Observations regarding Temple Beth Am, by Lynda R. Keeton, CPA, June 2006

Temple Beth Am June 2006 - Observations - Sue Blattner and Lynda R. Keeton CPA, LLC Organization - Executive Summary ? Office disorganized and cluttered ? Lots of wasted time ? Temple leadership structure out of date ? No clear reporting structure (org chart) ? No office leadership ? No clear tasks identified, no task demarcation (joint ownership = no ownership) ? No identifiable ?process? flow ? No documented /centralized policies ? No documented organizational procedures ? No ?authority level? guidelines in place for purchases/checks etc ? Entities do ?self ordering? - no PO or requisition process in place ? Personnel files not maintained ? No clear disciplinary procedure ? Incoming mail not date stamped ? Systems not networked ? No system back-ups completed ? No employee handbook / manual ? No clear ?terms and conditions? of employment ? No centralized staffing roster ? No office job descriptions ? No clear ?daily? task list ? Only 3 clear filing systems (membership/AP/personnel) ? Files not maintained in a timely manner ? Other ?critical files? not clearly managed (taxation/govt filings etc) ? Office often left ?empty? with no phone coverage at all ? No staff coverage if one associate is absent ? Different processes in place for each temple ?entity? ? Judaic store unmanaged or accounted for ? Historic unopened mail 2 . Financial - Executive Summary ? Single company only in Qulckbooks - no ?divisions? established for ?entities? ? Unable to find ANY asset ledger ? No monthly bank reconciliations done ? Unclear / unused chart of accounts ? No Purchase Order creation system on PC ? No Purchase Order ?process? in place ? No month-end close completed ? Quickbooks used only for AP and cash ? 2 signatures needed for checks ? Out of date signatory list ? Unclear banking (who uses which bank accounts and which accounts are active) ? No online banking mechanism ? Petty cash accounting not maintained and unclear ? Payroll done in house - no verification process before checks cut ? No taxation controls ? No attention to ?legal? associate requirements ? No divisional coding mechanism on AP ? No PO/receipt/invoice/check matching process ? AR (memberships) detail on separate system ? Last entries in Quickbooks in May? ? No date stamps on any AP ? Blank checks unsecured ? No financial data back up completed ? Unclear ?approved vendor? process ? Historic checks not deposited ? Historic AP not recorded 3. Financial - Hot Items ? Two deposits were lost from the Shenker Academy after the Accounting Clerks had signed for the deposits. (Both the Shenker Academy and the Adult Day Care have the Accounting Clerk sign for the deposit when they receive them.) One on 3/22/2006 for $3,508 and one on 3/27/2006 for $17,335. The school then had to send letters to all of the parents explaining what had happened and take the stop payment fee out of the tuition. The total amount that was recovered from both deposits was $19,064 due to recovering stop payment fees and the cash amount that was involved. ? Another deposit dated 5/25/2006 for $12,631.70 with the May tuition payments was misplaced and found on a desk in an envelope on 6/27/2006. Parents were going to the Shenker Academy letting them know that their checks from May still had not cleared. ? The bank account where the money from the refinance of the building was deposited, and that has Steve Stein as the only signer, needs to be received on this account in order to reconcile and see where the money has gone. ? The Adult Day Care is not able to receive their mail payments anymore because the Accounting Clerks believe that someone in the past was stealing money. ? The Adult Day Care does not receive all of their mail that is delivered to the Temple. There was an instance where some documentation for a grant was never delivered to the Adult Day Care and they received a call asking why they had not responded. ? The copier at the Adult Day Care has been out of service because it is out of toner. Apparently there Is a problem with the Office Depot account and they cannot order from there anymore. (The Temple Accounting Clerks complete all the ordering) ? A decision was made by the Board to take $100,000 and have it deposited into a CD to earn some interest. By the time that the check was cashed for the CD there was not sufficient funds in the account to cover it. A review needs to be completed to see where the money went. ? Acknowledgement letters are not sent for donations that have been received. ? Accounts Payable invoices are not input into QuickBooks timely so that the Temple as a whole does not know what its true Accounts Payable obligation is. Accounts Payable invoices appear to be entered only when there Is money to pay them. Financial - Process Improvements ? Clarify roles, see job descriptions attached. ? Deposits that are not going immediately to the bank that same day need to be locked in the safe. Deposit should be verified by two people. ? Deposits over $10,000 need to be taken to the bank the same day they are received. ? Accounts receivable files and deposit files need to be established and maintained. ? In addition to acknowledge letter through out the year being sent out, a yearly tax summary should be provided to all donors. ? The entire receivables process needs to be reviewed and over hauled so that the Temple as a whole knows who has outstanding receivables and who does not. ? Some membership dues for the Temple have not been collected in over a year. Need to see who is still actually a member and to work on collecting the outstanding balances. ? The Temple should utilize it existing Temple software to cultivate and communicate with donors and customers. This is often outside of the accounting function. ? When payments for the Adult Day Care are received through the mail, the Temple Accounting Clerks prepare and make the deposit, but the information is not always sent back to the Adult Day Care for who the payment was for or the amount so that the client receivables file can be updated. ? A back-up of QuickBooks need to be done weekly. ? Personnel files need to be cleaned up and all documentation need to be in compliance with all federal and state record keeping guidelines. ? All tax returns, e.g. Payroll 940/941, Federal 990, 1099s need to be reviewed and ensured they were filed. ? Mail distribution process set up and mail for the Shenker Academy and Adult Day Care need to be opened by those entities to ensure that they are receiving their mail. ? Bank balances need to be controlled so that checks are not Issued where there are not funds available. ? Need to systematically run Accounts Payable and Payroll checks through QuickBooks. ? Accounts payable files need to be established and maintained. ? A full Purchase Order and Payables system needs to be Implemented, with divisional Executive Directors approving Purchase Orders prior to purchase. ? There is no W-9 or 1099 process in the payables function. ? There is no fixed assets inventory system. ? Bank statements need to be reconciled. ? Bank accounts need to be re-organized so each entity has their own account, there is one general account and the entity is able to take advantage of money making banking arrangements. ? Accounting should be completed on an accrual basis; currently It operates on a cash method. ? Higher level functions such as Budgeting and Forecasting, Debt Facilities Management, Capital Projects Managements, Financial Reporting both Consolidated and by Entity, Formal Accrual Month End Close are all absent in this environment.