It is the Policy of the Board of Directors that the financial conduct of the Corporation be conducted in a business and professional manner, using accepted accounting principals and procedures. It is the policy of the Board that the System shall operate on a self-sustaining basis, by application of these procedures. And shall include a system of checks and balances for the safeguarding of all system assets. Financial transactions shall be recorded and traceable thorough the record keeping process. Financial dealings shall be recorded in the monthly system financial report and a copy of this monthly report will be made available for examination to any and all members of the corporation during normal business hours in the lobby of the offices of the corporation. The Board of Directors of the Corporation will cause an annual audit of the corporation to be made at the close of the corporate year (September 30th). A copy of the annual audit report will be made available to all members attending the annual membership meeting. Also any members requesting a copy of the Audit report may pick up a copy of the Audit report at the Systems Operations Office.
The Board of Directors will cause the formation and implementation of an annual budget for the corporation. A copy of this annual budget for the ensuing year of operation will be made available to all members attending the annual meeting. A copy of the annual budget will be made available to any member requesting a copy at the Systems Operations Office. The purpose of this policy is to provide a framework for the effective management and conduct of the financial affairs of the Cheniere-Drew Water System. These procedures shall be reviewed periodically by the Board and may be amended as necessary by majority vote of the members. It is the policy of the Board that the System shall operate on a self-sustaining basis.
1. Applicability: Financial procedures of the Board shall conform to applicable State statutes, local ordinances and other legal obligations of the System. Any section or sections of these procedures determined to be in conflict shall be null and void without affecting the applicability of other sections and provisions.
2. Purpose: The purpose of these procedures is to provide a framework for the effective management and conduct of the financial affairs of the Cheniere-Drew Water System. These procedures shall be reviewed periodically by the Board and may be amended as necessary by majority vote of the members.
3. Enterprise Fund Accounting: The System shall be operated as an enterprise accounting function. It is the policy of the Board that the System shall operate on a self-sustaining basis, by application of these procedures. The cost of providing water services to the public on a continuing basis (including depreciation expenses) shall be recovered through user fees and charges.
4. Generally Accepted Principals and Basis: These procedures by the Board shall be that the financial affairs of the System be conducted according to generally accepted accounting principals. The System’s financials affairs shall be conducted on an accrual basis.
5. Audit Report: Audit reports shall be prepared annually covering financial operations for the previous year. An independent public accountant, with experience in auditing similar organizations, shall complete audit reports.
6. Fiscal Year: The fiscal year of Cheniere-Drew Water System shall be for a twelve month period, beginning on the first day of October and ending on the last day of September annually.
7. Bonding: All persons having access to System funds, or with responsibilities for the receipt, handling, or expenditure of funds shall have fidelity bond coverage in an amount necessary to protect the financial assets of the System, and in accordance with state statutes and other legal requirements.
8. Insurance: Insurance coverage shall be maintained which is adequate and necessary to protect the System against potential financial loss.
9. Conflicts of Interest: No member of the governing Board may have any direct or indirect interest in any contract for goods or services which may be awarded by the System. No employee or Board member of the System may receive money for furnishing, goods and/or services, installing utility services, or for the sale of materials to the system.
1. Long and Short Term Planning: The Board shall develop a long and short-term financial plan that forecast future capital and operational needs of the System, and provides a strategy for financing those future needs. Operational, financial and administrative staff of the System shall assist the Board in developing these financial plans.
2. Budget Development: Before the beginning of each fiscal year, the Board shall develop and adopt an annual revenue and expense budget for the operation of the System. Each annual budget shall reflect the long-range capital and operational needs of the System, as well as current year capital and operating expenses. The annual budget must show that anticipated revenues should be sufficient to cover all expenses.
1. Disbursement of Funds: All funds shall be disbursed by order of the Board, or its designee. The use and expenditure of System funds shall be restricted to approved purposes as defined by the System’s annual budget. System funds can only be used to pay for expenses that are covered in the annual budget.
2. Priority of Disbursements: Priority of disbursements and payments from current revenues by the System shall be in the following order or priority, unless otherwise ordered by the Board, or by law:
1. Payment of Debt Service Expenses and required Dept Service Reserves;
2. Payment of Operational and Maintenance Expenses or the System; and
3. Payments to Board authorized Financial Reserve Accounts.
3. Authorization to Incur Financial Obligations: Only the Board, or persons so designated by Board resolution, shall have authorization to incur financial obligations on behalf or the System.
4. Chart of System Accounts: Financial record-keeping of the System shall use standard, double-entry Chart of Accounts for the classification of all assets, liabilities, expenses, revenues and other accounting transactions, on a consistent basis.
5. Source Documentation: Payment for goods and/or services and expenses of the System operation shall be made from original invoices submitted for payment. Once paid, all invoices must be marked “paid” and initialed, to avoid duplicate payment.
6. Separation of Duties/Responsibilities: The Board shall assure that there is proper division of responsibility and function among persons who receive, deposit, account for and expend funds.
7. Financial Procedures Manual: The Board shall insure that a financial procedure manual is developed for the system. The manual shall describe routine accounting procedures and practices of the System. At a minimum the manual shall provide for:
1. Routine procedures for the daily collection, recording and deposit of receipts;
2. The proper us of Check Registers, Cash Receipts Journals, Monthly Disbursement and Collections Summaries, and General Ledger;
3. Proper maintenance of Individual Customer Account ledgers;
4. Monthly Bank Statement Reconciliation Procedures; and
5. Proper cross-referencing of all accounting transactions between journals, ledgers, and source documents.
6. The procedure manual shall contain financial and accounting forms and documents used by the System and instructions for how and when each form or document issued.
8. Bank Accounts: The System shall maintain appropriate, interest-bearing bank accounts for the operation of the System. Customer deposits shall be maintained in a separate interest-bearing account.
9. Payments by Check Only: All payments by the System shall be made by check. Return of customer deposits shall be by check. System transfers of funds from operating or revenue accounts and vise-versa shall be mad by check only. Two persons designated by the Board shall sign all System checks.
1. Once checks are approved and signed for payment, the checks shall not be returned to the originator for delivery but shall be mailed or hand delivered by a designated member of the board.
10. Cash Receipts: All receipts shall be recorded on a Cash Receipts Journal, then deposited daily “intact.” A person other that the individual who records the receipts received shall make deposits. Cash receipts shall not be used to pay expenses of the System, nor to cash personal checks of employees or others.
11. Property Assets: Tangible personal property and/or equipment purchased by the System, having a per unit acquisition cost greater than $500.00 and a useful life of thirty six (36) months or more, will be logged into a “fixed assets” inventory journal. Tangible property purchased by the System that does not meet this definition will be considered “supplies.” Procedures for cataloging and safeguarding fixed assets and supply inventories shall be implemented by the Board.
12. Reporting: In addition to monthly financial reports, the Board shall receive monthly billing information- total billing, number of customers, total gallons sold, total gallons produced, and line losses, etc.
13. Records Retention: All financial records, including original source documentation, purchase requisitions, canceled checks and bank statements shall be retained by the System for a time period, in accordance with legal requirements and recommended accounting procedures.
1. Purchasing Procedures: It is a procedure for the Board that the purchase of goods shall be on a competitive, and ‘least cost” basis. Depending on the nature of the goods/services to be acquired, however, the Board reserves the right to consider other factors aside from cost in the final procurement decision. Such factors may include: method and terms of payment, service availability, warranties and guarantees, delivery and set up charges, operational experience and reliability.
1. Purchase Requisitions: A properly completed and approved “Purchase Order” shall be required prior to the payment for all expenses and purchases, except routine expenses and purchases. “Routine” expenses and purchases are defined as regularly scheduled or incurred expenses, and purchases of supplies or parts exceeding $2,500.00 for any one item. Delivery tickets are to be attached to a copy of the purchase order when delivered, placed into parts or equipment inventory and if required listed in the assets journal along with the purchase order number. Two members of the Board, if required, must sign a purchase order
2. Relation to Budget: All purchases of goods and services are restricted to approved purposes as defined in the annual budget. Purchases of a single item or service, or a single procurement of a group of related items or services, the total of which will exceed $2,500.00 shall be identified specifically in the annual budget. (If and emergency comes up and the Board has to buy a piece of equipment, or a service, but does not have the financial reserves to pay for it, the Board will have to formally amend the annual budget with a majority vote of the Board.)
2. Purchasing Procedures: The following table indicates to proper procedure for procurement and purchasing for most goods/services to be used by the System:
|Value of Items(s) to be procured: Method of Procurement/Purchase:|
|$0.00 to $2,500.00||Open Market Purchase|
|$2,501.00 to $10,000.00||Three (3) oral quotations received prior
to purchase when feasible.
|Over $10,000.00||Sealed competitive bids from qualified vendors*|
|*(Unless an emergency condition is declared)|
3. Emergency Purchases: When necessary to effect emergency repairs and/or equipment replacement to restore or maintain services, the requirement for bids or price quotations, oral or written, may not be required. Emergency purchases shall be documented on a Purchase Order with a written explanation of the emergency, nature or the repairs within two (2) working days of the repair.
4. Board Approval: The Board must individually approve any single purchase of goods/services by the System that exceeds $2,500.00. Purchase request for such purchases must contain written quotations in accordance with the above procedures.
5. Conflict of Interest: Businesses or firms in which Board member(s) have a financial interest will not normally be considered as qualified vendors for supplying good or services to the System. If under extraordinary circumstances, the System must secure goods/services from such firms or businesses; they shall not receive preferential treatment in the procurement process. The reason for each such procurement form such a firm shall be individually documented on any purchase order and must be in accordance with applicable state statutes.
6. Out of Pocket Expenses: “Out of Pocket” purchases of goods or services, in general are not allowed. Should extraordinary circumstances make an out of pocket expense necessary, Board member or employee, shall submit the original invoice and completed purchase requisition for reimbursement. The Board or its designee shall consider request for reimbursement on a case by case basis. Documented travel expenses of Board members or employees will be reimbursed in accordance with mileage and/or travel allowances that may be developed by the Board. Prior board approval is required.