Reference can also be made to CCRA’s IT-110R3 for further information related to donations.
In some cases, someone may donate an asset, e.g. a computer, office furniture etc. For such gifts in
kind, the fair market value at the time of the donation will be used for invoice purposes and
ultimately the preparation of a tax receipt. In such situations, the accounting entry would be:
Debit Capital asset
Credit Donations
$xxx
$xxx
CAWST will issue donation receipts no later than the end of February of the following year.
As part of the process of issuing tax receipts the total of money and/or assets received should be
reconciled to the general ledger donations receipt account. This reconciliation should ideally be
done on a monthly basis. The starting point for this reconciliation is the donation database.
This reconciliation can be prepared on an Excel spreadsheet and contain the following
information:
Donation Receipts(1) in 20xx Reconciled to General Ledger and 20xx Statement of
Operations Donations
Gross Total for year from Donations Cash Receipts AA
Updated and Approved: November 6, 2014
$xxx
34
Portion of current year restricted contributions (Column A) for purchase of
capital assets recognized in current year (equal to the asset depreciation in the
current year). B
Portion of prior year restricted contributions for purchase of capital assets in
prior years recognized in the current year (equal to depreciation in the current
year). C
Portion of current year restricted contributions (column A) related to current
year operating expenses recognized in current year. D
Portion of prior year restricted contributions related to current year operating
expenses to be recognized in current year. E
$xxx
Total donations recognized in the Statement of Operations (AA+B+C+D+E)(2)
$xxx
====
$xxx
$xxx
$xxx
(1) Restricted contributions for the purchase of capital assets that will be amortized should be deferred and
recognized as revenue on the same basis as the depreciation and amortization expense related to the
acquired capital assets. As such, it will be over a number of years before the contribution is fully reflected
in the Statement of Operations.
(2) Total should agree to the donations general ledger account on a month and year-to-date basis and the
annual audited financial statements.
Externally restricted contributions related to general operation expenses of future periods should
be deferred in the Statement of Financial Position and recognized in the Statement of Operations
as revenue in the period in which the related expenses are recognized. Refer to APR 265
Sufficient information should be captured with respect to each donation to permit the preparation
of a donor tax receipt.
Project Funding:
Project funding can come in two forms: related to program funding or services provided, e.g.
training.
Revenue related to fees for services are recorded when the service is provided, all contractual
commitments (whether verbal or written) have been met and collection is reasonably assured.
Invoices are prepared for training services provided through CAWST’s accounting system and a
copy is given or emailed to the person and/or company/organization attending the training.
Business Services throughout the month and again at month end will determine, in consultation
with the CEO and/or program managers, where services have been provided or the sponsorship
funds9 for a program have been committed to and are reasonably assured of collection, then an
invoice should be prepared by Business Services and the revenue recognized for accounting
9
Sponsorship Funds – Sponsorship funding is when a company provides funding and receives a benefit in return,
such as public profile for its corporate citizenship, i.e. as a sponsor of a major CAWST event.
Updated and Approved: November 6, 2014
35
purposes.
All project funding invoices follow a sequential numbering series. The next number in the series
should be used. Where a number is not used, Business Services should provide a brief written
explanation for the omission.
Business Services should list all invoices and enter the totals in the general ledger revenue
accounts and enter the individual invoices in the accounts receivable sub-ledger:
Business Services is responsible for ensuring that even if the invoice is sent the next month, the
invoice should be recorded in the month that the service is provided or sponsorship funding is
reasonably assured. Where an invoice is not prepared but the service has been provided and/or
sponsorship funds are committed and reasonably assured of collection, then an accrual should be
made via a journal entry that is reversed next month as follows:
Debit Accounts receivable (not posted to sub-ledger)
Credit Training Services provided
Credit Sponsorship funds
$xxx
$xxx
$xxx
All invoices should be prepared by Business Services.
Updated and Approved: November 6, 2014
36
Accounting Procedure: Expenses – Accounts
Payable and accruals
Procedure is Responsibility of: Board of
Directors or delegate
APR 310
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Refer to APR 260 above.
For expenditures, refer to the Grants of Authority to view approval limits for staff, staff Directors,
and the CEO.
Business Services should ensure that all invoices for goods and services provided are approved
and entered into the general ledger as soon as possible. Where there could be a delay in entering
invoices into the system due to the absence of the approver, such invoices should still be entered
into the system and the approval received subsequently. Business Services shall ensure that all
invoices are approved as expeditiously as possible. Invoices are only paid when due and
approved.
All such invoices entered into the system shall have the accounting code recorded, be marked with
a “Posted” to indicate that such invoices have been entered into the system. The date the invoice is
entered should also be shown along with the “Posted” symbol.
Updated and Approved: November 6, 2014
37
Accounting Procedure: Expenses – Expense
Reports
Procedure is Responsibility of: Board of
Directors or delegate
APR 320
Date Initially Prepared:
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
Refer to APR 260 above. A template of the expense report form can be obtained from Business
Services.
It is expected that all expenditures should be supported by original receipts and a brief description
of the nature of the expenditure. Where a receipt is lost or not received, a description is still
required with respect to the nature of the expense.
Employees will be reimbursed for all reasonable expenditures in the specific circumstances.
Business Services should ensure that all employee/contractor/volunteer/Board of Director Expense
Reports are approved and entered into the general ledger as soon as possible. Where there could be
a delay in entering expense reports into the system due to the absence of the approver, such
invoices should still be entered into the system and the approval received subsequently. Business
Services shall ensure that all expense reports are approved as expeditiously as possible. Expense
reports are only paid when approved. If there are unusual circumstances that prevent approval
prior to payment, exceptions can be made to ensure that an individual is not short of funds to pay
off credit card balances.
Volunteers must have their expenses approved by a CAWST staff member (refer to the Grants of
Authority) prior to actually making the expenditures.
The expense report of the CEO is to be approved by a member of the Audit Committee.
All such employee expense reports entered into the system shall have the accounting code
recorded, be marked with a “Posted” to indicate that the expense report has been entered into the
system. The date the employee expense is entered should also be shown along with the “Posted”
symbol.
Updated and Approved: November 6, 2014
38
Accounting Procedure: Payroll
APR 330
Procedure is Responsibility of: Board of Directors or Date Initially Prepared:
delegate
January 2005
Previous Procedure No.
Date Last Updated:
November 6, 2014
General:
At all times in dealing with payroll related matters, Business Services must be continually aware
of the private and confidential nature of payroll information. While there may also be contractors
working at CAWST, the information related to these individuals, whether their contract
information or the periodic invoices submitted for payment, should receive the same level of
confidentiality as accorded to CAWST employees.
Payroll information should always be kept under lock and key when not in use.
Prior to the payment of employees or contractors, Business Services should confirm that
employees on the payroll have signed an approved contract. For further information on payroll
related matters refer to Appendix A attached to this procedure.
Other:
All employees are paid semi-monthly; therefore there are no necessary accruals to be made at the
end of the month.
A vacation pay accrual is tracked by Business Services. The liability should be agreed to the
general ledger account as part of the monthly reconciliation of the payroll liability accounts.
At the month end a reconciliation of the payroll accrual and all payroll deductions recorded in the
general ledger should be reconciled to the payroll register. It is anticipated that the balances in the
payroll deduction liability accounts should only reflect the current month payroll activity. All
employees who leave or who take their vacation is at the current rate of pay.
At the end of the year, the vacation pay accrual should be approved by the CEO.
No accrual is recorded for employee overtime though overtime hours are tracked by Business
Services. The untaken overtime hours should be reviewed periodically to ensure that there is not a
growing potential liability.
Also refer to APR 260 – Other Payroll for additional work with respect to month end
reconciliations.
Updated and Approved: November 6, 2014
39
Other – Garnishments, Family Support, Maintenance Orders and Certain Wage
Assignments
Employers are required by law to enforce garnishments, family support, maintenance orders, and
certain wage assignments. As such, if an employee has one of these notices and CAWST has been
advised, CAWST is required to withhold the specified amount or percentage of an employee’s
wages and remit the amount to the applicable court or government agency.
A Requirement to Pay notice remains in force until the tax debtor’s liability is paid in full or until
the Canada Revenue Agency (CRA) releases the employer from its collection obligations.
Likewise, Human Resources and Skills Development Canada (HRSDC) Third Party Demand
notices must be adhered to until the liability is satisfied in full or the employer is released by
HRSDC from its deduction obligations.
Even if an employee indicates that they have reached a settlement with the government regarding
his or her outstanding debt, an employer is required to continue the specified deductions until they
receive a written notice from CRA requesting that the deduction be terminated.
If more than one garnishment is received, legal counsel may need to be consulted to ensure how to
proceed with multiple orders including handling the priority of one order over another.
Alberta permits a fee to be deducted for the administration of some of the orders. Not all orders
necessarily permit the deduction of a fee. Business Services should ensure that before any fee is
deducted that legal counsel may need to be consulted or a call made to the agency to confirm
whether or not CAWST may deduct an administrative fee.
It should be noted that failure to make the required deductions may leave CAWST responsible for
the deductions not remitted. In Alberta employers who do not comply with payment requirements
could be held liable for the entire debt.
Updated and Approved: November 6, 2014
40
Appendix A
Employee and Contractor Hiring



Paid positions at CAWST are subject to approval of the CEO, who will assign wage,
position description, and whether the position will be a contractor or employee.
The CCRA has guidelines on whether an individual is a contractor (self-employed) or an
employee. CAWST will use these guidelines to determine the status of a hired individual.
Refer to http://www.ccra-adrc.gc.ca/E/pub/tg/rc4110/README.html for more information
on these guidelines.
Pay Periods




CAWST employees will be paid semi-monthly on the 15th and the last day of the month.
Cut off for any pay period will be the Friday prior to the payday. Also refer to the section
on Overtime below.
Employment Insurance (EI), Canada Pension Plan (CPP), Federal and Provincial tax will
be deducted from each pay. In addition to this, any other deductions will be taken off as
applicable.
Employees will receive their net pay by direct deposit or by cheque.
.
Updated and Approved: November 6, 2014
41