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BRENTWOOD BIOMEDICAL RESEARCH INSTITUTE

Financial & Accounting Policies Manual

E ecti!e Date o Financial an" Accounting Policies The effective date of this manual is January 1, 2001. Several financial policies that existed prior to the adoption of this manual have been incorporated herein and, therefore, remain in effect. If a policy is added or modified subsequent to this date, the effective date of the ne !revised policy ill be indicated parenthetically immediately follo in" the policy headin".

TABLE OF CONTENTS
#a"e $umber Int#o"uction $ENERAL POLICIES Accounting De%a#t&ent O!e#!ie' Internal &ccountin" 'ontrol System 'orporation (esponsibilities Business Con"uct #ractice of )thical *ehavior 'ompliance ith +a s, (e"ulations and 'orporation #olicies ,isciplinary &ction F#au" Polic( Scope #olicy &ctions 'onstitutin" .raud /ther Irre"ularities Investi"ation (esponsibilities 'onfidentiality &uthority for Investi"ation of Suspected .raud (eportin" #rocedures 10 Secu#it( &ccountin" ,epartment &ccess to )lectronically Stored &ccountin" ,ata Stora"e of *ac23up .iles 4eneral /ffice Security $ene#al Le"ge# an" C)a#t o Accounts 'hart of &ccounts /vervie ,istribution of 'hart of &ccounts 'ontrol of 'hart of &ccounts &ccount ,efinitions 'lassification of $et &ssets 'han"es to the 'hart of &ccounts .iscal 7ear of 'orporation Journal )ntries Resea#c) Account Polic( 'reation of (esearch &ccounts / nership of .unds .und )xpenditures Termination of (esearch &ccounts ,istribution of (emainin" .unds Transfer of .unds from /ne 8arious ,onors &ccount to &nother 3 10 10 10 10 11 11 12 12 1111110 10 10 %

11 11 11 11 15 16 16 16 1% 1% 21 21 21 21 2222222-

POLICIES ASSOCIATED WITH RE*ENUES AND CASH RECEIPTS Re!enue (evenue (eco"nition #olicy (efunds Cont#i+utions Recei!e" ,efinitions ,istin"uishin" 'ontributions from )xchan"e Transactions &cceptance of 'ontributions (estricted 4ifts &cceptance of :onoraria &ccountin" for 'ontributions Transfer of 4eneral #ost .unds (eceipts and ,isclosures Billing,In!oicing Policies /vervie (esponsibilities for *illin" and 'ollection 'ustomer Invoicin" &ccounts (eceivable )ntry #olicies 'lassification of Income and $et &ssets Cas) Recei%ts /vervie In3:ouse 'ash (eceipts #rocessin" )ndorsement of 'hec2s Timeliness of *an2 ,eposits (econciliation of ,eposits #rocessin" of 'redit 'ards /n3Site 'ollections at 'onferences and Seminars Accounts Recei!a+le Manage&ent ;onitorin" and (econciliation 'ollections 'redits and /ther &d<ustments to &ccounts (eceivable &ccounts (eceivable =rite3/ff &uthori>ation #rocedures (eserve for ?ncollectible &ccounts 20 20 29 21 21 21 25 25 25 26 2% 2% -1 -1 -1 -1 -1 -1 -------0 -0 -9 -9 -9 -9 -9 -1

POLICIES ASSOCIATED WITH E-PENDITURES AND DISBURSEMENTS Pu#c)asing Policies an" P#oce"u#es /vervie ?se of #urchase /rders (esponsibility for #urchasin" #rocedures for #rocurement of 4oods and Services (eimbursement #olicy (eceipt and Inventory or ;erchandise $on3,iscrimination #olicy &uthori>ations and #urchasin" +imits 4 -5 -5 -5 -5 -5 -6 -6 -% -%

(equired Solicitation of @uotations from 8endors )valuation of &lternative 8endors &ffirmative 'onsideration of ;inority, Small *usiness A =omen3/ ned *usiness Special #urchasin" 'onditions )thical 'onduct in #urchasin" 'onflicts of Interest #rohibited Political Acti!ities #rohibited )xpenditures )ndorsements of 'andidates 0#rohibited ?se of 'orporation &ssets and (esources 'ell #hones Accounts Pa(a+le Manage&ent /vervie (ecordin" of &ccounts #ayable &ccounts #ayable 'ut3off )stablishment of 'ontrol ,evices #reparation of a 8oucher #ac2a"e #rocessin" of 8oucher #ac2a"es #ayment ,iscounts )mployee )xpense (eports (econciliation of &!# Subsidiary +ed"er to 4eneral +ed"er 01 T#a!el an" Business Ente#tain&ent 4eneral #olicy 05 &cceptable Travel &pproval &uthority (elevance of Travel &dvances TravelerBs (esponsibility to /btain &pproval TravelerBs (esponsibility for )xcess )xpenses (eimbursement ,ocumentation and Time +imit Travel #rocedures for **(I )mployees Travel (equest #rocedures for 8& )mployees )mployee and ,irector *usiness Travel (easonableness of Travel 'osts Special (ules #ertainin" to &ir Travel Spouse!#artner Travel $on3reimbursable )xpenditures &cceptable )xpenditures BBRI Su%%o#t o# Meetings an" Con e#ences Cas) Dis+u#se&ent .C)ec/0W#iting1 Policies 'hec2 #reparation 'hec2 Si"nin" ;ailin" of 'hec2s 8oided 'hec2s and Stop #ayments (ecord3Ceepin" &ssociated ith Independent 'ontractors 5

-% 00 01 01 02 02 000000 00 00 00 09 09 09 09 01

05 05 05 05 05 05 06 06 06 06 0% 90 90 91 91 91 91 99990 90 90

Pa(#oll an" Relate" Policies 'lassification of =or2ers as Independent 'ontractors or )mployees #ayroll &dministration 'han"es in #ayroll ,ata #ayroll Taxes #reparation of Timesheets #rocessin" of Timesheets (evie of #ayroll ,istribution of #ayroll 'ompensation for Services (endered by a *oard ;ember POLICIES PERTAININ$ TO SPECIFIC ASSET AND LIABILIT2 ACCOUNTS Cas) an" Cas) Manage&ent 'ash &ccounts *an2 (econciliation 'ash .lo ;ana"ement Stale 'hec2s #etty 'ash =ire Transfers In!est&ent Policies Introduction Investment #olicy ,ele"ation of &uthority Investment /b<ectives &llo able Investments ,iversification &ccountin" Treatment #rocedures and (eportin" Fi3e" Asset Manage&ent 'apitali>ation #olicy 'ontributed &ssets )stablishment and ;aintenance of a .ixed &sset +istin" (eceipt of $e ly3#urchased )quipment and .urniture ,epreciation and ?seful +ives (epairs of .ixed &ssets ,ispositions of .ixed &ssets =rite3/ffs of .ixed &ssets Leases 'lassification of +eases &ccountin" for +eases Acc#ue" Lia+ilities Identification of +iabilities &ccrued +eave

99 99 95 95 95 96 96 9% 9% 9%

10 10 10 11 11 11 11 12 12 12 12 111110 19 19 19 19 11 11 15 15 15 16 16 16 1% 1% 1%

POLICIES ASSOCIATED WITH FINANCIAL AND TA- REPORTIN$ Financial State&ents Standard .inancial Statements of the 'orporation .requency of #reparation (evie and ,istribution Special @uarterly ,istribution &nnual .inancial Statements $o!e#n&ent Retu#ns /vervie .ilin" of (eturns #ublic &ccess to Information (eturns Un#elate" Business Acti!ities Identification and 'lassification (eportin" (,IS (eport FINANCIAL MANA$EMENT POLICIES Bu"geting /vervie #reparation and &doption ;onitorin" #erformance *ud"et ;odifications Annual Au"it (ole of the Independent &uditor :o /ften to (evie the Selection of the &uditor Selectin" an &uditor #reparation for the &nnual &udit .inance 'ommittee (esponsibilities Insu#ance /vervie 'overa"e 4uidelines Insurance ,efinitions Reco#" Retention #olicy Functional E3%ense Allocations /vervie ,irect 'har"in" of 'osts &llocation of /verhead 'osts 61 55 55 55 55 56 5% 5% 5% 5% 5% 61 62 62 62 62 60 60 61 61 61 51 51 52 52 52 52 55550 51 51 51 51

POLICIES ASSOCIATED WTH FEDERAL AWARDS A"&inist#ation o Fe"e#al A'a#"s ,efinitions #reparation and (evie of #roposals #ost3& ard #rocedures 'ompliance ith +a s, (e"ulations, and #rovisions of & ards *illin" and .inancial (eportin" #rocurement ?nder .ederal & ards 'ode of 'onduct ;a2in" of Sub3a ards ;onitorin" of Sub3recipients )quipment and .urniture #urchased ith .ederal .unds Standards for .inancial ;ana"ement Systems *ud"et and #ro"ram (evisions 'lose /ut of .ederal & ards C)a#ging Costs to Fe"e#al A'a#"s /vervie Se"re"atin" ?nallo able from &llo able 'osts 'riteria for &llo ability ,irect 'osts Indirect 'osts 'ost Sharin" and ;atchin" %9 %9 %9 %1 %5 %5 %5 65 65 65 65 66 6% 6% %0 %0 %1 %2 %%%0

INTRODUCTION
The follo in" accountin" manual is intended to provide an overvie of the accountin" policies and procedures applicable to the *rent ood *iomedical (esearch Institute, hich shall be referred to as D**(IE or Dthe 'orporationE throu"hout this manual. BBRI is incorporated in the state of 'alifornia. **(I is exempt from federal income taxes under I(' Section 901FcGF-G as a nonprofit, public benefit corporation. The .ederal Tax I, number is %93 016-512. **(IBs tax3exempt mission isH To u#t)e# &e"ical science +( su%%o#ting an" %#o&oting +io&e"ical #esea#c) an" #elate" e"ucational acti!ities at t)e *A $#eate# Los Angeles Healt)ca#e S(ste&4 West Los Angeles Healt)ca#e Cente#5 T)e Co#%o#ation %#o!i"es a le3i+le &ec)anis& o# #esea#c) acti!ities inclu"ing t)e #ecei%t an" a"&inist#ation o #esea#c) un"s ot)e# t)an *ete#ans A"&inist#ation a%%#o%#iations5 T)e gene#al %u#%oses an" %o'e#s o t)e Co#%o#ation a#e to )a!e an" to e3e#cise all #ig)ts an" %o'e#s con e##e" on non%#o it %u+lic +ene it co#%o#ations un"e# t)e la's o t)e State5 No %olic( o t)e Co#%o#ation s)all +e /no'ingl( ca##ie" out at !a#iance to Fe"e#al4 State o# Local aut)o#it(4 o# to t)e co&&on et)ical %#inci%als o aca"e&ic &e"icine5 BBRI is a %#i!ate co#%o#ation4 +ut su+6ect to ce#tain o#&s o Fe"e#al o!e#sig)t5 This manual shall document the financial operations of the 'orporation. Its primary purpose is to formali>e accountin" policies and selected procedures for the accountin" staff and to document internal controls. The )xecutive ,irector and the *oard of ,irectors approved the contents of this manual as official policy of the 'orporation. &ll **(I employees are bound by the policies herein, and any deviation from established policy is prohibited.

$ENERAL POLICIES ACCOUNTIN$ DEPARTMENT O*ER*IEW


Inte#nal Accounting Cont#ol S(ste& The safe"uardin" of assets and the reliability of financial records are the primary ob<ectives of internal accountin" controls. &ccountin" controls are concerned ith systems of authori>ation and approval, controls over assets, internal auditin" and all other financial matters. ;ost of **(IBs business transactions can be bro2en do n into four stepsH 1. 2. -. 0. (equisition &pproval )xecution (ecordin"

In order to achieve effective internal accountin" control, these functions should be separated, so that no one person should be in a position here he or she can perform all aspects of a function. Co#%o#ation The accountin" department consists of six staff that mana"e and process financial information for **(I. The positions comprisin" the accountin" department of **(I, and the abbreviations of each position used throu"hout this manual, are as follo sH 'hief .inancial /fficer F'./G &ccount Supervisor F&SG Staff &ccountant FS&G &ccountin" 'ler2 F&'G #urchasin" &"ent F#&G .inancial &nalyst F.&G /ther officers and employees of **(I ho have financial responsibilities, and the abbreviations of each position used throu"hout this manual, are as follo sH )xecutive ,irector F),G :uman (esource ;ana"er F:(;G Treasurer FT(G .inance 'ommittee *oard of ,irectors F*oardG Res%onsi+ilities The primary responsibilities of the accountin" department consist ofH 4eneral +ed"er *ud"etin" 'ash and Investment ;ana"ement &sset ;ana"ement .inancial ;ana"ement of 4rants and 'ontracts #urchasin" 10

&ccounts (eceivable and *illin" 'ash (eceipts &ccounts #ayable 'ash ,isbursements #ayroll and *enefits .inancial Statement #rocessin" )xternal (eportin" of .inancial Information *an2 (econciliation (econciliation of Sub3+ed"ers 'ompliance ith 4overnment (eportin" (equirements &nnual &udit

BUSINESS CONDUCT
P#actice o Et)ical Be)a!io# ?nethical actions, or the appearance of unethical actions, are unacceptable under any conditions. The policies and reputation of **(I depend to a very lar"e extent on the follo in" considerations. )ach employee must apply her!his o n sense of personal ethics, hich should extend beyond compliance ith applicable la s and re"ulations in business situations, to "overn behavior here no existin" re"ulation provides a "uideline. It is each employeeIs responsibility to apply common sense in business decisions here specific rules do not provide all the ans ers. In determinin" compliance the follo in" questionsH 1. 2. -. 0. 9. 1. Is my action le"alJ Is my action ethicalJ ,oes my action comply ith **(I policyJ ith this standard in specific situations, employees should as2 themselves

&m I sure my action does not appear inappropriateJ &m I sure that I ould not be embarrassed or compromised if my action became 2no n the 'orporation or publiclyJ &m I sure that my action meets my personal code of ethics and behaviorJ ith

)ach employee should be able to ans er, KyesK to all of these questions before ta2in" action. )ach ,irector, ;ana"er and supervisor is responsible for the ethical business behavior of her!his subordinates. ,irectors, ;ana"ers and supervisors must ei"h carefully all courses of action su""ested in ethical as ell as economic terms, and base their final decisions on the "uidelines provided by this policy as ell as their personal sense of ri"ht and ron". Co&%liance Wit) La's4 Regulations an" Co#%o#ation Policies **(I does not tolerate the illful violation or circumvention of any .ederal, state, local, or forei"n la by an employee durin" the course of that personIs employmentL nor does the 'orporation tolerate the 11

disre"ard or circumvention of **(I policy or en"a"ement in unscrupulous dealin"s. )mployees should not attempt to accomplish by indirect means, throu"h a"ents or intermediaries, that hich is directly forbidden. Implementation of the provisions of this policy is one of the standards by levels of employees ill be measured. hich the performance of all

Disci%lina#( Action .ailure to comply ith the standards contained in this policy ill result in disciplinary action that may include termination, referral for criminal prosecution, and reimbursement to the 'orporation or to the "overnment, for any loss or dama"e resultin" from the violation. &s ith all matters involvin" disciplinary action, principals of fairness ill apply. &ny employee char"ed ith a violation of this policy ill be afforded an opportunity to explain her!his actions before disciplinary action is ta2en. ,isciplinary action 1. 2. -. ill be ta2enH ho authori>es or participates directly in actions that are a violation of ithheld

&"ainst any employee this policy.

&"ainst any employee ho has deliberately failed to report a violation or deliberately relevant and material information concernin" a violation of this policy.

&"ainst any ,irector, ;ana"er or supervisor ho attempts to retaliate, directly or indirectly, or encoura"es others to do so, a"ainst any employee ho reports a violation of this policy.

12

FRAUD POLIC2
Sco%e This policy applies to any fraud or suspected fraud involvin" employees, officers or directors, as ell as members, vendors, consultants, contractors, fundin" sources and!or any other parties ith a business relationship ith **(I. &ny investi"ative activity required ill be conducted ithout re"ard to the suspected ron"doerBs len"th of service, position!title, or relationship ith **(I. Polic( ;ana"ement is responsible for the detection and prevention of fraud, misappropriations, and other irre"ularities. .raud is defined as the intentional, false representation or concealment of a material fact for the purpose of inducin" another to act upon it to his or her in<ury. )ach member of the mana"ement team ill be familiar ith the types of improprieties that mi"ht occur ithin his or her area of responsibility, and be alert for any indication of irre"ularity. &ny fraud that is detected or suspected must be reported immediately to the )xecutive ,irector or, alternatively, to the 'hair of **(IBs *oard of ,irectors, ho coordinates all investi"ations.

Actions Constituting F#au" The terms fraud, defalcation, misappropriation, and other fiscal irre"ularities refer to, but are not limited toH 1. 2. -. 0. 9. 1. 5. 6. %. &ny dishonest or fraudulent act .or"ery or alteration of any document or account belon"in" to **(I .or"ery or alteration of a chec2, ban2 draft, or any other financial document ;isappropriation of funds, securities, supplies, equipment, or other assets of **(I Impropriety in the handlin" or reportin" of money or financial transactions ,isclosin" confidential and proprietary information to outside parties &cceptin" or see2in" anythin" of material value from contractors, vendors, or persons providin" "oods or services to **(I. )xceptionH "ifts less than MN90O in value. ,estruction, removal or inappropriate use of records, furniture, fixtures, and equipment &ny similar or related irre"ularity

Ot)e# I##egula#ities Irre"ularities concernin" an employeeBs moral, ethical, or behavioral conduct should be resolved by the )xecutive ,irector or the *oard. If there is a question as to "uidance. hether an action constitutes fraud, contact the ), or the './ for

13

In!estigation Res%onsi+ilities The )xecutive ,irector has the primary responsibility for the investi"ation of all suspected fraudulent acts as defined in the policy. The ), may utili>e hatever internal and!or external resources s!he considers necessary in conductin" an investi"ation. If an investi"ation substantiates that fraudulent activities have occurred, the &udit 'ommittee ill issue reports to appropriate desi"nated personnel and, if appropriate, to the **(I *oard of ,irectors and!or concerned 8eterans &dministration officials. ,ecisions to prosecute or refer the examination results to the appropriate la enforcement and!or re"ulatory a"encies for independent investi"ation ill be made in con<unction ith le"al counsel and the *oard, as ill final dispositions of the case.

Con i"entialit( The *oard and the )xecutive ,irector treat all information received confidentially. &ny employee ho suspects dishonest or fraudulent activity ill notify the )xecutive ,irector or the *oard 'hair immediately, and should not attempt to personally conduct investi"ations or intervie s!interro"ations related to any suspected fraudulent act Fsee Re%o#ting P#oce"u#es section belo G. Investi"ation results ill not be disclosed or discussed ith anyone other than those ho have a le"itimate need to 2no . This is important in order to avoid dama"in" the reputations of persons suspected but subsequently found innocent of ron"ful conduct and to protect **(I and the 8& from potential civil liability.

Aut)o#it( o# In!estigation o Sus%ecte" F#au" ;embers of the *oard and its desi"nees 1. 2. ill haveH hether o ned or rentedL and

.ree and unrestricted access to all **(I records and premises,

The authority to examine, copy, and!or remove all or any portion of the contents of files, des2s, cabinets, and other stora"e facilities on the premises ithout prior 2no led"e or consent of any individual ho may use or have custody or any such items or facilities hen it is ithin the scope of their investi"ations.

Re%o#ting P#oce"u#es 4reat care must be ta2en in the investi"ation of suspected improprieties or irre"ularities so as to avoid mista2en accusations or alertin" suspected individuals that an investi"ation is under ay. &n employee ho discovers or suspects fraudulent activity ill contact the )xecutive ,irector or the *oard 'hair. The employee or other complainant may remain anonymous. &ll inquiries concernin" the activity under investi"ation from the suspected individualFsG, his or her attorney or representativeFsG, or any other inquirer should be directed to the )xecutive ,irector or le"al counsel. $o information 14

concernin" the status of an investi"ation ill be "iven out. The proper response to any inquiry is DI am not at liberty to discuss this matter.E ?nder no circumstances should any reference be made to Dthe alle"ationE, Dthe crimeE, Dthe fraudE, Dthe for"eryE, Dthe misappropriationE, or any other specific reference. The reportin" individual should be informed of the follo in"H 1. 2. ,o not contact the suspected individual in an effort to determine facts or demand restitution. ,o not discuss the case, facts, suspicions, or alle"ations ith anyone unless specifically as2ed to do so by **(IBs le"al counsel or the )xecutive ,irector.

15

SECURIT2
Accounting De%a#t&ent & loc2 ill be maintained on the door leadin" into the **(I &ccountin" ,epartment. This door shall be closed and loc2ed in the evenin"s and henever the &ccountin" ,epartment is vacant. The 2ey!combination to this loc2 ill be provided to all accountin" personnel and the executive director. &ll 2eys to **(I offices ill be obtained from any employee ho leaves **(IBs employment, before a final paychec2 ill be issued. If 2eys are not returned for any reason, the loc2 to the &ccountin" office ill be chan"ed. The **(I corporate seal ill be 2ept loc2ed in the ),Bs office and blan2 chec2 stoc2 shall be stored in a fireproof file cabinet in the &ccountin" ,epartment. This cabinet ill be loc2ed ith a 2ey that is 2ept in the &ccountin" ,epartment. &ccess to this file cabinet shall be by 2eys in the possession of the './, &ccountin" Supervisor and Staff &ccountant. #etty cash is stored in a dra er loc2ed ith a 2ey. The :uman (esource ;ana"er and the )xecutive ,irector ill be the only employees ith 2eys to the petty cash dra er.

Access to Elect#onicall( Sto#e" Accounting Data It is the policy of **(I to utili>e pass ords to restrict access to accountin" soft are and data. /nly duly authori>ed accountin" personnel ith data input responsibilities ill be assi"ned pass ords that allo access to the system. &ccountin" personnel are expected to 2eep their pass ords secret and to chan"e their pass ords on a re"ular basis, no less frequently than quarterly. &dministration of pass ords shall be performed by the './. )ach pass ord enables a user to "ain access to only those soft are and data files necessary for each employeeIs required duties.

Sto#age o Bac/0U% Files It is the policy of **(I to maintain bac23up copies of electronic data files off3site in a secure, fire3 protected environment. &ccess to bac23up files shall be limited to individuals authori>ed by mana"ement. The './ shall be responsible for bac2in" up all accountin" data at the end of each or2day. *ac2up database files shall be maintained on a separate server as ell as on hard copy.

16

$ene#al O ice Secu#it( ,urin" normal business hours, all visitors are required to chec2 in at the front des2. &fter hours, all internal offices are to be loc2ed and all computer or2stations are to be shut do n.

17

$ENERAL LED$ER AND CHART OF ACCOUNTS


The "eneral led"er is defined as a "roup of accounts that supports the information sho n in the ma<or financial statements. The "eneral led"er is used to accumulate all financial transactions of **(I, and is supported by subsidiary led"ers that provide details for certain accounts in the "eneral led"er. The "eneral led"er is the foundation for the accumulation of data and reports. C)a#t o Accounts O!e#!ie' The chart of accounts is the frame or2 for the "eneral led"er system, and therefore the basis for **(IBs accountin" system. The chart of accounts consists of account titles and account numbers assi"ned to the titles. 4eneral led"er accounts are used to accumulate transactions and the impact of these transactions on each asset, liability, net asset, revenue, expense and "ain and loss account. **(IBs chart of accounts is comprised of six types of accountsH 1. 2. -. 0. 9. 1. &ssets +iabilities $et &ssets (evenues )xpenses /ther (evenues and )xpenses

There are t o types of accountsH real accounts and nominal accounts. (eal accounts are asset, liability, and net asset accounts and they appear on the statement of financial position. $ominal or temporary accounts are revenue and expense accounts, as ell as "ain and loss accounts, and they appear on the statement of activities. **(IBs nominal accounts are annually closed or >eroed out, but real accounts are permanent. & t o3di"it type number and a four3di"it classification code shall precede each account number.

Dist#i+ution o C)a#t o Accounts &ll **(I employees involved ith account codin" responsibilities Fassi"nment or revie of codin"G or bud"etary responsibilities ill be issued a current chart of accounts. &s the chart of accounts is revised, an updated copy of the chart of accounts shall be distributed to these individuals promptly.

Cont#ol o C)a#t o Accounts 18

**(IBs chart of accounts is monitored and controlled by the 'hief .inancial /fficer. (esponsibilities include the handlin" of all account maintenance, such as additions and deletions. &ny additions or deletions of accounts should be approved by the './, ho ensures that the chart of accounts is consistent ith the 'orporate structure of **(I and meets the needs of each division and department.

Account De initions 4eneral +ed"er &ccount (an"e 1000 3 1%%%

'ate"ory Assets

,efinition &ssets are probable future economic benefits obtained or controlled by the 'orporation as a result of past transactions or events. &ssets of )xample $#/ are classified as current assets, fixed assets, contra3assets, and other assets. 'urrent assets are assets that are available or can be made readily available to meet the cost of operations or to pay current liabilities. Some examples are cash, temporary investments, and receivables that ill be collected ithin one year of the statement of financial position date. .ixed assets are tan"ible assets ith a useful life of more than one year that are acquired for use in the operation of the 'orporation and are not held for resale. 'ontra3assets are accounts that reduce asset accounts, such as accumulated depreciation and reserves for uncollectible accounts receivable /ther assets include lon"3term assets that are assets acquired ithout the intention of disposin" them in the near future. Some examples are security deposits, property and lon"3term investments.

2000 P 2%%%

Lia+ilities +iabilities are probable future sacrifices of economic benefits arisin" from present obli"ations of the 'orporation to transfer assets or provide services to other entities in the future as a result of past transactions or events. +iabilities of **(I are classified as current or lon"3term.

'urrent liabilities are probable sacrifices of economic benefits 19

that ill li2ely occur ithin one year of the date of the financial statements or hich have a due date of one year or less. 'ommon examples of current liabilities include accounts payable, accrued liabilities, short3term notes payable, and deferred revenue. +on"3Term +iabilities are probable sacrifices of economic benefits that ill li2ely occur more than one year from the date of the financial statements. &n example is the non3current portion of a mort"a"e loan. -000 3 -%%% Net Assets $et &ssets is the difference bet een total assets and total liabilities. See the next section for **(IBs policies on classifyin" net assets. 0000 3 0%%% Re!enues (evenues are inflo s or other enhancements of assets, or settlements of liabilities, from deliverin" or producin" "oods, renderin" services, or other activities that constitute an 'orporationBs on"oin" ma<or or central operations. (evenues of **(I include membership dues, conference re"istrations, and sales of publications. &lso included in revenues of **(I are contributions received from donors. 1000 3 5%%% E3%enses )xpenses are outflo s or other usin" up of assets or incurrences of liabilities from deliverin" or producin" "oods, renderin" services, or carryin" out other activities that constitute **(IBs on"oin" ma<or or central operations.

6000 P 6%%%

Ot)e# Re!enue an" E3%enses 4ains are increases in net assets from peripheral or incidental transactions and from all other transactions and other events and circumstances affectin" the 'orporation except those that result from revenues or contributions. +osses are decreases in net assets from peripheral or incidental transactions and from all other transactions and other events and circumstances affectin" the 'orporation except those that result from expenses. 4ains or losses occur hen **(I sells a fixed asset or as orthless a fixed asset ith remainin" boo2 value. 20 rites off

Classi ication o Net Assets $et assets of the 'orporation shall be classified based upon the existence or absence of donor3 imposed restrictions as follo sH Un#est#icte" Net Assets 3 $et assets that are not sub<ect to donor imposed stipulations. Te&%o#a#il( Rest#icte" Net Assets 3 $et assets sub<ect to donor imposed stipulations that may or ill be satisfied throu"h the actions of the 'orporation and!or the passa"e of time. Rest#icte" Net Assets 3 $et assets sub<ect to donor imposed stipulations that the 'orporation permanently maintain certain contributed assets. 4enerally, donors of such assets permit the 'orporation to use all or part of the income earned from permanently restricted net assets for "eneral operations or for specific purposes. $et assets accumulated by **(I that are not sub<ect to donor imposed restrictions, but hich the board of directors of the 'orporation has earmar2ed for specific uses, shall be se"re"ated in the accountin" records as Kboard3desi"natedK funds ithin the unrestricted cate"ory of net assets.

C)anges to t)e C)a#t o Accounts &dditions to, deletions from, or any other chan"es to **(IBs standard chart of accounts shall only be done ith the approval of the 'hief .inancial /fficer.

Fiscal 2ea# o Co#%o#ation **(I shall operate on a fiscal year that be"ins on January 1 and ends on ,ecember -1. &ny chan"es to the fiscal year of the 'orporation must be ratified by ma<ority vote of the *oard of ,irectors. 7ou#nal Ent#ies &ll "eneral led"ers entries that do not ori"inate from a subsidiary led"er shall be supported by M<ournal vouchersO, hich shall include a reasonable explanation of each such entry. )xamples of such <ournal entries includeH 1. 2. -. (ecordin" of non3cash transactions 'orrections of postin" errors $on3recurrin" accruals of income and expenses

'ertain <ournal entries, called recurrin" <ournal entries, occur in every accountin" period. These entries may include, but are not limited toH 21

1. 2. -. 0. 9.

,epreciation of fixed assets &morti>ation of prepaid expenses &ccretion of discounts on promises to "ive &ccruals of recurrin" expenses &morti>ation of deferred revenue

Support for recurrin" <ournal entries shall be in the form of a schedule associated ith the underlyin" asset or liability account or, in the case of short3term recurrin" <ournal entries or immaterial items, in the form of a <ournal voucher. It is the policy of **(I that the 'hief .inancial /fficer shall authori>e all <ournal entries not ori"inatin" from subsidiary led"ers.

22

RESEARCH ACCOUNT POLIC2


C#eation o Resea#c) Accounts **(I may create a research account only in con<unction ith a specific research pro<ect, and only after the pro<ect has been approved by the (A, 'ommittee of the 8& 4reater +os &n"eles :ealthcare System. The purpose of the account is to receive funds from sources of support for the pro<ect and obli"ate expenses from such funds in order to accomplish the or2 of the pro<ect. (esearch accounts ill remain active only so lon" as the pro<ect remains approved and activated by the 8& (esearch Service. O'ne#s)i% o Fun"s &ll funds accepted for deposit by **(I represent corporate income and are not to be used for personal benefit of any investi"ator. &ll interest earned remains ith the corporation. ;oney maintained in research accounts in the name of individual Investi"ators is nevertheless the sole property of the 'orporation. If an investi"ator does not qualify as a **(I Investi"ator, or resi"ns from **(I, all unrestricted funds remainin" after outstandin" obli"ations have been met ill remain ith the corporation. Fun" E3%en"itu#es )xpenditures from any research account must be for research related activities in support of the specific (A, approved pro"ram. .unds deposited in 8arious ,onors accounts must be used to support research activities carried out ithin the =+& :ealth 'are System. Te#&ination o Resea#c) Accounts **(I can only close a research account after receivin" notification from the 8& (esearch Service that the related pro<ect has been terminated. &ll activity related to that account shall then end and the remainin" balance shall be removed from the account after resolution of all obli"ations of the account. Dist#i+ution o Re&aining Fun"s F#o& Te#&inate" Resea#c) Accounts If the #rincipal Investi"ator of a pro<ect can demonstrate control of remainin" funds in an account after its termination, the funds shall be moved into the #IBs 8arious ,onors &ccount. &ny ne"ative balance remainin" in a terminated research account shall also be transferred into the #IBs 8arious ,onors &ccount. If the #I cannot demonstrate control of remainin" funds, then the 'hief .inancial /fficer ill deposit those funds into the **(I &dministrative &ccount. The .inance 'ommittee shall resolve any disputes bet een the #I and the &dministration of **(I concernin" the correct distribution of the funds. T#ans e# o Fun"s F#o& One *a#ious Dono#s Account to Anot)e# &n investi"ator ith funds accrued in a various donors account may expend such funds by transfer of monies to the **(I account of another investi"ator ho has an appointment at 8&4+&:S and an active 8&3approved research pro<ect. &n investi"ator may ma2e such funds available to another **(I investi"ator ith the approval of the **(I )xecutive ,irector hen the amount is up to N29,000, or the *oard of ,irectors hen the amount to be transferred exceeds that amount. In the event of such a transfer, it is not the responsibility of the )xecutive ,irector, the *oard or the 8& to ensure reciprocation of that transfer. There shall be no reco"nition of a DdebtE or DlienE, nor can investi"ators 23

ma2e any claim for compensation from **(I or the 8&.

POLICIES ASSOCIATED WITH RE*ENUES AND CASH RECEIPTS RE*ENUE


Sou#ce o Re!enue The sources of funds may be "rants, contracts or "ifts from for3profit companies, charitable foundations, the #ublic :ealth Service or other .ederal a"encies, professional societies or other nonprofit entities, and individuals. *ecause the only statutory purpose of the 'orporation is to facilitate 8& research, all funds expended by the 'orporation must be related to approved 8& research activities

Re!enue Recognition Polic( **(I receives revenue from several types of transactions. (evenue from each of these types of transactions is reco"ni>ed in the financial statements of **(I in the follo in" mannerH 1. 2. O!e#)ea" P .ees char"ed to corporate sponsors, foundations and donors that cover the cost of settin" up and administerin" their research pro<ects. Facilities an" A"&inist#ation costs 3 ;onthly accrual based on incurrence of allo able costs Ffor cost3reimbursement a ardsG or based on other terms of the a ard Ffor fixed price, unit3of3 service, and other types of a ardsG Con e#ence an" se&ina# #e!enue 3 ,eferred as received, reclassified to income at close of the month in hich the conference or seminar is held E3)i+it s%ace inco&e 3 ,eferred as received, then reco"ni>ed as income hen the conference is held S%onso#s)i%s 3 (eco"ni>ed as income hen received, unless accompanied by restrictions or conditions Fsee the next section on contribution incomeG Cont#i+utions 3 (eco"ni>ed as income hen received, unless accompanied by restrictions or conditions Fsee the next section on contribution incomeG IRB ees 8 .ees char"ed to corporate sponsors to cover the cost of Institutionsl (evie *oard revie and approval

-. 0. 9. 1. 5.

&ll corporate sponsored research contracts administered by **(I are assessed at the rate of 20Q of the amount #ecei!e" from that contract. ?nless other ise ne"otiated, all other **(I pro<ects for .7 200- are assessed .acilities and &dministration F.A&G costs atH 4overnment F-1QG, .oundations Fup to -1QG and donations F9QG. &ll chec2s must be made out to *rent ood *iomedical (esearch Institute or *&'(&, **(IBs former name. Self3funded accounts ill be char"ed at 9Q, re"ardless of the source of fundin".

24

Re un"s The follo in" policies apply to refunds associated ith revenue collected by **(IH

Conferences and Seminars: 1. .or cancellations received by **(I at least -0 days prior to a conference or seminar, a full refund, less a N90 processin" fee, ill be provided to the re"istrant. 2. .or cancellations received less than -0 days prior to a conference or seminar, a credit to ards attendance at a future conference or seminar ill be provided. -. $o refunds or credits ill be provided for no3sho s and cancellation notifications received after the conference or seminar is held.

25

CONTRIBUTIONS RECEI*ED
De initions The follo in" definitions shall apply ith respect to the policies described in this sectionH

Cont#i+ution 3 &n unconditional transfer of cash or other assets to the 'orporation, or a settlement or cancellation of the 'orporationIs liabilities, in a voluntary nonreciprocal transfer by another entity actin" other than as an o ner. Con"ition 3 & donor3imposed stipulation that specifies a future and uncertain event hose occurrence or failure to occur "ives the promisor a ri"ht of return of the assets it has transferred to the 'orporation or releases the promisor from its obli"ation to transfer its assets. Rest#iction 3 & donor3imposed stipulation that specifies a use for the contributed asset that is more specific than broad limits resultin" from the nature of the 'orporation, the environment in hich it operates, and the purposes specified in **(IBs articles of incorporation and byla s. (estrictions on **(IBs use of an asset may be temporary or permanent. Non#eci%#ocal T#ans e# 3 & transaction in hich an entity incurs a liability or transfers assets to **(I ithout directly receivin" value from **(I in exchan"e. P#o&ise to $i!e 3 & ritten or oral a"reement to contribute cash or other assets to **(I. hich **(I and another entity each receive and

E3c)ange T#ansaction 3 & reciprocal transaction in sacrifice somethin" of approximately equal value.

Distinguis)ing Cont#i+utions #o& E3c)ange T#ansactions **(I receives income in the form of contributions, revenue from exchan"e transactions, and income from activities ith characteristics of both contributions and exchan"e transactions. **(I shall consider the follo in" criteria, and any other relevant factors, in determinin" hether income ill be accounted for as contribution income, exchan"e transaction revenue, or bothH 1. 2. **(IBs intent in solicitin" the asset, as stated in the accompanyin" materialsL The expressed intent of the entity providin" resources to **(I Fi.e. does the resource provider state its intent is to support **(IBs pro"rams or that it anticipates specified benefits in exchan"eJGL =hether the method of delivery of the asset is specified by the resource provider Fexchan"e transactionG or is at the discretion of **(I FcontributionGL 26

-.

0.

=hether payment received by **(I is determined by the resource provider FcontributionG or is equal to the value of the assets!services provided by **(I, or the cost of those assets plus a mar2up Fexchan"e transactionGL =hether there are provisions for penalties Fdue to nonperformanceG beyond the amount of payment Fexchan"e transactionG or hether penalties are limited to the delivery of assets already produced and return of unspent funds FcontributionGL and =hether assets are to be delivered by **(I to individuals or 'orporations other than the resource provider FcontributionG or hether they are delivered directly to the resource provider or to individuals or 'orporations closely connected to the resource provider.

9.

1.

Acce%tance o Cont#i+utions .unds may be accepted by the 'orporation from such sources as .ederal or private nonprofit a"encies en"a"ed in the support of research and!or 8& related education from commercial or"ani>ations involved in the development of ne dru"s and devices or in the support of medical research and!or education, Din lieu ofE honoraria or consultantBs fees obtained else here or from personal contributions by members of the corporation, or from "roups or individuals to defray the costs of scientific meetin"s, teachin" sessions or other le"itimate academic functions. &ll chec2s must be made payable to the 'orporation. $o t o party chec2s should be accepted. .unds donated in support of a particular activity can be accepted only if the responsible investi"ator holds an appointment at the 4+& 8& ;edical 'enter. Rest#icte" $i ts *efore acceptin" any restricted donation, the )xecutive ,irector shall revie the conditions the donor ishes to impose on the investi"ator and!or 'orporation in terms of ho the funds can be used. The ), should authori>e acceptance of the "ift only hen s!he is satisfied that the conditions can be met, le"ally, ethically and or"ani>ationally. The donorBs letter settin" forth the restrictions should also contain a clause authori>in" **(I to utili>e any residual funds as it sees fit in the event the concerned investi"ator should leave the 8& before completin" the pro<ect or if money remains after the pro<ect has been completed. & letter from the donor must accompany a "ift3donation indicatin" that the chec2 represents a "ift to be used by an investi"ator, or **(I, in support of one or more various research pro"rams. .urther, the letter should indicate that the "ift is irrevocable and does not impose contractual requirements on the corporation beyond the reportin" of research results. **(I ill provide ac2no led"ement of the "ift by letter to the donor. Acce%tance o Hono#a#ia .ederal +a Title 16 ?S' 20%FaG prohibits a 8& investi"ator from receivin" salary or any contribution to or supplementation of salary from any source other than the ?nited States 4overnment as compensation for services as an employee of the ?nited States. Therefore, re"ardin" honoraria, **(I can only deposit into an investi"atorBs 8arious ,onors &ccount 27

honoraria derived by an investi"ator ho as on annual leave. **(I policy requires a letter from the investi"ator that states that s!he as on annual leave before the honoraria ill be accepted for deposit into his or her account. &ny honoraria derived by an investi"ator durin" their 8& tour of duty or 8& authori>ed absence must be accompanied by a letter that states the honorarium is a donation to **(I. The investi"ator cannot use these moniesL nor can the investi"ator have control over the honoraria donation. Accounting o# Cont#i+utions **(I shall reco"ni>e contribution income in the period in hich the 'orporation receives restricted or unrestricted assets in nonreciprocal transfers, or unconditional promises of future nonreciprocal asset transfers, from donors. 'ontribution income shall be classified as increases in unrestricted, temporarily restricted, or permanently restricted net assets based on the existence or absence of such restrictions. ?nconditional promises to "ive shall be recorded as assets and increases in temporarily restricted net assets Fcontribution incomeG of **(I in the period that **(I receives evidence that a promise to support the 'orporation has been made. ?nconditional promises to "ive that are to be collected ithin one year shall be recorded at their face value, less any reserve for uncollectible promises, as estimated by mana"ement. ?nconditional promises to "ive that are collectible over time periods in excess of one year shall be recorded at their discounted net present value. &ccretion of discount on such promises to "ive shall be recorded as contribution income in each period leadin" up to the due date of the promise to "ive. The interest rate that shall be used in calculatin" net present values of unconditional promises to "ive is the ris23free rate of return available to **(I at the time the 'orporation receives a promise from a donor. =hen the final time or use restriction associated ith a contributed asset has been met, a reclassification bet een temporarily restricted and unrestricted net assets shall be recorded. =hen it receives support in the form of volunteer labor, **(I shall record contribution income and assets or expenses if one of the follo in" t o criteria is metH 1. The contributed service creates or enhances a non3financial asset Fsuch as a buildin" or equipmentG, or The contributed service possesses all three of the follo in" characteristicsH a. b. c. It is the type of service that ould typically need to be purchased by **(I if it had not been contributed, It requires speciali>ed s2ills Fi.e. formal trainin" in a trade or professionG, and It is provided by an individual possessin" those speciali>ed s2ills.

2.

'ontributed services that meet one of the t o precedin" criteria shall be recorded at the fair mar2et value of the service rendered.

28

T#ans e# o $ene#al Post Fun"s -6 ?.S.'. Section 0112 allo s funds donated to the 8& medical center Rs 4eneral #ost .und for "eneral 8& research purposes to be transferred to the 'orporation. /ther funds donated to the 4eneral #ost .unds for a specific research pro<ect may be transferred to the 'orporation only if the donor provides consent. The (A, 'ommittee should also approve the transfer. If the 4eneral #ost .und consists of multiple donors, chec2 the balance in the fund and "o bac2 to the last donors that ould ma2e up the balance left. =hen their approval is received, a cover letter shall be prepared by the './ and for arded ith the si"ned authori>ations from the donors to the 8& .iscal Service. =hen this has been approved, the funds ill be ithdra n from the medical center and the 'orporation ill receive a chec2. The &ccountin" ,epartment shall ma2e a note of the exact amount of the balance that **(I ill receive as the 8& does not al ays send a notification or correspondence ith the chec2 to identify hy the chec2 is sent.

Recei%ts an" Disclosu#es **(I and its donors are sub<ect to certain disclosure and reportin" requirements imposed under the Internal (evenue 'ode and the underlyin" (e"ulations. To comply ith those rules, **(I shall adhere to the follo in" "uidelines ith respect to contributions received by the 'orporation. .or any separate contribution received by **(I, it shall provide a receipt to the donor. The receipt shall be prepared by the **(I &ccountin" ,epartment. &ll receipts prepared by **(I shall include the follo in" informationH 1. The amount of cash received and!or a description Fbut not an assessment of the valueG of any noncash property receivedL & statement of hether **(I provided any "oods or services to the donor in consideration, in hole or in part, for any of the cash or property received by the 'orporation from the donor, and If any "oods or services ere provided to the donor by **(I, a description and "ood faith estimate of the value of those "oods or services.

2.

-.

=hen **(I receives cash in excess of N59, or non3cash property ith a value in excess of N59, as part of a quid pro quo transaction, the 'orporation shall follo additional disclosure procedures. .or purposes of this para"raph, a Kquid pro quoK transaction is one in hich **(I receives cash or property in a transaction that is part contribution and part exchan"e transaction Fi.e. the value of the "oods or services provided to the donor by **(I is less than the value of cash or property provided by the donorG. In such instances, **(I shall provide to the donor a receipt statin" that only the amount contributed in excess of the fair mar2et value of the "oods or services provided by **(I may be deducted as a charitable contribution. The receipt shall also include a "ood3faith estimate of the fair 29

mar2et value of the "oods or services provided to the donor by **(I. I(S rules provide for certain exceptions to the precedin" disclosure rules applicable to quid pro quo transactions. &s such, **(I shall not provide receipts hen it receives cash or property in excess of N59 in any of the follo in" circumstancesH 1. The "oods provided to the donor durin" 2000 bear **(IBs name or lo"o and have an a""re"ate cost of N5.00 or lessL The "oods provided to the donor in 2000 have a fair mar2et value equal to no more than 2Q of the contribution or N50, hichever is lessL or The "ift received by **(I resulted from the 'orporationIs 2000 fundraisin" appeal that included articles orth no more than N5.00, as ell as a request for contributions and a statement that the recipient may 2eep the article even if a contribution is not made.

2.

-.

The I(S on an annual basis ad<usts the precedin" thresholds for inflation. Inflation ad<ustments subsequent to 2000 are incorporated into this policy manual by reference. &ll estimates of the fair mar2et value of "oods or services provided by **(I shall be prepared by the &ccountin" ,epartment. It is the policy of **(I to comply ith all current federal and state rules re"ardin" solicitation and collection of charitable contributions, hether specifically addressed in this manual or not, as ell as all future revisions to those rules. &ll contributed services or facilities received by the $#' ill be valued at fair mar2et value on the date of that contribution and ill be recorded in the financial statements of the corporation.

30

BILLIN$,IN*OICIN$ POLICIES
O!e#!ie' The follo in" is a list of items billed and!or accrued and received by **(I and the frequency hich each is billedH Monthly or Quarterly Billings 1. 4rants and contracts 2. 'onferences and seminars Res%onsi+ilities o# Billing an" Collection **(IBs &ccountin" ,epartment is responsible for the invoicin" of "oods and services as ell as the collection of outstandin" receivables. F$oteH 'ash receipts, credit memo, and collection policies ill be discussed in subsequent sectionsG. Accounts Recei!a+le Ent#( Policies #ostin" of customer invoices to the accounts receivable subsidiary led"er of shall be performed by individuals independent of the cash receipts function of **(I. #ostin" of credit memos and other ad<ustments to customer accounts an individual independent of the cash receipts function of **(I shall also perform receivable. ith

Classi ication o Inco&e an" Net Assets &ll income received by **(I is classified as KunrestrictedK, 1. 2. ith the exception of the follo in"H

4rants and other a ards received from "overnment a"encies or other "rantors, hich are classified as temporarily restricted Special endo ments received from donors requestin" that these funds be permanently restricted for specific purposes

.rom time to time, **(I may raise other forms of contribution income hich carry stipulations that **(I utili>e the funds for a specific purpose or ithin a specified time period identified by the donor of the funds. =hen this form of contribution income is received, **(I shall classify this income as Temporarily (estricted income. &s ith all Temporarily (estricted net assets, hen the restriction associated ith a contribution has been met Fdue to the passin" of time or the use of the resource for the purpose desi"nated by the donorG, **(I ill reclassify the related net assets from KTemporarily (estrictedK to K?nrestrictedK in its Statement of .inancial #osition and reflect this reclassification as an activity in its Statement of &ctivities. .rom time to time, the **(I *oard of ,irectors may determine that it is appropriate to set funds aside 31

for specific pro<ects. To the extent these set3asides result from a *oard action, rather than a donor3 imposed requirement, the resultin" set3aside shall be classified as DunrestrictedE. :o ever, to identify these funds as bein" set aside for special pro<ects, such set3asides shall be labeled D*oard3 ,esi"natedE funds ithin the unrestricted net assets of **(I, and shall be reported as a separate component of unrestricted net assets on the **(I financial statements.

32

CASH RECEIPTS
O!e#!ie' 'ash Fincludin" chec2s payable to the 'orporationG is the most liquid asset an 'orporation has. Therefore, it is the ob<ective of **(I to establish and follo the stron"est possible internal controls in this area. In0House Cas) Recei%ts P#ocessing .or funds that are received directly at **(I Fi.e. payments not mailed to a loc2boxG, cash receipts are centrali>ed to ensure that cash received is appropriately directed, recorded and deposited on a timely basis. ;ail is opened and a listin" of cash!chec2s received shall be prepared in an open area, in the presence of other employees, and under the supervision of a senior accountin" department representative. The individual preparin" the daily list of receipts shall be someone that is not involved in the accounts receivable or accounts payable process. & deposit slip is prepared from the cash!chec2s received and compared to the daily receipts listin" for discrepancies. ,eposits are prepared and ta2en to the ban2 by an individual other than the employee ho prepared the daily cash receipts listin".

En"o#se&ent o C)ec/s It is the policy of **(I that all chec2s received that are payable to the 'orporation shall immediately be restrictively endorsed by the individual ho prepares the daily receipts listin". The restrictive endorsement shall be a rubber stamp that includes the follo in" informationH 1. 2. -. 0. .or ,eposit /nly *rent ood *iomedical (esearch Institute The ban2 name The ban2 account number of **(I

Ti&eliness o Ban/ De%osits It is the policy of **(I that ban2 deposits ill be made on a daily basis, unless the total amount received for deposit is less than N10,000. In no event shall deposits be made less frequently than ee2ly. Reconciliation o De%osits /n a periodic basis, the 'hief .inancial /fficer, ho does not prepare the initial cash receipts listin" or ban2 deposit, shall reconcile the listin"s of receipts to ban2 deposits reflected on the monthly ban2 statement. &ny discrepancies shall be immediately investi"ated. 33

P#ocessing o C#e"it Ca#"s **(I accepts ;aster'ard, 8isa and &merican )xpress credit cards for payment, all of hich are authori>ed throu"h the participatin" credit card company. .ollo in" the credit card authori>ation instructions from the participatin" credit card company does this. .or all credit card payments, **(I 1. 2. -. 0. 9. ill document the follo in" informationH

'ustomer!'orporation name, address and phone number $ame of credit cardholder &ddress of cardholder 'redit card number )xpiration date

/ne individual desi"nated by the 'hief .inancial /fficer shall perform all credit card processin". This individual shall be independent of the accounts receivable function.

On0Site Collections at Con e#ences an" Se&ina#s 'ash, chec2 and credit card payments may be accepted at conferences and seminars for payment of re"istration fees. The follo in" policies apply to the processin" of on3site paymentsH 1. 2. 'ashier duties are se"re"ated from the processin" of re"istrations & special, multi3part, on3site re"istration form is utili>edL these forms shall be pre3numbered and accounted for /ne part of the re"istration form is returned to the re"istrant as a receipt for payment &t the end of each day, a reconciliation of collections to the re"istration database and pre3 numbered receipts shall be performed &ll documentation associated ith these transactions is brou"ht bac2 and turned in to the accountin" department immediately follo in" the conference or seminar. This documentation ill include the actual chec2s collected, and any credit card char"e slips. Thereafter, deposits are processed as described earlier in this section.

-. 0.

9.

34

ACCOUNTS RECEI*ABLE MANA$EMENT


Monito#ing an" Reconciliations /n a monthly basis, a detailed accounts receivable report Fsho in" a"ed, outstandin" invoices by customerG is "enerated and reconciled to the "eneral led"er by the accountin" department. &ll differences are immediately investi"ated and resolved, and the reconciliation is revie ed by the 'hief .inancial /fficer.

Collections 'ollections are performed on a monthly basis, accordin" to a revie of the outstandin" items sho n on the accounts receivable a"in" report. This report sho s the current monthBs activity for each customer and prior monthsB balances outstandin" for -0, 10, %0, and 120 days. 'ustomers ith unpaid balances receive statements every thirty days. &fter a balance is unpaid for 10 days, an accountin" department employee ill contact the customer by telephone and attempt to collect the amount due. & record ill be 2ept of all telephone contacts. If %0 days have elapsed ithout payment, a statement ill be sent to the customer requestin" payment or documentation that payment has already been made. In addition, ee2ly telephone calls ill be placed in an attempt to collect the amount due. If 120 days have passed ithout payment, the account may be turned over to a collection a"ency or the 'orporationBs attorney.

C#e"its an" Ot)e# A"6ust&ents to Accounts Recei!a+le .rom time to time, credits a"ainst accounts receivable from transactions other than payments and bad debts ill occur. )xamples of other credits include returned products and ad<ustments for billin" errors. &n employee ho is independent of the cash receipts function shall process all credits. In addition, the 'hief .inancial /fficer shall authori>e all credits.

Accounts Recei!a+le W#ite0O Aut)o#i9ation P#oce"u#es It is the policy of **(I to ensure that all available means of collectin" accounts receivable have been exhausted before rite3off procedures are initiated. The ,epartment associated ith the amount to be ritten off, in con<unction ith the accountin" department initiates rite3offs. If an account receivable is deemed uncollectible, the follo in" approvals are required before the rite3off is processedH

/nce a

rite3off has been processed, appropriate individuals in the ori"inatin" department are to be 35

advised to ensure that further credit is not "ranted and to update the master list of bad accounts. 'ustomers listed as poor credit ris2s ill be extended future credit only if the bac2 debt is paid and the customer is no lon"er deemed a collection problem. If 1. 2. rite3off procedures have been initiated, the follo in" accountin" treatment appliesH 'urrent year invoices that are ritten off ill either be char"ed a"ainst an appropriate revenue or revenue ad<ustment account or a"ainst the ori"inal account credited. Invoices ritten off that are dated prior to the current year ill be treated as bad debt and ill reduce the allo ance for doubtful accounts, discussed in the next section.

Rese#!e o# Uncollecti+le Accounts It is the policy of **(I to maintain a reserve for uncollectible accounts receivable. &t the end of each fiscal year, the allo ance for doubtful accounts is ad<usted based on the follo in" factorsH 1. 2. -. &n analysis of outstandin" a"ed accounts receivable :istorical collection and bad debt experience )valuations of specific accounts based on discussions sale resultin" in the receivable

ith the department that ori"inated the

7ear3end ad<ustments to the reserve for uncollectible accounts shall be performed only authori>ation from the 'hief .inancial /fficer.

ith

This reserve account is used in the follo in" year to rite off those items that are deemed uncollectible from the prior year after further collection efforts have been abandoned, as described earlier.

36

POLICIES ASSOCIATED WITH E-PENDITURES AND DISBURSEMENTS PURCHASIN$ POLICIES AND PROCEDURES
O!e#!ie' It is the policy of **(I to follo a practice of ethical, responsible and reasonable procedures related to purchasin", a"reements and contracts, and related forms of commitment. The policies in this section describe the principals and procedures that all staff shall adhere to in the completion of their desi"nated responsibilities.

Use o Pu#c)ase O#"e#s It is the policy of **(I to utili>e a purchase order system. & properly completed purchase order shall be required for all purchases of "oods and services, ith the exception of travel advances and expense reimbursements, hich require the preparation of a separate form described else here in this manual. The #urchasin" &"ent usin" the purchasin" module of the 'ost #oint &ccountin" System shall issue purchase order numbers. Res%onsi+ilit( o# Pu#c)asing #rincipal Investi"ators ho have open accounts ith sufficient fund balances shall have the authority to initiate purchases on behalf of their departments, ithin the "uidelines described in this policies manual. In addition, #IBs may dele"ate purchasin" authority to responsible individuals ithin their department. #IBs shall inform the accountin" department of all individuals that may initiate purchases or prepare purchase orders. The accountin" department shall maintain a current list of all staff that has si"nature authority for their respective #IBs. The accountin" department shall be responsible for processin" purchase orders. The 'hief .inancial /fficer has approval authority over all purchases and contractual commitments requested by #IBs. The )xecutive ,irector shall ma2e the final determination on any proposed purchases here bud"etary or other conditions may result in denial. P#oce"u#es o# P#ocu#e&ent o $oo"s an" Se#!ices It is **(IBs "oal to place all orders for equipment, supplies and services ithin one business day after receivin" a completed #urchase /rder (equested form. The follo in" procedures are intended to insure timely and accurate placement of all orders and to avoid problems ith delivery and payment to vendorsH Su+sc#i%tions an" Me&+e#s)i%s )xpenditures for continued education, includin" scientific boo2s, conferences and re"istration fees, etc., specifically relatin" to a research activity may be requested by submittin" the appropriate paper or2 to **(I. The )xecutive ,irector may pay subscriptions or professional association dues, 37

ith the exclusion of license fees, from appropriate research or 8arious ,onors funds upon approval. $ormally, professional association dues ill not be paid unless doin" so is a requirement for obtainin" the desired subscription to a professional publication or a discounted re"istration fee for a professional conference . P#oce"u#e 1. 2. &ll requests for purchases must be submitted on a **(I #?(':&S) /(,)( ()@?)ST form. .orms are available at **(I or on the 8& Intranet. &ll forms must provide the follo in" informationH a. b. c. d. e. The fund account number to be char"ed for the purchase #rincipal Investi"atorBs name 8& #ro<ect number ,ate request is submitted ,elivery date required. =rite :RUSHE if the order is needed immediately and payment for D$ext ,ay Shippin"E is authori>ed f. :S)i% Onl( To;< information. The personBs name and buildin" and room numbers to here order should be delivered ". 'atalo" numberFsG of itemFsG h. 'omplete description of itemFsG i. @uantity desired <. ?nit of measureL i.e. each, pac2a"e, bottle, case, etc. 2. Su""ested vendor l5 B#ie state&ent "esc#i+ing t)e #esea#c) 6usti ication o# t)e %u#c)ase5 &ll equipment purchased ith the use of **(I funds is the property of the 'orporation. &ll purchases made ith **(I funds must have the prior approval of **(IBs &ccountin" ,epartment. Rei&+u#se&ent Polic( ?nless prior approval has been obtained, **(I ill not "uarantee payment to vendors or reimbursement to any individual for purchases made ithout **(I #urchase /rder $umber authori>ation. **(I ill not reimburse any individual for the unauthori>ed purchase of "oods or equipment that ill be stored any here off =+& 8& property. &ny exception to this policy must have the ritten approval of the **(I )xecutive ,irector before the purchase is made. &ny equipment approved for off site stora"e must be personally inspected and ta""ed ith a **(I property ta" by the #urchasin" &"ent. **(I ill not reimburse for any "oods or services that are purchased for the primary benefit of an individual. )quipment such as personal computers and peripherals that are purchased for home use are assumed to be for the personal benefit of the purchaser and ill not be authori>ed for purchase or reimbursement.

Recei%t an" In!ento#( o Me#c)an"ise ?pon placin" an order, the #& ill provide the #I ith a "oldenrod copy of #urchase /rder. =hen the order is received and inventoried by the #I or his!her authori>ed representative, the "oldenrod copy is to be si"ned and dated on the :ALL ITEMS RECEI*ED< line and returned to **(I as soon as the 38

order is received and accepted. & si"ned and dated #ac2in" Slip is also acceptable in lieu of the "oldenrod as verification of receipt of the order. **(I ill not pay the vendor until it is in receipt of the si"ned and dated "oldenrod or pac2in" slip sho in" that the itemFsG have been delivered. &ll returns of #urchase /rder equipment, supplies or "oods or other problems ith orders shipped by vendors ;?ST be handled throu"h the **(I &ccountin" ,epartment. This is to ensure proper billin" of the #IBs fund accounts and avoid confusion. Non0Disc#i&ination Polic( &ll vendors!contractors ho are the recipients of 'orporation funds, or ho propose to perform any or2 or furnish any "oods under a"reements ith **(I shall a"ree to these important principalsH 1. 8endors!'ontractors ill not discriminate a"ainst any employee or applicant for employment because of race, reli"ion, color, sexual orientation or national ori"in, except here reli"ion, sex, or national ori"in is a bona fide occupational qualification reasonably necessary to the normal operation of the vendors!contractors. 8endors!contractors a"ree to post in conspicuous places, available to employees and applicants for employment, notices settin" forth the provisions of this non3discrimination clause. $otices, advertisement and solicitations placed in accordance ith .ederal la , rule or re"ulation shall be deemed sufficient for meetin" the intent of this section.

2.

Aut)o#i9ations an" Pu#c)asing Li&its &ll completed purchase orders must be si"ned by the #rincipal Investi"ator and approved by the &ccountin" ,epartment. In addition, the )xecutive ,irector must approve all purchases that are to be paid from 8arious ,onors accounts. &ll contracts in excess of N10,000 bet een **(I and outside parties must be revie ed and approved by the )xecutive ,irector. The *oard must approve any contract that ill require the expenditure of over N29,000 of **(I &dministrative funds in a sin"le fiscal year.

Re=ui#e" Solicitation o >uotations #o& *en"o#s #urchases in excess of N10,000 for labor, equipment, supplies or services purchased, leased or contracted for shall be made only after receivin", henever possible, oral quotations from at least three F-G vendors. )xpenditures exceedin" N29,000 for labor, equipment, supplies or services purchased, leased or contracted for shall be made only after receivin" henever possible, ritten quotations from at least three F-G vendors. Specific selections shall be recommended, via the ,epartment ,irectors, to the ,irector of .inance for approval ith ritten quotations attached for revie . (ecommendations shall be based on consideration of all applicable criteria as described under D)valuation of &lternative 8endorsE belo . 39

Solicitations for "oods and services Frequests for proposalsG should provide for all of the follo in"H 1. & clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description shall not contain features, hich unduly restrict competition. (equirements that the bidder must fulfill and all other factors to be used in evaluatin" bids or proposals Fsee the next section entitled D)valuation of &lternative 8endorsE for required criteriaG & description, henever practicable, of technical requirements in terms of functions to be performed or performance required, includin" the ran"e of acceptable characteristics or minimum acceptable standards. The specific features of Kbrand name or equalK descriptions that bidders are required to meet hen such items are included in the solicitations. The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement. #reference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are ener"y efficient. & description of the proper format, if any, in hich proposals must be submitted.

2.

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0.

9.

1.

5.

E!aluation o Alte#nati!e *en"o#s It is the policy of **(I to request ritten proposals from at least three vendors for all purchases that ill exceed N29,000. &lternative vendors shall be evaluated on a ei"hted scale that considers the follo in" criteriaH 1. 2. -. 0. 9. etc.G 1. 5. 6. %. 10. 11. 12. &dequacy of the proposed methodolo"y of the vendor S2ill and experience of 2ey personnel ,emonstrated company experience /ther technical specifications Fdesi"nated by department requestin" proposalsG 'ompliance ith administrative requirements of the request for proposal Fformat, due date, 8endorBs financial stability 8endorBs demonstrated commitment to the nonprofit sector (esults of communications ith references supplied by vendor &bility!commitment to meetin" time deadlines 'ost ;inority3 or omen3o ned business status of vendor /ther criteria Fto be specified by department requestin" proposalG

$ot all of the precedin" criteria may apply in each purchasin" scenario. :o ever, in each situation requirin" consideration of alternative vendors, the department responsible for the purchase shall establish the relative importance of each criterion prior to requestin" proposals and shall evaluate 40

each proposal on the basis of the criteria and

ei"htin" that have been determined.

&fter a vendor has been selected and approved by a #I, the )xecutive ,irector prior to enterin" into a contract shall approve the final selection.

A i#&ati!e Consi"e#ation o Mino#it(4 S&all Business an" Wo&en0O'ne" Businesses #ositive efforts shall be made by **(I to utili>e small businesses, minority3o ned firms, and omenIs business enterprises, henever possible. The follo in" steps shall be ta2en in furtherance of this "oalH 1. )nsure that small business, minority3o ned firms, and to the fullest extent practicable. omenIs business enterprises are used

2.

;a2e information on forthcomin" opportunities available and arran"e time frames for purchases and contracts to encoura"e and facilitate participation by small business, minority3 o ned firms and omenIs business enterprises. 'onsider in the contract process hether firms competin" for lar"er contracts tend to subcontract ith small businesses, minority3o ned firms and omenIs business enterprises. )ncoura"e contractin" ith consortiums of small businesses, minority o ned firms and omenIs business enterprises hen a contract is too lar"e for one of these firms to handle individually. ?se the services and assistance, as appropriate, of such 'orporations as the Small *usiness &dministration and the ,epartment of 'ommerceIs ;inority *usiness ,evelopment &"ency in the minority3o ned firms and omenIs business enterprises.

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9.

S%ecial Pu#c)asing Con"itions Emergencies: =here equipment, materials, parts, and!or services are needed, quotations ill not be necessary if the health, elfare, safety, etc., of staff and protection of 'orporation property is involved. Single Distributor/Source: =here there is only one F1G distributor for merchandise needed and no other product meets the stated needs or specifications, quotations ill not be necessary.

Federally Funded Programs: 41

#urchases that ill be char"ed to pro"rams funded ith federal a ards ill be sub<ect to additional policies. These policies are described in a separate section, D#olicies &ssociated =ith .ederal & ards.E Et)ical Con"uct in Pu#c)asing )thical conduct in mana"in" the 'orporationIs purchasin" activities is an absolute essential. Staff must al ays be mindful that they represent the *oard of ,irectors and share a professional trust ith other staff and the "eneral membership. Staff shall discoura"e the offer of, and decline, individual "ifts or "ratuities of value in any ay that mi"ht influence the purchase of supplies, equipment, and!or services. 4ifts to the 'orporation, vie ed as normal business incentives to obtain future 'orporation3approved business such as for meetin" sites, are acceptable donations.

Con licts o Inte#est P#o)i+ite" $o member of the *oard of ,irectors of the 'orporation or staff members thereof shall, either directly or directly, be a party to or be in any manner interested in any contract or a"reement ith the 'orporation for any matter, cause, or thin" hatsoever by reason hereof any liability of indebtedness shall in any ay to be created a"ainst the 'orporation. If any a"reement or contract shall be made in violation of these re"ulations, the same shall be null and void, and no action shall be maintained thereon a"ainst the 'orporation. &ll 'orporation employees, officers and directors are sub<ect to .ederal la s and re"ulations applicable to .ederal employees on conflicts of interest in the performance of official functions. )ach *oard member and each employee shall submit on an annual basis to the /ffice of (esearch and ,evelopment 'entral /ffice, a si"ned statement certifyin" a areness of and compliance ith these la s and re"ulations.

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POLITICAL ACTI*ITIES
P#o)i+ite" E3%en"itu#es It is the policy of **(I that the 'orporation shall not incur any expenditures for political activities. .or purposes of this policy, political activities shall be defined as any activity associated ith the direct or indirect support or opposition of a candidate for elective public office at the federal, state or local level. )xamples of prohibited political expenditures include, but are not limited to, the follo in"H 1. 2. -. 0. 9. 'ontributions to political action committees 'ontributions to the campai"ns of individual candidates for public office 'ontributions to political parties )xpenditures to produce printed materials Fincludin" materials included in periodicalsG that support or oppose candidates for public office )xpenditures for the placement of political advertisements in periodicals

En"o#se&ents o Can"i"ates It is the policy of **(I not to endorse any candidates for public office in any manner, either verbally or in ritin". This policy extends to the actions of mana"ement and other representatives of **(I, hen these individuals are actin" on behalf of, or are other ise representin", the 'orporation.

P#o)i+ite" Use o Co#%o#ation Assets an" Resou#ces It is the policy of **(I that no assets or human resources of the 'orporation shall be utili>ed for political activities, as defined above. This prohibition extends to the use of 'orporation assets or human resources in support of political activities that are en"a"ed in personally by board members, members of mana"ement, employees, or any other representatives of **(I. =hile there is no prohibition a"ainst these individuals en"a"in" in political activities personally Fon their o n time, and ithout representin" that they are actin" on behalf of the 'orporationG, these individuals must at all times be a are that 'orporation resources cannot at any time be utili>ed in support of political activities.

Cell P)ones The purchase of cell phones or payment for the costs associated policy, established January 11, 2001. ith their use is prohibited by *oard

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ACCOUNTS PA2ABLE MANA$EMENT


O!e#!ie' **(I strives to maintain efficient business practices and "ood cost control. & ell3mana"ed accounts payable function can assist in accomplishin" this "oal from the purchasin" decision throu"h payment and chec2 reconciliation. It is the policy of **(I that an employee independent of orderin" and receivin" performs the recordin" of assets or expenses and the related liability. The amounts recorded are based on the vendor invoice for the related "oods or services. The vendor invoice should be supported by an approved purchase order here necessary, and should be revie ed and approved by the Staff &ccountant prior to bein" processed for payment. Invoices and related "eneral led"er account distribution codes are revie ed prior to postin" to the subsidiary system. The primary ob<ective for accounts payable and cash disbursements is to ensure thatH 1. 2. -. ,isbursements are properly authori>ed Invoices are processed in a timely manner 8endor credit terms and operatin" cash are mana"ed for maximum benefits

Reco#"ing o Accounts Pa(a+le &ll valid accounts payable transactions, properly supported recorded as accounts payable in a timely manner. ith the required documentation, shall be

&ccounts payable are processed on a ee2ly basis. Information is entered into the system from approved invoices or disbursement vouchers ith appropriate documentation attached. It is the policy of **(I that only ori"inal invoices ill be processed for payment unless duplicated copies have been verified as unpaid by researchin" the vendor records. $o vendor statements shall be processed for payment.

Accounts Pa(a+le Cut0O .or purposes of the preparation of the 'orporationBs monthly financial statements, all vendor invoices that are received, approved and supported ith proper documentation by the tenth day of the follo in" month shall be recorded as accounts payable as of the end of the immediately precedin" month if the invoice pertains to "oods or services delivered by month3end.

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Esta+lis)&ent o Cont#ol De!ices The Staff &ccountant establishes control of invoices as soon as invoices are received. 8endors instructed to mail all invoices directly to the accounts payable department. ill be

?pon receipt of invoices, each invoice shall be recorded on a lo" of invoices received, Ddate receivedE stamped, and distributed to the appropriate personnel for approval. The lo" is to be revie ed daily to determine hich, if any, invoices have not been returned to the accountin" department.

P#e%a#ation o a *ouc)e# Pac/age #rior to any account payable bein" submitted for payment, a pac2a"e called a Dvoucher pac2a"eE shall be assembled. )ach voucher pac2a"e shall contain the follo in" documentsH 1. 8endor invoice For employee expense reportG 2. #ac2in" slip F here appropriateG -. (eceivin" report For other indication of receipt of merchandise and authori>ation of acceptanceG 0. #urchase order 9. &ny other supportin" documentation deemed appropriate

P#ocessing o *ouc)e# Pac/ages The Staff &ccountant shall apply the follo in" procedures to each voucher pac2a"eH 1. 2. -. 0. 'hec2 the mathematical accuracy of the vendor invoice. 'ompare the nature, quantity and prices of all items ordered per the vendor invoice to the purchase order, pac2in" slip and receivin" report ,ocument the "eneral led"er distribution, usin" the 'orporationBs current chart of accounts /btain the revie and approval of the department director For their desi"neeG associated ith the "oods or services purchased

&pprovals by department directors indicate their ac2no led"ement of satisfactory receipt of the "oods or services invoiced, a"reement ith all terms appearin" on the vendor invoice, a"reement ith "eneral led"er account codin"s, and a"reement to pay vendor in full.

Pa(&ent Discounts To the extent practical, it is the policy of **(I to ta2e advanta"e of all prompt payment discounts offered by vendors. =hen availability of such discounts is noted, and all required documentation in support of payment is available, payments ill be scheduled so as to ta2e full advanta"e of the discounts.

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E&%lo(ee E3%ense Re%o#ts (eimbursements for travel expenses, business meals, or other approved costs ill be made only upon the receipt of a properly approved and completed expense reimbursement form Fsee further policies under DTravel and *usiness )ntertainmentEG. &ll receipts must be attached, and a brief description of the business purpose of trip or meetin" must be noted on the form. )xpense reports ill be processed for payment in the next vendor payment cycle if received ithin t o business days of the deadline.

Reconciliation o A,P Su+si"ia#( Le"ge# to $ene#al Le"ge# &t the end of each monthly accountin" period, the total amount due to vendors per the accounts payable subsidiary led"er shall be reconciled to the total per the accounts payable "eneral led"er account Fcontrol accountG. &ll differences are investi"ated and ad<ustments are made as necessary. The reconciliation and the results of the investi"ation of differences are revie ed and approved by the 'hief .inancial /fficer. &lso on a monthly basis, the Staff &ccountant shall perform the follo in" proceduresH 1. 2. 'hec2 all statements received for unprocessed invoices. 'hec2 the #urchase /rder file for open #./.Bs that are more than 10 days old and follo up.

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TRA*EL AND BUSINESS ENTERTAINMENT


$ene#al Polic( **(IBs mission is to further medical science by promotin" research and education. (elevant research or educational activities are appropriate and necessary expenditures required to help accomplish the corporate mission. &ccordin"ly, funds donated to and accepted by **(I may be used to reimburse travel expenses associated ith furtherin" research or education relevant activities. Acce%ta+le T#a!el Travel to meetin"s of clinical specialty societies, research societies, national and international "eneral clinical "roups Fe."., &;&, =:/G, the reco"ni>ed or stated primary "oals of hich are to further medical 2no led"e, research, public health and!or education is acceptable hen the proposed travel has a demonstrable research or education relevance.

A%%#o!al Aut)o#it( &pproval of proposed corporate travel fundin" requests is the responsibility of the )xecutive ,irector, ith final authority for interpretation residin" ith the 'hairman or the *oard of ,irectors. )xceptions to stated policy may be made only by the *oard of ,irectors. Rele!ance o T#a!el It is the responsibility of the traveler to submit adequate material to <ustify a primary research or education purpose. A"!ances $o cash advances or reimbursements of transportation tic2ets ill be made prior to the date of the actual travel. &ll travel expenses must be paid by the traveler and ill be promptly reimbursed upon completion of the approved travel. The only exception to this policy is that meetin" re"istration fees N-00 and above may be requested in advance. 'orporate chec2s for such re"istrations ill be made out to the or"ani>ation sponsorin" the meetin", not the individual traveler. T#a!ele#?s Res%onsi+ilit( to O+tain T#a!el A%%#o!al The #rincipal Investi"ator hose funds are to be expended for travel must requests authori>ation to spent those funds in advance from either the )xecutive ,irector or the 'hief .inancial /fficer of **(I.

T#a!ele#?s Res%onsi+ilit( o# E3cess E3%enses 47

The traveler is responsible for excess costs and any additional expenses incurred for personal preference or convenienceL e.". cost of accommodations in excess of conference scheduleL luxury accommodations and services unnecessary or un<ustified in the performance of official business. Rei&+u#se&ent Docu&entation an" Ti&e Li&its (eimbursement ill be issued only upon submission of o#iginal #ecei%ts an" "ocu&entation5

(eimbursements for completed travel should be requested ithin 10 days. (equests submitted more than 10 days after the expense is incurred may be denied or may require additional <ustification and approval before reimbursement can be made. T#a!el Re=uest P#oce"u#e Fo# a BBRI E&%lo(ee The traveler must complete and submit a **(I RE>UEST FOR TRA*EL FUNDS alon" ith the follo in" documents for approval, to the #rincipal Investi"ator hose funds ill be usedH & copy of the meetin"!conference announcement or letter of invitation If traveler is presentin" a paper at the meetin", also attach a copy of the abstract or invitation letter and (A, 'ommittee approval for presentation. The #rincipal Investi"ator must indicate hich research account funds should be encumbered and then si"n the (equest for Travel .unds and for ard it to **(I. **(IBs 'hief .inancial /fficer ill determine that there are sufficient funds in the account indicated by the #I and if so, encumber the appropriate amount. the './ ill then for ard the (equest to the )xecutive ,irector for final approval. T#a!el Re=uest P#oce"u#e Fo# a *A E&%lo(ee The traveler must complete and submit a **(I RE>UEST FOR TRA*EL FUNDS alon" ith the follo in" documents for approval, to the #rincipal Investi"ator hose funds ill be usedH & copy of the meetin"!conference announcement or letter of invitation If traveler is presentin" a paper at the meetin", also attach a copy of the abstract or invitation letter and (A, 'ommittee approval for presentation. &n approved D(equest for &pproval of &cceptance of 4ifts or ,onationsSE Fform 103010*G If Traveler is receivin" 8& travel orders, a copy of the approved S.351, requestin" D&uthori>ed +eaveE The #rincipal Investi"ator must complete #art 8, #a"e 2, of the 8& form D(equest for &pproval of &cceptance of 4ifts or ,onationsSE Fform 103010*G and other required documents in support of the request. The #I must si"n and submit the (equest for Travel .unds form to **(I. The './ ill revie the request and determine hether sufficient funds are available to encumber. If funds are available, the './ shall encumber the funds and submit the (equest to the ), for final 48

approval.

E&%lo(ee an" Di#ecto# Business T#a!el Rei&+u#se&ent (eimbursement may include payment for the follo in" expensesH &ir travel Fcoach class rates onlyG :otel accommodations Fsin"le room rate P authori>ed traveler onlyG ;eals F&ctual cost of each meal up to a maximum N59 per day ith ori"inal receipts. **(I ill not reimburse for any meal or other travel related expense for hich an ori"inal receipt is not submitted.G ;ilea"e F99 cents per mile G 4round transportation (eimbursement &t the conclusion of a **(I business trip, an employee or member of the *oard that has incurred business3related expenses should complete a (equest for Travel (eimbursement (eport in accordance ith the follo in" policiesH 1. 2. -. 0. Identify each separately incurred business expense Fi.e. do not "roup all expenses associated ith one trip to"etherG =ith the exception of tips and reimbursed milea"e, all business expenses must be supported ith invoices!receipts. .or all lod"in" and any expenditure other than meals, vendor receipts!invoices must be submitted. 'redit card char"e slips do not represent adequate supportin" documentation. .or airfare, airline3issued receipts should be obtained. If a traveler fails to obtain a receipt, other evidence must be submitted indicatin" that a trip as ta2en and the amount paid Ffor example, a combination of an itinerary, a credit card receipt, and boardin" passesG. ;ilea"e may be reimbursed at the standard federal rates currently in effect, as published each year by the I(S. The business purpose of each trip must be adequately explained on each report. #ro<ect!function codes must be identified for all expenditures. .or all meals and other business entertainment, the follo in" must be clearly identifiedH a. $ames, titles, 'orporations, and business relationships of all persons entertained b. The business purpose of the entertainment Ftopics discussed, etc.G &ll expense reports must be si"ned and dated by the employee. &ll expense reports must be approved by the employeeIs supervisor. /nly one expense report form should be prepared for each trip.

9. 1. 5. 6.

%. 10. 11.

&n employee ill not be reimbursed for expense reports not meetin" the precedin" criteria. If the )xpense (eport results in a balance due to **(I Fas a result of receivin" a travel advance "reater than actual business expendituresG, the employee must attach a chec2 or si"n a statement indicatin" authori>ation to settle the balance due throu"h a payroll deduction. $o further travel advances ill be issued to any employee **(I from previous business trips. 49 ho has an outstandin" balance due to

Reasona+leness o T#a!el Costs **(I shall reimburse travelers only for those business3related costs that are reasonably incurred. &ccordin"ly, the follo in" "uidelines shall applyH 1. 2. -. 0. 9. 1. 5. Suites and other up"raded rooms at hotels shall not be allo edL Travelers should stay in standard rooms =hen utili>in" rental cars, travelers should rent midsi>e or smaller vehiclesL Share rental cars henever possible *usiness3related lon"3distance telephone calls hile a ay on business travel are permitted, but should be 2ept to a minimumL )xpense reports should explain lon"3distance char"es #ersonal lon"3distance calls hile a ay on business are reimbursable if 2ept to a minimum, such as one ni"htly call home to familyL #ersonal calls in excess of this shall not be reimbursed =henever possible, travelers should utili>e lon"3distance callin" cards hen placin" calls hile a ay on travelL &void usin" the hotelBs lon"3distance service if possible /ne in3room movie shall be reimbursedL $o other entertainment expenses shall be reimbursed (easonable tips for ba""a"e handlin" shall be reimbursedL $o receipts are required

S%ecial Rules Pe#taining to Ai# T#a!el The follo in" additional rules apply to air travelH 1. &ir travel should be at coach classL .irst class air travel shall not be reimbursed unless there is a documented medical reason 2. ;emberships in airline fli"ht clubs is not reimbursable -. 'ost of fli"ht insurance is not reimbursable 0. =hen returnin" on a Sunday or departin" on a Saturday in order to obtain a cost savin"s in airfare due to the Saturday3ni"ht stayover, travelers should provide a total cost comparison Fsho in" that the lo er airfare plus an extra ni"ht lod"in" is less costly than airfare ithout the Saturday ni"ht stay overG 9. 'ost of up"rade certificates is not reimbursable 'ost of cancelin" and reboo2in" fli"hts is not reimbursable, unless it can be sho n that it as necessary or required for le"itimate business reasons Fsuch as chan"ed meetin" dates, etc.G 1. 'ost of cancelin" and reboo2in" fli"hts is not reimbursable, unless it can be sho n that it as necessary or required for le"itimate business reasons Fsuch as chan"ed meetin" dates, etc.G 5. Travelers must identify and pay for all personal fli"hts, even if such fli"hts are incorporated into a fli"ht schedule that serves that business purposeFi.e. **(I ill not reimburse for the personal le" of a tripG 6. #ersons travelin" on **(I funds cannot use "overnment rate airfares.

50

S%ouse,Pa#tne# T#a!el It is the policy of **(I not to reimburse any employee or board member for separate travel costs Fair fare, etc.G associated ith his!her spouse or partner. The cost of a shared hotel room need not be allocated bet een employee!director and spouse!partner for purposes of this policy. Non0#ei&+u#sa+le E3%en"itu#es The reimbursement of funds ill be "uided by the principal that no expenditure ill be reimbursed that could be considered to be of personal benefit FincomeG to the investi"ator involved or to represent a conflict of interest or apparent conflict of interest. $o payment for state licensin" fees can be made. $o supplies or equipment not located on site Fi.e. personal computersG, computer supplies, paper, folders, etc. $o reimbursement ill be made for off site meals in connection ith visitin" professors, lecturers, or staff meetin"s of any type. $o payments ill be reimbursed for maintenance or repairs of non3**(I o ned equipment. Acce%ta+le Rei&+u#se&ents &ll direct costs related to (A, approved research such asH employee salaries F T)e#e &ust +e @ &ont)s? sala#( an" #inge +ene it un"s a!aila+le +e o#e an e&%lo(ee 'ill +e )i#e"1L purchases of supplies and equipment, maintenance and repair of **(I o ned equipmentL servicesL support of forei"n and domestic travelL payment to consultants includin" fees and reasonable expensesL honorariaL purchase of boo2sL reprints and subscriptions. (eimbursement for refreshments served at on site, approved seminars, site visits, and etc. must be approved in advance

BBRI Su%%o#t o# Meetings an" Con e#ences ;eetin"s, conferences, or2shops, seminars, "rand rounds, to n halls, symposia, and other similar meetin"s are accepted features of conductin" research and education. &dditionally, certain events, such as retreats and board meetin"s as ell as fundraisin" and public relations, are necessary for the conduct of business. Incidental to the business purpose of such meetin"s, it may be appropriate to serve meals or refreshments. 8arious re"ulations, the federal ethics standards and the statute that authori>es **(I influence hether expenditures related to such events are appropriate for **(I support. 'onsequently, in order to be considered for **(I support by direct payment or reimbursement, **(I has established the follo in" policy. 1. In order to be eli"ible for **(I support, a meetin" must have a documented research, education or **(I business purpose. **(I ill not support DentertainmentE expenses such as social activities, parties, ceremonial occasions or those that provide amusement. .or a resea#c) #elate" &eeting H & request for **(I support must include an explicit statement about the research rationale for the eventL that is, its research related purpose and ho it ill further 8& research. &ccompanyin" documentation should include the pro"ram, a"enda or topic of discussion and a roster of attendees. =hen appropriate, the request should tie the meetin" to an approved research pro<ect. .or an e"ucational %#og#a& not #elate" to #esea#c) H The education activity itself must first be approved by the 8&;' )ducation 'ommittee. ,ocumentation should include an explicit statement of the purpose and ho the pro"ram ill further the 8&;'Bs and!or 8&Bs education and trainin" mission, the a"enda, pro"ram or topic of discussion, and a roster of attendees.

51

.or ot)e# BBRI +usiness e!entsH & request must include an explicit statement of ho the meetin" ill further the **(IBs ability to facilitate research and education. &ppropriate events include, but are not limited to retreats and board, annual membership and investi"ator meetin"s as ell as fundraisin", and public relations. ,ocumentation should include the purpose, a"enda, pro"ram or topic of discussion and a roster of attendees.

2. The types of meetin"s that may be eli"ible for **(I support are too numerous to list and the characteristics of appropriate meetin"s may vary. :o ever, factors that **(I ill consider hen evaluatin" a meetin" for support includeH =hether at least one spea2er ma2es a research presentation or presents educational instruction. =hether there is a non38&;' spea2er and!or non38&;' personnel are amon" the expected attendees. The frequency of similar meetin"s that may involve the same personnel. Irre"ularly scheduled meetin"s and!or those that occur no more than monthly may be eli"ible for supportL ee2ly meetin"s "enerally ill not. =hether support is requested for routine 8&;' staff, committee or department meetin"s. 4enerally, **(I ill not support meal expenses for such meetin"s. =hether the meetin" involves at least one individual research or education at the 8&;'. ho is bein" recruited to conduct

=hether the meetin" lasts more than t o hours or extends throu"h a normal mealtime.

(e"ardless of the type of meetin", the documentation required in T1 above is a prerequisite for **(I support. -. (equests for **(I support ill be revie ed and approved by the individual desi"nated by the board, "enerally the executive director or the executive directorBs desi"nee. **(I ill provide direct payment or reimbursement for reasonable meetin" costs based on submission of ori"inal receipts. In the event of disa"reement, the request ill be referred to a desi"nated member of the board of directors or to the full board as appropriate. 0. **(I encoura"es meetin" or"ani>ers to obtain pre3approval of **(I support for meetin"s. Such approval is not mandatory, but events lac2in" pre3approval may be denied support or may receive only partial support.

52

CASH DISBURSEMENTS .CHECA0WRITIN$1 POLICIES


C)ec/ P#e%a#ation It is the policy of **(I to print vendor chec2s and expense reimbursement chec2s on a ee2ly basis. /nly persons independent of those ho initiate or approve expenditures, as ell as those ho are authori>ed chec2 si"ners shall prepare chec2s. &ll vendor and expense reimbursement chec2s shall be produced in accordance "uidelinesH 1. 2. -. 0. 9. 1. 5. 6. %. ith the follo in"

)xpenditures must be supported in conformity ith the purchasin", accounts payable, and travel and business entertainment policies described in this manual Timin" of disbursements should "enerally be made to ta2e advanta"e of all early3payment discounts offered by vendors 4enerally, all vendors shall be paid ithin -0 days of submittin" a proper invoice upon delivery of the requested "oods or services Total cash requirements associated ith each chec2 run is monitored in con<unction ith available cash balance in ban2 prior to the release of any chec2s &ll supportin" documentation is attached to the correspondin" chec2 prior to for ardin" the entire pac2a"e to an authori>ed chec2 si"ner 'hec2s shall be utili>ed in numerical order Funused chec2s are stored in a loc2ed safe in the accountin" departmentG 'hec2s shall never be made payable to DbearerE or DcashE 'hec2s shall never be si"ned prior to bein" prepared ?pon the preparation of a chec2, vendor invoices and other supportin" documentation shall immediately be canceled in order to prevent subsequent reuse.

C)ec/ Signing 'hec2s up to N2,000 requires a sin"le si"nature. 'hec2s over N2,000 require t o si"natures. $o chec2s shall be si"ned prior to the chec2 bein" completed in its entirety Fno si"nin" of blan2 chec2sG. It is the policy of **(I that an individual other than the one shall si"n each chec2. ho approved the transaction for payment

'hec2 si"ners should examine all ori"inal supportin" documentation to ensure that each item has been properly chec2ed prior to si"nin" a chec2. 'hec2s should not be si"ned if supportin" documentation appears to be missin" or there are any questions about a disbursement.

53

Mailing o C)ec/s &fter si"nature, chec2s are returned to the individual ho prepared them, ho then mails chec2s immediately. Individuals ho authori>e expenditures shall not mail chec2s.

*oi"e" C)ec/s an" Sto% Pa(&ents 'hec2s may be voided due to processin" errors by ma2in" proper notations in the chec2 re"ister and defacin" the chec2 by clearly mar2in" it as D8/I,E. &ll voided chec2s shall be retained to aid in preparation of ban2 reconciliation. Stop payment orders may be made for chec2s lost in the mail or other valid reasons. Stop payments are processed by telephone instruction and ritten authori>ation to the ban2 by accountin" personnel ith this authority. & <ournal entry is made to record the stop payment and any related ban2 fees.

Reco#"0Aee%ing Associate" 'it) In"e%en"ent Cont#acto#s **(I shall obtain a completed .orm =3% from all vendors to hom payments are made. & record shall be maintained of all vendors to hom a .orm 10%% is required to be issued at year3end. #ayments to such vendors shall be accumulated over the course of a calendar year.

54

PA2ROLL AND RELATED POLICIES


E&%lo(&ent Polic( &ll 'orporate employees must be citi>ens or have the appropriate le"al (esource ;ana"er supplies an application pac2a"e. &ll 'orporate personnel must be recorded or2 documents. The :uman

ith the 8&;' as =or2in" =ithout 'ompensation F=/'G.

It is the policy of **(I that employees ill not normally be hired unless at least the 'orporation receives six monthBs salary costs and frin"e benefits in advance or unless the entire pro<ect ill not last lon"er than six months. Shorter pro<ects should be bud"eted in full before startin". The )xecutive ,irector must approve exceptions to this policy. Classi ication o Wo#/e#s as In"e%en"ent Cont#acto#s o# E&%lo(ees It is the policy of **(I to consider the 203factor list developed by the Internal (evenue Service in ma2in" determinations about the classification of or2ers as independent contractors or employees. :o ever, even I(S officials have indicated that their 203factor list is out3of3date in certain respects and not al ays relevant. Thus, all relevant facts and circumstances ill be considered, and certain factors may be ei"hed more heavily than others. The 20 factors described in I(S "uidelines areH 1. Inst#uctions5 & person ho is required to comply ho to or2 is ordinarily an employee. ith instructions about hen, here, and

2.

T#aining5 Trainin" of a person by an experienced employee or by other means is a factor of control and indicates that the or2er is an employee. Integ#ation5 Inte"ration of a personIs services into the business operations "enerally sho s that the person is sub<ect to direction and control and, accordin"ly, is an employee. Se#!ices #en"e#e" %e#sonall(5 If the individual employed must render the services personally, it su""ests an employer3employee relationship. Self3employed status may be indicated hen an individual has the ri"ht to hire a substitute ithout the employerIs 2no led"e. Hi#ing4 su%e#!ising4 an" %a(ing assistants5 The hirin", supervisin", and payin" of assistants by the employer "enerally indicates that all or2ers on the <ob are employees. Self3employed persons "enerally hire, supervise, and pay their o n assistants. Continuing #elations)i%5 The existence of a continuin" relationship bet een an individual and the 'orporation for hom the individual performs services is a factor tendin" to indicate the existence of an employer3employee relationship. Set )ou#s o 'o#/5 The establishment of set hours of or2 by the employer is a factor indicatin" control and, accordin"ly, the existence of an employer3employee relationship. Self3 employed persons are Kmasters of their o n time.K 55

-.

0.

9.

1.

5.

6.

Full ti&e #e=ui#e"5 If or2ers must devote full time to the business of the employer, they ordinarily ill be employees. & self3employed person, on the other hand, may choose for hom and hen to or2. Doing 'o#/ on e&%lo(e#Bs %#e&ises5 ,oin" or2 on the employerIs premises may indicate that the or2er is an employee, especially if the or2 could be done else here. O#"e# o# se=uence o 'o#/5 If or2ers must perform services in an order or sequence set by the 'orporation for hom they perform services, it indicates that the or2ers are employees. O#al o# '#itten #e%o#ts5 & requirement that or2ers submit re"ular oral or the employer may be indicative of an employer3employee relationship. ritten reports to

%.

10.

11.

12.

Pa(&ent +( )ou#4 'ee/4 &ont)5 &n employee usually may be paid by the hour, ee2, or month, hereas a self3employed person may be paid by the <ob on a lump3sum basis Falthou"h lump3sum may be paid in intervals in some casesG. Pa(&ent o +usiness e3%enses5 #ayment by the employer of the or2erIs business or travel expenses may indicate that the or2er is an employee. Self3employed persons usually are paid on a <ob basis and may ta2e care of their o n business and travel expenses. Fu#nis)ing o tools an" &ate#ials5 The furnishin" of tools and materials by the employer indicates an employer3employee relationship. Self3employed persons ordinarily provide their o n tools and materials. Signi icant in!est&ent5 The furnishin" of all necessary facilities Fequipment and premisesG by the employer su""ests that the or2er is an employee. Reali9ation o %#o it o# loss5 =or2ers ho are in a position to reali>e a profit or suffer a loss as a result of their services "enerally are self3employed, hile employees ordinarily are not in such a position. Wo#/ing o# &o#e t)an one i#& at a ti&e5 & person ho 'orporations at the same time is usually self3employed. or2s for a number of persons or

1-.

10.

19.

11.

15.

16.

Ma/ing se#!ices a!aila+le to t)e gene#al %u+lic5 =or2ers ho ma2e their services available to the "eneral public are usually self3employed. Individuals ordinarily hold their services out to the public by havin" their o n offices and assistants, hin"in" out a Kshin"leK in front of their office, holdin" a business license, and advertisin" in ne spapers and telephone directories. Rig)t to "isc)a#ge5 The ri"ht to dischar"e is an important factor in indicatin" that the person possessin" the ri"ht is an employer. Self3employed persons ordinarily cannot be fired as lon" as they produce results that measure up to their contract specifications. Rig)t to te#&inate5 )mployees ordinarily have the ri"ht to end the relationship ith the employer at any time they ish ithout incurrin" liability. & self3employed person usually a"rees to complete a specific <ob and is responsible for its satisfactory completion or is le"ally obli"ated to ma2e "ood for failure to complete the <ob. 56

1%.

20.

If an individual qualifies for independent contractor status, the individual ill be sent a .orm 10%% if total compensation paid to that individual for any calendar year, on the cash basis is N100 or more. The amount reported on a .orm 10%% is equal to the compensation paid to that person durin" a calendar year Fon the cash basisG. )xcluded from DcompensationE are reimbursements of business expenses that have been accounted for by the contractor by supplyin" receipts and business explanations. If an individual qualifies as an employee, a personnel file ill be created for that individual and all documentation required by the **(I personnel policies shall be obtained. The policies described in the remainder of this section shall apply to all or2ers classified as employees. Pa(#oll A"&inist#ation **(I operates on a semi3monthly payroll. .or all **(I employees, a personnel file is established and maintained ith current documentation, as described throu"hout this section and more fully described in **(IBs #ersonnel ;anual.

C)anges in Pa(#oll Data It is the policy of **(I that all of the follo in" chan"es in payroll data are to be authori>ed in 1. 2. -. 0. 9. 1. $e hires Terminations 'han"es in salaries and pay rates 8oluntary payroll deductions 'han"es in income tax ithholdin" status 'ourt3ordered payroll deductions hires, terminations, and chan"es in salaries or pay rates in ritin"H

The )xecutive ,irector shall authori>e ne ritin".

The individual employee shall authori>e voluntary payroll deductions and chan"es in income tax ithholdin" status in ritin". ,ocumentation of all chan"es in payroll data shall be maintained in each employeeBs personnel file.

Pa(#oll Ta3es The &ccountin" ,epartment is responsible for ensurin" all required tax forms are properly completed and submitted, and that all required taxes are ithheld and paid. The &ccountin" ,epartment may utili>e the services of an outside payroll service center for the processin" of payroll, as determined by the 'hief .inancial /fficer. P#e%a#ation o Ti&es)eets 57

)ach **(I employee must submit to the &ccountin" ,epartment a si"ned and approved timesheet no later than 12H00 noon 1st and 11th days of each month. If either date falls on a ee2end or holiday, receipt must be on the last or2in" day before the 1 st or 11th of the month. Timesheets received after the due date ill not be paid until the next re"ularly scheduled payroll period. #ayroll chec2s are issued on the 6th day of the month for or2 performed from the 11 th throu"h the last day of the previous month and on the 2- rd of the month for or2 performed from the 1 st throu"h the 19th day of the same month. Timesheets shall be prepared in accordance ith the follo in" "uidelinesH 1. 2. -. )ach timesheet shall reflect all hours or2ed durin" the pay period Ftime actually spent on the <ob performin" assi"ned dutiesG, hether compensated or not Timesheets shall be prepared in in2 )rrors shall be corrected by crossin" throu"h the incorrect entry, fillin" in the correct entry, and placin" the employeeBs initials next to the chan"e Fi.e. employees shall not use D hite outE or correction tapeG )mployees shall classify hours or2ed based on the nature of the or2 performedL 'ompensated absences should be clearly identified as such

0.

&fter preparation, ,epartment ,irectors or their desi"nees, prior to submission to the accountin" department, shall approve timesheets. 'orrections identified by an employeeBs supervisor F,epartment ,irectorG shall be authori>ed by the employee by placin" the employeeBs initials next to the chan"e. &n 'orporation employee ho is on leave, on travel, or is ill on the day that timesheets are due may telephone or e3mail timesheet information to his or her supervisor For desi"nated alternateG. Time so submitted must reflect the actual time or2ed and the appropriate classifications. The employee must initial a timesheet submitted in this manner immediately upon his!her return to the office. Timesheets submitted in this manner shall bear the notation, KTime reported by telephone or e3mail by FemployeeG to Fsupervisor or desi"nated alternateG.K The supervisor or the desi"nated alternate shall si"n the timesheet.

P#ocessing o Ti&es)eets #rocessin" of timesheets in the accountin" department is performed by the &ccountin" 'ler2. The &' chec2s all timesheets for mathematical accuracy, then inputs all timesheets into the payroll system. The &' may not chan"e or correct timesheets. =hen errors are noted, if a corrected and approved timesheet is not re3submitted in time to the &', the employee may not receive a pay chec2 until the next pay period. Tamperin" ith, alterin", or falsifyin" time records, recordin" time on another employeeIs time record, or illfully violatin" any other timesheet policy or procedure may result in disciplinary action, up to and includin" dischar"e.

58

Re!ie' o Pa(#oll ?pon return of payroll reports and chec2s from the payroll service center, the 'hief .inancial /fficer revie s payroll prior to its distribution to employees. The './ shall si"n the payroll re"ister, indicatin" approval of the payroll. Dist#i+ution o Pa(#oll #ayroll payments For chec2 stubs for electronic depositsG shall be distributed by individuals ho do not approve time sheets, are not responsible for hirin" and firin", and do not control the preparation of payroll. Co&%ensation o# Se#!ices Ren"e#e" B( A Boa#" Me&+e# The ;edical 'enter ,irector F')/G, 'hief of Staff, &ssociate 'hief of Staff for (esearch and ,evelopment and the &ssociate 'hief of Staff for )ducation may not receive any compensation for services to the 'orporation. &ll other members of the *oard Fincludin" 8& employees not referred to in the precedin" sentenceG may be compensated by the 'orporation, if the *oard has authori>ed said compensation in its *yla s. If the *yla s so state, directors and officers, includin" the four 8& members listed in the first sentence, may be compensated for travel expenses to attend meetin"s of the *oard.

POLICIES PERTAININ$ TO SPECIFIC ASSET AND LIABILIT2 ACCOUNTS CASH AND CASH MANA$EMENT
Cas) Accounts General Checking Account (operating account): The primary operatin" account provides for routine business chec2 disbursements. &ll cash and credit card deposits. 'ash transfers are done on an as needed basis to cover disbursements. )xcess funds in this account are transferred into short3term investments or hi"her interest3bearin" cash equivalents. Payroll Account: The payroll account is separate from the operatin" account. The payroll account is a >ero3balance account FU*&G. &s such, only the amount needed to cover each payroll is transferred into this account from the operatin" account, based on the amount calculated and communicated by the outside payroll service center. 59

The 'hief .inancial /fficer initiates transfers from the operatin" account into the payroll account. It is the policy of **(I that the 'orporationBs a"reement ith its financial institution limits ire transfers from its operatin" account to those transfers into payroll only. &uthori>ed si"ners on the payroll account ill be the same as those on the operatin" account.

Ban/ Reconciliations *an2 account statements are received each month and for arded unopened to the )xecutive ,irector. This ), shall open the statement and revie its contents for unusual or unexplained items, such as unusual endorsements on chec2s, indications of alterations to chec2s, etc. ?nusual or unexplained items that cannot be resolved throu"h routine inquiry shall be reported immediately to the Treasurer. &fter this revie is complete, the entire ban2 statement is for arded to the accountin" department, here someone ho is not an authori>ed chec2 si"ner prepares reconciliation bet een the ban2 balance and "eneral led"er balance. It is the policy of **(I to complete the ban2 reconciliation process ithin one month of receipt of each ban2 statement. &ll ban2 reconciliation, includin" any ad<ustin" <ournal entries resultin" from preparin" ban2 reconciliations, are revie ed by the 'hief .inancial /fficer on a monthly basis. *an2 reconciliation and copies of resultin" <ournal entries are filed in the current yearIs accountin" files. &ll canceled chec2s returned ith ban2 statements shall be filed in numerical order by ban2 account and month.

Cas) Flo' Manage&ent The 'hief .inancial /fficer monitors cash flo needs on a ee2ly basis to eliminate idle funds and to ensure that payment obli"ations can be met. 'ash transfers bet een accounts are performed on an as3needed basis.

Stale C)ec/s It is the policy of **(I to void chec2s that are more than %0 days old that have not cleared the 'orporationIs ban2. .or uncashed chec2s that are more than 1 months old, contact ill be made the payee to resolve the issue.

ith

&ll stale chec2s that are ritten off ithin the same fiscal year as they ere ritten shall be credited to the same expense or asset account that as debited hen the chec2 as ritten, or the expenditure incurred. .or stale chec2s ritten off in fiscal years subsequent to the year in hich the chec2 as ritten, the credit shall be to miscellaneous income.

60

Pett( Cas) It is the policy of **(I to provide for imprest funds Fused for payment of minor office expendituresG only for valid transactions and to periodically replenishes these funds up to its authori>ed balance of N290. It is the responsibility of the #etty 'ash 'ustodian to ensure that the petty cash fund is loc2ed at all times. & completed and approved petty cash voucher must accompany all disbursements from the petty cash fund. (eceipts are required for all disbursements from petty cash. The petty cash custodian shall prepare a reconciliation of the petty cash account on a periodic basis. #etty cash reconciliations are sub<ect to revie by the Staff &ccountant.

Wi#e T#ans e#s The 'hief .inancial /fficer, The )xecutive ,irector and the &ccountin" Supervisor shall be the only **(I employees authori>ed to transact ire transfers from **(I ban2 accounts. To prevent anyone other than these authori>ed personnel from transactin" ire transfers, a system shall be employed that requires the use of pass codes and the calculation of a test32ey for each ire transfer. #ass codes, issued only to the 'hief .inancial /fficer and )xecutive ,irector, are assi"ned by the ban2 and are chan"ed semi3annually. 'onfirmations of all ire transfers are delivered to the 'hief .inancial /fficer.

61

IN*ESTMENT POLICIES
Int#o"uction It is the policy of **(I to treat all assets of the 'orporation, includin" those funds that are le"ally unrestricted, as thou"h they are held by **(I in a fiduciary capacity for the purpose of accomplishin" the 'orporationBs tax3exempt mission. &s such, the policies described in this section are to be interpreted in li"ht of that overall sense of ste ardship, and the investment standards of **(I shall be those of a prudent investor. In!est&ent Polic( It is the policy of **(I to minimi>e the ris2 to principal in every investment strate"y it underta2es. **(I is also constrained under .ederal la from investin" research funds in any vehicle that ould put the funds at ris2, even ith the prospect of financial "ain. Such ris2 could result in the loss of those monies, thus defeatin" 'on"ressB intent that they be available to fund 8& research. &n investment in stoc2s, mutual funds, federal a"encies, or similar investment vehicles is prohibited. .unds should be deposited in interest bearin" accounts that are .ederally3approved depositories, such as .ederally insured ban2s, savin"s and loans or credit unions. ;oney mar2et accounts ill qualify if they are .ederally insured. #urchase of ?.S. Treasury securities such as bill and notes are acceptable because they are bac2ed by the .ederal 4overnment and Dare direct obli"ations of, or obli"ations "uaranteed as to principal or interest by, the ?nited States.E 'orporation funds may be placed in insured accounts, certificate of deposits or other instruments "uaranteed by the ?.S. 4overnment a"ainst ris2 of loss throu"h the .ederal ,epository Insurance 'orporation F.,I'G. +on" term investiments should be made only ith corporate funds not needed immediately. &ppropriate forms of investiment ill be determined by the .inance 'ommittee and approved by the *oard. To mana"e lar"e amounts **(I ill deposit funds in interest bearin" federally3insured accounts throu"h a bro2era"e firm if the account provides full .,I' covera"e of deposits.

Delegation o Aut)o#it( The *oard of **(I has dele"ated supervisory authority over its investin" activities to the .inance 'ommittee. The .inance 'ommittee is responsible for re"ularly reportin" on the 'orporationBs investments to the full board of directors. The .inance 'ommittee is authori>ed to authori>e the 'hief .inancial /fficer one or more Investment 'ounselors to assume the investment mana"ement function. In that re"ard, the .inance 'ommittee may enter into a"reements ith, dele"ate investment authority to, pay compensation to, and receive reports from the './ or more Investment 'ounselors.

62

In!est&ent O+6ecti!es **(IBs investment ob<ectives are the preservation and protection of the 'orporationBs assets, as ell as the maintenance of liquid reserves to meet obli"ations arisin" from unanticipated activities, by earnin" an appropriate return on investments.

Allo'a+le In!est&ents Investments of **(I shall be made exclusively 1.

ith the follo in" securitiesH

.ederally3insured 'ertificates of ,eposit, not to exceed N100,000, includin" interest, at commercial ban2s or savin"s and loan institutionsL ?.S. Treasury securities and securities of .ederal a"encies and instrumentalitiesL (epurchase a"reements a"ency securitiesL ith financial institutions, collaterali>ed by ?.S. Treasury or .ederal

2. -.

0. 9. 1.

'orporate bonds and notes rated & or better by ;oodyBs and Standard A #oorsL 'ommercial paper rated #31!&31 by ;oodyBs and Standard A #oorsL ;oney mar2et funds that invest in securities approved under these "uidelines.

**(I shall not en"a"e in mar"in transactions, short sellin", commodity transactions or use of derivatives. Accounting T#eat&ent &ll purchased investments shall initially be recorded at cost. &ll investments acquired by donation to **(I shall initially be recorded at their fair mar2et value as of the date of donation. ,onated investments shall be recorded as unrestricted, temporarily restricted, or permanently restricted income and net assets based on the existence or absence of such restrictions, as defined earlier. Subsequent to acquisition, it shall be the policy of **(I to carry all equity securities ith readily determinable fair mar2et values and all debt securities at their mar2et values. &d<ustments to mar2et value shall be made in the accountin" records and financial statements of **(I on a quarterly basis. &d<ustments to mar2et value result in unreali>ed "ains and losses on investments. Such "ains and losses resultin" from contributed investments shall be classified as unrestricted, temporarily restricted, or permanently restricted based on the existence or absence of explicit restrictions on such appreciation and depreciation from the donor, as defined earlier.

63

P#oce"u#es an" Re%o#ting The follo in" procedures ill be follo ed to ensure that investments are properly mana"ed and that these investment policies are consistent ith the mission of **(I and accurately reflect the current financial condition of the 'orporationH 1. The 'hief .inancial /fficer shall prepare a schedule of investments for presentation on a quarterly basis for the .inance 'ommittee and on an annual basis for the *oard of ,irectors. 2. The quarterly investment reports shall detail the portfolioBs composition and performance for the quarter and year3to3date, alon" ith a comparison to bud"et and to the prior year. -. The annual investment report shall be presented to the *oard of ,irectors at the time the **(I annual audit is presented, outlinin" in detail the investment portfolioBs composition and performance for the fiscal year, alon" ith a comparison to appropriate mar2et indices. 0. The 'hief .inancial /fficer and the )xecutive ,irector, or2in" ith the .inance 'ommittee, to determine any appropriate modifications, shall revie investment policies annually. 9. (ecommendations for any revisions or modifications to the investment policy the .inance 'ommittee to the *oard of ,irectors for their approval. ill be made by

64

FI-ED ASSET MANA$EMENT


Ca%itali9ation Polic( #hysical assets acquired ith unit costs in excess of N9,000 are capitali>ed as fixed assets on the financial statements. Items ith unit costs belo this threshold shall be expensed in the year purchased. 'apitali>ed fixed assets are accounted for at their historical cost and all such assets, except land and certain or2s of art and historical treasures, are sub<ect to depreciation over their estimated useful lives, as described later.

Cont#i+ute" Assets &ssets ith fair mar2et values in excess of N9,000 that are contributed to **(I shall be capitali>ed as fixed assets on the financial statements. 'ontributed items ith mar2et values belo this threshold shall be expensed in the year contributed. 'apitali>ed contributed assets are accounted for at their mar2et value at the time of donation and all such assets, except land and certain or2s of art and historical treasures, are sub<ect to depreciation over their estimated useful lives, as described later.

Esta+lis)&ent an" Maintenance o a Fi3e" Asset Listing &ll capitali>ed fixed assets shall be recorded in a property lo". This lo" shall include the follo in" information ith respect to each assetH 1. 2. -. 0. 9. 1. ,ate of acquisition 'ost ,escription Fincludin" color, model, and serial numberG +ocation of asset ,epreciation method )stimated useful life

& physical inventory of all assets capitali>ed under the precedin" policies ill be ta2en on an annual basis by **(I. This physical inventory shall be reconciled to the property lo" and ad<ustments made as necessary. The )xecutive ,irector ill approve all ad<ustments resultin" from this reconciliation.

65

Recei%t o Ne'l(0Pu#c)ase" E=ui%&ent an" Fu#nitu#e &ll equipment purchased ith **(I funds is the property of the 'orporation. &ll purchased made ith **(I funds must have the prior approval of **(I and be made throu"h the **(I #urchasin" ,epartment. ?nless prior approval of **(I has been obtained, **(I ill not "uarantee payment to vendors or reimbursement to any individual for purchases made ithout a **(I #urchase /rder $umber authori>ation. &t the time of arrival, all ne ly purchased equipment and furniture shall be DeyeballedE for obvious physical dama"e. If an asset appears dama"ed or is not in or2in" order, it shall be returned to the vendor immediately. In addition, descriptions and quantities of assets per the pac2in" slip or bill of ladin" shall be compared to the assets delivered. ,iscrepancies should be resolved ith the vendor immediately. The **(I #urchasin" ,epartment is the only party authori>ed to contact vendors concernin" disputed deliveries.

De%#eciation an" Use ul Li!es &ll capitali>ed assets are maintained in the special fixed assets account "roup and are not to be included as an operatin" expense. .ixed assets are depreciated over their estimated useful lives usin" the strai"ht3line method. In the year of acquisition, depreciation is recorded based on the number of months the asset is in service, countin" the month of acquisition as a full month F)xampleH an asset purchased on the 19 th day of the fifth month shall have 6 full months of depreciation Fei"ht3t elfths of one yearG recorded for that year. )stimated useful lives of capitali>ed assets shall be determined by the &ccountin" ,epartment in con<unction ith the department or employee that shall utili>e the asset. The follo in" is a list of the estimated useful lives of each cate"ory of fixed asset for depreciation purposesH .urniture, and fixtures 4eneral office equipment 'omputer hard are and peripherals 'omputer soft are +eased assets +easehold Improvements ?p to 10 yrs 9 yrs -39 yrs 23- yrs life of lease remainin" lease term

&lternatively, at the direction of the ,irector of .inance, capitali>ed assets may be depreciated over useful lives expressed in terms of units of production or hours of service in place of the precedin" useful lives expressed in terms of time. .or accountin" and interim financial reportin" purposes, depreciation expense monthly basis. 66 ill be recorded on a

Re%ai#s o Fi3e" Assets )xpenditures to repair capitali>ed assets shall be expensed as incurred if the repairs do not materially add to the value of the property or materially prolon" the estimated useful life of the property. )xpenditures to repair capitali>ed assets shall be capitali>ed if the repairs increase the value of property, prolon" its estimated useful life, or adapt it to a ne or different use. Such capitali>ed repair costs shall be depreciated over the remainin" estimated useful life of the property. If the repairs si"nificantly extend the estimated useful life of the property, the ori"inal cost of the property shall also be depreciated over its ne , extended useful life.

Dis%ositions o Fi3e" Assets In the event a non3expendable asset is sold, scrapped, donated or stolen, ad<ustments need to be made to the fixed asset listin" and property lo". If money is received for the asset, then the difference bet een the money received and the Kboo2 valueK Fpurchase price less depreciationG of the asset ill be recorded as a loss if the money received is less than the boo2 value and a "ain if the money received is more than the boo2 value.

W#ite0O s o Fi3e" Assets The )xecutive ,irector approves the disposal of all capitali>ed fixed assets that may be orn3out or obsolete. #roperty that is discovered to be missin" or stolen ill be reported immediately to the 'hief .inancial /fficer. If not located, this property ill be ritten off the boo2s ith the proper notation specifyin" the reason. If it is determined that **(I property has been stolen, or other ise misappropriated, a police report shall be filed ith the 8eterans &dministration #olice ,epartment or other appropriate la enforcement a"ency as soon as practicable. & copy of the crime report shall be filed ith the annual inventory and maintained as part of the annual audit record for the year of occurrence.

67

LEASES
Classi ication o Leases It is the policy of **(I to classify all leases in hich the 'orporation is a lessee as either capital or operatin" leases. **(I shall utili>e the criteria described in Statement of .inancial &ccountin" Standards $o. 1- in determinin" hether a lease is capital or operatin" in nature. ?nder those criteria, a lease shall be treated as a capital lease if, at the time of enterin" into the lease, any of the follo in" factors are presentH 1. 2. -. The lease transfers o nership to **(I at the end of the lease termL The lease contains a bar"ain purchase optionL The lease term is equal to 59Q or more of the estimated economic life of the leased propertyL or The present value of the minimum lease payments is %0Q or more of the fair value of the leased property Fusin", as the interest rate, the lesser of **(I incremental borro in" rate or, if 2no n, the lessorIs implicit rateG.

0.

&ll leases that do not possess any of the four precedin" characteristics shall be treated as operatin" leases.

Accounting o# Leases &ll leases that are classified as operatin" leases shall be accounted for as expenses in the period in hich the obli"ation to ma2e a lease payment is incurred. .or leases ith firm commitments for lease payments that vary over the term of the lease Fi.e. a lease ith fixed annual increases that are determinable upon si"nin" the leaseG, the amount that **(I shall reco"ni>e as monthly lease expense shall equal the avera"e monthly lease payment over the entire term of the lease. ,ifferences bet een the avera"e monthly payment and the actual monthly payment shall e accounted for as an asset or liability of **(I. &ll leases that are classified, as capital leases shall be treated as fixed asset additions of **(I. &s such, upon the inception of a capital lease, **(I shall record a fixed asset and a liability under the lease, based on the net present value of the minimum lease payments For the fair value of the leased asset, if it is less than the present value of the lease paymentsG. #eriodic lease payments shall be allocated bet een a reduction in the lease obli"ation and interest expense. The fixed asset recorded under a capital lease shall be depreciated over the term of the lease, usin" the strai"ht3line method of depreciation.

68

ACCRUED LIABILITIES
I"enti ication o Lia+ilities The accountin" department shall establish a list of commonly incurred expenses that may have to be accrued at the end of an accountin" period. Some of the expenses that shall be accrued by **(I at the end of an accountin" period areH Salaries and a"es #ayroll taxes 8acation pay Fsee policy belo G (ent Interest on notes payable 'ommissions (oyalties

Acc#ue" *acation #ersonnel policies of **(I permit employees to carry for ard up to five days of unused leave from year to year. Such unused leave is payable to an employee upon termination of employment. &ccordin"ly, it shall be the policy of **(I to record a liability for accrued leave to hich employees are entitled. The total liability at the end of an accountin" period shall equal the total earned but unused hours of leave, up to a maximum of 110 hours, multiplied by each employeeBs current hourly pay rate.

69

70

POLICIES ASSOCIATED WITH FINANCIAL AND TA- REPORTIN$ FINANCIAL STATEMENTS


Stan"a#" Financial State&ents o t)e Co#%o#ation #reparin" financial statements and communicatin" 2ey financial information is a necessary and critical accountin" function. .inancial statements are mana"ement tools used in ma2in" decisions, in monitorin" the achievement of financial ob<ectives, and as a standard method for providin" information to interested parties external to the 'orporation. .inancial statements may reflect year3to3 year historical comparisons or current year bud"et to actual comparisons. The basic financial statements of **(I shall includeH 1. State&ent o Financial Position 3 reflects assets, liabilities and net assets of the 'orporation and classifies assets and liabilities as current or non3current!lon"3term State&ent o Acti!ities 3 presents support, revenues, expenses, and other chan"es in net assets of the 'orporation, by cate"ory of net asset Funrestricted, temporarily restricted and permanently restrictedG This statement should present costs separately for each si"nificant pro"ram and supportin" activity. State&ent o Cas) Flo's 3 reports the cash inflo s and outflo s of the 'orporation in three cate"oriesH operatin" activities, investin" activities, and financin" activities State&ent o Functional E3%enses P presents the expenses of the 'orporation in both a natural, or ob<ective, format and by function Fi.e. hich pro"ram or supportin" service as servedG

2.

-.

0.

F#e=uenc( o P#e%a#ation The ob<ective of the accountin" department is to prepare accurate financial statements in accordance ith "enerally accepted accountin" principals and distribute them in a timely and cost3effective manner. In meetin" this responsibility, the follo in" policies shall applyH & standard set of financial statements described in the precedin" section shall be produced on a monthly basis, by the -0th of each month. The standard set of financial statements described in the precedin" section shall be supplemented by the follo in" schedulesH 1. 2. Individual statements of activities on a departmental and functional basis 'omparisons of actual year3to3date revenues and expenses ith year3to3date bud"eted amounts

The monthly set of financial statements shall be prepared on the accrual method of accountin", includin" all receivables, accounts payable received by the 10 th of the month, and actual depreciation 71

expense.

Re!ie' an" Dist#i+ution &ll financial statements and supportin" schedules shall be revie /fficer prior to bein" issued by the &ccountin" ,epartment. and approved by the 'hief .inancial

&fter approval by the './, a complete set of monthly financial statements, includin" the supplemental schedules described above, shall be distributed to the follo in" individualsH 1. 2. -. Treasurer Mand all members of the .inance 'ommitteeO )xecutive ,irector ,epartment ,irectors and any other employee ith bud"et3monitorin" responsibilities

.inancial statements may include an additional supplemental schedule prepared or compiled by the ,irector of .inance. The purpose of this schedule is to provide 2no n explanations for material bud"et variances in accordance ith **(IBs bud"et monitorin" policies described later in this manual Funder the D.inancial ;ana"ement #oliciesE sectionG.

S%ecial >ua#te#l( Dist#i+ution /n a quarterly basis, a complete set of **(I financial statements and supplemental schedules shall be distributed to the entire board of directors. @uarterly financial statements distributed to the board shall include an additional supplemental schedule prepared or compiled by the ,irector of .inance. The purpose of this schedule is to provide 2no n explanations for material bud"et variances in accordance ith **(IBs bud"et monitorin" policies described later in this manual Funder the D.inancial ;ana"ement #oliciesE sectionG.

Annual Financial State&ents & formal presentation of the 'orporationIs annual financial statements shall be provided by the Independent &uditor to the full *oard of ,irectors at the 'orporationBs ;ay ;eetin". This presentation ill be preceded by a meetin" ith **(IBs .inance 'ommittee, at hich the .inance 'ommittee ill vote to accept or re<ect the annual financial statements. See separate policies re"ardin" the annual audit under D.inancial ;ana"ement #olicies.E

72

$O*ERNMENT RETURNS
O!e#!ie' To le"itimately conduct business, **(I must be a are of its tax and information return filin" obli"ations and comply ith all such requirements of federal, state and local <urisdictions. .ilin" requirements of **(I include, but are not limited to, filin" annual information returns ith I(S, state charitable solicitation reports, annual reports for corporations, property tax returns, income tax returns, sales tax returns, information returns for retirement plans, annual reportin" of compensation paid, and payroll tax ithholdin" tax returns.

Filing o Retu#ns It is the policy of **(I to become familiar ith the obli"ations in each <urisdiction and to comply ith all 2no n filin" requirements. The 'hief .inancial /fficer shall be responsible for identifyin" all filin" requirements and assurin" that **(I is in compliance ith all such requirements. It is also the policy of **(I to file complete and accurate returns ith all authorities. **(I shall ma2e all efforts to avoid filin" misleadin", inaccurate or incomplete returns. .ilin"s made by **(I include, but are not limited to, the follo in" returnsH 1. Fo#& CCD 3 &nnual information return of tax3exempt 'orporations, filed ith I(S. .orm %%0 for **(I is due on the fifteenth day of the fifth month follo in" year3end. & request for extension of time to file .orm %%0 may be filed usin" .orm 2596. Fo#& CCD0T 3 &nnual tax return to report **(IBs unrelated trade or business activities, filed ith I(S. .orm %%03T is due on the fifteenth day of the fifth month follo in" year3end. & request for extension of time to file .orm %%03T may be filed usin" .orm 5000. Fo#& EEDD 3 &nnual return for **(IIs employee benefit plans. .orm 9900 is due July -1, but a request for extension of time to file may be filed. Pe#sonal P#o%e#t( Ta3 Retu#n 3 .iled ith the State of 'alifornia to report personal property and officers of the corporation. **(IIs personal property tax return is due July -1. W0FBs an" GDCCBs 3 &nnual report of employee and non3employee compensation, based on calendar3year compensation, on the cash basis. ,ue to employees and independent contractors by January -1. Fo#& CHD 3 &nnual unemployment tax return filed ith I(S, for all employers, due January -1.

2.

-.

0.

9.

1. 5.

Fo#& CHG 3 @uarterly payroll tax return filed ith I(S to report a"es paid to employees and federal payroll taxes. .orm %01 is due by the end of the month follo in" the end of each quarter, or 10 days later if all payroll tax deposits have been made in a timely manner durin" 73

the quarter. %. Fo#& GCC 8 &nnual Information (eturn for 'alifornia exempt or"ani>ations. .orm is due on or before ;ay 19. RRFG 8 (e"istration!(ene al .ee (eport to &ttorney 4eneral of 'alifornia. .orm is due on or before ;ay 19. &nnual (eport to the 8eterans &ffairs :eadquarters P June 1 each year. (,IS (eport of (esearch )xpenditures **(IIs fiscal and tax year3end is ,ecember -1. &ll annual tax and information returns of **(I F.orm %%0, .orm %%03TG are filed on the accrual basis of reportin". The 'orporationBs outside audit firm prepares .ederal and all applicable state payroll tax returns. It is the policy of **(I to comply ith all state payroll tax requirements by payroll taxes to the state of residency of each **(I employee. ithholdin" and remittin"

10.

Pu+lic Access to In o#&ation Retu#ns ?nder re"ulations that became effective in 1%%%, **(I is sub<ect to federal requirements to ma2e the follo in" forms K idely availableK to all members of the "eneral publicH 1. The three most recent annual information returns F.orm %%0G, Mexcludin" the list of si"nificant donors that is attached to the .orm %%0, but includin" the accompanyin" Schedule &O, and **(IBs ori"inal application for reco"nition of its tax3exempt status F.orm 102- or .orm 1020G, filed ith I(S, and all accompanyin" schedules and attachments. ith the precedin"

2.

It is the policy of **(I to adhere to the follo in" "uidelines in order to comply public disclosure requirementsH 1.

&nyone appearin" in person at the offices of **(I durin" normal or2in" hours ma2in" a request to inspect the forms ill be "ranted access to a file copy of the forms. The 'hief .inancial /fficer shall be responsible for maintainin" this copy of each form and for ma2in" it available to all requesters. .or all ritten requests for copies of forms received by **(I, the 'orporation shall require pre3 payment of all copyin" and shippin" char"es. .or requests for copies that are received ithout pre3payment, **(I ill notify the requester of this policy via phone call or by letter ithin 5 days of receipt of the ori"inal request. The copyin" cost char"ed by **(I for providin" copies of requested forms shall be N1.00 for the first pa"e copies and N0.19 for each subsequent pa"e. &ll copies shall be shipped to 74

2.

-.

requesters via M#riority ;ail, thus, shippin" char"es 0.

ill be a standard N-.00 per shipmentO. ithin

&fter payment is received by **(I, all requested copies shall be shipped to requesters -0 days. ;a2in" of all copies and shippin" ithin the -03day time period shall be the responsibility of the accountin" department. .or requests for copies made in person durin" normal business hours, copies shall be provided hile the requester aits.

9.

1.

**(I shall accept certified chec2s and money orders for requests for copies made in person. **(I shall accept certified chec2s, money orders and credit cards For personal chec2sG as payment for copies of forms requested in ritin".

75

UNRELATED BUSINESS ACTI*ITIES


I"enti ication an" Classi ication It is the policy of **(I to properly identify and classify income3producin" activities that are unrelated to the 'orporationBs tax3exempt purpose usin" the "uidelines described in the Internal (evenue 'ode and underlyin" re"ulations. Such income accounts shall be se"re"ated in separate accounts in the "eneral led"er of **(I in order to facilitate trac2in" and accumulation of unrelated trade or business activities.

Re%o#ting It is the policy of **(I to file I(S .orm %%03T to report taxable income from unrelated trade or business activities. .orm %%03T is not sub<ect to any public access or disclosure requirements. &ccordin"ly, it is the policy of **(I not to distribute copies of .orm %%03T to anyone other than mana"ement of the 'orporation.

RDIS REPORTS
&ll funds expended for a specific approved research pro<ect must be reported on the 8&Bs (,IS &nnual (eport as )xtra38& .undin" for that pro<ect.

76

FINANCIAL MANA$EMENT POLICIES BUD$ETIN$


O!e#!ie' *ud"etin" is an inte"ral part of mana"in" any 'orporation in that it is concerned ith the translation of corporate "oals and ob<ectives into financial and human resource terms. & bud"et should be desi"ned and prepared to direct the most efficient and prudent use of the 'orporationIs financial and human resources. & bud"et is a mana"ement commitment of a plan for present and future 'orporation activities that ill ensure survival. It provides an opportunity to examine the composition and viability of the 'orporationIs pro"rams and activities simultaneously in li"ht of the available resources.

P#e%a#ation an" A"o%tion It is the policy of **(I to prepare an annual bud"et on the accrual basis of accountin". To prepare the 'orporation bud"et, the 'hief .inancial /fficer shall "ather proposed bud"et information from all ,epartment ,irectors and others ith bud"etary responsibilities and prepares the first draft of the bud"et. *ud"ets proposed and submitted by each department should be accompanied by a narrative explanation of the sources and uses of funds and explainin" all material fluctuations in bud"eted amounts from prior years. &fter appropriate revisions and a compilation of all department bud"ets by the './, a draft of the 'orporation3 ide bud"et, as ell as individual department bud"ets, is presented to the )xecutive ,irector for discussion, revision, and initial approval. The revised draft is then submitted to the .inance 'ommittee, and finally to the entire *oard of ,irectors for adoption. It is the policy of **(I to adopt a final bud"et at least -0 days before the be"innin" of the 'orporationBs fiscal year. The purpose of adoptin" a final bud"et at this time is to allo adequate time for the accountin" department to input the bud"et into the accountin" system and establish appropriate accountin" and reportin" procedures Fincludin" any necessary modifications to the chart of accountsG to ensure proper classification of activities and comparison of bud"et versus actual once the year be"ins.

Monito#ing Pe# o#&ance It is the policy of **(I to monitor its financial performance by comparin" and analy>in" actual results ith bud"eted results. This function shall be accomplished in con<unction ith the monthly financial reportin" process described earlier. 77

/n a monthly basis, financial reports comparin" actual year3to3date revenues and expenses ith bud"eted year3to3date amounts shall be produced by the accountin" department and distributed to the .inance 'ommittee and the *oard. &ll bud"et variances in excess of five percent on a quarterly basis must be explained in ritin" to the .inance committee and the *oard.

Bu"get Mo"i ications The )xecutive ,irector must approve any reclassification of bud"et expenses. ,eviations of more than N29,000 must be revie ed by the .inance 'ommittee and approved by the *oard of ,irectors.

78

ANNUAL AUDIT
Role o t)e In"e%en"ent Au"ito# It is the policy of **(I to arran"e for an annual audit of the 'orporationIs financial statements to be conducted by an independent accountin" firm. The independent accountin" firm selected by **(I ill be required to communicate directly ith the 'orporationIs .inance 'ommittee upon the completion of their audit. In addition, members of the .inance 'ommittee and the *oard are authori>ed to initiate communication directly ith the independent accountin" firm. &udited financial statements, includin" the auditorIs opinion thereon, ill be submitted and presented to the *oard of ,irectors by the independent accountin" firm at the 'orporationBs ;ay ;eetin", after the financial statements have been revie ed and approved by the .inance 'ommittee.

Ho' O ten to Re!ie' t)e Selection o t)e Au"ito# **(I shall revie 1. 2. -. the selection of its independent auditor in the follo in" circumstancesH

&nytime there is dissatisfaction ith the service of the current firm =hen a fresh perspective and ne ideas are desired )very 9 years to ensure competitive pricin" and a hi"h quality of service Fthis is not a requirement to chan"e auditors every five yearsL simply to re3evaluate the selectionG

Selecting an Au"ito# The selection of an accountin" firm to conduct the annual audit is a tas2 that should be ta2en very seriously. The follo in" factors shall be considered by **(I in selectin" an accountin" firmH 1. 2. -. 0. The firmBs reputation in the nonprofit community The depth of the firmBs understandin" of and experience ith not3for3profit 'orporations Mand federal reportin" requirements under /;* 'ircular &31--O The firmBs demonstrated ability to provide the services requested in a timely manner The ability of firm personnel to communicate ith 'orporation personnel in a professional and con"enial manner

If **(I decides to prepare and issue a ritten (equest for #roposal F(.#G to be sent to prospective audit firms, the follo in" information shall be includedH 1. #eriod of services required 2. Type of contract to be a arded Ffixed fee, cost basis, etc.G -. 'omplete description of the services requested Faudit, mana"ement letter, tax returns, etc.G 0. Identification of meetin"s requirin" their attendance, such as staff or *oard of ,irector meetin"s 9. /r"ani>ation chart of **(I 79

1. 5. 6. %. 10. 11. 12. 1-. 10.

'hart of account information .inancial information about the 'orporation 'opy of prior year reports Ffinancial statements, mana"ement letters, etc.G MIdentification of need to perform audit in accordance ith /;* 'ircular & 31--O /ther information considered appropriate ,escription of proposal and format requirements ,ue date of proposals /vervie of selection process Fi.e. hether finalists ill be intervie ed, hen a decision shall be made, etc.G Identification of criteria for selection

;inimum #roposal (equirements from prospective '#& firms shall beH 1. 2. -. 0. 9. 1. 5. 6. %. 10. 11. 12. .irm bac2"round *io"raphical information FresumesG of 2ey firm member ho ill serve **(I 'lient references Information about the firmIs capabilities .irmIs approach to performin" an audit 'opy of the firmBs most recent quality!peer revie report /ther resources available ith the firm )xpected timin" and completion of the audit )xpected delivery of reports 'ost estimate includin" estimated number of hours per staff member (ate per hour for each auditor /ther information as appropriate

In order to narro do n the proposals to the top selections, the 'hief .inancial /fficer shall meet ith the prospective en"a"ement teams from each proposin" firm to discuss their proposal. 'opies of all proposals shall be for arded to each member of the .inance 'ommittee. &fter the ,irector of .inance narro s do n the field of prospective auditors to three firms, final intervie s of each firm are conducted by the .inance 'ommittee or its desi"nee, ho ma2es the final recommendation to the *oard of ,irectors for approval.

P#e%a#ation o# t)e Annual Au"it **(I shall be actively involved in plannin" for and assistin" ith the 'orporationBs independent accountin" firm in order to ensure a smooth and timely audit of its financial statements. In that re"ard, the accountin" department shall provide assistance to the independent auditors in the follo in" areasH Planning 3 The ,irector of .inance is responsible for dele"atin" the assi"nments and responsibilities to accountin" staff in preparation for the audit. &ssi"nments shall be based on the list of requested schedules and information provided by the independent accountin" firm. In!ol!e&ent 3 'orporation staff ill do as much therefore, reduce the cost of the audit. or2 as possible in order to assist the auditors and, 80

Inte#i& P#oce"u#es 3 To facilitate the timely completion of the annual audit, the independent auditors may perform selected audit procedures prior to the 'orporationBs year3end. *y performin" si"nificant portions of audit or2 as of an interim date, the or2 required subsequent to year3end is reduced. 'orporation staff ill as much as possible in order to provide requested schedules and documents and to other ise assist the auditors durin" any interim audit field or2 that is performed. Throu"hout the audit process, it shall be the policy of **(I to ma2e every effort to provide schedules, documents and information requested by the auditors in a timely manner.

Finance Co&&ittee?s Au"it Res%onsi+ilities In accordance ith the **(I by3la s, there shall be a .inance 'ommittee consistin" of at least three members. The term of office shall be for three years, ith one member bein" elected by the **(I to serve as *oard Treasurer each year. The .inance 'ommitteeIs responsibilities include, but shall not be limited to, the follo in"H 1. 2. -. 0. 9. 1. &ppointment of, and communication ith, the 'orporationBs independent auditors (evie and approval of the annual, audited financial statements ,iscussion of internal control matters ith the independent auditor (espondin" to any reported instances of fraud involvin" **(I or its employees 'onductin" a quarterly analysis of the 'orporationIs financial statements ;a2in" policy and other recommendations to the **(I board of directors re"ardin" matters arisin" out of the audit

In fulfillin" these duties and responsibilities, the .inance 'ommittee is entitled to examine any and all documents ithin the control of **(I and its employees. In addition, the .inance 'ommittee shall have the authority to contract ith independent contractors in the fulfillment of the committeeBs responsibilities.

81

INSURANCE
O!e#!ie' It is fiscally prudent to have an active ris2 mana"ement pro"ram that includes a comprehensive insurance pac2a"e. This ill ensure the viability and continued operations of **(I. It is the policy of **(I to maintain adequate insurance a"ainst "eneral liability, as ell as covera"e for buildin"s, contents, computers, fine arts, equipment, machinery and other items of value.

Co!e#age $ui"elines &s a "uideline, **(I Type of 'overa"e 'omprehensive +iability &utomobiles for )mployees, 8olunteers, or )scorts )mployee dishonesty!bondin" ill arran"e for the follo in" types and levels of insurance as a minimumH &mount of 'overa"e N2,000,000 N1,000,000

N2,000,000 for all accountin" department employees and the )xecutive ,irector N-00,000 covera"e for all items "reater than N1,000 ith acquisition cost

.ire and =ater ,ama"e

,irectors and /fficers 'rime

N2,000,000 F ith an appropriate deductible levelG N2,000,000 covera"e for all items "reater than N9,000 To the extent required by la ith acquisition cost

=or2ersI 'ompensation

Insu#ance De initions =or2ersI 'ompensation and )mployerIs +iability 'ontractors are required to comply ith applicable .ederal and State or2ersI compensation and occupational disease statutes. If occupation diseases are not compensated under those statutes, they shall be covered under the employerIs liability insurance policy except hen contract operations are so commin"led that it ould not be practical to require this covera"e.

.idelity *ond 82

.or all personnel handlin" cash, preparin" or si"nin" chec2s, **(I shall obtain insurance that provides covera"e in a blan2et fidelity bond. The specific needs of the 'orporation ill determine the dollar limit of this covera"e.

'omprehensive +iability This type of covera"e may include directors, officers and employee "eneral liability insurance, buildin"s, contents, computers, fine arts, boilers and machinery.

83

RECORD RETENTION
Polic( It is the policy of **(I to retain records as required by la and to destroy them hen appropriate. The destruction of records must be approved by the )xecutive ,irector, and lo""ed into the 'orporationBs ,estroyed (ecords +o". The formal records retention policy of **(I is as follo sH

&ccident reports!claims Fsettled 'asesG &ccounts payable led"ers and schedules &ccounts receivable led"ers and schedules &udit reports *an2 reconciliations *an2 Statements 'hart of &ccounts 'ancelled 'hec2s 'ontracts, mort"a"es, notes and leasesH )xpired Still in effect 'orrespondenceH 4eneral +e"al and important matters only (outine ith customers and!or vendors ,eeds, mort"a"es and bills of sales ,epreciation schedules ,uplicate deposit slips )mployment applications )xpense analyses!expense distribution schedule .inancial statementsH 7ear end /ther 4arnishments 4eneral led"ers!year end trial balance Insurance policies FexpiredG Insurance records Fpolicies, claims, etc.G Internal audit reports Internal reports Inventories of products, materials and supplies Invoices Fto customers, from vendorsG Journals ;inute boo2s of directors, byla s and charters $otes receivable led"ers and schedules #ayroll records and summaries #ersonnel records FterminatedG #etty cash vouchers #hysical inventory ta"s #roperty records Fincl. depreciation schedulesG #urchase ordersH #urchasin" department copy /ther copies

5 7ears 5 7ears 5 7ears #ermanently 2 7ears - 7ears #ermanently 5 7ears 5 7ears #ermanently 2 7ears #ermanently 2 7ears #ermanently #ermanently 2 7ears - 7ears 5 7ears #ermanently /ptional 5 7ears #ermanently - 7ears #ermanently - 7ears V - 7ears 5 7ears 5 7ears #ermanently #ermanently 5 7ears 5 7ears 5 7ears - 7ears - 7ears #ermanently 5 7ears 1 7ear 84

(eceivin" sheets (etirement and pension records (equisitions Sales records Subsidiary led"ers Tax returns and or2sheets, examination reports and other documents relatin" to determination of income tax liability Time sheets!cards Trademar2 re"istrations and copyri"hts Trainin" manuals 8oucher re"ister and schedules =ithholdin" tax statements

1 7ear #ermanently 1 7ear 5 7ears 5 7ears #ermanently 5 7ears #ermanently #ermanently 5 7ears 5 7ears

85

FUNCTIONAL E-PENSE ALLOCATIONS


O!e#!ie' &s one of its financial mana"ement ob<ectives, **(I strives to determine the actual costs of carryin" out each of its pro"ram service and supportin" activities. In this re"ard, it is the policy of **(I to char"e expenses to the appropriate cate"ory of pro"ram service or supportin" activity. )xpenses that serve multiple functions or are not readily identifiable ith one function shall be allocated bet een functions henever possible.

Di#ect C)a#ging o Costs 'ertain internal costs shall be directly char"ed to the appropriate **(I function based upon underlyin" documentation. The follo in" costs shall be directly char"ed based on the documentation or factor listed next to eachH 'ost Salaries +on"3,istance Telephone #osta"e Supplies *asis .or 'har"e Timesheets &ctual use, based on codes &ctual, per posta"e lo" &ctual, per usa"e forms

=ith the exception of salaries, hich are recorded ith each payroll cycle, all other costs identified above shall be initially char"ed to one account hen incurred, then allocated and recorded to the appropriate functions via monthly entries.

Allocation o O!e#)ea" Costs /n a monthly basis, an allocation of overhead to each pro"ram service and supportin" activity area shall be recorded via a <ournal entry. /verhead shall be allocated based on Mdirect salaries char"ed to each functionO. 'osts included in overhead to be allocated include all costs associated ith buildin" occupancy, buildin" and equipment maintenance, and any other indirect costs that benefits all functions of the 'orporation. 4eneral and administrative costs shall not be allocated to pro"ram service or other supportin" functions of the 'orporation.

POLICIES PERTAININ$ TO FEDERAL AWARDS


86

ADMINISTRATION OF FEDERAL AWARDS


De initions There are several types of a"reements throu"h donor!"rantor a"encyH hich **(I may receive financial assistance from a

$#antH & financial assistance a ard "iven to the 'orporation to carry out its pro"rammatic purpose. Cont#actH & mutually bindin" le"al a"reement here the 'orporation a"rees to provide supplies or services and the donor a"rees to pay for them. Coo%e#ati!e Ag#ee&entH & le"al a"reement direct involvement of the donor. here the 'orporation implements a pro"ram ith the

Throu"hout this manual, federal assistance received in any of these forms federal Da ard.E

ill be referred to as a

P#e%a#ation an" Re!ie' o P#o%osals Individual #rincipal Investi"ators are responsible for preparin" proposals for pro<ects that they intend to pursue. :o ever, the 'hief .inancial /fficer prior to submission to "overnment a"encies or other fundin" sources shall revie all proposals.

Post0A'a#" P#oce"u#es &fter an a ard has been made, the follo in" steps shall be ta2enH 1. 8erify the specifications of the "rant or contract. The 'hief .inancial /fficer shall revie the terms, time periods, a ard amounts and expected expenditures associated ith the a ard. &ll reportin" requirements under the contract or a ard shall be summari>ed. 'reate ne "eneral led"er account numbers. $e accounts shall be established for the receipt and expenditure cate"ories in line ith the "rant or contract bud"et. 4ather documentation. & file is established for each "rant or contract. The file contains the proposal, all correspondence re"ardin" the "rant or contract, the final si"ned a ard document and all reports submitted to the fundin" sources.

2.

-.

Co&%liance 'it) La's4 Regulations an" P#o!isions o A'a#"s 87

**(I reco"ni>es that as a recipient of .ederal funds, the 'orporation is responsible for compliance ith all applicable la s, re"ulations, and provisions of contracts and "rants. To ensure that the 'orporation meets this responsibility, the follo in" policies apply ith respect to every "rant or contract received directly or indirectly from a .ederal a"encyH 1. .or each .ederal a ard, a **(I employee ithin the department responsible for administerin" the a ard ill be desi"nated as K4rant!#ro<ect ;ana"erK F4#;G. )ach 4#; shall attend a class on "rant mana"ement prior to be"innin" their role as a 4#; For as early in their functionin" as a 4#; as practicalG. Thereafter, all 4#;Bs shall attend refresher!update courses on "rant mana"ement every t o years. The 4#; shall ta2e the follo in" steps to identify all applicable la s, re"ulations, and provisions of each "rant and contractH a. b. (ead each a ard and prepare a summary of 2ey compliance requirements and references to specific la s and re"ulations. (evie the D/;* 'ircular &31-- 'ompliance SupplementK Fupdated annuallyG published by the /ffice of ;ana"ement and *ud"et F/;*G for compliance requirements unique to the a ard and for compliance requirements common to all .ederal a ards. (evie the section of the 'atalo" of .ederal ,omestic &ssistance applicable to the a ard.

2.

-.

c.

0.

The &ccountin" ,epartment shall for ard copies of applicable la s re"ulations to the 4#; Fsuch as /;* 'irculars, pertinent sections of compliance supplements, and other re"ulationsG. The 4#; and!or the **(I &ccountin" ,epartment shall identify and communicate any special chan"es in policies and procedures necessitated by .ederal a ards as a result of the revie of each a ard. The 4#; shall ta2e all reasonable steps necessary to identify applicable chan"es in la s, re"ulations, and provisions of contracts and "rants. Steps ta2en in this re"ard shall include, but not be limited to, revie in" subsequent "rant and contract rene als, revie in" annual revisions to the D/;* 'ircular &31-- 'ompliance SupplementE, and communications ith .ederal a ardin" a"ency personnel. The 4#; shall cooperate ith the 'orporationBs Independent &uditors by informin" the '#& firm as to applicable la s, re"ulations, and provisions of contracts and "rants and communicatin" 2no n instances of noncompliance ith la s, re"ulations, and provisions of contracts and "rants to the auditors.

9.

1.

5.

88

Billing an" Financial Re%o#ting **(I strives to provide mana"ement, staff and fundin" sources ith timely and accurate financial reports applicable to federal a ards. These reports include monthly and cumulative expenditures, a pro<ect bud"et, and a balance remainin" column. **(I shall prepare and submit financial reports as specified by the financial reportin" clause of each "rant or contract a ard document. The follo in" policies shall apply to the preparation and submission of billin"s to federal a"encies under a ards made to **(IH 1. It is the policy of **(I to request reimbursement after expenditures have been incurred, unless an a ard specifies another method. )ach a ard normally specifies a particular billin" cycleL therefore, a schedule is established for each "rant and contract to ensure that reimbursement is made on a timely basis alon" ith any other reportin" that is required in addition to the financial reports. (equests for reimbursement of a ard expenditures ill use the actual amounts as posted to the "eneral led"er as the source for all invoice amounts. &ll financial reports required by each federal a ard ill be prepared and filed on a timely basis. To the extent **(IBs year3end audit results in ad<ustments to amounts previously reported to federal a"encies, revised reports shall be prepared and filed in accordance ith the terms of each federal a ard.

2.

-.

0.

**(I shall maintain separate billin" records in addition to the official "eneral led"er accountin" records. *illin" records shall be reconciled to the "eneral led"er on a monthly basis.

P#ocu#e&ent Un"e# Fe"e#al A'a#"s #rocurement of "oods and services hose costs are char"ed to federal a ards received by **(I are sub<ect to the entire specific 'orporation purchasin" policies described earlier. In addition, procurements associated ith .ederal a ards are sub<ect to the follo in" supplemental policiesH 1. **(I shall avoid purchasin" items that are not necessary for the performance of the activities required by a .ederal a ard. =here appropriate, an analysis shall be made of lease and purchase alternatives to determine hich ould be the most economical and practical procurement for the .ederal "overnment. ,ocumentation of the cost and price analysis associated ith each procurement decision shall be retained in the procurement files pertainin" to each .ederal a ard. .or all procurements in excess of the threshold established by the .ederal & ardin" &"ency, procurement records and files shall be maintained the include all of the follo in"H 89

2.

-.

0.

a. b. c. 9.

The basis for contractor selection. Justification for lac2 of competition The basis for a ard cost or price. hen competitive bids or offers are not obtained.

**(I shall ma2e all procurement files available for inspection upon request by a .ederal & ardin" &"ency. &ll contracts ith vendors shall require the vendor to certify in ritin" that it has not been suspended or disbarred from doin" business ith any federal a"ency.

1.

Co"e o Con"uct $o employee, officer or a"ent of **(I shall participate in the selectionL a ard or administration of a contract supported by .ederal funds if a real or apparent conflict of interest ould be involved. Such a conflict ould arise hen the employee, officer or a"ent, or any member of his or her immediate family, his or her partner, or an 'orporation hich employs or is about to employ any of the parties indicated herein, has a financial or other interest in the firm selected for an a ard. The officers, employees, and a"ents of **(I shall neither solicit nor accept "ratuities, favors or anythin" of monetary value from contractors or parties to sub3a"reements unless the "ift is an unsolicited item of nominal value FN29 or lessG.

Ma/ing o Su+0a'a#"s .rom time to time, **(I may find it practical to ma2e sub3a ards of federal funds to other 'orporations. &ll sub3a ards in excess of N9,000 shall be sub<ect to the same procurement policies described in the precedin" section. In addition, all sub3recipients must a"ree to the subsequent monitorin" provisions described in the next section. =ith respect to sub3recipients ith hom **(I has not recently had a sub3a ard relationship, the &ccountin" ,epartment shall determine an appropriate level of pre3a ard inquiry that shall be performed. The purpose of such inquiry, hich may involve a site visit to a potential sub3recipient, is to "ain assurance that a potential sub3recipient has adequate policies and procedures in place to provide reasonable assurance that it is capable complyin" ith all applicable la s, re"ulations and a ard provisions.

Monito#ing o Su+0#eci%ients =hen **(I utili>es .ederal funds to ma2e sub3a ards to sub3recipients, **(I is sub<ect to a 90

requirement to monitor each sub3recipient in order to provide reasonable assurance that sub3 recipients are complyin", in all material respects, ith la s, re"ulations, and a ard provisions applicable to the pro"ram. In fulfillment of its obli"ation to monitor sub3recipients, the follo in" policies apply to all sub3a ards of federal funds made by **(I to sub3recipientsH 1. Sub3a ard a"reements shall include all information necessary to identify the funds as federal fundin". This information shall includeH a. b. c. d. 2. The applicable 'atalo" of .ederal ,omestic &ssistance F'.,&G title and number & ard name $ame of .ederal a"ency &mount of a ard

Sub3a ard a"reements shall identify all applicable audit requirements, includin" the requirement to obtain an audit in accordance ith /;* 'ircular &31--, if the sub3recipient meets the criteria for havin" to under"o such an audit. Sub3a ards shall include a listin" of all applicable .ederal requirements that each sub3 recipient must follo . **(I ill follo up ith all sub3recipients to determine hether all required audits have been completed. **(I ill cease all fundin" of sub3recipients failin" to meet the requirement to under"o an audit in accordance ith /;* 'ircular &31--. .or sub3recipients that properly obtain an audit in accordance ith /;* 'ircular &31--, **(I shall obtain and revie the resultin" audit reports for possible effects on **(IIs accountin" records or audit. **(I shall assi"n one of its employees the responsibility of monitorin" of each sub3recipient on an on"oin" basis, durin" the period of performance by the sub3recipient. This employee ill establish and document, based on her!his understandin" of the requirements that have been dele"ated to the sub3recipient, a system for the on"oin" monitorin" of the sub3recipient. /n"oin" monitorin" of sub3recipients by **(I ill inherently vary from sub3recipient to sub3 recipient, based on the nature of or2 assi"ned to each sub3recipient. :o ever, on"oin" monitorin" activities may involve any or all of the follo in"H a. b. c. d. (e"ular contacts ith sub3recipients and appropriate inquiries re"ardin" the pro"ram. (evie in" pro"rammatic and financial reports prepared and submitted by the sub3 recipient and follo in" up on areas of concern. ;onitorin" sub3recipient bud"ets. #erformin" site visits to the sub3recipient to revie financial and pro"rammatic records and assess compliance ith applicable la s, re"ulations, and provisions of the sub3 a ard. /fferin" sub3recipients technical assistance here needed. ;aintainin" a system to trac2 and follo up on deficiencies noted at the sub3recipient in order to assure that appropriate corrective action is ta2en. 91

-.

0.

9.

1.

e. f.

".

)stablishin" and maintainin" a trac2in" system to assure timely submission of all reports required of the sub3recipient. ith **(IBs monitorin"

5.

,ocumentation shall be maintained in support of all efforts associated of sub3recipients.

E=ui%&ent an" Fu#nitu#e Pu#c)ase" Wit) Fe"e#al Fun"s **(I may occasionally purchase equipment and furniture that ill be used exclusively on a pro"ram funded by a .ederal a"ency. In addition to those policies on &sset ;ana"ement described earlier, equipment and furniture char"ed to .ederal a ards ill be sub<ect to certain additional policies as described belo . .or purposes of .ederal a ard accountin" and administration, KequipmentK shall include all assets ith a unit cost equal to the lesser of N9,000 or the capitali>ation threshold utili>ed by **(I, described under &sset ;ana"ement. The follo in" policies shall apply re"ardin" equipment purchased and char"ed to federal a ardsH 1. 2. &ny equipment that is o ned by the .ederal "overnment shall be mar2ed as such. &dequate insurance covera"e char"ed to .ederal a ards. ill be maintained ith respect to equipment and furniture

-.

.or equipment For residual inventories of suppliesG ith a remainin" per unit fair mar2et value of N9,000 or less at the conclusion of the a ard, **(I shall retain the equipment ithout any requirement for notifyin" the federal a"ency. If the remainin" per unit fair mar2et value is N9,000 or more, **(I shall "ain a ritten understandin" ith the federal a"ency re"ardin" disposition of the equipment. This understandin" may involve returnin" the equipment to the federal a"ency, 2eepin" the equipment and compensatin" the federal a"ency, or sellin" the equipment and remittin" the proceeds, less allo able sellin" costs, to the federal a"ency. The **(I 4rant ;ana"er shall determine hether a specific a ard ith a .ederal a"ency includes additional equipment requirements or thresholds and requirements that differ from those described above. & physical inventory of all equipment purchased ith federal funds shall be performed at least once every t o years. The results of the physical inventory shall be reconciled to the accountin" records of and federal reports filed by **(I.

0.

9.

Stan"a#"s o# Financial Manage&ent S(ste&s In accordance ith /;* 'ircular &3110, it is the policy of **(I to maintain a financial mana"ement 92

system that provides for the follo in"H 1. &ccurate, current and complete disclosure of the financial results of each federally3sponsored pro<ect or pro"ram in accordance ith the reportin" requirements of 'ircular &3110 and!or the a ard. (ecords that identify adequately the source and application of funds for federally sponsored activities. These records shall contain information pertainin" to .ederal a ards, authori>ations, obli"ations, unobli"ated balances, assets, outlays, income and interest. )ffective control over and accountability for all funds, property and other assets. **(I shall adequately safe"uard all such assets and assure they are used solely for authori>ed purposes. 'omparison of outlays ith bud"et amounts for each a ard. =henever possible, financial information shall be related to performance and unit cost data. =ritten procedures to minimi>e the time elapsin" bet een the transfer of funds to **(I from the ?.S. Treasury and the issuance of redemption of chec2s, arrants or payments by other means for pro"ram purposes by the recipient. =ritten procedures for determinin" the reasonableness, allocability and allo ability of costs in accordance ith the provisions of the applicable .ederal cost principals and the terms and conditions of the a ard. &ccountin" records includin" cost accountin" records that are supported by source documentation.

2.

-.

0.

9.

1.

5.

Bu"get an" P#og#a& Re!isions It is the policy of **(I to request prior approval from .ederal a ardin" a"encies for any of the follo in" pro"ram or bud"et revisionsH 1. 'han"e in the scope or ob<ective of the pro<ect or pro"ram, even if there is no associated bud"et revision requirin" prior ritten approval. 'han"e in a 2ey person specified in the application or a ard document. The absence for more than three months, or a 29 percent reduction in time devoted to the pro<ect, by the approved pro<ect director or principal investi"ator. The need for additional .ederal fundin". The transfer of amounts bud"eted for indirect costs to absorb increases in direct costs, or vice versa, if approval is required by the .ederal3a ardin" a"ency. 93

2. -.

0. 9.

1.

The inclusion, unless aived by the .ederal a ardin" a"ency, of costs that require prior approval in accordance ith /;* 'ircular &3122. The transfer of funds allotted for trainin" allo ances Fdirect payment to traineesG to other cate"ories of expense. ?nless described in the application and funded in the approved a ards, the sub3a ard, transfer or contractin" out of any or2 under an a ard F:o ever, this provision does not apply to purchases of supplies, materials, equipment or "eneral support servicesG.

5.

6.

Close Out o Fe"e#al A'a#"s **(I shall follo the close out procedures described in /;* 'ircular &3110 and in the "rant a"reements as specified by the "rantin" a"ency. **(I and all sub3recipients shall liquidate all obli"ations incurred under the "rant or contract days of the end of the "rant or contract a"reement. ithin %0

94

CHAR$IN$ OF COSTS TO FEDERAL AWARDS


O!e#!ie' It is the policy of **(I that only costs that are reasonable, allo able and allocable to a .ederal a ard shall be char"ed to that a ard directly or indirectly. &ll unallo able costs shall be appropriately se"re"ated from allo able costs in the "eneral led"er in order to assure that unallo able costs are not char"ed to .ederal a ards.

Seg#egating Unallo'a+le F#o& Allo'a+le Costs The follo in" steps shall be ta2en to identify and se"re"ate costs that are allo able and unallo able ith respect to each federal a ardH 1. The bud"et and "rant or contract for each a ard shall be revie ed for costs specifically allo able or unallo able. &ccountin" personnel shall be familiar ith the allo ability of costs provisions of /;* 'ircular &3122, K'ost #rincipals for $on3#rofit 'orporationsK, particularlyH a. The list of specifically unallo able costs found in &ttachment * FSelected Items of 'ostG, such as alcoholic bevera"es, bad debts, contributions, fines and penalties, lobbyin", etc. Those costs requirin" advance approval from .ederal a"encies in order to be allo able in accordance ith &ttachment *

2.

b.

-.

$o costs shall be char"ed directly to any .ederal a ard until the cost has been determined to be allo able under the terms of the a ard and!or /;* 'ircular &3122. .or each .ederal a ard, an appropriate set of "eneral led"er accounts shall be established in the chart of accounts of **(I to reflect the cate"ories of allo able costs identified in the a ard or the a ard bud"et. &ll items of miscellaneous income or credits, includin" the subsequent rite3offs of un3cashed chec2s, rebates, refunds, and similar items, shall be reflected for "rant accountin" purposes as reductions in allo able expenditures if the credit relates to char"es that ere ori"inally char"ed to a .ederal a ard or to activity associated ith a .ederal a ard.

0.

9.

95

C#ite#ia o# Allo'a+ilit( It is the policy of **(I that all costs must meet the follo in" criteria in order to be treated as allo able direct or indirect costs under a .ederal a ardH 1. The cost must be DreasonableE for the performance of the a ard, considerin" the follo in" factorsH a. =hether the cost is of a type that is "enerally considered as bein" necessary for the operation of the 'orporation or the performance of the a ardL (estraints imposed by such factors as "enerally accepted sound business practices, armBs len"th bar"ainin", .ederal and state la s and re"ulations, and the terms and conditions of the a ardL =hether the individuals concerned acted ith prudence in the circumstancesL

b.

c. d.

'onsistency ith established policies and procedures of the 'orporation, deviations from hich could un<ustifiably increase the costs of the a ard.

2.

The cost must be DallocableE to an a ard by meetin" one of the follo in" criteriaH a. b. The cost is incurred specifically for a .ederal a ardL The cost benefits both the .ederal a ard and other reasonable proportion to the benefits receivedL or or2, and can be distributed in

c.

The cost is necessary to the overall operation of the 'orporation, but here a direct relationship to any particular pro"ram or "roup of pro"rams cannot be demonstrated.

-.

The cost must conform to any limitations or exclusions of /;* 'ircular &3122 or the .ederal a ard. Treatment of costs must be consistent ith policies and procedures that apply to both federally financed activities and other activities of the 'orporation. 'osts must be consistently treated over time. The cost must be determined in accordance ith "enerally accepted accountin" principals.

0.

9. 1. 5.

'osts may not be included as a cost of any other .ederally financed pro"ram in the current or prior periods. The cost must be adequately documented.

6.

96

Di#ect Costs ,irect costs include those costs that are incurred specifically for one a ard or non3.ederal function. **(I identifies and char"es these cost exclusively to each a ard or pro"ram. )ach invoice shall be coded ith the appropriate account number reflectin" hich pro"ram received direct benefit from the expenditure. Invoices are approved by the appropriate pro<ect director and revie ed by the 'hief .inancial /fficer. Time sheets, described earlier, are also submitted on a re"ular basis reflectin" employeesI or2 and hich pro"rams directly benefited from their effort. Time sheets shall serve as the basis for char"in" salaries directly to .ederal a ards and non3.ederal functions. )quipment purchased for exclusive use on a federal a ard and reimbursed by a federal a"ency shall be accounted for as a direct cost of that a ard.

In"i#ect Costs Indirect costs are those costs that either benefit more than one a ard Foverhead costsG or non3federal function or that are necessary for the overall operation of **(I Fmana"ement and "eneral costsG. **(I maintains an annual indirect cost bud"et. )ach year a ne indirect cost bud"et is prepared and submitted to **(IBs 'o"ni>ant &"ency for approval. The indirect cost rate approved is used hen determinin" the overhead applied to each federal a ard. )xamples of the types of expenditures normally included in the indirect cost pool areH 1. 2. -. 0. 9. 4eneral administration Salaries and benefits of the executive officers, finance, accountin" and administrative personnel ,epreciation of equipment and buildin"s /ffice rent and maintenance 4eneral office repairs and maintenance

**(IIs independent auditor has the responsibility of revie in" **(IIs indirect cost rates. These rates are submitted to **(IBs /versi"ht &"ency and ill be bindin" on all other federal a"encies and their contractin" officers unless specifically prohibited by statute.

Cost S)a#ing an" Matc)ing It is the policy of **(I to value contributed services and property that are to be used to meet a cost sharin" or matchin" requirement at their fair mar2et values at the time of contribution, unless a ard documents or .ederal a"ency re"ulations identify specific values to be used. **(I shall claim contributions as meetin" a cost sharin" or matchin" requirement of a .ederal a ard only if all of the follo in" criteria are metH 97

1. 2. -.

They are verifiable from **(I records They are not included as contributions for any other federally assisted pro<ect or pro"ram. They are necessary and reasonable for proper and efficient accomplishment of pro<ect or pro"ram ob<ectives. They are allo able under /;* 'ircular &3122. They are not paid by the .ederal "overnment under another a ard, except by .ederal statute to be used for cost sharin" or matchin". They are provided for in the approved bud"et here authori>ed

0. 9.

1. 5.

hen required by the .ederal3a ardin" a"ency.

They conform to all provisions of /;* 'ircular &3110.

'ontributed services used for cost sharin" or matchin" purposes shall be valued at rates consistent ith those rates paid for similar or2 in the 'orporation, includin" an estimate of reasonable frin"e benefits. In cases in hich the required s2ills are not found in the 'orporation, rates used shall be consistent ith those paid for similar or2 in the labor mar2et in hich **(I competes. It is the policy of **(I to require volunteers to document and account for their contributed time in a manner similar to the time32eepin" system follo ed by **(I employees.

98