b. Financial Accounting

Financial Accounting Policy and Procedure

Authority
1. This policy is in all respects subordinate to the articles of incorporation, by laws and standing rules of the corporation.
General
1. This policy is designed to create clear rules for how and when SF Pride enters accounting transactions on its books, how and when the books are closed on a monthly, quarterly and yearly basis. The basic intent of the policy is to ensure that SF Pride complies with applicable law, generally accepted accounting principles and specific SF Pride accounting principles. It is not intended to unduly constrain the ED and F\&A staff and contractors from using the accounting system to support operational needs.
Compliance and Filings
1. Accounting will be performed in compliance with all applicable federal, state and local laws.
2. Accounting will be performed according to applicable Generally Accepted Accounting Principles (GAAP).
3. The Corporation is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code and from the California franchise and/or income taxes under section 23701(d) of the Revenue and Taxation Code and shall keep its books of record in compliance with these tax codes.
4. The Corporation will file all legally required business filings, income tax and sales tax returns in accordance with applicable tax codes.
Accounting Policies
1. Basis of Accounting – Accounting transactions will be entered and financial reports will be presented on the accrual basis of accounting in accordance with GAAP.
  1. Revenues are recognized when they become both measurable and available.
  2. Expenditures are recognized when the obligation to pay is incurred.
2. Basis of Presentation – SF Pride accounts for and reports information regarding its financial position and activities according to three types of assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.
  1. Unrestricted Net Assets consist of resources over which the Board of Directors of the Corporation has discretionary control. These resources are used in carrying on the operations of the Corporation in accordance with its articles of incorporation and bylaws.
  2. Temporary Restricted Assets consist of contributions received with donor-imposed restrictions that limit their expenditure either to specific purposes or to specific time periods.
  3. Permanently Restricted Net Assets consist of the part of the net assets of the Corporation resulting (a) from contributions and other inflows of assets whose use by the Corporation is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the Corporation, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) from reclassification from (or to) other classes of net assets as a consequence of donor-imposed stipulations.
3. Cash and Cash Equivalents – For the purposes of the Statement of Cash Flows, management considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents.
4. Property and Equipment – Purchased furniture and equipment are recorded at cost. Donated furniture and equipment are recorded at estimated fair market value when received. Property and equipment that are donated or acquired with resources restricted for such acquisitions are considered to be unrestricted when placed in service. The Corporation follows the practice of capitalizing all expenditures for equipment in excess of $1000 USD. Depreciation is computed on straight-line method over the assets estimated useful lives ranging from three to five years depending on the asset class.
5. Trademarks – The Corporation has and may from time to time create internally developed intangible assets such as copyrights and trademarks. The cost associated with registering these assets is capitalized.
6. Support and Revenue Recognition – All contributions are considered to be available for unrestricted use unless specifically restricted by the donor.
  1. Support that is restricted by the donor is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restriction.
  2. Gifts of cash and promises to give are presented as restricted support if they are received with donor stipulations that limit the use of the donated assets; otherwise they are presented as unrestricted support.
  3. Contributions of services, materials and supplies are recorded at their fair values on the date of contribution.
  4. Revenue that is earned and collected during the SF Pride celebration by various alcohol and merchandise booths located throughout the celebration grounds are audited upon deposit to the books of record. Adequate care shall be taken to guard against shrinkage of these revenues due to theft.
  5. Contributions are recognized when received or unconditionally promised. The Corporation reports gifts of cash and other assets as restricted support if such gifts are received with donor stipulations that limit the use of the donated asset.
  6. Donated Professional Services are recognized when received if such services (a) create or enhance non-financial assets or (b) require specialized skills that are provided by individuals possessing those skills, and would typically need to be purchased if not donated. The value of these contributed services is recognized as revenue.
  7. Donated Merchandise/Advertising are recognized when received if such services (a) create or enhance non-financial assets or (b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not donated. The value of these services are recognized as revenue.
7. Functional Expense Classifications – The Corporation’s operating expenses are classified between program, management, and fundraising activities based on actual expenses, employee ratios and estimates made by the Corporation’s management. Additional classifications are tracked for internal reporting and operational needs at managements descreation
8. Fiscal Year – The Corporation’s fiscal year starts on the first day of October and runs through the last day in September each year.
9. Accounting Calendar – The corporation will maintain an accounting calendar documenting all key dates for accounting events, filing dates and reporting due dates.
Reporting Specifications

The Corporation will issue financial reports as follows:

Report Name	Description	Periodicity	Due	Initial Distribution
P\&L Budget to Actual FYE Projection	Shows Actuals to Date, Total of budget allocated to remaining months, Total FY Budget, Projected FYE Variance by account. Accounts are grouped and summarized by revenue and expense type.	Monthly	3 days in advance of any scheduled finance committee meeting or Board Meeting	BFC Members
P\&L	Shows P\&L Actuals by Month, including the most recent closed month and total P\&L to Date by account	Monthly	Same as above	BFC Members
Balance Sheet	Shows Assets and Liabilities to date for the most recent closed accounting period. Summarizes by Current and Long term assets and liabilities and owners equity. Includes Accounts Receivable and Accounts Payable for all contracts, invoices issued, and invoices received.	Monthly	Same as above	BFC Members
Statement of Cash Flows	Report all inflows and outflows affecting the balances of all cash asset accounts	Monthly	Same as above	BFC Members
Budget Adjustment Record	Report on all budget adjustments and reallocations including account, change in value, reason, status, approved by and approval date.	Monthly	Same as above	BFC Members
Treasurer’s Report	The Treasurer’s Report will include all the above reports plus a narrative report highlighting and discussing significant realized or projected budget variances, cash flow problems and any other unexpected liabilities or assets. The report should highlight any fiscal policy or budgeting issues that should be discussed by the BFC or Board	Monthly	Same as above	Board of Directors
Audit Report	Upon completion of the Audit, the auditor will complete an audit report along with a set of audited financial statements in compliance with applicable law. The report is subject to review and approval by the Board of Directors	Yearly	Within 3 months after the end of the Fiscal Year