Highland Presbyterian Church Financial Controls Policy

Transcription

1 Highland Presbyterian Church Financial Controls Policy Approved by the Session December

2 TABLE OF CONTENTS I. Introduction... 1 II. Definitions... 1 III. Finance Committee... 1 IV. Receipts... 2 V. Disbursements... 4 VI. Credit Cards... 5 VII. Operating Accounts... 6 VIII. Gifts/Contributions... 6 IX. Investment Accounts... 7 X. Financial Books and Records XI. Financial Reporting XII. Budgeting XIII. Financial Reviews XIV. Major Building / Remodeling / Renovation Projects XV. Borrowing of Money by the Church XVI. Insurance XVII. Document Retention Policy XVIII. Amendments to the Policy i

3 I. Introduction A. The Session approved the Highland Presbyterian Church (HPC or the Church) Administrative Procedures Manual which provides: The Finance Committee shall work with the Treasurer to prepare internal financial control policies and procedures for approval by the Session. These policies and procedures may be amended by the Session at any time upon proposal of the Finance Committee to the Session. B. This Policy was prepared by the Finance Committee Chair and is intended to be a living document, meaning that it can be amended as needed and at any time by the Session. C. All HPC employees are expected to be familiar with this policy and to adhere to all applicable policy content. II. Definitions A. Cash Contributions Donations to HPC made by check, cash, credit card or automated funds transfer. B. Contribution An unconditional transfer of cash or other assets to HPC. C. Endowment A fund that, under the terms of the gift that established or contributed to it, is not wholly expendable by HPC. D. Gifts-in-Kind All non-cash contributions, such as, but not limited to, land, buildings, securities, automobiles, musical instruments, furnishings, sheet music, stamp or coin collections, art, books, mineral or patent rights, office equipment, intangible assets, and services. E. Invested Funds Assets that are invested to produce earnings, generally in the form of interest and dividends, in order to provide an ongoing revenue stream to HPC. F. Permanent Restriction A donor-imposed restriction which stipulates that resources be maintained permanently, but which permits HPC to use or expend part or all of the income derived from the donated assets. G. Temporary Restriction A donor-imposed restriction that permits HPC to use or expend the donated asset as specified by the restriction and which expires either by the passage of time or by the actions of HPC. H. Unrestricted Funds Assets that are neither permanently nor temporarily restricted. III. Finance Committee A. In consultation with other Session committees and the Head of Staff, the Finance Committee shall prepare the annual Church budget and submit it to the Session for review, 1

4 amendment and approval; review income and expenses on a monthly basis to identify and address any deviations from the approved budget; report monthly to the Session regarding the status of income and expenses relative to the approved budget; provide summary financial reports for dissemination to the Church membership on a regular basis; ensure that the Church adopts and follows adequate financial controls; consult with the Investment Committee with respect to the Church s endowment and investment funds and report on the same to the Session; and arrange for and review any audits or financial reviews required by the Book of Order or the Presbytery or otherwise deemed appropriate by the Finance Committee or the Session. IV. Receipts A. The Session shall authorize offerings for Christian purposes and shall account for the proceeds of such offerings and their disbursement. B. Except as otherwise provided in this policy, all cash and checks received by the Church shall be put into the Church safe on the day received. Envelopes for depositing cash and checks into the drop-slot of the safe shall be available on the safe, in the business office, and from the Church secretaries. Cash envelopes shall be clearly marked to show the aggregate amount of cash enclosed, the source activity (e.g., Sunday offering or Youth Group auction) or person giving, the name of the person(s) dropping the envelope into the safe, and the date of the drop. Check envelopes shall be clearly marked to show the aggregate amount of checks enclosed, the source activity or person giving, the check number(s), the name of the person(s) dropping the envelope into the safe, and the date of the drop. C. Sunday offerings 1. Only the ushers and the counters shall have access to the Church safe. 2. All monetary collections received during a worship service shall be placed into a single envelope by at least two ushers, acting together, who shall then seal, sign and date the envelope and place it in the Church safe. 3. On the next possible day (typically Monday), at least two counters, acting together, shall open the safe and count and record the previous Sunday s offering. They shall also count all other cash and checks in the safe. They shall make copies of the face of each check, the recording of the amount of the Sunday offering, the collection envelopes and a cash summary, all for the Church Accountant. They shall also promptly stamp the back of each check with a restrictive endorsement stating For deposit only to account # [HPC s operating account #] JPMorgan Chase Bank, or words to that effect. 4. The Finance Committee shall periodically propose to the Session those persons it believes should count collections, who shall serve if approved by the Session. 5. At least two counters, acting together, shall take the deposit to the bank. 6. A copy of the bank-validated deposit ticket shall be returned to the Church promptly by the counters who made the deposit and shall be delivered to the Church Accountant. D. The Church Accountant shall record the pledge payments, gifts, special offerings and loose cash offerings, Kentucky Refugee Ministries lease and utility payments, Nursery and 2

5 Weekday School (NWDS) usage fees, miscellaneous rents and all other amounts received by the Church. E. The Church Accountant shall deposit the NWDS payroll reimbursement checks to HPC's operating bank account. F. Online giving The Church Accountant shall record online giving amounts and ensure online giving fees are appropriate. G. Handling of money received at other Church functions The person acting as cashier should count the money at the conclusion of the activity; record the receipts along with complete documentation as to what the money was collected for; sign and date the record of receipts; place it all in an envelope; seal, sign and date the envelope; and place the envelope into the Church safe. H. Handling of money coming from other sources (e.g., in the mail) Money coming from other sources, such as in the mail or money delivered to the Church office during the week, shall immediately be forwarded to the Church Accountant. The Church Accountant shall then place any cash into an envelope, along with appropriate documentation showing its source; seal, sign and date the envelope; and place the envelope into the Church safe to be counted along with the weekly offering moneys on following Monday morning. In unusual circumstances (e.g., a particularly large check or amount of cash is received early in the week), the Church Accountant may record and deposit the amount into the bank promptly after receipt, rather than placing it into the Church safe and waiting for it to be deposited the following Monday. I. Giving statements shall be issued quarterly. A Charitable Contributions Report for each year, identifying each of a donor s gifts to HPC during the year by date, amount and purpose (e.g., on the donor s yearly pledge, for a Youth Group mission trip, as a memoriam), shall be issued by January 31st of the following year to each identified donor to HPC. J. Tangible non-cash gifts (e.g., food, furniture, office or kitchen supplies) shall be acknowledged by a donation receipt letter, with no statement of dollar value. K. All gifts become the property of the Church, and their use and/disposal is at the sole discretion of the Church, except where the donor has subjected the gift to a specific designation. L. Members and other potential donors wishing to give designated funds should consult with the Senior Pastor to request the Church s consideration of their preferred designation and any alternatives. Designated funds shall be restricted solely for the designated use and may not be diverted to other purposes without the written authorization of the donor or, if the donor is deceased or incompetent, an appropriate family member or other representative. M. The Church Accountant shall make arrangements for Church members and other donors to authorize direct transfers of funds from their personal bank accounts into the Church s bank account. N. Handling of returned checks The Church Accountant shall handle any returned checks from a member or other donor by contacting the individual to request their attention to the matter. As in any matter dealing with a Church member or other donor, Church staff should be sensitive to the donor s circumstances and hold them to appropriate levels of confidence. 3

6 V. Disbursements A. The Church Accountant shall handle all disbursements from the Church s bank accounts, including payroll for Church staff and the NWDS staff. B. The Session is responsible for annually designating authorized check signers and those individuals with general banking authority for all Church bank and investment accounts. Generally, those designated as authorized check signers are the Senior Pastor, the Clerk of Session, the Church Business Administrator, the Treasurer, and the senior head of the NWDS. The Church Business Administrator shall be responsible for maintaining the list of authorized signers and individuals with general banking authority and conveying those lists to the respective institutions holding HPC bank and/or investment accounts. C. All disbursement checks in excess of $1,000 shall require the signatures of two authorized signers. D. Every check issued must be supported by a source document (e.g., a receipt, invoice or check request). E. Some expenses may be paid via online transfer, pursuant to approval by the Church Business Administrator. The following vendors are paid electronically from HPC s operating account. The Church Accountant shall post each such payment based on appropriate source documentation: 1. LG&E 2. Louisville Water Company 3. AT&T 4. Courier-Journal 5. QuickBooks 6. Neopost Postage Advance F. Expenditure of Committees budgeted funds 1. Expenditures shall be monitored against the budgets that were approved by the Session for each Committee and/or major line item. Committees will maintain the flexibility within their budgets to over/under spend individual line items provided that the total cumulative budget for the Committee does not exceed the budgeted spending level. Session approval is required for a Committee to overspend its total annual budget, except in an emergency or other extraordinary circumstance (e.g., an expenditure by the Property Committee to repair an unforeseen leaky roof or faulty furnace). 2. Although each Committee is by the Session to spend up to 100% of the budget approved for that Committee, an Expenditure Authorization Sheet is required for each transaction so that the Church Accountant can track and report expenditures correctly and timely. G. Reimbursement for purchases made on behalf of HPC: 1. Requires an Expenditure Authorization Sheet signed by the appropriate Committee Chair or an Elder on the Committee; 2. Must have original receipt(s) attached to the Expenditure Authorization Sheet; and 4

7 3. Shall be paid by check (mailed or hand-delivered) within two weeks following receipt of the required paperwork. H. Expenditures from restricted or designated funds shall be approved only to the extent that cash has been accumulated for the specific purpose being requested and only if that purpose is consistent with the restriction or designation. I. Staff members shall be reimbursed for mileage and any other reasonable ministry and professional expenses for which an allowance has been established within the operating budget or as otherwise approved by the Session. J. The payroll is administered in-house using Intuit QuickBooks payroll software. The Church Accountant processes payroll, including both direct deposits and manual payroll checks. If an individual direct deposit transmittal or a payroll check exceeds $1,000, two signatures are required. The Church Accountant shall pay all tax liabilities Federal, Kentucky, Indiana and Louisville Metro Tax in a timely manner. All quarterly and yearly payroll tax reports are to be filed by the Church Accountant in a timely manner. These include W-2 s to the employees and W-3 s to the state and federal entities, as well as the 941 and Sch. B Quarterly Federal Tax Return, the K-1 and K-3 for the monthly and total year State Tax Return and the W-1 for the city occupational tax quarterly return. K. Any surplus income (revenues greater than expenses) of the Church at the conclusion of any budget year shall be entered into a reserve ledger account, to be used for purposes approved by the Session. L. Emergency Aid HPC maintains funds for emergency needs. Emergency aid includes the purchase of gift cards (e.g., ValuMarket) and TARC cards, to secure vouchers from Goodwill for clothing and other needs, and to pay rent or utilities for people in special need of assistance. The source of these funds is loose offering at Christmas Eve services and special gifts. If funds are lacking, one of the Pastors or the Church in the World committee may request Session to release funds from the Memorial Fund or to authorize a special offering from the congregation. Each month, the Church Accountant shall report the monthly balance of emergency aid funds to the Pastors and the Chair of the Church in the World Committee. Signature approval or approval is required to charge account Community Relief. Any of the Pastors may authorize the disbursement of emergency aid funds or approve charges to the Community Relief account. VI. Credit Cards A. The Church may provide credit cards to those staff members deemed appropriate by the Senior Pastor and the Finance Committee Chair. B. Purchases made on Church credit cards are restricted to items directly related to Church business, programs and operations. Each charge must be substantiated by invoices or sales receipts with notations indicating the purpose of the charge. The failure to properly document charges and/or to submit the monthly billing in a timely manner may result in forfeiture of the user s card. C. Process 5

8 1. The card holders submit charge receipts, review their credit card section on each monthly statement, and sign off on the charged receipts. 2. The Church Accountant receives the statements and pays the bill electronically. 3. The Senior Pastor or Church Business Administrator approves the transmittal. (If the amount of the payment exceeds $1,000, two signatures are required.) 4. The Finance Committee Chair reviews each credit card statement, evidenced by his or her signature and the date of review. VII. Operating Accounts A. The only individuals authorized to open a bank deposit account for HPC are the Senior Pastor and the Church Business Administrator. All bank accounts opened by HPC must be pre-approved by the Finance Committee. B. The deposit account statements shall be mailed by the bank directly to the Finance Committee Chair, for his or her review. Such review shall include, but not necessarily be limited to, a review for apparent reasonableness and for adherence to the dual signature policy. C. Main operating account All contributions and other revenues of the Church received in cash, by check or by automatic transfer shall be deposited to the HPC operating account and all operating expenditures and distributions shall be made from the HPC operating account. D. Capital Savings Account All Capital Pledge payments and designated capital gifts are deposited to the HPC Capital Savings Account. The Church Accountant shall pay all expenses for capital improvements from the Operating Account and shall transfer corresponding funds online from the Capital Savings Account to the Operating Account, subject to approval by the Church Business Administrator based on the submission of appropriate documentation. VIII. Gifts/Contributions A. All contributions are the sole property of HPC. B. Contributions designated as pledge payments shall be accounted for as such in the operating budget. Undesignated cash contributions received in Sunday offerings shall be recorded as Loose Offerings in the operating budget. C. Designated contributions accepted for approved projects and programs shall be used as designated. D. Undesignated cash contributions other than those received in Sunday offerings shall be recorded as Gift Income in HPC s Operating Budget. 6

9 E. New endowment accounts shall be established only by approval of the Session upon receipt of a major new gift which the Session determines should not be placed into one of the current deposit or investment accounts. F. Unless otherwise directed by the Session upon recommendation of the Finance Committee, gifts of marketable securities shall be placed in HPC s Hilliard-Lyons account and sold promptly following receipt, with the proceeds of the sale being deposited to the HPC Operating Account. The gross amount of the sale shall be posted as the value of the gift on the donor s giving record/tax statement. The sale of a security shall be documented with a trade confirmation statement from Hilliard-Lyons. G. Gift-in-Kind Contributions A "Gift-in-Kind" letter shall be sent to the donor of any gift-inkind contribution to acknowledge the gift. The letter shall include the following statements or words substantially identical thereto: "Highland Presbyterian Church does not assign values or judge the condition of donations for tax purposes. The Internal Revenue Service places the responsibility for estimating "fair market value" upon the donor. Highland Presbyterian Church is a non-profit organization under section 501 (C)3 of the Internal Revenue Code." The Church may reject any gift deemed by the Session to be not in the best interests of the Church. The following should be considered before accepting a gift-in-kind contribution: 1. Is there a specifically identified ministry or program need for the gift? 2. What are the costs to transport, up-grade, maintain, or repair such a gift? Are these expenses reasonable for the value of the item? 3. Are there any controversial designations or restrictions? 4. Is there any liability? 5. Are there licensing or legal ramifications? IX. Investment Accounts A. All investment accounts created by the Church must be approved by the Session upon recommendation of the Finance Committee. B. JPMorgan Chase (JPM) serves as account custodian and Todd Investment Advisors, Inc. serves as the portfolio manager for all Church investment accounts. As custodian, JPM executes trades requested by the portfolio manager, holds the actual brokerage and cash accounts for both the Stodghill and Memorial funds, and provides monthly account statements to HPC. C. Oversight of the investment accounts is provided by the Investment Review Committee (IRC), a subcommittee of the Finance Committee. 1. The IRC shall meet at least quarterly to review investment performance and provide oversight of the portfolio manager and the investment accounts. 2. The IRC shall meet, generally twice per year, with the portfolio manager to discuss investment performance and long-term goals. 7

10 3. The investment performance shall be reviewed at least quarterly by the Finance Committee. 4. An Investment Policy shall be maintained by the IRC and delivered to the portfolio manager to provide general investment guidelines and performance objectives. Any changes to the Investment Policy must be approved by the IRC, the Finance Committee, and the Session. D. In determining amounts to appropriate from endowments, HPC shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances. HPC shall consider, if relevant, the following factors: 1. The duration and preservation of the endowment; 2. The purposes of the Church and the endowment; 3. General economic conditions; 4. The possible effect of inflation or deflation; 5. The expected total return from income and the appreciation of investments; 6. Other resources of the Church; and 7. The Church s Investment Policy. E. Stodghill Fund A permanently-restricted endowment managed by the IRC and the Finance Committee. 1. The Stodghill Trust stipulates that the Stodghill Fund is to be kept intact and the income therefrom used for programs for the enrichment of the members of [HPC s] congregation and of the community in which [HPC] is situated. The original endowment amount was $9.46 million. 2. The Stodghill Fund accrues an amount each calendar quarter to the Church s operating budget, per the Session-approved distribution formula. As of December, 2014, the formula is 3.7% times the average ending balance of the Fund for the twenty (20) consecutive calendar quarters ending with the second calendar quarter of the immediately preceding year. F. Memorial Fund A collection of moneys, some restricted and some not restricted, managed by the Investment Review Committee and the Finance Committee. 1. Unrestricted a. General Memorial Fund Memorial gifts and other gifts directed by the donor to the General Memorial Fund shall be added to the General Memorial Fund. The Session may direct that all or a portion of other gifts that are not restricted and are not directed to a specific endowment be added to the General Memorial Fund. All earnings of interest and dividends by the General Memorial Fund shall be included in the Church s operating budget and, as needed, transferred to the HPC Operating Account. The principal in this fund may be utilized for the needs of HPC not accounted for within the operating budget, such as, but not limited to, major maintenance projects, periodic building (exterior and interior) updates, and other unanticipated or special needs or purposes. Session approval is required for the withdrawal of principal from the General Memorial Fund. Prior to Session approval, the committee seeking such funds must submit its proposal 8

11 to the Finance Committee. The Finance Committee shall endeavor to ensure that the General Memorial Fund balance remains at a level that will help provide for future needs of the operating budget and also for emergency needs. The Finance Committee shall, at least annually, report to the Session the total amount of principal withdrawn from the General Memorial Fund, as well as net changes in the principal balance, during the preceding year. b. Mary & Leon Rapier General Fund Unrestricted Music Fund supervised by the Director of Music, with guidance from the Senior Pastor and the Worship and Spiritual Life Committee. Memorial or other contributions under $5,000 that are designated for the Rapier Fund or for music are added to this fund. Moneys comprising this fund are maintained in HPC s Operating Account, as the amounts in this fund are usually used within 6-12 months after receiving the gifts. 2. Temporarily Restricted a. Christian Education Fund Gifts made to the Church for the express purpose of supporting youth or children's ministries are added to this fund. Earnings from the Mary Jane Atkinson Fund and the Youth Restricted Fund also are added to this fund. Principal and earnings from this fund can be used for hard goods that are not for immediate consumption (e.g., furnishings, electronics, and items that would be deemed to have a long-term value) or for scholarships for youth mission trips. The Christian Education Committee oversees distributions from the fund. However, in one calendar year, the Associate Pastor for Youth / Christian Education may distribute up to $1,000 for youth trips with no more than $100 per person at his/her discretion. Individual expenditures of more than $5,000 must be approved by the Session. b. Mary & Leon Rapier Permanent Endowment Fund Supervised by the Director of Music, with additional supervision by the Worship and Spiritual Life Committee and the Session. Memorial or other contributions of $5,000 or more that are designated for the Rapier Fund or for music are added to this fund. Earnings from this fund are transferred to the Mary & Leon Rapier General Fund. Amounts less than $5,000 may be distributed by the Director of Music, with oversight by the Worship and Spiritual Life Committee. Amounts in excess of $5,000 may be distributed from this fund only with approval of the Worship and Spiritual Life Committee and the Session. 3. Permanently Restricted a. Mary Jane Atkinson Fund Endowment to provide for youth financial aid. Only new gifts to this fund increase the principal balance. Earnings and capital gains are allocated to the Christian Education Fund. Earnings and capital gains may be distributed at the discretion of the CE Committee, but only in accordance with the original terms of the gift. b. Youth Restricted Fund These represent designated gifts made for which the principal has been specifically restricted to use for youth activities. Only new gifts to this fund increase the principal balance. Earnings and capital gains are allocated to the Christian Education Fund. 9

12 c. Endowment Principal These represent gifts for which use of the principal is permanently restricted but use of earnings and capital gains is unrestricted. Only new gifts to this fund increase the principal balance. Earnings go into the operating budget. Capital gains accrue to the General Memorial Fund. G. Transfers from the Stodghill Fund or the Memorial Fund to the HPC Operating Account to support the operating budget require approval of the Senior Pastor or the Treasurer. These transfers are supported by Session s approval of HPC s annual operating budget, which includes investment income from the Stodghill and Memorial Funds. H. The investment account statements shall be reconciled to the applicable HPC QuickBooks accounts on a quarterly basis. This reconciliation is produced by the Church Accountant and reviewed by the Finance Committee Chair, evidenced with the date of the review and the Chair s signature. X. Financial Books and Records A. Financial books and records adequate to reflect all financial transactions of the church shall be kept and shall be open to inspection by the Finance Committee, the Treasurer, and others approved by the Finance Committee or the Session at reasonable times. B. The Church s accounting records shall be kept in a computerized system adapted for church accounting. A procedure manual shall be prepared and maintained to outline the various steps and procedures the Church Accountant shall take to make entries into and retrieve data from the computerized system. C. The Church Accountant shall safeguard the privacy of financial records by maintaining them in a secure location. The computer system files shall be backed up each day that the accounting/reporting system is used. On a weekly basis, a backup shall be created and stored offsite. D. All bank accounts shall be reconciled on a monthly basis. The Finance Committee shall designate a person who does not have check signing authority to be responsible for bank account reconciliations. This person, currently the Finance Committee Chair, will review the reconciliation prepared by the Church Accountant. E. The Church Accountant shall provide the Finance Committee Chair a list of all checks that have been outstanding for more than 2 months, on a quarterly basis. F. Recording of donor contributions must be accurate and timely. Contributions must be entered into the proper account and the Church must report to its contributors the amount given, except as otherwise provided in this Policy. Cash offerings shall be recorded in the name of the giver whenever they can reasonably be identified and recorded. G. Cash gifts (coins, currency, checks, money orders, electronic funds transfers, etc.) shall be posted to the church s automated contribution computer system. This contribution system consists of a database of all members contributions. H. Any donor may request to verify his or her contribution records with the Church Accountant, who shall coordinate an appropriate time for the donor to come to the Church 10

13 to inspect his or her giving records or shall arrange for a copy of the record(s) to be sent to the donor. I. Acknowledgement of all gifts made to the Church and compliance with current IRS requirements in acknowledgement of such gifts shall be the responsibility of the Church Accountant. J. The amount of any donor s contribution shall be maintained on a confidential, need-toknow basis, except as expressly authorized by the donor. XI. Financial Reporting A. The Finance Committee Chair shall provide financial reports at each Finance Committee meeting. This report will include comparisons of actual revenues and expenses compared to the operating budget. B. Quarterly, the Finance Committee Chair shall provide to the Finance Committee an overview of the finances of the HPC Nursery and Weekday School. C. Quarterly, the Finance Committee Chair shall provide to the Finance Committee an overview of the investment account performance and asset allocation. D. The Chair of the Finance Committee shall provide a report at each regular meeting of the Session concerning the finances of the church. E. At least annually the Chair of the Finance Committee shall provide to the Session a report concerning the various funds of the congregation. F. Quarterly, the Finance Committee Chair shall provide a financial report to the HPC congregation within the HPC newsletter that includes a comparison of operating results to the operating budget. G. Annual reports of all financial activities shall be made by the Finance Committee to the congregation at the Annual Meeting. The Annual Report shall include the prior year s operating results and other pertinent financial information. XII. Budgeting A. The Finance Committee shall prepare and submit to the Session a proposed annual budget, which shall be subject to approval by the Session with such modifications as the Session chooses to make. B. The budget shall include funds for property and liability insurance coverage to protect the Church s facilities, programs, staff, and elected and appointed officers. C. The Maintenance Reserve shall be used only to fund emergency maintenance expenses for the Church buildings and grounds not included in the operating budget. It shall be funded within each operating budget. Any other contributions to the Maintenance Reserve must be approved by the Session. The Finance Committee shall report to the Session the amount of the Maintenance Reserve expended each year. 11

14 D. Budget Process 1. Each Committee Chair shall submit his or her Committee s budget proposal to the Church Accountant. 2. The Church Accountant shall provide the proposed budget for Administrative Resources. 3. The Finance Committee Chair shall consult with the Stewardship Committee Chair to develop the proposed pledge income budget. 4. The proposed Annual Budget shall be prepared by the Finance Committee Chair and the Church Accountant. 5. The proposed Annual Budget for the succeeding calendar year shall be submitted to the Finance Committee and then to the Session each September for review, any amendments and approval. 6. The final Annual Budget shall be submitted to the Finance Committee and then to the Session in January or February for review, any amendments and approval. E. The Church Accountant shall prepare monthly operating results, determine and note variances from actual results to budget estimates, and report same to the Finance Committee Chair. F. The Finance Committee Chair shall review the monthly results and variances from budget with the Finance Committee and submit same to the Session. XIII. Financial Reviews A. A full financial review of the financial books and records of the Church shall be conducted every year by a public accountant or a committee of Church members versed in accounting procedures. B. Following that review, a report of the results of the review shall be made to the Session by the Finance Committee. XIV. Major Building / Remodeling / Renovation Projects A. The Session shall designate the person(s) to be responsible for overseeing the financial aspects of the project. B. All records for a building or renovation project shall be accounted for in a separate ledger account from the normal church operating ledger account. No charges to the building or renovation ledger account shall be made for normal Church operating expenses. C. Competitive bids or price comparisons should be secured whenever practicable. At least two competitive bids shall be obtained for all purchases exceeding $5,000. Choosing a bid shall be based upon quality, references, timeliness, terms and cost. D. If any funds remain once a project is completed, the Session shall decide into which account to transfer the remaining funds. 12

15 XV. Borrowing of Money by the Church A. The Finance Committee shall be responsible to address any borrowing needs of the Church and to make a comprehensive report and recommendation to the Session. 1. In fulfilling that responsibility, the Finance Committee shall review the nature and priority of the need, the amount expected to be borrowed, the nature of the loan (short or long-term), plans for repaying the loan, and the impact of the indebtedness on the overall financial health of HPC (including, especially, the impact on future operating budgets). 2. The Finance Committee shall submit a Request for Proposal to a minimum of two financial institutions or other prospective lenders to determine expected interest costs, any collateral requirements, any out-of-pocket expenses, and other terms and conditions. 3. The Finance Committee shall assemble the pertinent preliminary financial information necessary for presentation to the Presbytery for approval to seek the proposed loan. 4. If Session agrees to proceed with a loan, the Finance Committee shall arrange for a final selection of the loan provider. XVI. Insurance A. The Property Committee shall assure and report annually to the Session that adequate insurance coverage exists against: 1. Physical loss of buildings and personal property on a replacement-cost basis. 2. General liability appropriate to the ministries of the Church and sufficient to provide coverage for liabilities arising from the ministry of Church members and staff, both volunteer and paid, on an occurrence basis. Coverage may be provided under a basic policy with additional coverage under an umbrella liability policy. 3. Fidelity insurance coverage on all Church and NWDS staff and volunteers who are involved in the handling or oversight of funds of the Church. Fidelity insurance provides that, if a loss from embezzlement occurs, the Church shall recover the loss (up to the amounts listed in the policy). It does not cover theft or burglary by an outside person. It provides protection only against staff or volunteer dishonesty. B. The Personnel Committee shall assure that adequate insurance coverage exists for: 1. Statutory Workers Compensation and Employers Liability XVII. Document Retention Policy A. To help facilitate the retention process, computer file back-up and other similar storage devices are all acceptable means for meeting record retention requirements. 13

16 B. In addition to normal accounting records, the Church Accountant shall maintain a folder containing the following essential information - Federal ID#; State ID# s (Tax exemption #, State Withholding #, Local Withholding #); Bank and investment account numbers; Investment Firms (contacts and phone number and any account numbers); Loan information (how financed, account #, rate, term, secured by, payment information, etc.) credit card information (financial institution, account #, etc.), and any other pertinent information. The Church Business Administrator shall maintain a folder containing a list of all software being used by the Church, including version, serial numbers, secure passwords, and support phone numbers. C. The following files shall be retained in the church archives for the current year and the immediately preceding year: 1. Pledge cards and pledge payment envelopes D. The following files shall be retained in the church archives for five years: 1. Bank statements and reconciliations 2. Contribution statements -- year-end 3. Employee wage and tax records and related files 4. Purchase invoices 5. Checks, including canceled checks 6. Misc. records supporting ledger entries 7. Records of building improvement costs and fixed assets 8. Broker s statements 9. General ledger 10. Cash disbursements 11. Cash receipts 12. Year-end financial statements E. The following files shall be retained in the church archives indefinitely: 1. Insurance contracts and records 2. Session minutes F. Disposal of Church Records the disposal of Church financial documents and records shall be the responsibility of the Church Accountant. XVIII. Amendments to the Policy A. This Policy may be amended at any time by the Session at any regular Session meeting or at a special Session meeting called for that purpose. 14