3.1 Accounting Policies and Procedures

Policy and Procedure 3.1 - Accounting

1. Basis of Accounting

   1. Policy: The organization uses the accrual basis of accounting. The accrual basis is the method of accounting whereby revenue and expenses are identified with specific periods of time, such as a month or year, and are recorded as incurred. This method of recording revenue and expenses is without regard to date of receipt or payment of cash.

   2. Procedure:

      1. Throughout the fiscal year, expenses are accrued into the month in which they are incurred. The books are closed no later than the 15th of the month after the close of the month. Invoices received after closing the books will be counted as a current-month expense.

      2. At the close of the fiscal year, this rule is not enforced. All expenses that should be accrued into the prior fiscal year, are so accrued, in order to ensure that year-end financial statements reflect all expenses incurred during the fiscal year. Year-end books are closed no later than 90 days after the end of the fiscal year.

      3. Revenue is always recorded in the month in which it was earned or pledged.

2. Reconciliations

   1. Policy: All bank and credit card statements will be opened and reviewed in a timely manner. Reconciliation and approval will occur within 30 days of the close of the month. The Treasurer approves the Executive Director charges and any invoice over $5,000.

   2. Procedures:

      1. Monthly statements are reviewed and reconciled by the Operations Director. The Operations Director communicates to the Executive Director any discrepancies, and reports back the results of the reconciliations.

3. Security

   1. Access to online banking and credit card accounts is restricted to the following:

      1. The Executive Director

      2. The Operations Director

   2. Access to the internal accounting system (Quickbooks) is restricted to the following:

      1. The Executive Director

      2. Operations Director

      3. The accountant

      4. External Auditor

   3. Only the Executive Director has the authority to approve payments and sign checks, or perform online banking transactions, and any payments in excess of $5,000 must be approved by the ESIP President in addition to the Executive Director.

      For continuity, the operations Director will have access to online bank and grant accounts. In the event that the Executive Director is unable to perform these tasks, the Operations Director may approve payments and sign checks, or perform online banking transactions, and initiate draws from federal grant accounts with written permission from the Executive Director or Treasurer for each instance. (exercising this authority without express permission is grounds for disciplinary action up to and including termination.) All authorizations will be kept for review by the auditors.

   4. Only the Executive Director has administrative rights to internal and external accounting functions, and only the Executive Director can add, delete, or grant permissions to the list of others who have access.

This Policy was approved by the Board of Directors of ESIP on October 17, 2017. Revisions to this policy were approved by the Board on September 15 2021.