- Recommendation: EWUA should consider abandoning the “Bill.com” system and process all vendor invoices and checks through its normal accounts payable cycle.
Implemented.
Eastsound Water discontinued Bill.com as an AP platform in 2021. We discontinued it as a COVID-ready check routing and approval platform on January 1, 2023. The sole use for Bill.com in 2023 after January was for sending reoccurring monthly invoices to our operations and maintenance (O&M) venders to pay for contracted monthly services. Each of them wanted to pay online, and this was the only system we had at the time to do that. Once we were able to handle this within our newly implemented enterprise software system, we abandoned Bill.com. This software was fully discontinued in June of 2023 and the subscription to Bill.com has been cancelled. We no longer use Bill.com for any bookkeeping.
- Recommendation: Ask WaFD to return cancelled check images with the monthly bank statements (this may require an additional bank fee).
Implemented.
As of July 6, 2023, Eastsound Water started receiving both physical and electric copies of all cleared and cancelled checks along with our monthly statements. There is an additional $5/mo or $60/year charge for this service.
All cleared and cancelled checks are also available in a timely basis online at the WaFD website 24/7/365. The Treasurer of Eastsound Water has full access to our accounts via their own personal login and can review all statements, past and present, and transactions online with the bank directly without restriction.
- Recommendation: Bank statements should be issued in paper form to EWUA and provided to the Board Treasurer or a Board designee, unopened. The Board should review all bank statements to ensure total deposits align with budgeted income for the month and to ensure all electronic and check payments are for the benefit of EWUA.
Implemented.
The Board Treasurer has assigned the Caselle Team of CPAs as their designee to audit and reconcile all expenditures and deposits, including all electronic and check payments to make sure they are for the benefit of EWUA (Caselle is a Utah-based corporation who provides an industry-leading utilities enterprise software which Eastsound Water implemented last October. They also have a Services team that supports their clientele on a service contract basis). A monthly check register is provided by Caselle to the Board Treasurer to review for accuracy, anomalies, and mistakes.
Physical bank statements will be mailed to the CPA Team at Caselle on behalf of the Board Treasurer every month directly from Washington Federal, and any other financial institution we choose to use in the future.
In addition, the Treasurer has real-time access to all cleared and cancelled checks in a timely basis online at the WaFD website 24/7/365.
- Recommendation: It is highly recommended that EWUA consider significantly limiting the activity allowed on the Divvy credit card accounts. This would include ensuring that all individual cardholders have daily and monthly charge limitations and limitations on where charges can be made (e.g., no charges at certain types of establishments).
Implemented.
There is a monthly total organization max on all Divvy charge cards collectively. Additionally, each cardholder has a daily and monthly max. These limits have been in place from the inception of the Divvy account in 2020, and the inception of each cardholder’s card. Divvy will not allow a credit card to exist in their system without a daily and monthly limit.
Our Divvy cards are an important part of running our business efficiently. We are a 24/7/365 organization and the systems we manage have many moving parts. We pick up parts, ship water quality tests, buy stamps, refill supplies in emergencies, drive across the island several times a day, etc. As a result, we have issued charge cards to employees with limited budgets. Each employee has a different monthly and daily limit based on their position and the needs of their specific jobs. Current cards and limits below:
Employee 1 $4,500/mo.
Employee 2 $1,500/mo.
Employee 3 $1,500/mo.
Employee 4 $1,500/mo.
Employee 5 $500/mo.
Employee 6 $500/mo.
Employee 7 $100/mo.
Employee 8 $100/mo.
Employee 9 $100/mo.
Employee 10 $100/mo.
Employee 11 None (after 90 days of hire)
A monthly petty cash account has been assigned to support the total monthly limit of all cards collectively, and no monies can be accessed beyond that limit. The only exception to extending this monthly amount would be granted only after a formal request was made by the General Manager to the Board with supporting materials in writing. The Board will approve/deny any request on a case-by-case basis.
- Recommendation: All credit card charges should be supported by an itemized receipt and retained in a format which can ensure the easy review of those receipts by the EWUA Board (e.g., an electronic filing system, a paper filing system, etc.)
Implemented.
The Eastsound Water staff has been collecting receipts for decades, but recently changed the receipt collecting and filing process to be more in line with this recommendation. All charge card receipts are filed by card, by person, by month, and is available to be accessed and reviewed in paper format at any time by the Treasurer.
- Recommendation: Proposed credit card charges should be preapproved by an appropriate Board Member prior to the charge being made.
This recommendation is contained in, and more fully expanded, in Recommendation 8 below.
- Recommendation: Credit card statements should be issued in paper format to EWUA and provided to the Board Treasurer or a Board designee, unopened. The Board should review all credit card statements to ensure that charges were pre-approved and were for the benefit of EWUA.
Implemented.
Physical bank statements will be mailed to the Board Treasurer’s designee, the Caselle team of CPAs, every month directly from Divvy. This procedure will also apply to any other credit institution we choose to use in the future.
The Board Treasurer has assigned Caselle’s Team of CPAs as the designee to audit and reconcile all expenditures and payments, including all electronic and charge card expenditures to make sure they are for the benefit of EWUA. A monthly register is provided by Caselle to the Board Treasurer to review for accuracy, anomalies and mistakes.
In addition, the Treasurer and the Caselle CPAs have real-time access to all cleared and cancelled charges, including all statements past and present, in a timely basis online at the Divvy website 24/7/365.
- Recommendation: All regularly recurring expenditures (e.g., utilities, dues, equipment lease payments, etc.) should be budgeted for properly, but such payments would not necessitate a review by the EWUA board members prior to the issuance of payment. All non-recurring expenditures should also be budgeted for. However, non-recurring expenses (e.g., repair bills, accountant fees, attorney fees, etc.), no matter the amount, should be pre-approved prior to payment. Ideally, the process would be as follows:
a. Annual Budget is approved.
b. Vendor invoices received.
i. Non-recurring invoices should be coded with a proper budget line item and routed to Board Designee for approval.
ii. Recurring invoices routed to accounting to pay.
c. Approved invoices are entered into the accounting system and properly coded to expense line items.
d. Checks are processed weekly (or on a regularly scheduled basis).
e. Checks are attached to invoices.
f. Checks, with supporting invoices, are directed to Board Member for review and signature.
g. Checks are mailed & invoices are filed.
Implemented.
This recommendation is expressed in two different types of expenditures; we will address our solution to each separately below.
Regularly recurring expenditures were listed in detail during the budgeting cycle last fall and is expressed in our 2023-2024 budget approved by the Board of Directors in December of 2022. The account associated with these regular reoccurring expenditures is listed on our profit and loss statement next to the allocated budgeted amount. This report will be reviewed every month by the Board Treasurer and Board of Directors as prepared by the Caselle team of CPAs.
Our solution for all non-reoccurring expenditures is to provide a daily and monthly limit on any charge card expenditures, as described in Recommendation 4, and the Caselle CPA and Treasurer will have access to review the charge card charges and other expenditures to ensure that the expenses are incurred for the benefit of the Association, as provided in Recommendation 7. Because it would be infeasible for our operations to have volunteer Board members preapprove each any every expense, the solutions above are implemented to provide spending guardrails and provide necessary Board oversight.
- Recommendation: Consider hiring a part time bookkeeper or accounts payable clerk who can manage all incoming vendor invoices, timely record approved expenditures in the accounting system, manage credit card receipts, issue checks, and maintain a proper filing system.
Implemented.
The Association has had a part-time bookkeeper on staff for decades. These part-time contractors have managed all incoming vendor invoices, recorded approved expenditures in the accounting system on a timely basis, managed credit and charge card receipts, issued checks, and maintained a proper filing system. All files exist at our offices.
Additionally, the Board approved a CPA service contract with the Caselle Services Team at the May 16, 2023, Board Meeting. This team of CPAs perform all General Ledger and Payroll duties for the Association. This contract allows for further separation of duties as well as to ensure that GAAP standard are being followed across the entire organization’s finances.
Caselle’s CPA team has worked backwards to January 1, 2023, at our request, to be able to represent the entire 2023 calendar/fiscal year completely and accurately.
- Recommendation: An audit of the General Manager’s time off in 2021 and 2022 should be conducted and deductions from his personal time bank should be considered. If the General Manager was overpaid on the payroll payout, those amounts should be reimbursed. In the future, the General Manager should be required to provide the Board with a bi-weekly or monthly summary of hours or days taken off in advance of payroll being processed.
Implemented.
The Association reviewed the 2021 and 2022 PTO issue as identified by the Acuity Report and determined that its employee policies did not provide adequately clear guidance on PTO accrual, use, or cash out options, resulting in confusion about how the PTO banks would be used and cashed out. As such, it did not find any conclusive basis to find a violation or a valid basis to seek reimbursement.
Moving forward, a monthly report of the General Manager’s summary of hours, overtime, sick and paid days off will be supplied to the Board Treasurer directly from the team of CPAs at Caselle.
The Board also began the process of revising the Association’s Employee Handbook in July of 2023 to clarify any ambiguities in its PTO accrual, use, and cash out policies. This new handbook not only clarifies all PTO policies but updates all governing rules for all employees of the organization. This handbook will be complete for review and adoption this Fall.
- Recommendation: A detailed payroll report showing gross wages, hours paid, personal time used, paycheck deductions, and net pay should be part of the Board Treasurer’s (or a Board Designee) review each month.
Implemented.
As of June 1, 2023, Cassell has been managing our payroll. As a result, we now receive 40 monthly reports that support our payroll process. Caselle CPAs generate these reports, and then the Eastsound Water General Manager reviews/approves them prior to running payroll.
The General Manager makes any corrections or changes to payroll prior to issuing his approval. Once all reports have been reviewed and approved, these 40 reports are filed on an EWUA confidential network folder for archival purposes and future reference.
Our Caselle CPAs then processes the approved ACH file directly with Washington Federal for payroll payment. Industry standard separation of duties has been implemented for years with our bookkeepers, and now with Caselle since June 1, 2023.
The Board Treasurer has access to all 40 of these files each month and all payroll history.
12. Recommendation: Employee housing payments should be set up as after-tax deductions from employee payroll checks. This will ensure that all amounts are paid on a regular basis and are accounted for in a proper rental income ledger account.
Implemented.
This recommendation has been implemented in the Caselle billing system as of August 4, 2023. This revenue will be credited to account number 43200 Rental Property Income and is viewable on both the P&L and budget monthly reports.
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