Section II – The Policies and Procedures
Financial Policies and Procedures Manual
What is a Financial Policy?
It is part of the Treasurer’s responsibilities to ensure that the Board develops, reviews and
updates, as necessary, a set of financial policies that will provide an overview of how the notfor-profit will manage it finances. The financial policies should also incorporate the internal
controls that help to define how transactions will be documented. Within each policy there
should also be detailed procedures documenting how the organization will make effort to
ensure compliance.
A financial policy is a written document that clarifies the roles, authority, and responsibilities for
essential financial management activities and decisions. The purpose of the financial policy is to
describe and document how the Board wants the financial management activities to be carried
out.
In the absence of an adopted policy, staff and Board members are likely to operate under a set
of assumptions that may or may not be accurate or productive.
TIP: Developing and adopting a written financial policy is a valuable practice for any not-forprofit organization, no matter how small or large.
Developing and Approving a Financial Policy
It is important to create and adopt a policy that meets your organization's needs. There are
some helpful steps you can take to make the policy as useful as possible:
1. Discuss policy needs with the Treasurer and Finance Committee or Executive
Committee.
2. Conduct informal risk assessment.
3. Draft financial policy, followed by review and discussion by staff and Board leadership.
4. Present to Board for adoption.
5. Train staff on policy.
6. Review at least annually.
TIP: Because of the turn over in voluntary organizations, like community associations, setting
policy will help to provide continuity over the long term.
Remember the Board has the following responsibilities which might help you in achieving your
responsibilities as the Treasurer.
1. The Board should engage in ongoing planning activities as necessary to determine the
mission of the organization and its strategic direction, to define specific goals and
objectives related to the mission, and to evaluate the success of the organization's
services toward achieving the Mission.
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2. The Board should approve the policies for the effective, efficient, and cost-effective
operation of the organization.
3. The Board should annually approve the organization's budget and assess the
organization's financial performance in relation to the budget at least four times per
year.
4. The Board is responsible for the financial health of the organization and should actively
participate in the fundraising process through members' financial support and active
seeking of the support of others. As part of the annual budget process, the Board should
review the percentage of the organization's resources spent on program,
administration, and fundraising, with a goal of at least ____(70)% of revenue used for
programs.
5. The Board should hire, set the compensation for, and annually evaluate the
performance of the executive director/CEO.
6. If the organization employs staff, the Board should annually review its overall
compensation structure, using industry-based surveys of salaries and benefits and at
minimum ensure that:
 a livable hourly compensation is paid to all employees, whether full- or part-time
 sufficient funds are allocated to contribute to full-time, permanent employees'
benefit plans
 the Board establishes policies, when appropriate, on employee benefits, vacation,
and sick leave
7. The Board should approve written policies and procedures governing the work and
actions of its employees and volunteers. These policies and procedures should address
the following: working conditions; evaluation and grievance procedures; confidentiality
of employee, volunteer, client, and organization records and information; and employee
and volunteer growth and development.
8. The Board should ensure that an internal review of the organization's compliance with
known existing legal, regulatory, and financial reporting requirements is conducted
annually and that a summary of the results of the review is provided to the entire board.
9. The Board should periodically assess the need for insurance coverage in light of the
nature and extent of the organization's activities, its financial capacity and compliance
with the insurance requirements required through their Lease or License of Occupations
Agreement - any decision to make changes to general liability insurance coverage or
Directors and Officers liability insurance coverage should be made only by the Board of
Directors.
Policies, Best Practices and Suggested Procedures
In order to supply our members with the most critical information, the following provides some
high level policy statements, best practices and suggested procedures that relate to the specific
policy. The Board of Directors will clearly see policy statements and then, using the suggested
best practices and procedures make their own custom policy and procedures that will meet
their unique needs. This section is not exhaustive but rather highlights some of the most
important areas of consideration.
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1. Policy- Property, Plant & Equipment
Policy Statement
The Association values its assets at cost and amortizes Property, Plant & Equipment at the
following rates:
Buildings - 20 years straight line
Furniture and equipment - 5 years straight line
Computer hardware - 3 years straight line
Other equipment - may vary*
*assets are amortized based on useful life, for example, building improvements, buy-out of leased equipment
Best Practices to Be Achieved
1. To reduce the possibility of a material misstatement on the financial statements, all
Property, Plant & Equipment should be amortized according to Canadian generally accepted
accounting principals.
TIP: According to Canadian generally accepted accounting principles Property, Plant &
Equipment can be expensed or capitalized according to Section 4430 of the CICA Handbook.
Expense
“…if the average of annual revenues recognized in the statement of operations for the current
and preceding period of the organization and any entities it controls is less than $500,000” then
Section 4430.40 is allowable (can expense Property, Plant & Equipment in the period they are
acquired).
Section 4430.40 states:
“…Organizations meeting the criterion…should disclose the following:
(a) the policy followed in accounting for Property, Plant & Equipment;
(b) information about the major categories of Property, Plant & Equipment not recorded in
the statement of financial position, including a description of the assets; and
(c) if Property, Plant & Equipment are expensed when acquired, the amount expensed in
the current period.”
Capitalize
“The Accounting Standards Board encourages even those organizations meeting the criterion in
paragraph 4430.03 to follow all of the Recommendations of this Section.” (CICA HB 4430.04)
This means that all organizations should “capitalize all classes of Property, Plant & Equipment,
amortize and write down those assets in accordance with this and other relevant Handbook
Sections” (CICA HB 4430.04A)
Property, Plant & Equipment should be recorded at cost and amortized over its estimated useful
life.
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“The cost of a capital asset includes the purchase price and other acquisition costs such as
installation costs, design and engineering fees, legal fees, survey costs, site preparation costs,
freight charges, transportation, insurance costs and duties.” (CICA HB 4430.08)
“Useful life is the estimate of the period over which a capital asset is expected to be used by an
organization.” (CICA HB 4430.05 (i))
Amortization
“The cost, less any residual value, of a capital asset with a limited life, should be amortized over
its useful life in a rational and systematic manner appropriate to its nature and use by the
organization. Amortization should be recognized as an expense in the organization’s statement
of operations.” (CICA HB 4430.16)
Suggested Procedures
Property, Plant and Equipment Purchases
1. Property, Plant & Equipment purchases will be made according to the capital budget and
approved by the Board before purchase.
2. Purchases with a value over $_____ will require three quotations before Board approval is
sought.
3. Property, Plant & Equipment with a value greater than $______ will be recorded as
Property, Plant & Equipment and amortized over their useful life. Items under this amount
will be recorded as expenses.
4. The Association will keep a list of Property, Plant & Equipment including the item, when
purchased, and the purchase price.
5. When Property, Plant & Equipment is no longer in use by the Association, it is disposed of
and removed from the list and the accounting records.
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2. Policy - Annual Budget
Policy Statement
In order to ensure that planned activities minimize the risk of financial jeopardy the Board will
approve and monitor the Annual Operating and Capital Budgets
Best Practices to Be Achieved
1. The Board approves, monitors, and revises as necessary an annual budget that is tied to
program outcomes and supports operations.
2. Board approves budgets that contain realistic projections of revenue and expenses.
3. A method is established for budget planning and monitoring at the program level.
4. Annual budget is tied to outcomes, is in alignment with available resources, includes staff
input, and supports programs, administration, evaluation, and fundraising.
Suggested Procedures
Budget Process
1. The fiscal year of the Association commences _____________.
2. The business plans developed by the Board of Directors will be used by the committees and
staff to develop work plans and budgets for the year.
3. The budget planning process will commence at the end of the third quarter with a draft
budget being presented to the Board at their regularly scheduled meeting the prior to year
end - final approval will follow shortly thereafter, but before the first of the new year.
4. To start the process, the Board will provide certain budget assumptions to committees,
program directors, staff and contractors and include things such as economic
considerations, potential capital projects, and adjustments to programs and some salary
increase guidelines.
5. The finance committee will review the draft budget and provide feedback to the committees
and others who will update and return to the finance committee.
6. The finance committee will provide the budget with a recommendation to the Board as
noted above.
7. The finance committee will develop a capital budget with input from others and make
recommendations to the Board for approval.
8. Capital item expenditures will be approved by the Board as per the contracting policy.
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3. Policy – Authority
Policy Statement
The Board of Directors is ultimately responsible for the financial management of all activities of
the organization.
Best Practices to be Achieved
1. No one position is given total authority.
2. Checks and balances are in place to mitigate the risk to the organization.
Suggested Procedures
Authority
1. The _______________ (senior staff person or Treasurer) is authorized to act on the Board's
behalf on financial matters when action is required in advance of a meeting of the Board of
Directors.
2. The _______________ (senior staff person or treasurer) is responsible for the day-to-day
financial management of the organization. The Board authorizes the ____________ to hire
and supervise staff and independent consultants, pay bills, receive funds, and maintain bank
accounts.
3. Two signatures will be required on all cheques.
4. The ______________ (senior staff person or treasurer) is authorized to enter into contracts
for activities that have been approved by the Board as a part of budgets or plans. The Board
of Directors must authorize any contracts outside of these parameters and all contracts with
a financial value greater than $_____________.
5. The __________________ (senior staff person or treasurer) is authorized to manage
expenses within the parameters of the overall approved budget, reporting to the Finance
Committee on variances and the reason for these variances.
6. The Board of Directors must approve any use of the Board designated cash reserve fund.
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4. Policy - Contracting
Policy Statement
The Association contracts with individuals and organizations to provide service to the
Association.
Best Practices to Be Achieved
1. All contracts will be awarded in an atmosphere of openness, competitive opportunity, and
equal access to information.
2. No contracts will be entered into that place the association in financial jeopardy.
3. If a contract is awarded to a company of a staff or board member, relative of the staff or
board, this has to be documented and approved at a board meeting.
Suggested Procedures
Contracts for goods and services
1. Contracts must be consistent with the objectives of the Association and within approved
budgets.
2. All contracts over $5,000 require a minimum of three quotations. The lowest bid will not
necessarily be accepted; however, the reasons for accepting the higher bid must be
documented and kept on file.
3. A Board member identifying a real or potential conflict of interest must withdraw from any
discussion and voting on the contract.
4. Committee chairs must review all contracts for content and format.
5. The executive committee must give final approval for all contracts and approve all changes to
contracts.
6. The Board chair, committee chair and the contractor must sign all contracts.
7. The committee chair requiring the contracted services must monitor delivery of the service.
8. They must review invoices to be sure that services have been received and that billings are
consistent with contract specifications.
9. The committee chair then signs the invoice and forwards to the accountant for payment.
Employment contracts
1. Contracts will be signed by all employees of the Association, contracts will include start date,
job title, details of compensation and benefits.
2. All contracts will be in accordance with Alberta Employment Standards and adhere to the
Canada Revenue Agency around employment of employees or contractors.
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5. Policy - Diversified Funding Base
Policy Statement
The organization generates sufficient revenue through a diversified funding base to support the
administration, programs and life cycling of the community’s assets.
Best Practices to Be Achieved
1. There is a fund development plan that ensures a diversified funding base.
2. The organization engages in cost effective fund development activities.
3. Direct and indirect costs are monitored, including allocation of staff time to program,
administration, evaluation, and fundraising activities.
4. A system exists for tracking revenue and expense streams to comply with government
reporting requirements, funder's expectations and to effectively manage the organization's
finances.
5. The association should follow the ethical fundraising & financial accountability code
developed by Imagine Canada
(http://www.imaginecanada.ca/files/www/en/ethicalcode/ethical_code.pdf)
Suggested Procedures
Fund Development Plan
1. A fund development plan will be developed each year in alignment with the strategic,
operating and marketing plan. The fund development group will work with the finance
committee to help meet the revenue needs.
2. So as not to be, or appear to be, overly dependent on donations from any particular sector
or type of individuals no more than ____(30)% of the overall budget will be obtained from
any one funding source.
3. The association may solicit and accept donations from any individual or organization that
supports the mission of the association. The association will not solicit or accept donations
from __________.
4. The costs of fundraising activities are clearly reported on financial statements and during
the campaigns themselves.
5. The donors’ restrictions will be respected for all funds. The funds will be restricted and
reported upon as per agreements with the funders in return for their support; all donors
shall be acknowledged graciously, thanked appropriately and kept apprised of the ongoing
activities of the organization.
6. Investment and management of the funds shall be inline with the investment policy.
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6. Policy - Financial Data
Policy Statement
All financial data is kept up to date and use Canadian generally accepted accounting principles.
Best Practices to Be Achieved
1. Organization obtains periodic independent reviews of financial record-keeping methods.
2. Board regularly approves financial statements.
3. Annual audits or reviews are conducted.
Suggested Procedures
Accounting system
1. The Association will use a commonly recognized accounting system for the day-to-day
accounting of all transactions of the Association and will include all committees and
programs of the Association.
2. Day-to-day accounting will be completed on a timely basis using resources as determined by
the finance committee.
3. The accountant will use accrual accounting to provide the finance committee and the Board
with up-to-date information upon which to base decisions.
4. The monthly financial statements will be available to the finance committee the third week
of the month for previous month’s activities providing a monthly and a year to date budget
to actual comparison and an explanation of variances greater than 10% of that month’s
budget or 5% of the annual budget.
5. Adjusting entries into the general journal (ie. Not going through a sub ledger like A/P, A/R,
Invoice, Payroll) will be provided to the Treasurer for approval once per month.
Financial Documentation
1. All transactions need to be entered into an accounting system.
2. Adequate documentation will be maintained to support all general entries.
3. At the end of each month, the ____________ (staff position) will prepare a balance sheet,
income statement.
4. The statement of activities report will include a comparison to the budget.
5. _____________ (organization) will maintain its accounting records on the accrual basis in a
manner that facilitates the preparation of audited financial statements conforming to
Canadian generally accepted accounting principles.
Bank reconciliations
1. Bank reconciliations for all Association bank accounts will be completed and adjusting entries
entered into the accounting system.
2. Bank reconciliations will be provided to the Treasurer for approval once per month.
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Documentation filing
1. All documents relating to the accounting function will be filed using an appropriate filing
system. This documentation will be readily available for finance committee questions and for
audit purposes.
2. The documentation will be stored for the periods required by legislation.
3. The secretary of the board will prepare accurate minutes of all meetings of the board of
directors and committees, and note all items in the minutes relating to finance and take
appropriate action.
Selection of Auditor
1. The Finance Committee will recommend appointment of external auditors to the Board who
will recommend the appointment to the membership at the Annual General Meeting of the
Association.
2. After the AGM notify the auditor that they have been appointed.
3. One month before the year end call the auditor to book a drop off time for the records.
4. In order to facilitate the timeliness of the audit process, the finance committee will ensure
that the engagement letter and other documentation required by the auditor are completed
in a timely manner.
5. The committee will ensure that all documentation is readily available when required by the
auditor.
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7. Policy - Financial Filings
Policy Statement
The organization files all the appropriate legal and financial documents as required by law.
Best Practices to Be Achieved
1. A system exists that ensures the filing of all legal and financial documents, and updating as
required.
Suggested Procedures
Annual report to the City of Calgary
1. As part of the legal agreement between the City of Calgary and the Association, the
Association is required to provide a report including a copy of the audited financial
statements and the management letter received from the auditor for each fiscal year.
2. This report and statements will be provided to the City of Calgary by _______ each year.
3. The Finance Committee will ensure that the report is filed in a timely basis.
Legislative filings
The Finance Committee will provide a report to the Board on the following legislative filings:
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monthly payroll remittances filed by the fifteenth of the following month to Canada
Revenue Agency (CRA)
GST quarterly filing to Canada Revenue Agency
T4/T4A and summaries filed by February 28 to CRA
Corporate tax return (T2) filed with CRA within six months of fiscal year end
Other reports as identified
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8. Policy - Financial Reporting
Policy Statement
In order to ensure and maintain financial health and viability, the organization prepares,
provides, utilizes and files appropriate financial information in a timely manner.
Best Practices to Be Achieved
1. The Board approves, monitors, and revises as necessary an annual budget that is tied to
program outcomes and supports operations and evaluation.
2. All managers are provided periodic reports on planned and actual expenditures to-date for
each significant category of costs in their area of responsibility.
3. In order to ensure that the assets of organizations are used in accordance with the legal
restrictions of donors and the purposes designated by the Board.
Suggested Procedures
Annual audited financial statements
1. The financial statements will be prepared in accordance with Canadian generally accepted
accounting principles and accompanied by the report of the external auditors of the
Association.
2. The Finance Committee will oversee the audit process and ensure that it is completed on a
timely basis.
3. The annual external audit will be completed as per the Board calendar, but commenced no
later than six weeks following the year end and the statements and report presented at the
annual general meeting of the Association each year.
4. The external auditors will be appointed annually by the members at the Annual General
Meeting.
Funders
1. Reports to funders will be filed on a timely basis as per contracts and other requirements
such as Alberta Gaming.
2. Information will be recorded and filed in an organized fashion such that required reports
can be completed in an efficient way.
3. The Finance Committee will ensure their annual calendar includes all reporting deadlines
and will monitor the process to ensure timely filing.
Board of Directors reports
The Board will be provided with monthly reports that include a summary of actual revenue and
expenses versus budget per activity and a projection of revenue and expenses to year end.
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9. Policy - Insurance
Policy Statement
Reasonable, adequate coverage will be maintained to safeguard the assets of the organization.
Best Practices to Be Achieved
1. General Liability and Director and Officer Insurance will be obtained and maintained.
2. The insurance coverage, at minimum meets the requirements of the funders or stakeholders
(e.g. City of Calgary Lease or License of Occupation).
Suggested Procedures
Insurance Practice
1. The policy will be a standard liability business policy for blanket contents, valuable papers,
extra expenses, employee dishonesty, crime and comprehensive general liability covering all
operations of the Association.
2. Director and officer liability will include standard errors and omission insurance for Board
members.
3. The Finance Committee will carefully review insurance policies before renewal.
4. The Treasurer will maintain insurance policies in insurance files.
5. The policy will meet the requirements of the City of Calgary’s License of Occupation (or
Lease).
6. The policy will be reviewed on an annual basis by the Finance Committee to ensure coverage
is appropriate and updated as necessary.
7. The Association insurance broker is to be notified of all Association sponsored events to
determine is additional coverage is needed.
8. Automobile insurance is not provided for any Association volunteers or staff.
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10. Policy - Internal Controls
Policy Statement
The organization has an adequate system of internal controls which is reviewed annually.
Best Practices to Be Achieved
1. Written financial policies exist that govern: internal control procedures, purchasing
practices, reserve funds, compensation, expense account reporting, and earned income.
2. Internal financial management processes are monitored, including handling of cheques,
petty cash, cash disbursements, payroll management, etc. to prevent errors and/or misuse
of funds.
3. The use of restricted funds are monitored.
Suggested Procedures
Internal Control Procedures
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never sign blank cheques
if a cheque is made out to one of the signatories on the bank account then that person
should not be signing the cheque
when reimbursing directors/members, make sure receipts are provided and that
authorization was given for the expenditure
all reimbursements should be done by cheque and be supported by receipts or an invoice
for an approved budget expenditure
all cheques issued must be made out to a specific vendor or person. never issue a cheque
made out to “cash”
signing officers should not live in the same household nor should they be related
the people signing cheques should see the backup documents at the time of signing and the
cheques should be completed in full
all receipts for contributions and income should be prepared in duplicate and should be prenumbered
invoices should be approved for payment - cancel invoices when paid so they will not be
paid a second time - mark “paid”, chq #, date of cheque and account number posted to
use pre-numbered purchase orders and have them approved
cash must be counted, recorded and deposited by at least two people who are at arm’s
length, preferably people other than the bookkeeper - the recording should only be done
by the bookkeeper
be aware of what types of expenditures you can make with your gaming funds i.e. check
your casino licenses and other gaming licenses to see what was approved
you should not obtain credit or debit cards in the name of the organization - personal credit
or debit cards can be used for organization expenses and reimbursed with a cheque (signed
by two signing authorities)
issue receipts for all monies received i.e. rental revenue, program revenue, sports revenue,
special events, memberships, etc.
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Keep petty cash locked up and only one person should have control over the fund. All
disbursements made from petty cash should be supported by receipts. Use pre-numbered
slips and indicate who is getting the money. No iou’s for petty cash (reimbursement should
be to the petty cash holder/custodian based on vouchers submitted, rather than a fixed
amount per month – this way cash on hand plus vouchers should always equal a
predetermined amount)
keep floats to a minimum
bank accounts should be set up so that it takes 2 signatures to transfer funds
bank accounts should be set up so that cash withdrawals are not allowed under any
circumstances - all transactions require a cheque
make frequent deposits so there is not a large amount of cash on the premises
use pre-numbered hall rental forms
prepare an operating budget and a cash budget for the year for Board approval
do periodic comparisons to see how you are doing
ensure the financial reports are understandable for decision making
make a five year plan along with the Board and report back on it
plan for lifecycle maintenance on your facility
prepare bank reconciliations monthly (bookkeeper) and have the treasurer check and sign
off on it
prepare monthly financials/reports for the Board meeting every month
submit necessary grant reporting
prepare GST returns, corporate income tax returns, society returns and charity returns as
required
make regular remittances to Canada Customs & Revenue Agency for payroll source
deductions
ensure all pay rates, including overtime, are properly authorized and documented (if payroll
is paid direct to bank accounts, be sure it is properly controlled so that all changes and
exceptions are documented and properly authorized)
CAUTION: If an organization retains personal information such as names, addresses, and other
contact information of members you must ensure that It is stored in a safe, secure location. If
this information is located in a data file in a computer the firewall must be up to date and
adequate to protect the information in order to comply with The Privacy Act. In addition, the
computer must be password protected to prevent unauthorized access to this information. This
is especially critical if credit card or other financial institution information is retained by the
organization. Failure to comply with this requirement may entail civil and criminal liability.
Purchasing
A. Purchases under $500 (or other amount determined)
1. All purchases under $500 must be approved in the budget and, if not approved, it must be
approved by the Board as a variance to the budget.
2. The Project Director is responsible to know if the item ordered is within the budget and
guidelines.
3. Invoice copies are to be forwarded to the Treasurer.
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B. Purchases Over $500 (or other amount determined)
1. All purchases including services over $500 must be approved in advance either through the
budget or by the Board as a variance to the budget.
2. Purchases over $500 will be required to undergo a competitive bid procedure, where
appropriate.
3. All bid requests will contain clear specifications and will not contain features which unduly
restrict competition.
4. The Project Director will be responsible to ensure that all conditions and specifications of a
contract, bid, or order have been satisfactorily fulfilled and will be responsible for timely
follow-up of these purchases.
5. The Project Director will obtain at least 3 bids wherever possible unless prior approval by
Executive Committee has been obtained.
6. Purchases of over $500 will not be fragmented or reduced to components of less than $500
to avoid the bid process.
Restricted Funds
1. The Association records and reports the contributions it receives using the accrual method.
Contributions include government grants, sponsorships, donations and other funds received
where service is not provided directly back to the contributor.
2. The contributions will be restricted for use as per the contributors’ requirements/requests.
3. When contributions are received, they will be recorded as deferred contributions.
4. As the related expenses occur, the funds will be moved out of the deferred contributions in
the accounting system and into the appropriate revenue account. In this way, the
contributions are matched with the related expenses as per the contributors’ requirements.
5. The remaining deferred contributions are reported as a liability in the statement of financial
position.
Expenses
The Association will reimburse its directors, committee members, other volunteers and staff for
all reasonable out of pocket expenses incurred as a result of participating in approved
Association activities to the extent allowed within these guidelines.
1. A person should not incur abnormal costs through carelessness or excessive spending.
2. Expenses should be paid by the individual incurring them and should be submitted for
each event/activity as incurred for reimbursement.
3. All claims must be made on a prescribed expense claims report and must be supported
by receipts in all cases except as noted in other sections and, wherever possible, a
receipt for these amounts as well.
4. An explanation must be provided for any missing receipts.
5. All expense claims must be submitted within 60 days of the expense being incurred.
6. Claims for incidentals totaling less than $100.00 may be accumulated and submitted on
a quarterly basis and must be submitted within 10 days of the end of each fiscal quarter.
7. All expenditures must be within approved budgets and must be approved:
 the Chair of each Board committee will approve expenditures within their
committee with exceptions as noted
 the Board Chair will approve the committee chairs' claim forms
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the Board Chair will approve individual Board members claim forms and the staff
claim forms
volunteer committee members claim forms will be approved by the committee
chairs
Automobile travel expenses
Rate for reimbursement per kilometer will be established from time to time by the finance
committee. Receipts are not required but the expense claim must include information on the
event or activity attended and the exact distance traveled. Individuals must have adequate
public liability and property damage insurance.
Caution – Canada Revenue Agency has a few restrictions on mileage expenses. For example, an
individual must list starting and ending KM reading. For more information, visit www.craarc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns248-260/255/rts-eng.html?=slnk
Invoicing
Whenever possible, the Association will not invoice for goods and services. When invoicing is
necessary, the following conditions apply:
a. all invoices will be in sequential numbered order and entered into the accounts
receivable of the accounting system
b. no discounts will be granted on sales (unless associated with a particular event)
c. invoices are payable on receipt of invoice
d. interest on overdue accounts will be charges at a rate of 2% per month, calculated
monthly
e. this does not pertain to returned cheques which are payable immediately
Hall rentals
1. A valid Visa, MasterCard, Certified Cheque or bank draft is required plus a damage deposit
for hall rentals.
2. Collect the renter’s homeowner’s insurance policy information including provider and policy
number when renting your facility.
3. All payments are due 60 days prior to the event:
 a late payment fee will be applied to payments received after this time
 should it be past the 60 day mark, payment is due immediately or is subject to the
discretion of a designated employee or Board member
4. In the event of a cancellation the following will apply:
 if an event is cancelled with less than 60 days written notice, the security deposit is
forfeited
 if an event is cancelled with less than 90 days written notice, but more than 60 days
written notice, $300 of the security deposit is forfeited
5. Hall rental revenue and hall deposits are recorded separately in the book.
TIP: The Federation of Calgary Communities sells two part rental forms that are sequentially
numbered.
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Financial Accountability Handbook
Cash Receipts (includes cheques)
1. The ____________ (Secretary/staff position) opens any mail addressed to or without
specific addressee.
2. The receipt of cheques or cash will be recorded and immediately forwarded to the
bookkeeper who will record each cash payment received in a number receipt book with a
duplicate for the payer.
3. Cash shall be locked in a secure location until taken to the bank.
4. The bookkeeper will endorse all cheques by rubber stamp to read as follows:
PAY TO THE ORDER OF
________ Bank
Account #
FOR DEPOSIT ONLY
Organization Name
Account Number
5. The endorsement stamp will specify into which corporate account (savings, chequing,
gaming) the deposit will be made.
6. A report will be printed that includes the source and amount of the receipt as well as the
total daily deposit amount.
7. The cheques and cash will then be forwarded to the treasurer, who will complete deposit
slips in duplicate with one copy of the slip placed in an envelope for the bank.
8. If no cash is present, the envelope may be sealed and sent through the mail or if cash is
present, the deposit should be made in person.
9. Documentation for all receipts (a copy of cheque, letter, etc.) Will be attached to the
duplicate slip and filed chronologically.
10. All receipts will be deposited intact and no disbursements will be made from cash or cheque
receipts prior to deposit.
Cash Disbursements
A. Cheque Authorization
1. All invoices will be immediately forwarded to the ______________(position) who will review
all invoices for mathematical accuracy, validity, conformity to the budget (or other Board
authorization) and compliance with bid requirements.
2. Prior to payment, all invoices will be approved (indicated by initialing) by the
________________(position), who will code the invoice with an appropriate expense or
other chart of accounts line item number, class and job number (where applicable):
 by approving an invoice, the ______________(position) indicates that it has been
reviewed by the ______________ (position) and authorizes a cheque
 the _____________ (position) will ensure that all conditions and specifications on a
contract or order have been satisfactorily fulfilled, including inventorying items received
against packing slip counts
 the ______________ (position) is responsible for timely follow-up on discrepancies and
payment
3. Approved invoices will be entered into the accounting system using the “Enter Bills” screen.
4. The __________________ (position) will prepare cheques on a weekly basis.
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5. Authorized signatory on _____________ (organization’s) accounts will be in compliance with
the by-laws.
B. Cheques
1. The ________________ (position) will be responsible for all blank cheques.
2. All cheques, including payroll cheques (with the exception of direct deposit payroll items) will
be signed by the designated members of the board of directors or staff.
3. The _______________ (position) will generate cheques for approved invoices through the
accounting system using “pay bills” and/or “write cheques” screens where appropriate.
4. Voided cheques will have "void" written boldly in ink on the face and have the signature
portion of the cheque torn out. Voided cheques will be kept on file.
5. In no event will:
 blank cheques (cheques without a date or payee designated) be signed in advance
 cheques be made out to "cash", "bearer", "petty cash", etc.
 cheques be prepared on verbal authorization
6. In the event that it is necessary to issue a duplicate cheque for cheques in an amount over
$15, a stop payment will be ordered at the bank on the original cheque.
Bank deposits – Cash Receipts
1. Whenever cheques and/or cash on hand exceed $500, all such funds on hand shall be
deposited by the end of that day.
2. No cash or cheques (other than petty cash, which itself cannot exceed $500) may be kept on
hand in excess of 5 business days.
3. A receipt will be issued for all cash received and the details entered into a cash receipts log.
4. The deposit containing the cash will be reconciled to the cash receipts log.
5. With respect to events held funds should be kept separately and revenues from one activity
should not be taken for unplanned expenses in another. Gross funds should be reported in
all cases.
Preventing Misuse of Funds
1. Limit vendor credit accounts to prudent and necessary levels.
2. Make no contractual commitment for bank loans or for real estate lease or purchase
without the approval of the board.
3. Avoid conflicts of interest in purchases and in all other uses or disposition of company
assets.
4. Periodically assess the adequacy of reserves as they relate to current and long-range
spending plans.
CAUTION: If you choose to do on-line banking ensure that the following is turned off:
 transfer to personal bank accounts
 payment to vendors (i.e. Telus, Enmax) not already set up
 payment to credit cards
 cash advances
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Financial Accountability Handbook
Banking
1. The bank account or accounts and the banking business of the Association shall be
conducted or kept with a financial institution approved by the Board through resolution.
2. Signing authorities have been established in the by-laws of the Association. The signing
officers of the Association shall be any members of the executive. All cheques drawn on the
Association’s bank accounts shall be signed by any two of the executive officers
3. All cheques payable to a signing officer or member of his or her family shall not be co-signed
by that signing officer.
TIP –
is a partner with the Federation of Calgary Communities. They offer all Federation Members no
banking fees and premium interest rates on all accounts. The best part is deposits can be made
at any credit union for free (eg. ATB, First Calgary). Visit www.servus.ca for more information.
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The Federation of Calgary Communities
Financial Accountability Handbook
11. Policy – Investment of Funds
Policy Statement
The assets of the organization will be invested for maximum income with full protection of the
investment principal.
Best Practices
1. Investments are monitored on a consistent basis so that there is a maximum return on
investment.
2. Cash flow statements are created to ensure that longer term investments will be able to
mature to maximize return.
3. Investments made with funder or government funds are consistent with the rules around
fund use.
Suggested Procedures
Investment of Assets
1. Unrestricted excess funds shall be invested in conservative vehicles such as T-Bills, GIC’s and
other interest-bearing accounts.
2. Restricted funds shall be invested in conservative vehicles in accordance with the funders
criteria. Interest earned will be credited to the restricted fund account.
3. Reports on the investments will be made to the finance committee on a quarterly basis.
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12. Policy - Staffing
Policy Statement
Employees will be treated as a valued asset to the operation, vitality and sustainability of the
Association.
Best Practices to Be Achieved
1. Staff will be compensated at a rate that is appropriate for the duties and responsibilities
they carry out for the Association.
2. Staff benefits plans (i.e. vacation, extended health care, RRSP, education support, sick leave,
holidays) should be provided to encourage retention of employees.
3. Staff should have the right to a regular process of expression of employee concerns and
disputes.
Suggested Procedures
Time Sheets
1. Each hourly employee will be responsible for completing a time sheet on a biweekly basis.
2. Completed time sheets will be dated and signed by the employee, and will be submitted to
the _____________ (position) at the end of the last working day of each pay period.
3. No payroll cheques will be issued without a completed time sheet and time card if required.
4. Incomplete time sheets and cards will be returned to the employee for correction.
5. The _______________ (position) will verify the accuracy of the time sheets and addition.
6. Employees will be paid every ________, deductions are itemized on each pay cheque.
Employee Files
1. The Association is responsible for the maintenance of records pertaining to employees.
2. Personnel files are maintained for each employee containing records related to
employment, compensation, benefits, performance reviews, corrective action, retirement,
and other pertinent documentation.
3. Current employees have the right to review the material contained in their personnel file.
Employees wishing to review their file should contact their supervisor to schedule an
appointment.
4. It is an important responsibility of each employee to promptly notify their supervisor of any
changes in personal data such as: legal name, change in marital status, personal mailing
address, home telephone number, number and name(s) of dependents, individual(s) to
contact in case of emergency, and any other personal information needed for income tax,
benefits, or other employment purposes. This notification should occur within 30 days
following the change.
5. The Association respects individual rights to privacy and, to the extent possible, preserves
confidentiality of employment information.
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Staff Dispute Resolution Procedure (for larger more formal organizations)
1. Within 30 calendar days of the time that the employee knows, or should know, of an action
or issue in dispute, the employee must advise his or her immediate supervisor that he or she
is initiating a dispute resolution request. The employee may notify the supervisor verbally or
in writing, but must advise the supervisor of the specific issue in dispute, the facts in support
of the employee's position, and the remedy requested.
2. The supervisor is responsible for addressing the employee's request and responding to the
employee within 5 working days from receipt of the first step request. The supervisor shall
include notice to the employee of his or her right to appeal the dispute to the second step.
3. If the first step response is unsatisfactory, the employee may appeal the dispute in writing
to the Board of Directors within 5 working days of receipt of the first step response. The
second step appeal must state the specific issue in dispute, facts in support of the
employee's position, the reasons the first step response is unsatisfactory, and the remedy
requested.
4. The decision of the Board of Directors will stand.
Web Links to HR Forms and Templates:
Personal Tax Credit Return (TD1):
http://www.cra-arc.gc.ca/E/pbg/tf/td1/README.html
Record of Employment Link to explanation and form:
http://www.servicecanada.gc.ca/eng/ei/employers/roe_guide.shtml?=slnk
http://www.servicecanada.gc.ca/eng/ei/publications/roeguide.pdf
Record of Employment on the WEB:
http://www.servicecanada.gc.ca/eng/ei/employers/roe_web.shtml#what?=slnk
Fillable T4 summary:
http://www.cra-arc.gc.ca/E/pbg/tf/t4sum/t4sum-fill-08b.pdf
Fillable T4
http://www.cra-arc.gc.ca/E/pbg/tf/t4_flat/t4flat-fill-06b.pdf
Payroll deductions online calculator:
http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html
Remittance Form information and link – monthly payroll deductions:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/pymnts/frms/menu-eng.html
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The Federation of Calgary Communities
Financial Accountability Handbook
Glossary
Accounts payable - The amount owed to others for services or merchandise received by the
organization.
Accounts Receivable - dollars due from customers as a result of selling services or inventory on
terms which allow for delivery prior to the payment of cash. The transaction exists as a
receivable on the balance sheet until cash is collected from the customer.
Accrual basis accounting - A system of financial recordkeeping in which transactions are
recorded as expenses when they are incurred (i.e. when a bill is received for merchandise or
services provided to the organization) and as income when it is earned (i.e. when services or
merchandise is provided by the organization, or the organization receives a commitment of a
contribution) rather than when cash is paid or received.
Accruals: obligations owed but not yet billed.
Accrued expense - Costs of operation that have accumulated, but not yet due or payable.
Accrued interest - Interest costs or revenue which has accumulated, but are not received or
paid.
Allocation - A method of accounting that divides expenses among different program,
administrative, and fundraising categories based on a formula that recognizes the use of the
resources such as use of the facility or staff time.
Allowance for doubtful accounts - An amount reflecting the portion of the accounts receivable
which the organization reasonably believes it may not collect.
Amortization (depreciation) - The recognition, by recording an expense, of the decrease in value
of a property, plant and equipment over its expected physical or economic life. The value of land
is not depreciated.
Asset: an item of value owned by the organization. An asset may be in the form of cash,
securities, equipment, or real estate, etc.
Audit - A financial report that has been tested and verified for accuracy and prepared in
accordance with Canadian generally accepted accounting principles. An essential component of
the audit is the Audit Report.
Balance sheet - A report showing the financial condition – Assets, Liabilities, and Net Assets - of
the organization at a particular moment in time. Referred to as a Statement of Financial Position
in the not-for-profit sector or Statement of Funds.
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Board-designated funds - A condition placed by an organization’s Board of Directors on how an
amount of money is to be used. A common type of Board designation is for Operating Reserves.
For accounting purposes, these funds are considered unrestricted because the condition was
not specified by a donor.
BN/registration number - The BN is used by the federal government to identify organizations
and the various program accounts they have. A complete BN has two parts: the registration
number (first nine digits) and the account identifier (two letters and four digits). The registration
number is the same for all accounts you have with the federal government. The account
identifier is assigned by the Canada Revenue Agency for each of its business programs including
corporate income tax, import/export, payroll deductions, goods and services tax/harmonized
sales tax (GST/HST), and registered charities. The registered charity account identifier always
starts with the letters "RR".
Business Consent Form (RC59) – Consent to release confidential information about your
program accounts (GST, T2, payroll, etc.) to the representative Auditor.
By-laws - form part of the governing documents. They set out the rules and regulations for the
administration and management of the organization. For example, by-laws often identify the
duties of officers, the fiscal year end of the organization, and when meetings must be held.
Property, Plant & Equipment - An asset that has a relatively long useful life, usually several
years or more, such as equipment, furniture, buildings and land.
Capital Budget - A fiscal plan for the proposed additions to Property, Plant & Equipment and
their financing.
Capital expenditure - Payment of money to acquire assets, such as a building or equipment
Capitalizing an asset - Recording the cost of land, a building or equipment as Property, Plant &
Equipment rather than as an expense when purchased.
Cash equivalents - Funds which can be quickly and easily converted to cash; those bank
accounts, money market funds or other investments which mature within 90 days.
Cash flow - The movement of cash into and out of an organization; or the difference between
cash receipts and cash disbursements during a period of time.
Cash flow statement - A report of incoming and outgoing cash during a specified period of time.
Cash basis accounting - A system of financial recordkeeping in which transactions are recorded
when cash is received or spent. The advantage over accrual-basis accounting is its simplicity as it
looks at cash coming in and going out.
Chart of Accounts - A list of all accounts used in accounting system, including assets, liabilities,
income and expenses.
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Charity – (Registered) – A not-for-profit organization that has applied to the CRA and received
approval as meeting the requirements for registration as a charity, and has been issued a
charitable registration number. A registered charity is exempt from paying income tax and can
issue tax deductible donation receipts for gifts it receives. However, if a registered charity is
under suspension, it no longer has receipting privileges during the suspension period. A
registered charity is designated by the CRA as a charitable organization, a public foundation, or
private foundation.
Collateral - an asset which is pledged to a lender until a loan is repaid. In case of default, the
lender legally owns the right to obtain or sell the collateral to repay the loan.
Committed grant - A contribution for which the organization has received a formal notification
from the donor that an award will be made at a future date.
Conditional promise to give - A commitment by a donor to make a contribution to the
organization if a specific requirement is met. The agreement becomes binding once the
requirement is met.
Contribution - A donation, gift or transfer of cash or other assets.
Current assets - Cash, investments, receivables, and other assets that can be expected to be
available as cash within twelve months.
Current liabilities - Those liabilities due to be paid now or within the next twelve months.
Represents what the organizations "owes" in the short term.
Current Portion of Long-Term Debt: the portion of a long-term loan (principal only) which is due
within the next 12 months.
Deferred revenue - Income for which payment has been received before it has been earned. It is
reflected as a liability on the Balance Sheet until it is earned and can be recognized as income in
a future accounting period.
Deficit - Expenses in excess of income; an operating loss or a negative change in Net Assets.
Direct costs - Those expenses which are specifically attributable to a program area or cost
center.
Earned revenue - Income received for providing services or goods, rather than as a voluntary
contribution.
Financial statements - Financial statements consist of Statement of Operations (Income),
Statement of Financial Position (Balance Sheet), Statement of Changes in Net Assets (Equity) and
Statement of Cash Flows.
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Fixed Assets (Property, Plant & Equipment): physical assets which have life in excess of one
year. This includes land, buildings, machinery, equipment, furniture/fixtures, and leasehold
improvements. Associations will set up a policy from which amount to capital e.g. $500.
Fund accounting - A system of accounting based on separating information into groups which
reflect organizational divisions or donor-imposed restrictions.
Fund Balance: appears between the bottom of the Statement of Financial Position or Balance
Sheet and is the difference between the Total Assets and Total Liabilities.
General Ledger - Accounting system tool for recording all transactions
Generally Accepted Accounting Principles (GAAP) - The set of norms and standards established
by the Accounting Standards Board to help ensure the accuracy and consistency of financial
records and reports.
Governing documents - These are the documents that formally establish an organization and
govern its operations. Some examples of governing documents are letters patent, certificate of
incorporation, memorandum or articles of association, a constitution, trust documents, and
bylaws.
Grants - Contributed assets given by an individual, another organization or government with no
reciprocal receipt of services of goods. Sometimes are given with a legal restriction imposed
upon its use.
Income Statement -A financial report that summarizes income and expenses and resulting
surplus or deficit for a given period of time. Also known in the not-for-profit sector as the
Statement of Operations.
In-kind contribution - A contribution made of goods or services rather than cash.
Intangibles: assets which have no physical properties or "set" values. Examples of intangibles
include reputation and goodwill.
Internally Restricted Fund – Restricted by board as a reserve. Can be taken out of restriction by
board decision.
Internal controls - The system of practices, procedures and policies intended to safeguard the
assets of the organization from fraud or error and ensure accurate recordkeeping.
Inventory - the goods and materials a company sells to make a profit. Inventory exists in three
forms: raw materials, work in progress, and finished goods. In the process of selling inventory,
either cash is received or an account receivable is created.
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Journal - is a record in which all day-to-day transactions are originally recorded. The journal is
organized chronologically and shows all information about transaction in one place.
Ledger - is composed of groups of accounts which have some common characteristics. It is
usually composed of asset, liability, reserve, expense and revenue accounts. The purpose of the
ledger is to classify and summarize data according to function.
Liabilities - What the organization owes to others, including accounts payable, debts, mortgages
and other obligations to pay.
Long Term Debt: the portion of a term loan which does not have to be paid within the next year.
Material - is very broadly defined as being large enough or important enough to cause
stakeholders to alter their decisions.
Misstatement - is defined as false or missing information, whether caused by fraud (including
deliberate misstatement) or error.
Net assets (Equity) -The difference between the organization’s total assets and its total liabilities
on the balance sheet indicating the net financial worth for the organization. Net assets is the
accumulation of the difference between cumulative income less cumulative expenses over the
life of the organization. Divided into Unrestricted and Temporarily Restricted net assets.
Net fixed assets - The value of land, buildings, equipment and other fixed assets owned by the
organization after the deduction of the accumulated depreciation of those assets.
Not-for-profit organization - A not-for-profit organization is an association, club, or society that
is operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other
purpose except profit. It is not a charity. No part of the organization's income can be payable to
or available for the personal benefit of any proprietor, member, or shareholder, unless the
recipient is a club, society, or association whose primary purpose and function is to promote
amateur athletics in Canada.
Note Payable Bank: obligations evidenced by a promissory note from the bank which have
maturity dates of less than one year.
Notes Receivable: a loan made by the company which is evidenced by a promissory note.
Operating expense - General term for expenses incurred for all the activities of the organization.
Operating reserve - An unrestricted fund balance set aside by the organization’s Board to
stabilize an organization’s finances by providing cash as a cushion for planned or unplanned
future expense or losses.
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Overhead - The costs that cannot be identified with a program activity but are needed for the
general administration of the organization. This expense is often distributed among programs
based on a formula.
Pledge - A formal commitment to make a contribution of a specific amount.
Prepaid Expense - An expense that is paid before use of the good or service, such as insurance
paid in advance.
Reconcile: To reconcile is to document the difference between two related records (e.g. account
for the difference between the month-end balance on the bank statement and the month-end
balance in the accounting records or books of account.
Release from Restrictions - The accounting transaction used to transfer temporarily restricted
funds into an organization’s unrestricted accounts when the restriction has been satisfied (such
as when a special project is initiated).
Reserves - An amount set aside by the Board to be used in case of losses or an unexpected
expense.
Restricted funds - Contributions which are designated by the donor for a specific use. See also
temporarily restricted funds and permanently restricted funds.
Revenue - Income earned from services performed or merchandise sold (as distinct from
support, or contributed income) as well as grants and donations contributed to operations.
Secured loan - A loan for which something of value is pledged in the case that repayment cannot
be made.
Short term debt/liability - A loan which is issued with a final payment date of one year or less.
Staff person: refers to an individual within the organization/corporation employed by the board.
Support - Income from voluntary contributions and grants (as distinct from revenue, or earned
income).
Taxable Supply - is a supply on which GST would be charged
Temporarily restricted funds - Contributions given by the donor or granting organization for a
specific use or for use during a specific period of time. The limitation is satisfied at a defined
time or when certain activities have been performed and the funds are released from
restriction.
Unconditional promise to give - A pledge to make a contribution of cash or another asset
without requiring the organization to meet any condition prior to receiving the contribution.
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Unrestricted funds - Contributions given without the donor placing any restrictions or
limitations as to their use.
Working capital – Current assets minus current liabilities.
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The Federation of Calgary Communities
Financial Accountability Handbook
References
This manual was created using a compilation of information, in whole or part, from a variety of
sources with permission. The sources include:

Accounting Standards Board

Betty Thompson, Lo Porter Hetu; materials contracted by the City of Calgary
Community and Neighbourhood Services, 2009

CICA Handbook, Section 4410

Heidi Brauer, 2001, Treasurer’s Manual

Canada Revenue Agency

Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. Copyright 1997-2008.

Financial Responsibilities for Not-for-profit Boards, Board Development Program,
Voluntary Sector Services Branch, Alberta Culture and Community Spirit

http://dawn.thot.net/board_treasurer.html

http://en.wikipedia.org/wiki/Bank_reconciliation

Not-for-profits Assistance Fund 2006

Riverbend Community Association Orientation Manual, Douglas Ratke, 2009
(specifically Debits and Credits information)
31