Finance Matters<br />Best practices in managing library funds<br />
Treasurer’s arrest shakes community<br />“…when people here found that mild-mannered [Ira] town treasurer Donald Hewitt wa...
In this presentation…<br />Where library funds come from<br />Trustee and librarian responsibilities<br />Best practices<b...
Where library funds come from<br />All figures from the VT Public Library Statistics <br />2010 Annual Report<br />
Sources for Library Funding<br />Vermont 	<br />National<br />
Use public library statistics to discover the library profile<br />
Trustee and librarian responsibilities<br />
Incorporated Libraries	<br />22 VSA 111, 103   Trustees may own and sell real and personal property<br />make and keep ban...
Incorporated funding	<br />Most incorporated libraries in Vermont receive a portion of their funding from local appropriat...
Municipal libraries	<br />22 VSA 144  Unless governed by charter or special law, trustees have authority to<br />Write ord...
Municipal library funding<br />Selectboard sets the municipal library budget to be presented at town meeting for approval<...
Basic trustee responsibilities<br />Financial management and oversight<br />Board and director put together the annual bud...
Basic staff responsibilities<br />Daily management and tasks of library income and expenditure<br />Director and Board bui...
Check book or petty cash fund<br />Staff have access to some funds for local payments<br />Staff should have board oversig...
Best Practices<br />
Set the control environment<br />Bank statements are reviewed by the board<br />No town or library records are kept in sta...
Lay out who is responsible<br />Write the procedures down<br />Who checks the invoice for addition errors?<br />Who approv...
Design physical controls<br />Lock money up<br />Staff computers should be secured and have passwords<br />Checks should b...
Design cash procedures<br />If cash is collected, two people count it<br />If cash is disbursed for postage or other small...
Reconcile the bank statement<br />The statement should be given unopened to someone on the board who does not handle the m...
Bookkeeper signs checks?<br />Bookkeepers should not sign checks<br />If this is impractical, set limit on the size of the...
Atmosphere and environment<br />Periodically another board member might survey the fiscal operations, checking whether an ...
Vermont Department of Libraries<br /> <br /> <br /> <br />This publication is supported by the Institute of Museum and Lib...
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Finance matters2011

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  • Actual figures for HardwickLocal tax $62,260State/federal $144Other $3,921Total $66,181 St Johnsbury Athenaeum local $115,000 state/federal $764 other $672,556
  • Finance matters2011

    1. 1. Finance Matters<br />Best practices in managing library funds<br />
    2. 2. Treasurer’s arrest shakes community<br />“…when people here found that mild-mannered [Ira] town treasurer Donald Hewitt was cooking the books, it was big news. When they learned the extent of it– more than $400,000 allegedly embezzled over about 30 years– it was even bigger.”<br />“Common threads… involvement of a trusted individual, specific expertise and individual transactions small enough to stay below the radar.”<br />Brattleboro Reformer, 4/11/2011 page 3<br />
    3. 3. In this presentation…<br />Where library funds come from<br />Trustee and librarian responsibilities<br />Best practices<br />
    4. 4. Where library funds come from<br />All figures from the VT Public Library Statistics <br />2010 Annual Report<br />
    5. 5. Sources for Library Funding<br />Vermont <br />National<br />
    6. 6. Use public library statistics to discover the library profile<br />
    7. 7. Trustee and librarian responsibilities<br />
    8. 8. Incorporated Libraries <br />22 VSA 111, 103 Trustees may own and sell real and personal property<br />make and keep bank accounts<br />accept contributions<br />spend money<br />Law of Libraries, 2010, page 4<br />
    9. 9. Incorporated funding <br />Most incorporated libraries in Vermont receive a portion of their funding from local appropriations<br />Public funds may come with strings such as town audit of certain accounts; open meeting law; or requirement that trustees be elected by voters<br />It is good practice to keep the lines of communication open between the library and the selectboard<br />Law of Libraries, 2010, page 4<br />
    10. 10. Municipal libraries <br />22 VSA 144 Unless governed by charter or special law, trustees have authority to<br />Write orders to the treasurer on the library accounts<br />Accept gifts on behalf of the municipal library<br />Decide how money will be spent, by budget adopted at town meeting<br />Town auditors may audit the municipal library accounts<br />Law of Libraries, 2010, page 5<br />
    11. 11. Municipal library funding<br />Selectboard sets the municipal library budget to be presented at town meeting for approval<br />Trustees may bring a petition signed by five percent of the voters asking for additional funding, to be placed on the town meeting ballot<br />It is good practice to keep the lines of communication open between the library and the selectboard<br />Law of Libraries, 2010, page 5<br />
    12. 12. Basic trustee responsibilities<br />Financial management and oversight<br />Board and director put together the annual budget<br />At least one trustee reviews library bills and signs that bill is accurate for town hall or treasurer payment<br />Financial committee reviews monthly disbursements and checks whether budget is on track<br />Payroll is handled by the town for municipal libraries, by board or fiscal agent for incorporated libraries<br />
    13. 13. Basic staff responsibilities<br />Daily management and tasks of library income and expenditure<br />Director and Board build the annual budget<br />Prepares weekly list of bills to be paid; director verifies and signs<br />Prepares monthly disbursements and notes variance from annual budget<br /> Staff verifies payroll<br />A Manual for Vermont Library Trustees, 2010, 12<br />
    14. 14. Check book or petty cash fund<br />Staff have access to some funds for local payments<br />Staff should have board oversight for checkbook<br />Should be regular protocol for the collection of library fees such as overdues or copier costs<br />Municipal library: fees and gifts may go back to town<br />Incorporated: fees and gifts managed by board treasurer<br />A Manual for Vermont Library Trustees, 2010, 7-8<br />
    15. 15. Best Practices<br />
    16. 16. Set the control environment<br />Bank statements are reviewed by the board<br />No town or library records are kept in staff or trustee’s homes<br />Treasurer attends all board meetings<br />Policies and procedures have been developed, written down, and govern all transactions<br />Management must use time sheets, get approval for travel expenses, have credit card scrutinized<br />Receipts are required for expense reimbursement<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    17. 17. Lay out who is responsible<br />Write the procedures down<br />Who checks the invoice for addition errors?<br />Who approves the invoice so it is paid?<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    18. 18. Design physical controls<br />Lock money up<br />Staff computers should be secured and have passwords<br />Checks should be in a locked location<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    19. 19. Design cash procedures<br />If cash is collected, two people count it<br />If cash is disbursed for postage or other small amounts, require receipts<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    20. 20. Reconcile the bank statement<br />The statement should be given unopened to someone on the board who does not handle the money<br />Reconciling the bank statement is probably the chief safeguard against embezzlement<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    21. 21. Bookkeeper signs checks?<br />Bookkeepers should not sign checks<br />If this is impractical, set limit on the size of the check, for example no more than $100<br />Safeguard: person who is not the bookkeeper should reconcile the checkbook<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    22. 22. Atmosphere and environment<br />Periodically another board member might survey the fiscal operations, checking whether an expense is legitimate, payroll taxes were paid properly<br />Setting a standard of high accountability actually is the best safeguard<br />The best safeguards may still not catch every thief; they will help honest people and prevent ongoing theft<br />Blue Avocado, Five Internal Controls for the Very Small Nonprofit, January 6, 2010. http://www.blueavocado.org <br />
    23. 23. Vermont Department of Libraries<br /> <br /> <br /> <br />This publication is supported by the Institute of Museum and Library Services, a federal agency, through the Library Services and Technology Act.<br />
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