This Accounting Procedures Manual for Trustee Accounts represents the basis of procedures for maintaining all Trustee Accounts operated in any state facility. These procedures supersede all previous procedures on trustee account funds as prescribed by Sections 4-52 through 4-57a of the Connecticut General Statutes.
Subsidiary instructional manuals may be issued with the approval of the Office of the State Comptroller - Administrative Services pertaining to the additional needs and information required by the individual facility.
Each fund will be used for the benefit of the following: employees, or clients, or inmates, or students or student organizations.
Sec. 4-52. Trustee account defined. "As used in sections 4-53 to 4-55, inclusive, trustee account means any account operated in any state educational institution or welfare or medical agency for the benefit of the employees or students of such institution or agency, including so called clients' funds in state hospitals, the revenue of which is derived from the operation of canteens, vending machines, dramatics, recitals, student activity fees, membership fees, deposits, gifts, donations, bequests or any other legal source compatible with the good government of such institution or agency."
Sec 4-53. Establishment of trustee accounts. "The administrative head of any such institution or agency may, with the approval of the Comptroller and in accordance with procedures prescribed by the Comptroller, establish one or more trustee accounts. The Governor may allot from the funds appropriated to any such institution or agency any amount needed in the Governor's judgement for the establishment of any such trustee account, and the Comptroller shall provide in such procedures for the reimbursement of such appropriation. The use of such state facilities as space, fixtures, heat and light to obtain revenue from the sources designated in section 4-52, is authorized."
Sec. 4-54. Management of trustee accounts. "(a) The management of such accounts may be under the control of students or employees other than those adjudged mentally ill but shall be under the supervision of the administrative head of the institution or agency, except that such accounts shall be under the total control of students under conditions hereinafter provided. The person acting as treasurer of any such account shall be bonded in an amount determined by the State Insurance and Risk Management Board.
(b) Where the duly constituted student government at any public institution of higher education or where by petition five percent of the students enrolled at such institution and paying activity fees seeks to establish total control and administration of the student trustee account at such institution, a referendum shall be held on the question. Such referendum shall be conducted by secret ballot and notice of such referendum shall be given to the students at such institution at least fourteen days prior to such referendum. Upon approval by a majority of at least forty per cent of all students enrolled in the institution and paying activity fees, the duly constituted student government of such institution shall become responsible for the control and administration of such account. Pursuant to this subsection any student government controlling student trustee accounts shall establish a finance committee whose duty it shall be to hold hearings on budget requests and expenditures of such accounts and to recommend the allocation of such accounts to the student government. Such student government shall have as one of its officers a duly elected treasurer who shall be accountable for such accounts and be bonded in accordance with the provisions of subsection (a) of this section.
(c) A referendum on whether to continue student control of such account shall be held upon the petition by five per cent of the students enrolled at such institution and paying activity fees. Such referendum shall be held in accordance with the provisions of subsection (b) of this section. Where a majority of those voting in such referendum disapprove of the continuation of student control over such accounts, supervision of such accounts shall be vested in the administrative head of the institution in accordance with subsection (a) of this section.
(d) Notwithstanding any provisions of this section, a referendum on whether to continue student control of such account shall be held at least every four years in accordance with the provisions of subsection (b) of this section. Such referendum shall require approval by a majority of at least forty per cent of all students enrolled in the institution and paying activity fees."
Sec. 4-55. Statement of trustee account operations. "The administrative head of any institution or agency operating a trustee account, the Commissioner of Correction operating a trustee account in accordance with the provisions of section 4-57a or the treasurer of a student government organization at a public institution of higher education in control of a trustee account, in accordance with the provisions of subsection (b) of section 4 54, shall file, or cause to be filed, a balance sheet and statement of operations with the Secretary of the Office of Policy and Management at such times as said secretary orders. A copy of such statements shall be retained for audit purposes."
Sec. 4-56. Separate accounts for student or client funds. "Unless otherwise provided by the donor, all gifts, donations or bequests made to the students or clients of any state educational institution or medical or welfare agency as a group, unclaimed funds accumulated from money deposited for the use of students or clients in any such state institution or agency, and the interest on any such money, shall be placed in a separate account at such institution or agency, and shall be used in accordance with procedures prescribed by the Comptroller, for the benefit of the students or clients of such institution or agency in any manner which the governing board of such institution or agency deems suitable."
Sec. 4-56a. Procedures re activity and institutional welfare funds not to constitute regulations. "Procedures prescribed pursuant to sections 4-53, 4-56 and 4-57a shall not be deemed to constitute state regulations within the meaning of subsection (13) of section 4-166."
Sec. 4-57a. Activity fund for inmates. Management of fund. Correctional General Welfare Fund. (a) As used in this section, "activity fund" means any fund operated by the Commissioner of Correction for the benefit of the inmates, the revenue of which is derived from any legal source compatible with the good government of any institution.
(b) The Commissioner of Correction may, with the approval of the Comptroller
and in accordance with procedures prescribed by the Comptroller, establish one
or more activity funds. The Governor may allot from the funds appropriated to
the Department of Correction any amount needed in his judgment for the
establishment of any such activity fund, and the Comptroller shall provide in
such procedures for the reimbursement of such appropriation. The use of such
state facilities as space, fixtures, heat and light
to obtain revenue from the sources designated in subsection (a) of this section, is authorized. At the end of each quarter any cash balance in such fund not needed for the maintenance and continuance of its activities may, with the approval of the Comptroller, be transferred to the "Correctional General Welfare Fund" if such a fund has been established and, if not, shall remain in such activity fund.
(c) The management of such funds shall be under the supervision of the Commissioner of Correction. The person acting as treasurer of any such fund shall be bonded in an amount determined by the State Insurance and Risk Management Board.
(d) Unless otherwise provided by the donor, all gifts, donations or bequests
made to the inmates of any correctional institution, unclaimed funds accumulated
from money deposited for the use of inmates in any institution, and the interest
on any such money, shall be placed in a separate fund which may be known as the
"Correctional General Welfare Fund" and shall be used in accordance with
procedures prescribed by the Comptroller, for the benefit of the inmates of any
institution in any manner which the Commissioner of Correction deems suitable."
C. Revisions to the Manual
A master copy of the manual will be maintained by the Comptroller's - Administrative Services. This unit is responsible for updating the manual and distributing the new or revised policies and procedures to the State agencies. The Office of the State Comptroller's - Administrative Services unit maintains a distribution list for issuing Trustee Account Manual material. This list identifies each State agency and the address to which material will be sent.
Notification must be sent to Administrative Services unit of any changes in the
Questions regarding this manual should be directed to:
Office of the State Comptroller
55 Elm Street
Hartford, Connecticut 06106
E. Glossary of Terms
A Glossary of Terms has been provided.
II. CHART OF ACCOUNTS
The Chart of Accounts, (Exhibit B) together with the books of original entry and other exhibits, is presented here as a guide. Actual transactions for a one month period are illustrated, showing the journalization; the summarization; and the posting to the General Ledger.
III. FINANCIAL RECORDS
The financial records of the Trustee Account will be maintained on the basis of a fiscal year, ending June 30. A comparative balance sheet, together with statements showing the operation for the year, will be prepared at the end of the fiscal year. Copies of the balance sheet and related statements, approved by the head of the institution, or agency will be filed with the Office of the State Comptroller as required. These reports are normally included with the submission of the agency's year-end GAAP closing package. Higher Education is excluded from this requirement. For internal purposes, financial statements should be prepared at a minimum once every six months. A double entry bookkeeping system of accounts should be maintained for each Trustee Account, separate from all other accounts of the parent facility. The financial records should include a General Journal; a Cash Receipts Journal; a Payment Voucher Register; and a General Ledger with three subsections: a) Proprietary, b) Operating, and c) Restricted. Subsidiary records should be maintained as necessary to properly account for the financial operations of the fund. The Restricted Ledger may be expanded by adding new accounts.
General Journal: (Exhibit C) A book of original entry. All transactions for which there is no specialized journal should be recorded here.
Cash Receipts Journal: (Exhibit D) A specialized book of original entry to record all cash receipts.
Payment Voucher Register: (Exhibit E) A specialized book of original entry to record all cash disbursements.
General Ledger: (Exhibits F 1 through F 22) A book of final entry. All entries recorded in the journals are to be posted to the General Ledger. The General Ledger is a historical record of all financial transactions by classification.
Subsidiary Records: All records that support a controlling account in the General Ledger, and documents to support transactions recorded in the journals, such as accounts receivable records, inventory records, bank reconciliations, bad checks, canceled checks, payment vouchers, receipt slips, etc., are to be included here.
Financial statements, Comparative Balance Sheet (Exhibit I) and Statement of Cash Receipts and Disbursements (Exhibit K), must be prepared at the close of each fiscal year. For internal purposes, such statements may be prepared more frequently. In addition to the annual financial statements, interim reports and statements are to be prepared. These include: Monthly Trial Balance (Exhibit F-23) of the General Ledger, Monthly Bank Reconciliation, Reconciliation of Subsidiary Records with General Ledger Control Accounts, and an Analysis of Operations - Restricted Accounts (Exhibit J).
These reports should be retained in agency files for auditing purpose.
1. Establishment of a Trustee Account
Requests to establish a Trustee Account require approval of the State Comptroller in accordance with Sections 4-53 and 4-56 of the General Statutes. Each fund must bear the name of the parent facility followed by the words "Trustee Account". All agencies must have their own Employer Identification Number (EIN) prior to establishing a Trustee Account.
Form CO 1052 (Exhibit A), Trustee Account Request For Account Activity Form", must be completed and submitted as directed on the form. Upon approval, the form will be authorized and copies forwarded to the head of the agency.
All requests to establish a checking account should include the documentation as required in the State Accounting Manual.
The head of each agency with a Trustee Account will be accountable and responsible for the operation of the fund and will designate the degree of responsibility of subordinate employees assigned to such operation and the limit of their authority.
Any funds allotted from the appropriation of any institution or agency for the establishment of any trustee account will be remitted to such appropriation in accordance with Section 4-53 of the General Statutes, within one year, unless an extension of time for making payment is granted by the Secretary of the Office of Policy and Management. No money or other assets belonging to the State of Connecticut may be deposited in or credited to any trustee account. Sections 4-52, 4-56 and 4-57a of the General Statutes prescribe the types of revenues that may be deposited into trustee accounts. Refer to Section IV B 1 of this manual for a summary.
Trustee Accounts may be established as 35100 accounts through the Office of the State Comptroller. Agencies are encouraged to make use of such accounts wherever practical in order to reduce costs to the state and minimize instances of fraud. Agencies are further encouraged to reduce the number of separate checking accounts in use, whether for Trustee Accounts or other purposes.
The Comptroller's Office may require agencies to institute other security
measures where feasible to prevent fraud.
2. Policy Statement
Section 4-56 of the Connecticut General Statutes is interpreted to mean that the governing board of the agency will develop a policy identifying suitable uses for the funds that would benefit the inmates/students/clients. Agencies without a governing board must establish a policy statement signed by the agency head. A copy of the approved policy must be forwarded to the Office of the State Comptroller, Administrative Services.
All future expenditure approvals will be based on the established policy as defined by the governing board.
The Policy Statement must include the following information:
3. Internal Controls Policy Statement
The management (governing body) is responsible for establishing and maintaining an effective internal control structure. To fulfill this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs for internal control policies and procedures. The objectives of an internal control structure are to provide management with reasonable assurances that assets are safeguarded against loss from unauthorized use or disposition, and that financial transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles (GAAP).
In addition, management is responsible for adhering to the prescribed accounting policies and procedures as promulgated by the Office of the State Comptroller in the State Accounting Manual (SAM) and in this manual.
a. Effective Internal Controls
The United States General Accounting Office describes the establishment and maintenance of an internal control structure as an important management responsibility. Effective internal controls are essential to achieving the proper conduct of government business with full accountability for the resources made available. Internal controls also facilitate the achievement of management objectives by serving as checks and balances against undesired actions.
More specifically, internal control may also be defined as a process, effected by an entity's management, personnel, and oversight agencies, designed to provide reasonable assurance regarding the accomplishment of the following objectives:
A well-designed internal control structure will reduce improper activity. The responsibility of designing and implementing internal controls is a continuous process. As conditions change, control procedures may become outdated and inadequate. Management must anticipate that certain procedures will become obsolete and modify internal control systems in response to these changes. The Internal Control Guide issued by the Office of the State Comptroller can provide guidance and assistance to State Agencies in establishing, evaluating, and maintaining adequate internal controls.
b. Relevant Internal Controls for Trustee Accounts
Sufficient controls to prevent theft, shortages, operational inefficiency or a breakdown in the control structure are necessary. In addition to general controls provided in Internal Control Guide, relevant internal controls specific to Trustee Accounts may also include:Statement of policy providing guidance for acceptable fund usage;
4. Transfer of Monies
Transfer of monies between one "Restricted" account to another requires the completion of the CO-1052 form (Exhibit A, Revised 3/2009), "Trustee Account Request For Account Activity". Proper authorization by all individuals responsible for the monies involved in the transfer is required
5. Closing or Merger of a Fund or Checking Account
The closing or the merger of a facility that has a trustee account will necessitate the closing of such fund(s). If a facility is closed and the clients, inmates or students are transferred to another facility, the accounts should be transferred to the same facility as the clients, inmates or students. If clients, inmates or students are transferred to more than one facility, the accounts should be pro rated accordingly.
To close a fund, the Office of the State Comptroller - Administrative Services must be notified by completing Form CO-1052, Trustee Account Request for Account Activity. Check the appropriate block and provide the reason the account is closed.
Requests to close a checking account should be submitted in writing to both the State Treasurer and the Comptroller's Office.
6. Closing Entries at Fiscal Year End
At the close of the fiscal year an entry is to be made in the General Journal to close the Operating Accounts (Revenue Receipts and Expenditures in the General Ledger) to the Fund Balance (Surplus) Account. Balances in the Restricted Accounts are not to be closed; they are to be continued into the new fiscal year. After the closing entries have been posted and the balances of the Operating Accounts closed, a Trial Balance is to be taken to verify that the open accounts are in balance. The Post Closing Trial Balance figures are to be used to open the General Ledger Accounts for the next fiscal year.
7. Excess Cash Balances
Any cash balance in a trustee account at the close of any fiscal year in excess of that required for the continuance of activities may be transferred to a Central Trustee Account.
Any excess monies not needed for the on-going operations should be placed in the Treasury's Short Term Investment Fund (STIF). The Treasury recommends that all agency discretionary investments be made through STIF.
A Bank Account Establishment Request Form (CO-929) must be submitted before any account may be established.
All cash belonging to the Fund will be deposited within 24 hours after receipt except if otherwise authorized by the State Treasurer, or the total amount is less than $500. Total daily receipts of less than $500 may be held until the total receipts to date amount to $500, but not for a period of more than 7 calendar days. The receipts are to be deposited in depositories approved by the State Comptroller and the State Treasurer consistent with Section 4-33 of the General Statutes.
All cash receipts in the form of currency, coin, checks or money orders will be deposited intact to the fund's bank accounts and are not to be placed in the petty cash fund or used directly for payment of any obligation.
All checking and savings bank accounts must be in the name of the agency followed by the words "Trustee Account". The mailing address must be the agency address.
Facilities should not be obligated to pay bank service charges on Trustee Accounts, which are non interest bearing accounts, as these accounts should be carried in the banks in which the State Treasurer maintains deposit accounts.
A prenumbered cash receipt form should be used for the Trustee Account transactions. Standard receipt forms, CO 99 Official Receipt, are available at the State forms vendor, Vanguard Direct. Agencies already using their own approved receipt forms may include the Trustee Account receipts on these forms, provided an audit trail is maintained for each. The cash receipts are to be recorded daily in the Cash Receipts Journal and should correspond with the bank deposit total. Summaries from the Cash Receipts Journal are to be posted monthly to the respective General Ledger Accounts. Cash receipts to be credited to the Restricted Accounts are to be posted daily to the individual Restricted Accounts and monthly to the Restricted Control Account in the General Ledger.
Upon receipt of a returned check, the clerk will make a deduction entry on the current sheet of the Cash Receipts record in both the "Total Cash" column and the column for the Activity on which the original receipt appeared. A reference to the return of the check will be noted beside the original entry.
When the check has been made good, a new entry should be made on the current sheet of the Cash Receipts record in both the "Total Cash" and the appropriate Activity columns, with a statement that it is the re deposit of a return check and referring to the previous entry.
This amount need not be deposited separately in the bank but may be included in the next deposit.
Income derived from and expenses incurred for social activities and/or similar events should be accounted for as follows: (Exhibits G-1 through G-4)
As prescribed by the General Statutes - Section 4-58.
(a) Notwithstanding the provisions of chapter 859 and as except as provided in subsection (b) of this section, any unclaimed article of jewelry or any accumulation of such articles or valuables in the custody of the administrative head of any state institution shall be retained by such administrative head for a period of three years, during which period he/she shall make every reasonable effort to return each such article to its owner. At the end of said period such administrative head may sell or otherwise dispose of such article with the approval of the governing board of such institution. Any revenue derived from the sale of any such articles shall be credited to the "Institutional General Welfare Fund" of the institution in which they were found and, if from any institution not having such a fund, shall be paid to the State Treasurer and credited to the General Fund of the state.
(b) The Commissioner of Correction shall adopt regulations in accordance with the provisions of Chapter 54 to set forth the manner in which the department shall sell or otherwise dispose of any unclaimed inmate property, clothing or jewelry after reasonable efforts have been made to return the same to the rightful owner. All proceeds from any such sale shall be deposited in the General Fund and credited to the Criminal Injuries Compensation Fund established by section 54-215.4. Restricted Accounts
Within the Fund, accounts may be set up to segregate the transactions
for monies or assets belonging to an individual or specific group, or
monies or assets donated or set aside for a specific purpose. Agencies
may establish a restricted account for employees where the revenue is
derived from the operation of agency approved
fund-raisers, where purchasing access is limited to employees and the funds are used for events available to all employees such as holiday parties or picnics.
A restricted account may not be established to process the collection and payment of funds that do not benefit all employees, such as individual retirement parties. The Trustee Account cannot be used as a depository for such functions. This type of function requires a private non-State account.
If any restricted account remains inactive for a period of one year after the purposes for which the account was set up have been satisfied, or no longer possible, the account should be closed and the balance transferred to the Central Trustee Account, with prior approval of the Comptroller.
A) Individual Client Funds and Personal Property
As mentioned above, an individual restricted account may be established. The individual client funds consist of revenue derived from private sources such as cash, bonds, or savings accounts, are for the sole benefit of the client, and are in the custody of the administrative head of a state agency. These funds are held in trust for the client to be used strictly for the client. The client may also have personal property such as jewelry, a television, radio, computer, etc.
B) Clients Who Are No Longer Residents of a Facility
When an individual has left the facility and has client funds and/or personal property of value, the agency must make every effort to return any funds or personal property to the rightful owner.
When all attempts to return the funds and/or personal property are exhausted then the funds and personal property are deemed "unclaimed property". Property is considered "unclaimed" when there has been no owner contact with the property for a set period, usually three or five years. Any person or entity in possession of property which belongs to another is deemed a "holder" of unclaimed property. The agency should follow the instructions for "holders" on the Office of the State Treasurer, Unclaimed Property Division's website, www.state.ct.us/ott/aboutucp.htm. The unclaimed funds must be held for three years before reporting them to the Office of the State Treasurer. Questions regarding the reporting process for unclaimed property may be submitted to the Office of the State Treasurer at 860-702-3276.
If the agency has personal property of a client, the agency must retain the property for a period of three years. During this period, the agency must make every reasonable effort to return each article to its owner. At the end of the three years, the administrative head of the agency may sell or otherwise dispose of the property with the approval of the governing board of the institution. Any revenue derived from the sale of the property will be credited to the "Trustee Account" of the institution. Any institution not having a "Trustee Account" will forward the revenue to the Office of the State Treasurer to be credited to the State General Fund.
If the agency has personal property of a client that has no value, then the agency must follow established agency policy on how to properly dispose unclaimed personal property.
C) Deceased Clients
When a deceased client leaves client funds and/or personal property that has value, the agency should notify the Department of Administrative Services (DAS) - Collection Services Division in writing that they have deceased client funds and/or personal property. DAS Collection Services will determine whether they will claim the deceased client funds and/or personal property and will notify the agency of their decision in writing. Questions regarding whether clients owe the State funds should be directed to DAS Collection Services at 860-713-5427.
Client Funds of Deceased Individual
If DAS Collection Services does not want these funds, the agency must follow the instructions for "holders" on the Office of the State Treasurer, Unclaimed Property Division's website, www.state.ct.us/ott/aboutucp.htm. The unclaimed funds must be held for three years before reporting them to the Office of the State Treasurer. A copy of the death certificate for the deceased client should be included with the holder report when it is sent to the Office of the State Treasurer.
Personal Property of Deceased Individuals
If DAS Collection Services does not want the personal property of a client, the agency must retain the property for a period of three years. During this period, the agency must make every reasonable effort to return such article to its legal owner. At the end of the three years, the administrative head of the agency may sell or otherwise dispose of the property with the approval of the governing board of the institution. Any revenue derived from the sale of the property will be credited to the "Trustee Account" of the institution. Any institution not having a "Trustee Account" will forward the revenue to the Office of the State Treasurer to be credited to the State General Fund.
Sales and use tax exemption for Trustee Accounts: Trustee Accounts established and administered under the provisions of Connecticut General Statutes 4-52 through 4-57a, are included in the exemption from sales and use taxes in Connecticut General Statutes 12-412 (1) (A), for "sales of tangible personal property or services to the State of Connecticut, or its agencies." (EXHIBIT M)
When making a purchase of goods or materials for trustee account purposes, as
established by the agency under CGS 4-52 through 4-57a, a purchasing agent
Provide the retailer with a properly completed governmental agency exemption certificate (EXHIBIT N) and a copy of the governing agency's tax-exempt number as assigned by the Department of Revenue Services. (EXHIBIT O) This exemption applies to purchases made through trustee accounts.
Sales of tangible personal property or services through trustee accounts are not exempt from sales tax.
Agencies, in their trustee role, assume the responsibility for the collection and remittance of all applicable tax on sales or resale of tangible personal property or services through the trustee account.
All agencies governing trustee accounts intending to sell or resell tangible personal property or services must apply for and obtain a Sales Tax Number through the Department of Revenue Services at 860-297-5962.
The agency must use this number when remitting any tax collected when selling or reselling tangible personal property or services other than items allowed to be sold tax exempt according to Connecticut General Statutes Section 12-412.
Under Connecticut General Statutes Section 12-412(94) any tax exempt entity can hold five events in one calendar year without charging sales tax on items sold. The five events can be five one-day events or one event that encompasses five days. See Special Notice 98(11).
The Department of Revenue Services has a Taxpayer Services Division that is available to answer any questions you may have. Phone Number: (860) 297-5962 or www.ct.gov/drs6. Contributions, Gifts Trusts and Bequests
Contributions, with a value under $250.00, may be accepted with the approval of the agency head or designee. These refer to small sums of money such as donations during the Magazine Campaign and minor items of commodities or equipment donated for student, patient, client or inmate trustee account purposes. The funds should be credited to whichever student, client, inmate or restricted account is applicable or if not identifiable, the "Miscellaneous" account may be used. Contributions of $250.00 or more are to be considered as gifts.
All gifts, trusts and/or bequests of cash, securities or property in the amount of $250.00 or more, to the trustee account of any facility must be submitted for approval to the head of the agency or designee, indicating the purpose and any conditions under which the gift or bequest is made and proposing the purpose for which it is to be expended or used.
The Office of State Ethics has advised that solicitation of donations for trustee accounts formerly known as welfare accounts is permissible, provided no state employee or public official is benefiting from it.
Notification to the donor of the approval or disapproval of the acceptance of the gift will be given. In order to satisfy an IRS recordkeeping requirement for donors, a donor of a monetary contribution of any amount may need an agency to provide a written communication. When approval has been given, the following procedure will be used.a. CASH
All expenditures should be made through the checking account, or Comptroller's restricted SID, upon submission of approved vouchers, and periodically funds should be withdrawn from the Investment Account, entered on the Cash Receipts Record, and deposited to cover the checks drawn for this purpose.
When dividends are received, the funds will be entered in the Cash Receipts Record and deposited in the checking account. Another "Restricted" account will be set up in the name of the donor and/or the purpose of the gift; for instance, "Thomas Adams Scholarship Account" to which the funds received from dividends will be posted from the Cash Receipts Record. Expenditures will be made from this account in accordance with the terms of the gift.
Donated equipment should be set up on the trustee account inventory records at fair market value. Donated commodities, which are on hand at the end of the year, should be included in the inventory of commodities at fair market value at the time of acquisition.
1. Purchasing Regulations
Purchases should be made at the best prices obtainable. Before making a purchase, the officer should contact the business office or the Director of Student Activities and obtain information about special rates available on State contracts. Competitive bids should be obtained for major purchases. Approval of the Department of Administrative Services - Procurement Services will be required for major purchases, such as motor vehicles and computer equipment. Personal Service Agreements over $3,000 require the Attorney General's signature as per the Purchasing Regulations. A purchase order system should be used.
2. Unauthorized Expenditures
3. Travel Expenses
When staff accompanies clients on a trip and that trip is for therapeutic purposes relating to the clients' treatment, expenses of the state employee should not be paid out of trustee accounts.
When staff accompanies students on a trip and that trip is part of the
curricular activities of the students, expenses of the state employee should not
be paid out of trustee accounts.
When staff accompany clients on a trip for recreational purposes, expenses of state employees may be paid out of the trustee account only if the expenses of the clients are paid out of the trustee account and if regular state funds are not available and the clients would be unable to take the trip if the state employee was unable to accompany them as a chaperone.
When staff accompany students of a Regional Vocational Technical School on a trip that is extracurricular, expenses of state employees may be paid out of trustee account only if the expenses of the students are paid out of the trustee account and if regular state funds are not available and the students would be unable to take the trip if the state employee was unable to accompany them as a chaperone.
If the costs of a trip are being paid by the participants, including any staff members participating in the trip, participants' payments may be deposited in a restricted trustee account and a check may be issued from the restricted trustee account to pay for the trip.
Agencies must have written policies governing the use of trustee accounts to pay the expenses of state employees for recreational or extracurricular trips and such policies shall be submitted to the State Comptroller - Administrative Services for approval. State employees may only be reimbursed for expenses incurred while engaging in approved state business.
Agencies must also develop written policies governing reimbursement rates for clients or students when reimbursement for travel expenses is made from a trustee account. Such policies shall be submitted to the State Comptroller - Administrative Services for approval.
4. Disbursement Procedures
The following procedure should be followed when making expenditures for the trustee account:
Prior approval of the State Comptroller - Administrative Services Division must be obtained for (1) any single expenditure from the trustee account in excess of $1,000 or (2) any combination of expenditures in excess of $1,000 for any single project, contract or event within a 12 month period. Form CO-1052, Trustee Account Request for Account Activity Form, must be completed for this request. Supporting documentation is required at the time of the request.
A waiver from the approval process may be granted to agencies that submit detailed annual budgets for expenditures from their trustee accounts. Requests for such waiver should be made to Administrative Services.
A waiver from the approval process for any other reason may be requested from the State Comptroller by writing to the Director of the Administrative Services.
The head of the facility, or his/her designated agent, may upon his/her discretion, subject to eligibility requirements as stated below, make loans directly from the fund to any one inmate, student, client or patient, such that the aggregate amount outstanding for one patient, client, student or inmate during the period of his/her association with the facility, does not exceed $1000.
Loans must be supported by a note or certificate of indebtedness, showing date or dates arranged for repayment and signed by the inmate, student or client. Once the loan has been repaid, the individual may apply for an additional loan.
In the event any such loan is found to be uncollectible, it may be written off in accordance with the provisions of the General Statutes Section 3-7.
The governing body will determine the type of and eligibility requirements for all such loans in order to guide the head of the agency or his/her agent in rendering such assistance.
Loans exceeding the $1000 limit require prior approval of the State Comptroller - Administrative Services Statewide Services.
The head of the facility, or his/her designated agent, may upon his/her discretion make grants directly from the fund to any one inmate, student, client or patient, such that the amount for one patient, client, student or inmate does not exceed $1000 per occurrence.
The governing body will determine the type of, and eligibility requirements for, all such grants in order to guide the head of the agency or his/her agent in rendering such assistance.
Grants exceeding the $1000 limit require prior approval of the State Comptroller - Administrative Services Statewide Services.
7. Federal Income Tax Reporting
Agencies have been directed by Comptroller's Statewide Memorandum 2008-36 to apply for their own employer identification number (EIN) for use in submitting reportable payments to the Internal Revenue Service (IRS). Examples of payments that are considered reportable can be found in the Expenditure Section of the State Accounting Manual, Subsection 8. All IRS reporting regulations must be complied with.
D. MISCELLANEOUS1. Physical Inventory of Trustee Account Assets
All equipment items purchased or acquired by the Trustee Account, valued $1,000 or more must be tagged and recorded pursuant to regulations promulgated by the State Comptroller with concise information about date of acquisition, cost, description, location and tag number. Removable items highly susceptible to theft should be under lock and key and subject to more frequent verification. Inventory items will be valued at cost for items purchased and at the fair market value at time of purchase for donated items. Items spoiled or damaged will be valued at estimated scrap value.
The head of the facility will review the inventory and ascertain the value of any items, which may have become unusable, or have been carried in stock for a long time and arrange for the disposal of such items. Surplus trustee account equipment can be disposed of in the following manner: sale, bids, donated or scrapped. All monies received from the sale of surplus equipment are to be deposited back into the fund. Items deemed to be donated should have proper documentation for the audit trail such as, approved minutes of the student board, and authorization of the agency head. The reduced value of all items on hand (spoiled, damaged, obsolete, etc.) should be shown separately in the balance sheet as of the end of the year. Inventory donated to the trustee account should be shown on the trustee account balance sheet. Assets donated to the State should not be shown on the trustee account balance sheet. It should be carried on State records as per instructions for donated equipment in the Property Control Manual.
A physical inventory of all property of each trustee account must be taken annually in accordance with the procedures outlined in the "Property Control Manual" issued by the Office of the State Comptroller - Administrative Services.
Lost, missing, or unaccountable property must be identified on the inventory
listing. All possible steps should be taken to determine the disposition of the item. The agency head should be made aware of the lost, missing or unaccountable equipment upon discovery.
Pursuant to Section 4-33a of the General Statutes, "Illegal, irregular and unsafe handling of state funds", the Office of the State Comptroller and the Auditors of Public Accounts must be notified immediately of all losses/damages to State property upon discovery. Indicate on the CO-853, Report for Loss or Damage to Real and Personal Property, that the claim is related to a trustee account. Provide an additional copy of the form to Administrative Services. For additional information, refer to the State of Connecticut Property Control Manual Chapter IX, Section .004.
The assets on hand, belonging to the trustee account, should be included in the cost section that is reported on form CO-59, Asset Management/Inventory Report/GAAP Reporting Form, and submitted to the Office of the State Comptroller - Administrative Services by October 1st of each year. The cost of trustee account property should be listed under the category "Other Property Owned With Trustee Funds (Outside of Core-CT)" on the CO-59.
A copy of the year-end report will be placed on file and will be made available to other divisions within our Office and the Auditors of Public Accounts for audit purposes.2. Insurance
Questions concerning insurance coverage should be directed to the State Insurance and Risk Management Board.3. Petty Cash Procedures
A petty cash fund may be established on the following basis: The funds should be limited to miscellaneous payments for which it would be impractical to issue individual checks. The amount of funds maintained for this purpose should be as small as possible, but adequate for the requirements of the fund.
a. CASH ADVANCES
If funds are needed to cover small purchases in connection with a specific project such as a dance, outing, party, etc., these may be obtained through the petty cash fund in the following manner:
b. CASH FOR CHANGE PURPOSES
If money is needed for making change at some location other than that at which the petty cash account is carried, this sum of money may be taken from the petty cash on hand and a memorandum placed in the petty cash box, signed by the person to whom the money is given, showing the date, the amount, and the purpose for which the funds are to be used. This slip will stay in the box until the money is returned; at which time the clerk will receipt the form to show that the money has been returned and gives the form to the individual. The return of the cash to the petty cash box should be done promptly when the need for change purposes has been met.4. Accounts Receivable and Vouchers Payable
Ledger control accounts for receivables and payables should be adequately supported by subsidiary records. Individual accounts should be set up for each receivable source and reconciled monthly with the control account balance. Receivables should be kept to a minimum. Unpaid vouchers should be listed in numerical order at the end of each accounting period and the total amount of such vouchers should agree with the control account total.
Any valid uncollectible receivables should be written off as per Section 3-7 of the General Statutes.
5. Outstanding Checks
Outstanding checks should be reviewed on a monthly basis.
To ensure that an uncashed check does not remain in the system for over six months an agency will attempt to locate the payee after the check is outstanding for four months.
If the payee claims that the check was never received or is missing, the payee should be sent a "Check Reissue Request Form" (Exhibit L).
If the payee indicates on the "Check Reissue Request Form" that the check was lost or not received after research, a stop payment order should be placed on this check, and a new check issued.
If after six months the check is still outstanding, a reverse entry is made in the checking account, and the funds accounted for under "unclaimed funds" for a period of three years.
Agencies must report unclaimed funds to the Office of the State Treasurer, Unclaimed Property Division when the funds have remained unclaimed for three years after the date of issue of the check. This procedure is applicable to all trustee accounts.
Agencies must transfer the unclaimed assets to the Office of the State
Treasurer as unclaimed property. Instructions and forms for entities to file
unclaimed property are available on the Unclaimed Property Division's website,
http://www.state.ct.us/ott/aboutucp.htm. Information about due diligence
letters can be found on this website. Assets must be reported by March 31 of the
calendar year following the calendar year in which the property is presumed
6. Vehicles -- Donation, Purchase or Lease
The donation, purchase or lease of any vehicle to or by an agency using a trustee account will, at a minimum, require compliance with Department of Administrative Services General Letter No. 115, "Policy for Motor Vehicles Used for State Business" revised July 2010. The policy, which is stated on page 5, is "No State Agency may acquire a motor vehicle from any other source unless approved in writing by the Director of DAS Fleet Operations".
The approval of the Director of Fleet Operations is needed prior to
acceptance of any vehicle no matter how it is acquired. Purchase or lease
must also receive approval of the State Comptroller to expend trustee funds prior to obtaining such a vehicle. All DAS purchasing requirements must be followed when acquiring any such vehicle(s).
In order to obtain a vehicle agencies must coordinate with DAS-Fleet Operations who may require a vehicle inspection for serviceability and safety. Upon acceptance of any vehicle, DAS-Fleet Operations will issue plates and other items necessary for it to operate as a state vehicle.
V. EDUCATIONAL INSTITUTIONS-STUDENT TRUSTEE FUNDS
The requirements outlined in previous sections of this manual also apply, with the following modifications, to Student Trustee Accounts of Institutions of Higher Education.
Activities at the institutions of Higher Education, which are normally characterized as auxiliary activities, will be deemed to be an operation of the State of Connecticut and will not be operated through the trustee funds.
The Chart of Accounts for Student Trustee Accounts includes budgetary accounts. Exhibit M is presented as a guide.
A. FINANCIAL RECORDS
B. REVENUES/CASH RECEIPTS
The requirement set forth in the General Statutes and in the previous section entitled "Cash Receipts" must be followed when handling cash receipts.
The receipts should be batched daily and summarized on the batch sheet. The totals from the batch sheet will then be entered in the Cash Receipts Journal and should correspond with the bank deposit total. Summaries from the Cash Receipts Journal will be posted monthly to the ledger accounts
C. SALES TAX REPORTING
Sales and use tax exemption for trustee accounts. Trustee accounts established and administered under the provisions of Connecticut General Statutes 4-52 through 4-57a, are included in the exemption from sales and use taxes in Connecticut General Statutes 12-412 (1) (A), for "sales of tangible personal property or services to the State of Connecticut, or its agencies." (Exhibit M)
When making a purchase of goods or materials for a trustee account purposes, as established by the agency under CGS 4-52 through 4-57a, a purchasing agent should:
Provide the retailer with a properly completed Governmental Agency Exemption Certificate (EXHIBIT N) and a copy of the governing agency's tax-exempt number as assigned by the Department of Revenue Services. (EXHIBIT O)
This exemption applies only to purchases made through such funds.
Sales of tangible personal property or services through student trustee accounts are not exempt, the exceptions to this rule are noted below.
Pursuant to Connecticut General Statutes 12-412(26), the sale of tangible personal property or services by certain non-profit organizations formed to support and sponsor youth activities or by any accredited elementary or secondary schools may be made on a tax exempt basis if they sell merchandise for $20 or less for youth activities. The sale of clothing under $50 is also exempt under Connecticut General Statutes 12-412(47).
Agencies, in their trustee role, assume responsibility for collection and remittance of all applicable tax on sales of tangible personal property or services through a trustee account.
All agencies having student trustee accounts that intend to sell or resell tangible personal property or services must apply for and obtain a Sales Tax Number through the Department of Revenue Services, at 860-297-5962.
The agency must use this number when remitting any tax collected while
selling or reselling tangible personal property or services other than items
exemption for youth activities or allowed to be sold tax-free.
Under Connecticut General Statutes Section 12-412(94), any tax-exempt entity can hold five events in one calendar year without paying tax on items sold. The five events can be five one-day events or one event that encompasses five days. See Special Notice 98(11).
The Department of Revenue Services has a Taxpayer Services Division that is available to answer any questions you may have at Phone Number (860)297-5962, or at the website address [http://www.ct.gov/drs].
The requirements as prescribed previously in section IV-C apply. Additionally, at the beginning of each accounting period the Student Senate will appropriate funds to the various organizations and other activities. The following procedure should be adhered to when making expenditures for the club or organization:
E. MISCELLANEOUS1. Class Accounts
A separate account (restricted) may be set up for each class. Receipts and expenditures that apply only to the activities of that particular class will be entered on this account. If there is a balance in the class account at the time of graduation, a statement as to the disposition of such balance, signed by the class officers and approved by the faculty advisor or dean of students, must be on file in the facility business office.
The treasurer of each class must submit to the president of the college at the end of each school year an itemized report of receipts and expenditures signed by the class treasurer and the faculty advisor or dean of students. Adequate records in support of this report must be maintained by the treasurer of the class.
If any such account remains inactive for a period of one year after the purposes for which the account was set up have been satisfied the account should be closed and the balance transferred to the Central Trustee Account.
2. Treasurer's Duties
Since the student trustee account may be under the control of the students of the educational institution, subject to the supervision of the president, a student treasurer should be elected or appointed by the student body to carry out the duties as prescribed in this manual. The president of the college may delegate his/her supervisory authority to the business manager or some other knowledgeable person to provide assistance to the student treasurer in the performance of his/her duties. The facility may decide to have the recordkeeping maintained by the facility's business office. Recordkeeping duties should be segregated to assure good internal control.3. Student-Organizations Trustee Accounts
Each fund will be operated by the parent educational institution for the benefit of the student organizations at the institution by providing, by mutual agreement in writing, adequate control of the assets owned by and belonging to each student organization, by furnishing formal documentation of financial transactions and by providing for timely payment of obligations incurred by such student organizations.
No cash disbursement by check or petty cash will be made by the president of the college or his/her agent except upon written authorization of the student organization to which the funds belong. In the event there is no official of the student organization available, from which authorization may be obtained, the Chief Fiscal Officer of the parent educational institution will have the authority to liquidate any fully substantiated obligation from the resources of the student organization. Specific approval by the Chief Fiscal Officer for each such payment will be made in writing and placed on file.4. Minutes of Meetings
Copies of the minutes of all meetings held by the student organization must be on file in the institution office, and be available for audit. These minutes must clearly indicate all action taken by the group, particularly that concerning financial matters. The minutes should be in typed form in a sufficient number of copies to provide one copy for the principal clerk, one for the faculty advisor or dean of students, and other copies as needed for student use. The office copies should be put in a binder and the sheets numbered consecutively. Each sheet should be initialed by the secretary of the student organization to indicate that the typed material is an accurate copy of the original minutes and the signatures of the secretary and advisor should be affixed to the final page. The meetings should be numbered in sequence and the minutes should indicate the number of the meeting and should run in consecutive order.
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