San Diego Mesa College Foundation, Inc.
Fiscal Policies and Procedures
Approved by Finance Committee on November 13, 2013
Approved by Board of Directors on November 20, 2014
Rewritten and approved by Finance Committee on April 9, 2014
Approved by Board of Directors on April 23, 2014
Internal Controls
The organization employs several safeguards to ensure that financial transactions are properly authorized,
executed and recorded. The Finance Committee may review this process at any time.
Four objectives for controls:
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Authorization (all transactions are authorized)
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Recording (all transactions are recorded)
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Access (allow access to assets only for authorized purposes)
•
Asset accountability (ensure that accounting records describe only real assets)
The general categories of internal accounting controls include:
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Segregation of duties
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Restricted access
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Document controls
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Processing controls
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Reconciliation controls
Cost and Benefits of Internal Control - The benefit of an internal control must exceed its cost. Typically the
primary cost is personnel, and benefits will stem from reductions in expected loss. The Foundation must
assess this cost benefit.
Basis of Accounting
The Foundation prepares its financial statements on the accrual basis of accounting and in accordance with
Generally Accepted Accounting Principles (“GAAP”); consequently revenues are recognized when earned
rather than when cash is received and certain expenses and purchases of assets are recognized when the
obligation is incurred rather than when cash is disbursed.
Financial Statement Presentation
The Foundation is required to report information regarding its financial position and actives according to three
classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net
assets. Unrestricted net assets include all resources available for use by the Board of Directors and
Management’s discretion in caring out the activities of the Foundation in accordance with its By-Laws.
Temporarily or permanently restricted net assets are restricted by the donor or as matter of law. Temporarily
restricted net assets are only expendable for the purposes specified by the donor or through the passage of
time. When a restriction expires (that is, when a stipulated time restriction ends, or purpose restriction is
accomplished), temporarily restricted net assets are reclassified to unrestricted net assets. Permanently
restricted net assets are generally required to be held by the Foundation in perpetuity while the earnings of
those net assets are available for use by the Foundation to support its activities. Donors can place restrictions
on the earnings from permanently restricted contributions at the time the contributions are made or pledged.
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Personnel and Contract Services
The following personnel provide services for the Foundation and are employees of San Diego Community
College District. The terms are used throughout this document:
• Director of Resource Development, San Diego Mesa College (“Director”)
• Vice President of Administrative Services, San Diego Mesa College (“VPA”)
• Bookkeeper/Accountant, San Diego Mesa College (“Accountant”)
• Assistant to the Director (“Assistant”)
There are times when independent contractor services are needed and provided. These terms are used
thought out this document:
• External CPA (“CPA’)
• External Audit Firm (“Auditor”)
Related Party Transactions
The Foundation may receive services from the San Diego Community College District as a related party. These
services will be valued and recorded at year end.
Recordkeeping
In accordance with the Sarbanes-Oxley Act, which makes it a crime to alter, cover up, falsify, or destroy any
document with the intent of impeding or obstructing any official proceeding, the Foundation created a
Documentation Retention and Destruction policy, which policy provides for the systematic review, retention,
and destruction of documents received or created by the San Diego Mesa College Foundation. This policy
covers all records and documents, regardless of physical form, contains guidelines for how long certain
documents should be kept, and how records should be destroyed. The policy is designed to ensure
compliance with federal and state laws and regulations, to eliminate accidental or innocent destruction of
records, and to facilitate the Foundation’s operations by promoting efficiency and freeing up valuable storage
space.
Segregation of Duties
The Foundation’s financial duties are distributed among multiple people to help ensure protection from fraud
and error. The distribution of duties aims for maximum protection of assets while also considering efficiency
of operations.
Security of Physical Assets
Security of physical assets is maintained by San Diego Mesa College, and shall remain the responsibility of the
College until and unless otherwise revoked.
Budgeting Process
The Foundation’s annual budget is prepared and approved annually in accordance with the Foundation’s ByLaws. The budget is prepared by the Director in conjunction with the Finance Committee. The budget is to be
approved by the Board of Directors prior to the start of each fiscal year. The budget is revised during the year
only if approved by the Board of Directors. The Board of Directors reviews and approves the draft budget at
its annual business meeting.
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Internal Financial Reports
The Foundation prepares regular financial reports on a monthly basis. All reports are finalized no later than 30
days after the close of the prior month. Year-end books are closed no later than 60 days after the end of the
fiscal year. The Director presents financial reports of the most recently closed month to the Finance
Committee. The Finance Committee presents reports to the Board of Directors semi-annually.
Significant Accounting Policies
Contributions and Receivables
Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted
depending on the existence or nature of any donor restrictions. A contribution is recognized as income at the
date the contribution is received or pledged.
Non-cash contributions of goods and materials are recorded at fair value at the date of contribution.
Contributed services are recorded at fair value at the date of contribution if they are used to create or
enhance a non-financial asset or require specialized skills are provided by someone who possesses those skills
and would have to be purchased by the organization of not donated.
The Foundation tracks receivables in accordance with GAAP. The Foundation has not historically had difficulty
collecting amounts due; however, receivables are tracked for age and collectability.
Cash and Bank Reconciliation Process
As authorized by the Board, the Director oversees the safekeeping of all cash receipts in accordance with
GAAP and the Foundation’s tax-exempt status.
All bank statements must be reviewed in a timely manner. Bank reconciliation and approval will occur within
15 days of the close of the month.
Given the size of the foundation and available accounting resources, separation of duties is of upmost
concern. To mitigate any risk given there is only one Accountant available, the following procedures must be
followed:
1. Checks received are opened by the Director or Director’s assistant and a manual log is maintained. All
checks and negotiable instruments received by the Foundation shall be marked “For Deposit Only” and
immediately be manually recorded by the Assistant as having been received, along with the day of
receipt, name of the remitter, and the purpose of the remittance. Any correspondence received with
the payment is kept with the record of the payment receipt.
2. Cash received is manually tracked with numbered receipts by the Director’s assistant
3. Deposits are made by the Accountant.
4. Checks and Cash are entered in the accounting system by the Accountant.
5. Check registers are approved by the Director prior to checks being issued.
6. Bank reconciliations are reviewed and approved by the VPA
a. The VPA will compare manual cash and check logs with accounting system reports during the
bank reconciliation process
Expenditures and Disbursement Procedures
All requests for payment must be accompanied by supporting detail and a Check Request Form which includes
all pertinent details of the expense request and disbursement. The check request form must be approved by
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the appropriate authority and the Director. Expenses will be accurately recorded by the Accountant in the
accounting system. Disbursements greater than $1,000 must have two authorized signatures.
Petty Cash
The Director may maintain petty cash not to exceed $100. Petty cash is used primarily to purchase office
supplies, snacks, delivery tips, etc. Petty cash will be kept in a locked cash box. Petty cash will be reconciled
monthly by the Accountant and replenished as needed following proper accounting process.
Credit/Debit Cards
Specific restricted programs through the Foundation may qualify for a credit/debit card.
The Director shall approve all credit/debit cards issued to a named card user. The card user is responsible for
the physical security of the card and card information, and is responsible for maintaining all receipts and
records. All credit/debit card usage must be accompanied by a receipt, signed by the person responsible for
the account. The card user must complete a Debit/Credit Card Usage Form signed by the proper authority and
submit to the Director. The VPA will oversee the reconciliation done by the Accountant of the monthly credit
card report, with the bank statement.
Cash Management, Investments and Operating Reserves
All cash and investments not held in Petty Cash shall be held in a financial institution account and managed by
the Finance Committee in accordance with a Board approved Investment Policy Statement. The Director shall
submit Annual Endowment Statements to all endowment holders upon completion of the annual audit.
Capital Assets
Purchases of assets greater than $1,000 that will be used for more than one year will be capitalized, and all
capital assets will be tracked. Assets will be depreciated using the straight-line method in accordance with
GAAP.
Accruals and Journal Entries
To ensure a timely and accurate close of the books, accruals or journal entries may be required. All journal
entries or accruals must be approved by the Director or VPA and recorded by the Accountant. Every journal
entry must have supporting documentation and be for a specific business purpose. All journal entries will be
kept by month along with the monthly financial statements.
Audit
External audits of the Foundation’s financial statements and activities are conducted annually to ensure
compliance with policies and applicable laws. The Director and VPA will coordinate with the San Diego
Community College District on the annual audit.
Tax Compliance
The Foundation complies with all applicable tax laws. The Foundation is a 509(a)(1) publicly supported
nonprofit organization that is exempt from income taxes under Section 501(a) and 501(c)(3) of the Internal
Revenue Code and classified by the Internal Revenue Service (“IRS”) as other than a private organization. The
Foundation is also exempt from state franchise or income tax under Section 23701(d) of the California
Revenue and Taxation Code and is registered with the California Attorney General as a charity.
Income that is not related to exempt purposes, less applicable deductions, is subject to federal and state
income taxes. The Director and VPA will ensure all appropriate tax filings are complete annually. A copy of
the annually completed federal form 990 is first approved by the Finance Committee then recommended for
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approval for the Board of Directors. Documents will be maintained in accordance with the IRS and California
state record retention rules.
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