Exhibit A- Accounting Procedures.pdf

Exhibit A

DIVISION OF YOUTH CORRECTIONS ACCOUNTING REQUIREMENTS FOR INDEPENDENT CONTRACTORS

The purpose of these requirements is to provide minimum assurance the Contractor has adequate accounting and budgeting information available to allow management to maintain a financially viable enterprise.

(1) The Contractor must have in place a double entry accounting system, which complies with generally accepted accounting principles (GAAP). All expenses must be posted to the double entry accounting system. Billings for services must be reconcilable to the double entry accounting system. The vendor must have adequate time keeping and cost allocation systems to allocate salary cost and indirect cost to appropriate cost centers.

(2) All billing by the Contractor must be in a format approved by the Division of Youth Corrections (DYC). The

Contractor must provide all supporting documentation requested by the Division of Youth Corrections.

Contractors must bill DYC at least once a month. Contractors may bill twice a month, on the 15th and last day of the month, for services rendered. Bills will be returned unpaid if the bills do not conform to the approved format or the documentation is inadequate.

(3) The Contractor must have an annual audit of their financial statements (Income Statement, Balance Sheet, and

Statement of Cash Flows) by an independent public accounting firm if the Contractor receives $400,000 dollars or more of state funds. If the Contractor is a government agency that has an independent audit done by another agency of that government, their regular audit meets this requirement. The audit must be completed and a copy provided to DYC Program Services within six (6) months after the end of the Contractor’s fiscal year. The audited financial statements must contain supplemental statements providing detailed financial information for the expenditures of this contract. Contractors that are a subsidiary of a parent organization must submit separate financial statements for the subsidiary that detail each of the Contractor's facilities and/or programs that provide services for the Division and also must reconcile with the consolidated statements of the parent organization. In cases where audit deficiencies are noted, a plan of corrective action shall be submitted to DYC for approval within four (4) months of the date of the audit.

(4) If Contractors do not submit their annual audit or refuse to disclose financial information regarding the operation of the program in a timely manner, DYC may withhold payment until the audit and/or requested information is submitted.

(5) If a contract contains a line item budget, any changes greater than 10% between budget categories must have prior written approval from the appropriate DYC Administrator. Any changes that delete or add line items to the budget must have prior written approval from the appropriate DYC Administrator. This type of change may require a formal written contract amendment. If the contract includes any Federal funds, any changes to the approved budget must meet all of the additional requirements specified in the Federal grant.

(6) If the Contractor is a subrecipient of federal funds, the Contractor is responsible for complying with all appropriate federal requirements for an adequate accounting system, audits, reporting and financial management.

In cases where audit deficiencies are noted, a plan of corrective action shall be submitted to DYC for approval within four (4) months of the date of the audit.

(7) Failure to comply with any of these requirements is justification for DYC to cancel the contract.

(8) The Contractors financial records shall be open for inspection and audit at reasonable times by an authorized representative of the State. The Contractor must allow the State complete access to all-financial and accounting records pertaining to the operation of the Contractor's program. This shall include but not be limited to inspection of the Contractor's accounting information system and any records related to the Contractor's accounting information system.