CHILDREN’S EDUCATIONAL CENTER CAMPANELLA LEGAL DOCUMENTS

CAMPANELLA FINANCIAL POLICY

Effective: January 16, 2024

​​

General

Campanella manages finances to support its mission effectively and remain accountable to clients, partners, funders, staff, and the community. Accurate financial data is maintained for use by the Executive Director and Board of Directors.

 

Fiscal Year:

September 1 – August 31

​

Financial Reporting

• Internal: Monthly board reports; reviews within 15 business days of school year start, fall semester end, and school year end.

• External: Annual statements submitted within 90 days after fiscal year-end; grant reports within 20 business days of the grant deadline.

Performance Metrics:

• Registration and fundraising revenue

• Program and administrative expense ratios

• Cash flow, grants, and net operating results

Tax Compliance:

• Timely Form 990 filing

• Organized records of all transactions

• Donor acknowledgments per IRS rules

• Compliance with sales tax and charitable solicitation laws

• Professional tax advice as needed

Donor & Stakeholder Communication:

• Regular updates, reports, and impact stories

• Donor recognition and transparency

• Open communication and feedback channels

• Active social media and community engagement
   

Authority

• Board of Directors holds ultimate financial responsibility.

• Treasurer acts on the Board’s behalf when needed between meetings.

• Executive Director (ED) manages daily finances.

Executive Director Authority

• Hire staff, manage accounts, pay bills, and receive funds

• Sign checks up to $1,500; over $1,500 needs Treasurer or Board approval

• Enter contracts within budget; over $5,000 requires Board approval

• Manage expenses within budget and report variances

• Board must approve use of designated reserve funds

Treasurer Duties

• Track restricted and designated funds

• Report finances 3 times yearly (start of year, spring, end of year)

• Ensure timely payments and filings

• Record capital assets over $500 and manage depreciation

Board Duties

• Review financials at each meeting

• Train members for financial oversight

• Prevent liability exposure and protect assets and data

• Ensure segregation of duties for all funds handling

• Approve annual budgets aiming for a surplus
   

Financial Transactions with Insiders

• No advances of funds to employees, officers, or directors unless for direct, necessary expenses with prompt reimbursement.

• Campanella will not borrow funds from any employee, officer, or director without explicit Board approval.
   

Accounting

• Campanella uses an automated, off-the-shelf accounting system to efficiently record and track financial transactions.

• The system includes a formal chart of accounts aligned with approved budget categories.

• General ledger accounts are reconciled monthly to ensure accuracy and reliability.

• Monthly bank reconciliations are performed to verify and resolve discrepancies.

• Security measures for financial software are regularly reviewed and updated to protect sensitive data.

• Written policies and procedures ensure proper segregation of duties to prevent fraud.

• User access requires unique sign-in credentials, with separate approval rights to maintain accountability and restrict access.

• No new accounting systems may be implemented during the fiscal year without formal Board of Directors review and approval.

• Any proposed changes or upgrades to the accounting system must be presented to the Board before implementation to ensure transparency and deliberate decision-making.
   

Segregation of Duties Policies and Procedures

• Authorization and Approval: Only designated individuals with proper authority may authorize and approve fiscal transactions.

• Recording and Reconciliation: Different individuals are responsible for recording financial transactions and reconciling financial statements.

• Custody of Assets: Custody of physical and electronic assets is kept separate from those handling financial record-keeping.

• Expense Approvals: Expenses over $250 require Board approval before payment.

• Bank Reconciliation: Bank reconciliations are performed regularly by someone independent of cash handling.

• Budget Oversight: Individuals who create budgets do not manage day-to-day financial transactions.

• Whistleblower Protection: Employees and volunteers are encouraged to report any suspected fraudulent activity.

• Documentation and Review: All financial transactions are documented, with periodic reviews to detect and correct any deviations from procedures.
   

Financial Management Rules

Internal Controls Assessment:

• Regular assessments evaluate the effectiveness of financial controls.

Fraud Prevention and Detection:

• Preventative measures include regular reviews and employee training.

Budget Monitoring and Reporting:

• Treasurer, Executive Director, and Board monitor budget vs. actual performance.

• Use of software/tools to track financial metrics.

• Protocols ensure accurate data input and processing, including reports on budget variances.

• Up-to-date financial insights facilitate decision-making.

• Proactive budget adjustments are made to stay on target.

Cash Management Procedures:

• Cash transactions allowed only at concert and special event box offices, unless Board-approved otherwise.

• Specific individuals are assigned to handle cash transactions.

• Segregation of duties minimizes fraud risk.

• Cash is counted at the point of sale or receipt.

• Cash transactions are cross-verified with sales records or invoices.

• All cash is promptly deposited into designated Campanella accounts following secure banking procedures.
   

Financial and Programmatic Reporting Policies and Procedures

Review and Approval Processes:

• Data Accuracy Check:

  • Executive Director reviews financial and programmatic data, verifying against invoices and receipts.

  • Careful verification is done despite limited staff.

• Departmental Review:

  • Board reviews reports for alignment with budgets and program goals.

  • Collaborates with Executive Director to resolve discrepancies.

• Financial Controller Evaluation:

  • Executive Director acts as financial controller, ensuring compliance with accounting standards and internal policies.

  • Performs account reconciliation within personnel constraints.

• Programmatic Impact Assessment:

  • Executive Director evaluates how activities meet program goals and identifies improvement areas.

  • Balances program needs with limited team capacity.

• Board Evaluation:

  • Board reviews consolidated reports for strategic alignment and compliance with external standards.

  • Uses combined expertise for comprehensive evaluation.

• Executive Approval:

  • Final approval by Executive Director, Treasurer, and Secretary.

  • Board ensures reports meet standards before sharing with stakeholders.

Enforcement of GAAP Standards:

• Annual Financial Statements follow Generally Accepted Accounting Principles (GAAP).

• Statements prepared by outside professional financial consultants.

• Deadline for preparation: November 30 after fiscal year end.

• Rigorous reviews ensure data accuracy, documentation integrity, and GAAP compliance.

Consistent Reporting Practices:

• Consistent accounting practices year-to-year for easy comparison.

• Any changes in policies or methods are transparently disclosed.

Alignment with IRS Forms:

• Financial Statements align with IRS requirements.

• Include all required schedules, attachments, and disclosures.

Transparency and Disclosure Standards:

• Comprehensive notes accompany financial statements to provide context and explanations.

• Mandatory disclosure of material uncertainties or contingent liabilities affecting financial position.
   

Cost Principles

Cost Allocation:

• Costs allocated fairly and consistently across programs and activities.

• Indirect costs allocated systematically and equitably to direct cost objectives.

• Allocation methods reviewed regularly for accuracy and relevance.

• Detailed documentation of cost allocation maintained for audits.

Reasonableness of Costs:

• Costs must be reasonable and necessary for project or activity performance.

• Reasonableness judged by market prices, industry standards, and organizational policies.

• Cost decisions documented with supporting records for review and audit.

Consistency in Costing:

• Uniform treatment of costs across all projects and activities.

• Standard costing methods applied to similar cost types.

• Regular updates to costing procedures based on operational or regulatory changes.

• Training provided to ensure consistent policy application.

Cost Control and Monitoring:

• Budget-to-actual analyses performed regularly to monitor costs.

• Variance threshold for Board review set at 15% (excluding inflation).

• Internal controls in place to detect and address cost overruns or deviations.

Indirect Cost Exclusion Policy:

• No indirect costs charged on financial transactions or reports.

• Clear communication with stakeholders about this policy.

• Direct allocation basis used for any costs that might be considered indirect.

• If accounting allows, indirect costs allocated directly to grants/contracts/projects.

Cost Documentation and Recordkeeping:

• Systematic recordkeeping for all financial transactions (receipts, invoices, etc.).

• Financial records retained for at least 7 years.

• Periodic internal reviews ensure compliance and documentation accuracy.

• Adequate, verifiable documentation required for all charged costs.
   

Financial Support

General Financial Management System:

• Campanella uses a structured financial management system for recording and monitoring financial transactions efficiently.

Donations Handling:

• All donations are recorded and tracked within the financial system.

• Donor information is securely managed to maintain privacy and accountability.

• Transparent reporting practices demonstrate financial stewardship.

Grants Management:

• Grants are systematically recorded, tracked, and reported.

• Documentation includes grant terms, conditions, and expenditures.

• Transparency and accuracy maintained throughout the grant lifecycle.

Grant Funds Management:

• Grant funds are recorded upon receipt, specifying source, amount, and conditions.

• Expenditures related to grants are logged with vendor info, purpose, and grantor compliance.

• Regular reconciliations ensure accuracy and alignment with budgets and regulations.

• Detailed documentation supports internal reviews and audits.

• Compliance with financial regulations is strictly maintained.

Grant Spending Outcome Measurement and Reporting:

• Uses a framework aligned with grant objectives to evaluate impact.

• Tracks outcome measures throughout projects.

• Transparent and detailed reporting to stakeholders.

• Scheduled reports provide updates on progress and challenges.

• Maintains clear communication with grantors demonstrating fund impact.

Donations and Fundraisers Financial Management:

• Fundraiser and donation funds are handled through a dedicated financial system ensuring transparency.

• Donations and fundraiser proceeds are systematically recorded and tracked.

• Secure user access with unique credentials required for managing these funds.

• Detailed records of fundraiser revenues and expenses maintained.

Donation Money Management Policies:

• Fundraised money is never used to compensate volunteers.

• Proposed changes to donation/fundraiser financial systems require Board review and approval.

• Significant contributors may apply for up to 50% discount on class/event fees for their children, subject to Board approval.

Donation Money Deposit and Account Management:

• Donations are promptly deposited into designated Campanella bank accounts following secure procedures.

• Donations are allocated to general projects unless restricted by fundraiser specifications, ensuring donor intent is honored.
   

Financial Contingency Planning

• Expense Review and Reduction: Regular agenda item at board meetings to identify and reduce non-essential expenses during financial challenges.

• Revenue Diversification: Executive Director and Board actively seek and diversify revenue streams beyond student tuition, including organizing concerts and negotiating choir performance engagements.

• Transparent Communication: Strategy to promptly inform donors, stakeholders, and the community about financial challenges and actions taken to address them.

• Partnerships and Collaborations: Maintains partnerships with other organizations to share resources, services, and fundraising opportunities.

• Board Involvement: Board members actively participate in financial decision-making, especially during challenging times, leveraging their diverse expertise.

• Grant Proposal Integration: Includes a contingency planning section in grant proposals to demonstrate proactive risk management to funders.

• Scenario Planning: Board conducts scenario planning exercises to anticipate financial challenges and develop responsive strategies ahead of time.
   

Third-Party Relationship Rules

• Vendor Evaluation: Engage vendors only after thorough evaluation of reputation, reliability, cost-effectiveness, and alignment with Campanella’s values.

• Formal Contracts: All vendor relationships formalized through written contracts detailing deliverables, timelines, payment terms, and conditions.

• Due Diligence: Conduct reference checks and assess vendor track record, especially with similar nonprofit organizations.

• Budget Alignment: Select vendor services that fit within budget constraints and support financial goals to maintain fiscal responsibility.

• Performance Evaluation: Implement periodic reviews of vendor performance, assessing effectiveness, responsiveness, and contract compliance.

• Data Security and Legal Compliance: Prioritize vendors who meet data security standards and legal requirements, particularly when handling sensitive information about choir members.
   

Record Retention Policy for Financial Documents

This policy applies to all financial documents generated, received, or maintained by Children’s Educational Center Campanella.

Record Categories and Retention Periods:

• Financial Statements and Reports: 7 years

• Bank Statements and Reconciliations: 7 years

• Invoices and Receipts: 7 years

• Purchase Orders: 7 years

• Payroll Records: 7 years

• Tax Records and Filings: 7 years

• Contracts and Agreements: Duration of the contract plus 7 years

• General Ledgers and Journals: 7 years

• Audit Reports: Permanent

Document Destruction:

• Secure Disposal: Shredding, deletion, or other secure methods must be used for document destruction.

• Authorization: Document destruction must be authorized by the designated person responsible for record management.
   

This version of the Children’s Educational Center Campanella Financial Policy was duly approved during the Board meeting held on 01/16/2024. It is now in effect immediately and governs all interactions, transactions, and engagements with Campanella. 

 

Any subsequent amendments or updates will be communicated in accordance with the established procedures. This document is subject to change without notice. 

 

The compliance of all involved parties with these terms is appreciated, and we encourage you to review this document periodically for any revisions or additions. 

 

For inquiries or clarifications, please contact:

Email: info@campanellacenter.org
Phone: 847-361-7989
Mail: PO Box 674, Wheeling, IL 60090