Financial Policy Manual

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Preamble

Dallas Makerspace (DMS) is a 501c3 Non-Profit Corporation formed to benefit its community by offering skills training, access to equipment, and access to instructors so that its members can learn,create, and share knowledge with the Community.  This Policy has been created to govern, without exception, the actions of the Dallas Makerspace’s Board of Directors, Officers, Managers, Supervisors, employees, and members. This manual shall document the financial operations of DMS. Its primary purpose is to formalize accounting policies and selected procedures for the business operations of DMS and to formalize internal controls. 

When and if conflicts occur between these rules and the other items of DMS governance (The bylaws, Standing Rules, or committee rules) these procedures are superseded by the by-laws,  but supersede all other sources of authority. However, areas not directly addressed by this policy may be governed by Committee Rules, the Standing Rules, or the By-Laws.  

This policy has been adopted by a two-thirds (2/3) vote of  the Board of Directors and not by a mere quorum. It may be modified by a two-thirds (2/3) majority vote of the Board but not by a minority quorum or subcommittee.

All members, instructors, board and committee members, are bound by the policies herein, and any deviation from established procedures and policy are prohibited.

Definitions that govern these policies:

“Dallas Makerspace” or “DMS”  means the 501c3 Non-Profit Corporation currently located at 1825 Monetary Lane, Suite 104, Carrollton, Texas 75006, and all other locations now existing or to exist in the future under the control of that nonprofit corporation.

“Premises” means any part of 1825 Monetary Lane, Carrollton, Texas, including all interior spaces within this building and all exterior spaces including the parking lots and common walkways in addition to similarly described spaces in locations that come under the nonprofit’s control in the future.

“Independent accountant” means an accountant, but not necessarily a certified public accountant or bookkeeper,  which is not directly retained and paid by Dallas Makerspace nor is a Dallas Makerspace member, who will create and provide an unbiased, candid, and uninfluenced accounting of its financials (e.g. income statement, balance sheet, and all related supporting statements) for both Management and the Board of Directors to use in running this corporation.

“Board of Directors” or “Board” means the properly-elected board members of the corporation known as Dallas Makerspace; whereas, “board member” means any one properly-elected board member.

“IRC” means the United States Internal Revenue Code of 1986, as amended, or 26 USC §1 et seq.

“Account Manager” means the person who is responsible and accountable for the corporation’s or a subunit’s (e.g. a committee or subcommittee) income or expenditures or both.  Generally, this means the corporation’s Treasurer (or the Treasurer’s designee such as the chief accountant, controller, CFO, or the independent accountant), its management, and its committee or subcommittee chairpersons.

“Internal controls” means the set of policies or procedures or both that are designed to prevent funds being used for unauthorized purposes either intentionally or unintentionally or abusive use for authorized purposes.

“Signed writing” means written instructions (e.g. ink on paper) that is signed by the authorizing person; however, it can also extend to electronic transmissions (e.g. email, fax, or text message) where a record is maintained for others to see, if needed, and can be authenticated.

“Quorum” means the minimum number of persons with no conflicts of interest assembled and present at a meeting to render decisions for the group it represents. Here, that amount is anything more than fifty percent (50.0%) of the Board of Directors or a committee or special interest group.

“Purchase order” is a binding, written agreement created in advance between seller and buyer for goods or services that establishes a firm price to be paid, the conditions for payment or tender, and reasonably describes the goods to be delivered or services to be rendered.

“GAAP” means generally accepted accounting principles.

Dallas Makerspace Treasurer’s Office

Treasurer and Financial Group duties and responsibilities

Dallas Makerspace’s Board of Directors appoints the Treasurer and is the only body that can remove the Treasurer, which is done by a majority vote of all board members after considering material facts and circumstances.

The Treasurer is an executive, corporate officer and will be indemnified and protected by Dallas Makerspace just as a board member would be.

The Treasurer’s term begins upon appointment and will last until the sooner of board removal or the board’s next annual meeting.

Treasurer’s duties and authorities

The Treasurer heads up the Financial Group.  As the group’s head, the Treasurer selects and appoints the group’s members and can remove members without cause.  The Treasurer also creates and enforces rules and procedures that govern this group.

A primary duty of the Treasurer is to maintain current and accurate accountings of Dallas Makerspace funds.  These accountings will be presented at least monthly to the Board of Directors for review, consideration, and approval. From time to time, the board may request and receive these accountings with reasonable notice.

Secondary duties include any board-delegated duties that relate to the accounting and the finances of Dallas Makerspace and such other duties as directed.

As an Executive Officer, the Treasurer is empowered to act as Dallas Makerspace’s agent.  Thus, the Treasurer can act on Dallas Makerspace’s behalf by signing financially-related documents and records, which includes retaining accounting firms (with board approval).

For the corporation’s annual meeting, the Treasurer will prepare (or will contract for an accountant to prepare) financial reports for the most recent fiscal year and will provide these financial reports to the Board for presentation to the membership.  For the corporation’s monthly meetings, the Treasurer will prepare (or will contract for an accountant to prepare) financial reports for the most recent past month and will present these financial reports to the board. Where an accountant was contracted to prepare financial reports, the Treasurer will review the reports in advance and will certify them prior to presenting them to the board monthly and annually.

The treasurer may complete reviews and audits of the corporation’s financial statements at any time.  This may include sampling and testing. The treasurer will retain an independent accounting firm, but not necessarily a certified public accounting firm, at least annually to complete independent reviews and audits, which will include sampling and testing.  Final results and findings from the accountant’s independent reviews and audits will be presented first to the Board of Directors for consideration and then shall be provided to the membership.  

Treasurer functions include (but are not limited) to:

• Oversight of the chart of accounts, reliable, timely and accurate recording of accounting transactions, and reliable, useful, financial reports.
• Preparation of DMS annual operating budget and capital budgets for final approval by the full board.
• Long-term financial planning
• Establishment of investment policy and monitoring investment performance
• Analysis of facility actions on overall DMS financial condition and evaluation and approval of facilities decisions (i.e., leasing, purchasing property)
• Monitoring of actual vs. budgeted financial performance
• Oversight of reserve and designated funds.
• Oversight of system of internal controls that protects against the risk of fraud, misstatement, or unreliable financial reporting by DMS.
• Oversight to ensure compliance with applicable laws and regulations.
• Review of financial procedures.
• Review and oversight of insurance coverage  

To foster prudent financial stewardship, the board will work with the Treasurer to develop short-term and long-term budgetary goals.  The primary goal is sustaining Dallas Makerspace. The secondary goal is expanding Dallas Makerspace.

The Board will meet with the Treasurer (and any accounting firm the Treasurer retains) at least annually to create and approve a budget for the following year.  Once established, the board will meet at least quarterly with the Treasurer and management to review current financial reports and compare them with the budget. Where there is a material variance between the budget and actual reports, management and the Treasurer will recommend to the board a course of action, and the Board will vote to determine whether to act.  

Financial Group responsibilities

The Financial Group’s primary responsibility is developing internal policies and procedures for accounting and financial statement preparation and executing them.  To develop its policies and procedures, the Financial Group should look to GAAP first and adopt them when possible. Developing policies and procedures may be done in conjunction with an independent, external accounting firm. Once established, it executes the internal controls developed under the policies and procedures to ensure proper accounting, proper characterization, waste detection, mismanagement detection, and fraud detection.  These internal policies and procedures will also govern the membership and the committees.

Its’ secondary responsibility is timely preparation and dissemination of Dallas Makerspace financial statements to the board, and, in conjunction with statement preparation, assist the board with budgeting.  This will include both short-term and long-term financial strategies that are consistent with prudent stewardship. And it will include developing fiscal policies for board consideration that foster financial integrity and sustainability, and control financial risk exposure to DMS.

The tertiary responsibility is to prudently manage Dallas Makerspace’s accounts as its Board has directed.

Other responsibilities include working with the independent accountant and Procurement Officers to timely secure receipt submissions; providing donors with receipts; investigating expenditures to make sure they were made in compliance with board-set policies and management-set procedures, if any; managing and timely filing for sales tax, IRS Form 990 (and related documents), IRS Form 1099, etc.; obtaining and maintaining permits and licenses needed for operations; and recruiting and developing successor treasurers and Financial Group members. 

The Finance Committee will review recommendations for hiring an independent accounting firm and shall also review communications received from the independent accountant regarding internal controls, illegal acts, or fraud.

The Treasurer also serves as the primary point of contact for any employee, member, officer, board or committee member who suspects that fraud has been committed against the Organization or by one of its employees or members.

Ethics and integrity

Unethical actions, or the appearance of unethical actions, are unacceptable under any conditions.  The Board of Directors, all officers, all committee chairs and vice-chairs, all special interest group leaders, all members and other volunteers are expected to use good judgment, professionalism, ethical standards, and avoid actual or potential conflicts of interest.  A conflict of interest is a set of circumstances that creates a risk that a member or employee having a duty to act in DMS’ best interest may be unduly influenced by a secondary interest.

Each individual, committee, officer and board member must apply her/his own sense of personal ethics, which should extend beyond compliance with applicable laws and regulations in business situations, to govern behavior where no existing regulation provides a guideline. Each member is responsible for applying common sense in business decisions where specific rules do not provide all the answers

In determining compliance with this standard in specific situations, members should ask themselves the following questions:

1. Is my action legal?
2. Is my action ethical?
3. Does my action comply with DMS policy?
4. Am I sure my action does not appear inappropriate?
5. Am I sure that I would not be embarrassed or compromised if my action became known within the Organization or publicly?
6. Am I sure that my action meets my personal code of ethics and behavior?
7. Would I feel comfortable defending my actions on the 6 o’clock news?
8. Is there a real or even an appearance of a conflict of interest or compromising action?

Each member should be able to answer "yes" to all of these questions

before taking action Each director, manager and supervisor is responsible for the ethical business behavior of her/his subordinates. Directors, managers and supervisors must carefully weigh all courses of action suggested in ethical, as well as economic terms, and base their final decisions on the guidelines provided by this policy, as well as their personal sense of right and wrong.

Compliance with laws, regulations, and organization policies

DMS does not tolerate

• The willful violation or circumvention of any Federal, state, or local law by an individual, committee, or group.
• The disregard or circumvention of DMS policy
• Engaging  in unscrupulous dealings.

Members are directed not attempt to accomplish by indirect means, through agents or intermediaries, that which is directly forbidden.

Conflicts of Interest

Introduction

In the course of business, situations may arise in which a DMS member has a conflict of interest, or in which the process of making a decision may create a potential, real or an appearance of a conflict of interest.  Conflicts of interest create a special risk to nonprofits as the organization may lose its tax exempt status for any real or apparent conflicts of interests.

All directors, employees, members, and volunteers have an obligation to: 

• Avoid conflicts of interest, or the appearance of conflicts, between their personal interests and those of the Organization in dealing with outside entities or individuals, 
• Disclose real and apparent conflicts of interest to the Board of Directors, and
• Refrain from participation in any decisions on matters that involve a real conflict of interest or the appearance of a conflict.

What Constitutes a Conflict of Interest?

All members owe a duty of loyalty to DMS. This duty necessitates that in serving the nonprofit, they act solely in the interests of DMS, not in their personal interests or in the interests of others.

The persons covered under this policy shall hereinafter be referred to as “interested persons.” Interested persons include all members (individually, and as members of committees and the Board of Directors), volunteers, employees, as well as persons with the following relationships to directors or employees:

1. Spouses or domestic partners
2. Brothers and sisters
3. Children, grandchildren, and great grandchildren
4. Spouses of individuals listed in 2 and 3.
5. Corporations, partnerships, LLCs, and other forms of businesses in which an employee, member or director, either individually or in combination with individuals listed in 1, 2, 3, or 4, collectively possess a [35%] or more ownership or beneficial interest.  (The financial interest threshold of 35% is based on the IRS definition of a disqualified person in IRC section 4958.)  

Conflicts of interest arise when the interests of an interested party may be seen as competing with those of DMS. Conflicts of interest may be financial (where an interested party benefits financially directly or indirectly) or nonfinancial (e.g. seeking preferential treatment, using confidential information).

Examples of conflicts of interest include, but are not limited to, situations in which a member, volunteer, or employee:

1. Negotiates or approves a contract, purchase, or lease on behalf of the Organization and has a direct or indirect interest in, or receives personal benefit from, the entity or individual providing the goods or services;
2. Negotiates or approves a contract, sale, or lease on behalf of the Organization and has a direct or indirect interest in, or receives personal benefit from, the entity or individual receiving the goods or services;
3. Employs or approves the employment of, or supervises a person who is an immediate family member of the director or employee;
4. Uses the Organization’s facilities, other assets, employees, or other resources for significant personal gain or in such a way that the organization can be negatively impacted;
5. Receives a substantial gift from a vendor, if the director or employee is responsible for initiating or approving purchases from that vendor.

Disclosure Requirements

A member, volunteer, or employee who believes that he/she may be perceived as having a conflict of interest in a discussion or decision must disclose that conflict to the finance committee.  Most concerns about conflicts of interest may be resolved and appropriately addressed through prompt and complete disclosure.

Therefore, DMS requires the following:

1. On an annual basis, all members and volunteers with purchasing and/or hiring responsibilities or authority shall inform, in writing, to the Treasurer of all reportable conflicts or confirm that there are no conflicts to report.
2. Prior to the preparation of the disclosure statements, the Treasurer shall distribute a list of all vendors with whom the DMS has transacted business at any time during the preceding year, along with a copy of the disclosure statement;
3. The Treasurer shall review all forms completed by committee and board members, and the Board shall review all forms completed by the Treasurer and Finance Committee and determine appropriate resolution in accordance with the next section of this policy.  
4. If a potential conflict of interest arises after disclosures are made and reviewed, the member shall immediately notify the Treasurer who will determine appropriate resolution.

Resolution of Conflicts of Interest

In the event a potential conflict of interest is discovered concerning the Board or Officers of the corporation, all uninterested board members will come together in a meeting and will decide whether a conflict of interest exists and determine the appropriate response and actions to take based on the specific facts and circumstances.  The response and actions to be taken must be approved by a majority of a quorum of uninterested board members. However, there must be at least three (3) uninterested board members to form a quorum to render this decision. Where no quorum can be formed as stated here, a conflict of interest is automatically presumed requiring an immediate end to the agreement between Dallas Makerspace and the disclosing person (e.g. resigning from the board, ending contractual arrangements, or relinquishing a management or supervisory position). Minutes will reflect any potential, real, or apparent conflict of interest.  All individuals who have potential interests must recuse themselves from discussions or influencing decisions. Actual or apparent conflicts of interest not involving the Board or Officers of the corporation will be reviewed and resolved by the treasurer, who will inform the Board as soon as is practicable of the actions taken and the Board shall have the opportunity to review. 

Failure to comply with the standards contained in this policy will result in disciplinary action that may include membership termination, referral for criminal prosecution, and reimbursement to the DMS or to the government, for any loss or damage resulting from the violation. As with all matters involving disciplinary action, principles of fairness will apply. Any individual charged with a violation of this policy will be afforded an opportunity to explain her/his actions before disciplinary action is taken.

Disciplinary action will be taken against

1. Any member who authorizes or participates directly in actions that are a violation of this policy.
2. Any member who has deliberately failed to report a violation or deliberately withheld relevant and material information concerning a violation of this policy.
3. Any director, officer, committee chairman, or vice-chair  who attempts to retaliate, directly or indirectly, or encourages others to do so, against any member who reports a violation of this policy.

A board member, officer or committee member who violates this policy will be removed from oversight responsibility. 

Policy on Suspected Misconduct

Like all organizations, DMS faces many risks associated with fraud, abuse, and other forms of misconduct. The impact of these acts, collectively referred to as misconduct throughout this policy, may include, but not be limited to:

• Financial losses and liabilities
• Loss of current and future revenue and customers
• Negative publicity and damage to the Organization’s good public image
• Loss of employees and difficulty in attracting new personnel
• Deterioration of member morale
• Harm to relationships with clients, vendors, bankers, and subcontractors
• Litigation and related costs of investigations, etc.

DMS is committed to establishing and maintaining an environment of the highest ethical standards. Achievement of this goal requires the cooperation and assistance of every member and volunteer at all levels of the Organization.

For purposes of this policy, misconduct includes, but is not limited to:

1. Actions that violate the Corporation’s Code of Conduct (and any underlying policies) or any of the accounting and financial policies included in this manual
2. Fraud 
3. Forgery or alteration of checks, bank drafts, documents or other records (including electronic records)
4. Destruction, alteration, mutilation, or concealment of any document or record with the intent to obstruct or influence an investigation, or potential investigation, carried out by a lawfully constituted public official, or by the Organization in connection with this policy
5. Disclosure to any external party of proprietary information or confidential personal information obtained in connection with employment with or service to the Organization
6. Unauthorized personal or other inappropriate use of equipment, assets, services, personnel or other resources
7. Acts that violate Federal, state, or local laws or regulations
8. Accepting or seeking anything of material value from contractors, vendors, or persons providing goods or services to DMS. Exception: gifts less than a nominal value ($50). 
9. Impropriety of the handling or reporting of financial transactions.
10. Failure to report known instances of misconduct in accordance with the reporting responsibilities described herein (including tolerance by members of misconduct of others).

Fraud is further defined to include, but not be limited to

• Theft, embezzlement, or other misappropriation of assets (including assets of or intended for the DMS, as well as those of our members, subcontractors, vendors, contractors, suppliers, and others with whom the DMS has a business relationship)
• Intentional misstatements in the DMS’s records, including intentional misstatements of accounting records or financial statements
• Authorizing or receiving payment for goods not received or services not performed
• Forgery or alteration of documents, including but not limited to checks, timesheets (to the extent that they exist), contracts, purchase orders, receiving reports, inventories

DMS prohibits each of the preceding acts of misconduct on the part of board members, officers, volunteers and others responsible for carrying out DMS activities.

Every member , officer, and volunteer is responsible for immediately reporting suspected misconduct to the Treasurer or President.  Additionally, anonymous reporting of allegations can be provided to the Treasurer or President via email or sealed envelope marked “Confidential: To Be Opened by Addressee only” and placed in the finance lockbox or hand-delivered. 

Reprisal Protection

DMS encourages those who believe they have information relating to possible criminal offenses or violations of DMS policy to report to the Treasurer (as described herein) or to other officers or Board members as they see fit, prior to engagement with outside officials.

Any reprisal against someone who in good faith reports a suspected act of misconduct or provides to a law enforcement official, acting in the performance of their duty, any truthful information relating to the commission or possible commission of a criminal offense or any other possible violation of DMS policy, is a violation of this policy and will subject the respriser to disciplinary action. 

DMS prohibits the knowing destruction, alteration, mutilation, or concealment of any record, document, or tangible object with the intent to obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States government, local or state law enforcement, or in relation to or contemplation of any such matter or case.

Accounting

Accounting basis and tax year

Dallas Makerspace uses the cash basis of accounting as defined under IRC §§446 and 448.  Under these definitions, cash basis is the method of accounting whereby revenue and expenses are identified and recognized when money is paid or received for goods sold or services rendered. 

Dallas Makerspace’s fiscal  and tax year runs from January 1 to December 31 each year (a calendar year).  

Year-end books are closed no later than ninety (90) days after the end of the calendar year.

Journal Entries

Automated and manual

Dallas Makerspace has automated much of its accounting to minimize human errors.  If, however, adjustments (e.g. corrections for errors or omissions) must be made to Dallas Makerspace’s accounting, an independent accountant will be responsible for making appropriate corrections to the accounting system based on the Treasurer’s  direction, when necessary, changes may be made by the Treasurer or such others as the Treasurer directs. An accounting manager, to the extent available, will be responsible for reviewing the entries for completeness and accuracy. And, just as with the automated accounting, manual adjustments will be reported to the Treasurer for approval. 

Income and expense allocations

Income and expense allocations will be done monthly and will involve creating a journal entry into the proper account to allocate funds to committees for their use as the Board of Directors has approved and directs.  To determine the allocations, the independent accountant will review the minutes of the board of director’s meetings and input the journal entries that were approved. Then, to post the allocations, an independent accountant will input the journal entry into the accounting system where appropriate, and an accounting manager will review the journal entries for completeness and accuracy.  Once complete, both the independent accountant and the accounting manager will certify the accounting for each month to the Board of Directors in signed writing, which the board will accept and approve or reject (requiring amending later) at its next meeting. To assist the independent accountant or auditors in their duties, a copy of the board of director’s minutes from every meeting will be attached to journal entries in the accounting system.

Reconciliations

All bank and credit card statements will be opened and reviewed on a timely basis (e.g. within seven (7) days of receipt).  Reconciliations will occur within twenty (20) days of the close of each month. Books for each month will not be closed until all reconciliations are complete.  Reconciliations can include identifying and entering uncategorized expenditures that are immaterial. However, by the twenty-first (21st) day following the close of each month, the books must be reconciled and closed, which means all material expenditures must be categorized and entered into the accounting system.

To reconcile bank and credit card statements, an independent accountant will review the statements and use proprietary spreadsheets to settle all accounts.  The independent accountant will notify the appropriate account manager that the work for the month is complete and ready for review. The account manager will review the reconciliation and approve the bank-account and credit-card-account reconciliations within seven (7) days of being notified.  Once reviewed and approved, the work will be saved in the filing system for that accounting period.

Month-end close

Month-end accounting and reporting

An independent accountant will be responsible for accurately closing the books at the end of each month.  The accounting system will be locked by the accounting manager for the month-end close by the twentieth (20th) day of the following month.  Any required adjustments after this date must be submitted to the account manager for review, consideration, and entry after receiving board approval.  Only under extraordinary circumstances will books from a prior period be reopened for a late entry. If required, all late entries will be reported by the independent accountant to the Board of Directors at the next board meeting for consideration and approval.

All balance-sheet accounts will be reconciled before closing accounts at month-end.  An independent accountant will be responsible for reconciling these accounts based on board-set policies established below and management-set procedures, if any, that are established separately.

On a monthly basis, the accounting firm is responsible for providing the treasurer all bank account reconciliations, a balance sheet, income statement, cash flow, and general ledger.

Committee month-end reporting

All committee reports will be completed and issued before the end of each reporting period, which is the same as the Dallas Makerspace reporting period.  If a discrepancy is identified in a committee report, corrections must be made within the twenty (20) days immediately following the reporting period’s end date.

Committees’ reports and accounts will be closed each month and will not remain open for future adjustments.  If, however, adjusting journal entries are required past the 20-day deadline, they will be posted only after getting the committee’s timely approval and after reporting the missed deadline along with the journal entry to the Board of Directors at its next meeting.  When presenting the adjustment to either the committee or the board, a brief description will be required along with supporting documentation. No reason for rejection need be provided by either the committee or the board. And once rejected, no subsequent requests may be made for the same adjustment.

Recordkeeping

Dallas Makerspace recognizes its duty and responsibility to its members to maintain accurate books and accounting.  To meet that duty, the Board of Directors has elected to delegate accounting duties and responsibilities to an independent accountancy firm, for a fee.  This accounting firm will maintain books and accounting for Dallas Makerspace under Generally Accepted Accounting Principles. Additionally this accounting firm will make all books and accounting available to the Board of Directors whenever requested and regularly, which will be at least on a monthly basis.

Onsite books and accounting will be maintained in a locked filing cabinet that is accessible by the account manager assigned to Dallas Makerspace as well as the Treasurer.  A record will be kept for each month that will include hard copies of each month-end reconciliation, bank statements, credit card statements, payables and approvals, board of director’s minutes, and other relevant documents for that corresponding month.

Dallas Makerspace will require a Form W-9 from all contractors prior to issuing any checks.   The independent accountant will request W-9’s within a reasonable time of being notified and report new contractors to the appropriate persons and taxing authorities within a reasonable time but not to exceed any established by law.

Accounting records will be maintained for all open tax years at a minimum.

Work-flow example

January 2:  Bank statements and credit card statements are prepared and mailed out by the issuing banks.  Internal reconciliation begins: internal accounts are reviewed and adjustments made where needed.

January 4:  Statements are received from banks.  Credit card and bank account reconciliation begins.  Statement to be opened and reviewed within seven (7) days or by January 11th; statements are then to be used to reconcile internal accounts.  Categorized expenditures are to be verified. Material, uncategorized expenditures are to be identified and documented by the person responsible for the expenditure, so the corporation can properly categorize the expenditures.  Where possible, immaterial, uncategorized expenditures are to be identified and documented by the person responsible for the expenditure. Then, once reconciliations are complete, accounting statements are to be sent to account managers for review, consideration, and approval well before January 21st.  If adjusting entries are to be made, reasonable time must be provided, so all deadlines may be met, and support for adjusting entries must be provided to the accounting areas by those recommending the adjustments.  Any material, uncategorized expenditures must be categorized during this time. Any material expenditures that cannot be categorized must be documented with an account manager’s statement explaining why there can be no categorization and seeking board approval for this exception (with no guarantees that it will be granted).  If the board does not approve the exception at its next meeting, the board will determine next steps, which should include identifying someone to investigate the expenditure and recommend what actions should be taken.

January 21:  By end of business day, reconciliations must be complete: all accounts must be reconciled, all manual adjustments must be made and documented, and all accounting must be finalized.

January 22:  Reports to the Board of Directors must be prepared (hard-copies printed) for their review at their next regularly-scheduled meeting as part of their board packet.

At the next regularly-scheduled board meeting, the Board of Directors will review, consider, and approve the accounting.  If, however, there is accounting that cannot be approved, which can be a portion of an accounting (e.g. a single uncategorized and material expense), the board will determine the next steps to resolve the issue based on its policy and delegate it to the appropriate person to investigate and report back to the board within a reasonable time frame.

Adjustments may be made to accommodate the board of director’s meeting schedule, as determined by the Board of Directors, such as adding more time to prepare accounting reports after taking federal holidays into consideration as was done in this example to accommodate New Year’s Day.

Expense reimbursements for members

Where a member is reimbursed for an expense incurred under this policy, reimbursement will be at the actual cost of the goods or services; there will be no mark-up permitted.  A receipt is required. Finance group-set procedures will dictate the process in which a member is reimbursed.

Class Reimbursement other than honorarium

Reimbursements for supplies provided by members will be available for classes.  For approval, they must be submitted in writing, with a receipt attached. Class materials may be included but the materials’ costs will be based on actual cost not retail value to adhere to the no-mark-up rule noted under Expense Reimbursements. These reimbursements will follow the same reimbursement requirements as other reimbursements.

Class fees set by class creators during event creation, shall be remitted to the sponsoring committee only.  Where class fees have been set and paid to a committee, reimbursement for materials used shall be deducted from the sponsoring committees balance.

Any other class reimbursement will be governed first by this policy then by any Finance group-set procedures in place when  the expense was incurred.

Honoraria payments

Honorarium is a payment made to a person for his or her volunteered services or for traditionally unpaid services and is paid without the payor recognizing any legal obligation to make that payment.  Dallas Makerspace permits honoraria to be paid to the organization’s service providers, which includes class instructors. Honoraria will be paid only in money; no goods or services may be exchanged. 

Honoraria will be paid at a rate determined and set by Board resolution.  Each payment will be classified as “Honorarium” and will be reported to the IRS as income earned by an independent contractor on an IRS Form 1099.  Board-set procedures, which will include minimum class size, will govern all other aspects of honoraria.

Expense allocations

Committees may receive a monthly allowance from the corporation’s general fund.  This money will be used by the committee to fund its operations. Additional funds can be acquired through donations, direct board action or through honoraria.  

Asset management

The Board of Directors, its Staff, and independent contractors (e.g. accounting firms) hired for such purpose shall monitor and manage the Dallas Makerspace and its assets.

Capital equipment

Dallas Makerspace deems any of its property that costs one-thousand dollars ($1,000.00) or more to be a capital item.  Capital equipment is recorded in the accounting system at historical costs. When property is contributed to the corporation that has a value more than one-thousand dollars ($1,000.00), the donation will be valued by the corporation then recorded as a capital asset on the corporation’s books at the donated value.

Cash management and investments

Except for petty cash, all cash will be deposited at a federally insured depository institution (i.e. FDIC insured bank or NCUA insured credit union).  Cash can be deposited into checking, savings, money market savings, certificates of deposit, or any combination of these accounts. To maintain full depository-insurance coverage or to maximize yields, Dallas Makerspace may maintain accounts at more than one federally insured depository institution.

Because Dallas Makerspace does not presently maintain any investments outside of insured depository accounts, all non-cash and non-capital asset donations will be converted to cash and the proceeds deposited into corporation accounts.  Likewise, cash donations will be deposited into corporation accounts as soon as reasonably possible.

With prior Board approval,  the Dallas Makerspace may invest cash in other investments types after completing reasonable due diligence that considers risk-of-loss and other relevant factors in short- and long-term liquidity needs.

Internal controls

Delegating authority to agents

Only the Board of Directors can delegate authority to spend money.  Therefore, only the Board can empower an individual or group to make purchases as Dallas Makerspace’s agent.  Only the Board of Directors or the Treasurer can establish limits for these agents, which may change from time to time.

Board-set allocation and authorization limits

There can be no deficit spending. Neither the Board or its agents will allow allocations or expenses to exceed the General Fund balance for a given year.

When allocating funds, the Board of Directors will not allocate more than five percent (5.0%) of the amount on deposit in the checking account without first obtaining and reviewing the most current financial reports prepared by the financial committee or the Treasurer.  When funds have been allocated from the General Fund, but have not yet been spent, no draws or advances on any line of credit may be made unless the draw or advance is approved, in advance, through a simple majority (anything more than 50.0%) by the Board of Directors where a proper quorum is present at a meeting.

$0.01-$200.00

Expenditures of $200.00 or less may be made by a previously authorized Officer, or Committee Chair without advance approval from the Finance Committee.

$200.01-$500.00

Expenditures of $200.01-$500.00 must be approved by the purchasing committee at a regularly scheduled committee meeting,  and reflected in their monthly meeting minutes. However, multiple expenditures that are related may not be broken down into smaller expenditures to circumvent obtaining proper approval (e.g. purchasing 4 automotive tires separately for $175.00 each instead of all 4 at once for $700.00). 

$500.01-$2,0000

Expenditures of $500.01-$2,000.00 or exceed one-third (33.33%) of the committee fund balance (whichever is smaller) must be approved in advance by the Treasurer, or designated Finance Committee Member, in writing or via electronic approval (email or text) in addition to the previous requirements. However, multiple expenditures that are related will not be broken down into smaller expenditures to circumvent obtaining finance committee approval.  

$2,000.01- $1,000,000,000

Purchases or expenditures that exceed $2,000.00 must be approved in advance by the Board of Directors in addition to the previous requirements stated herein. However, multiple expenditures that are related will not be broken down into smaller expenditures to circumvent obtaining Board of Directors’ approval. 

Emergency Spending

In a situation where the safety of the organization or its members has been determined to be at exigent risk by any Officer of the corporation or Board Member, or that a piece of high-demand equipment is in need of urgent repair, up to $5,000.00 can be spent without prior Board approval. Said expenditure will be reviewed by the Board of Directors at their earliest convenience.  

Required documentation for expenditures

For any expenditure made by or for Dallas Makerspace, a written invoice or receipt is required prior to payment.  This invoice or receipt will be provided and will determine the amount to be paid for any good or service. This will apply to both one-off vendors and vendors who regularly provide goods or services, and it will apply to those purchasing agents empowered to make purchases for Dallas Makerspace.

Once the written invoice or receipt is presented, payment will be made directly to the vendor or reimbursement will be made directly to the agent, provided  it has been properly approved.

Wherever possible and practical, the Board of Directors encourages the use of purchase orders.  However, to be binding, a purchase order must be approved by the Board of Directors or its agents within their authority, as stated under this policy.

Wherever possible and practical, the Board of Directors also encourages the use of internal auditors to reasonably monitor the implementation of these policies or the corporation-set procedures and audit the Dallas Makerspace books and accounts on a regular basis.  Internal auditors will report directly to the Treasurer and Board of Directors, and internal auditors will provide regular reports on their audit findings, first to the Board of Directors and then to the Treasurer. Recommendations for improvements (e.g. changes to policy or procedure) made by an auditor will be first considered by the Finance Group and implemented only after Board approval.

Payments on credit card balances and final authorizations

Only the Finance Group or its’ contractors have the authority to make payments or authorize final credit card approvals.  Payments on credit cards will be limited to once per month and will be made prior to the credit card bill’s due date. There will be no exceptions made to this policy, as the established credit limit for a credit card is set to curtail excessive spending by an authorized individual.

As part of his or her due diligence, the independent accountant will review past credit card expenditures and make credit-limit recommendations to the Treasurer, at least annually, for his or her  approval. Credit limits may then be adjusted up or down based on the Treasurer’s decision to expand or restrict spending.

Payment authority

Only the independent accountant or the Treasurer, as defined above, is authorized by the Board of Directors to make payments on its behalf.  Payments include drafting checks for authorized officers to sign or authorizing recurring electronic payments (e.g. credit card bill payments, utility payments, insurance payments, etc.) without officer approval.

Prior to a payment being made by the independent accountant, payments must be approved under the protocols stated within this policy.  As such, the independent accountant will ask for satisfactory approval evidence (e.g. board minutes, committee minutes, or signed writings).  If satisfactory approval is not provided, the independent accountant shall refuse to make any payment and cannot be compelled to make a payment that is not properly approved and documented.

Only the Treasurer or the independent accountant may provide final approval and upload credit card transactions through an integration tool (e.g. Expensify).  The independent accountant will properly code and document transactions from receipts provided by the purchaser before approval submission. Where prior approvals or receipts are not provided, payment will not be authorized, and the purchaser may be held personally responsible for reimbursing Dallas Makerspace for the unauthorized expenses.

Persons authorized to sign checks for payment

Only the Dallas Makerspace President, its Treasurer, or an individual authorized by the Board of Directors, may sign checks to make payments; however, proper approval for expenditures under this policy is required before a payment by check may be remitted. 

Persons authorized to remit funds electronically

Only the Dallas Makerspace Finance Group or it’s contractors may remit electronic payments to recurring service providers (e.g. utilities, insurance companies, or credit card vendors) or product providers (e.g. raw, consumable materials providers or office-supply vendors).

Physical and financial security

Physical security

To maintain integrity, records are to be stored in reasonably secure locations, currently a locked filing cabinet in the finance room .  Checks and cash are to be secured as well, currently in a filing cabinet in the finance room. Access to these secure locations are to be limited to authorized Dallas Makerspace members only.

As funds and space permits, the independent accountant’s office will be limited to authorized people only and not available for general members to access.  A locked, fire-proof cabinet will be made available to store records, and only the independent accountant and the Treasurer will have access to them.

Finally, to foster information integrity, the Dallas Makerspace Treasurer will have access to all financial records of any sort at any time.

Financial reporting

All Dallas Makerspace financial statements will be prepared using GAAP and, specifically, will follow GAAP guidelines established by the Financial Accounting Standards Board specifically for Not-for-profit organizations when practicable. 

Internal financial reports

Annual financial statements will be prepared by an independent accounting firm, but not necessarily by a certified public accounting firm, and finalized soon after year-end close.  These statements will be presented to the Board of Directors in the first meeting after the close of the calendar year (i.e. in the January board meeting).

Audit

Financials are not required to be audited on a regular basis.  However, the Board of Directors may choose to have more than compiled financial statements be prepared.  If the board decides it wants reviewed or audited financial statements, an independent accounting firm will be selected and a certified public accountant will lead and certify the review or audit.

Exempt organization returns

Currently, Dallas Makerspace is a tax-exempt organization (a 501(c)3) and is required to file a Form 990 annually for tax compliance.  This form will be prepared for Dallas Makerspace annually. The Treasurer will review and approve the form, once complete, and will authorize what is needed to transmit this information electronically to the IRS.

Quarterly reporting

The corporation will file and submit electronic payments for the collection and remittance of Texas sales tax to the Comptroller on behalf of Dallas Makerspace.