1. (a)

   1. (1) The Vending Facility Program maintains a double-entry record of financial transactions utilizing an automated accounting system (Peachtree/Sage) to process daily, monthly, quarterly, and annual accounting functions.
   2. (2) The ledgers are established by funding sources.

   3. (3) They are:

      1. (A) Set-aside (SA);
      2. (B) Special programs (SP); and
      3. (C) Highway program (HW).

   4. (4) These funds are:

      1. (A) Owned and controlled by the program managers and the ECM;
      2. (B) Not considered state or federal funds; and
      3. (C) Not subject to the rules and regulations of state and federal funds.
2. (b) A brief explanation of the fiscal information that is contained in these books of account, the source of that information, and method and frequency of posting is presented in the following sections.
3. (c) The accounting system is designed to systematically classify and accumulate financial data utilizing a formal chart of accounts, which is presented later in this section.
4. (d) The major accounting functions that are to be accomplished by the system and the internal accounting controls that may be achieved are discussed.

5. (e) Accounting functions.

   1. (1) The major accounting functions are discussed in the order they generally occur.
   2. (2) All checks arriving in the program accounting section each day are listed on the “Receipt of Checks for (date)”, the VFP-1a, before being recorded on the VFP-2, VFP-37, or DHS 1022 CR Log.

6. (f) Cash receipts control — Stand sales.

   1. (1)

      1. (A) Considered chronologically, the first major accounting function involves receiving, recording, and depositing cash.
      2. (B) All cash receipts are classified as either "sales" (from stand operations) or "miscellaneous" (all other) receipts.

   2. (2)

      1. (A) The initial accountability for cash received from sales is established when the mail envelopes containing the stand manager's weekly sales reports are opened.
      2. (B) The reports are normally accompanied by a check from the stand manager with the amount of the check representing gross profits on sales.
      3. (C) The amount of cash transmitted by the stand manager should be the difference between cash taken in from sales and cash paid out for stock, supplies, and miscellaneous operating expenses less petty cash.

   3. (3)

      1. (A) The first step in establishing accountability for this cash is to record the amount of cash received from each stand manager on a daily Cash Report, VFP-2, and form DHS-1022 Cash Receipts Log (9-1-11).
      2. (B) This is accomplished by the person responsible for opening the mail, and the completed cash reports, together with Weekly Sales Report of Manager, VFP-6, become the source documents for recording cash information in other books of original entry.
      3. (C) The daily cash report also provides a deposit total, which should agree with the amount shown on the validated bank deposit slip.

   4. (4)

      1. (A) At no time should actual cash or money be accepted by the program.
      2. (B) If a manager/person brings actual cash or money for their deposit or payment to the program, they are to be advised to exchange the cash for a money order and bring it back to the program for acceptance as payment or deposit.
      3. (C) The program does not accept actual cash or money.

7. (g) Verification of sales reports.

   1. (1)

      1. (A) An accounting function related to cash from stand sales involves testing the accuracy of amounts shown on manager's weekly sales reports.
      2. (B) Since these reports are the source document for a significant amount of the financial information that is ultimately recorded in the formal accounting system, report accuracy must be continuously emphasized and tested.
   2. (2) Check mathematical accuracy of amounts entered on the report form.
   3. (3) Examine invoices, tickets, and other documentary evidence of cash paid out to determine its allowability and authenticity.

   4. (4)

      1. (A) Run adding machine tape on each category of payout (report lines 2 and 3) and compare tape totals to amounts shown on the sales report.
      2. (B) When differences are discovered, the correcting adjustment will be made to sales. Example: Assume that the invoices submitted as evidence of stock purchased add up to one hundred dollars ($100) less than the amount shown for sales (line 6). This correction is made by pen on the report form and requires no formal accounting entries. However, to understand its effect, the correction as a journal entry would be: Debit Sales $100.00 Credit Purchases $100.00

   5. (5) Posting cash sales information. The recording of cash receipts and sales information in the accounting system is accomplished as follows:

      1. (A) From daily cash reports (validated bank deposit slip attached) the summary total of cash received is posted to the automated cash journal;
      2. (B)

8. (i) After the cash amounts shown on the stand managers' weekly sales reports have been totaled for accuracy, the information shown on the reports is posted on the automated four (4) weekly period reports.

   1. (ii) The accumulated totals from the period reports are automatically linked to the sales report register for the period; and

      1. (C) The sales report register is then used to post to the automated general ledger for each period.

9. (h) Cash control — Miscellaneous cash receipts.

   1. (1)

      1. (A) Miscellaneous cash receipts (receipts other than those accompanying the managers' weekly sales reports) are recorded on the form DHS-1022 Cash Receipts Log (9-1-11) and handled as listed in 22 CAR § 5-1001 et seq.

      2. (B)

         1. (i) Vending machine revenue is usually in the form of a check from the vending machine company that maintains the vending machine.
         2. (ii) The accountant has personal knowledge of which stand manager should receive credit for the check and makes a notation on the check to advise the receipting process.

      3. (C)

         1. (i) Receipts from the sale of equipment or other sources that are not credited to stand managers are also classified by the accountant and recorded.
         2. (ii) Then a daily bank deposit is developed.

   2. (2)

      1. (A) When the accountant has all miscellaneous receipts, the action taken also depends on the kind of revenue involved.

      2. (B)

         1. (i) For receipts that are to be credited to a stand as stand sales, the accountant records the amount received on the daily cash report as if the money had been received directly from the stand manager.
         2. (ii) The money is combined with other cash from stand sales and included in the daily bank deposit.
         3. (iii) Thereafter, the accounting treatment for this type of revenue is no different than that given all other stand sales.

      3. (C)

         1. (i) For other miscellaneous receipts that are not credited to stand managers, the accountant includes the money in the daily bank deposit.
         2. (ii) The accountant records the amount and source of such receipts on Miscellaneous Cash Receipts, VFP #37, and the form DHS-1022 Cash Receipts Log (9-1-11).
         3. (iii) The deposits are made by the program supervisor or Vending Facility Program Administrator for separation of duties.
         4. (i) Cash disbursements.

   3. (1)

      1. (A) The functions of controlling, classifying, and recording cash disbursements involves three (3) major types of expenditures:

         1. (i) Extra help payrolls;
         2. (ii) Commission and draw payments to stand managers; and
         3. (iii) Payments to vendors for goods received or services rendered.
      2. (B) These three (3) types of expenditures are discussed separately under their respective subdivisions.

   4. (2) Managers' draw payroll.

      1. (A)

         1. (i) The source document for the draw payroll is the draw payroll worksheet.
         2. (ii) This worksheet contains master payroll information for all managers.
         3. (iii) It is used by the payroll accounting clerk to record changes that may be required for the current payroll.
      2. (B) The back-up documentation for amounts paid on any draw payroll is the Draw Payroll Worksheet, VFP-9.
      3. (C) It is the duty of the accountant to accumulate this documentation and use it as a basis for making any changes on the payroll worksheet that may be required.
      4. (D) When the accountant has changed the worksheet to agree with the supporting documentation just described, he or she prepares a Vending Stand Payroll Control Sheet, VFP-12, which shows summary payroll information and dollar control totals.
      5. (E) The worksheet and VFP-12 are then entered on the program’s computer for processing.

      6. (F)

         1. (i) The VFP-12 is used to test the accuracy of the computer output.
         2. (ii) This output includes printing the individual draw checks, which are mailed from the program office.

      7. (G)

         1. (i) The accountant posts draw payroll information to the automated general ledger as follows.
         2. (ii) The summary totals from computer processed payroll detail listing are recorded in summary form.
         3. (iii) A typical posting could be: Debit: Draw $XXX.XX Credit: Payroll Deduction Payable $XXX.XX Cash XXX.XX

   5. (3) Managers' commissions.

      1. (A)

         1. (i) Stand managers are paid their earned commission every four (4) weeks.
         2. (ii) The payments represent their share of stand profits for the latest operating period.
      2. (B) The original source document for a commission payroll is the Weekly Sales Report, VFP-6, referred to under the subsection on cash receipts control, subsection (f) of this section.
      3. (C) When the amounts shown on each stand manager's weekly report has been verified, the amounts are transferred to the sales report register.

      4. (D) Information entered on the Weekly Sales Report that is necessary for arriving at the amount of commission payable includes:

         1. (i) Operating expenses;
         2. (ii) Stock purchases;
         3. (iii) Total deposit;
         4. (iv) Amount of draw for the same period (usually four hundred dollars ($400));
         5. (v) Amount of extra help to be charged against stand profits, including applicable taxes;
         6. (vi) The balance of these items represents commission earned or loss for the period; and
         7. (vii) Prior period information that could result in adjustment to the current commission earned includes prior period losses or set-aside payback.

      5. (E)

         1. (i) The net amount of commissions payable for the current period is then entered from the sales report register on the commission payroll worksheet.
         2. (ii) The completed payroll worksheet and Vending Stand Payroll Control Sheet, VFP-12, which shows predetermined totals, are then entered on the program’s computer for processing.
         3. (iii) The processing includes printing individual commission checks, which the program mails to stand managers along with a copy of their period report.
      6. (F) As in the case of draw payrolls, the computer output for commission payrolls includes a detailed payroll listing and a check register of amounts paid.

   6. (4) Vendor payments — Supplies and/or services.

      1. (A) The source documents for vendor payments include:

         1. (i) Copy of vendor's invoice; and
         2. (ii) Copy of the purchase verification form, VFP-23/VFP 23CC.
      2. (B) When an invoice for goods or services is received, it is given to the specialist who either placed the order or the supervisor/manager who placed the order.
      3. (C) To authorize payment, the specialist and/or the administrator must sign a completed bid sheet or Purchase Verification Form, VFP 23/VFP 23CC, processed and sent to the program accounting department.
      4. (D) With the vendor's invoice and signed verification for supporting documentation, payment is made on a voucher/check, which is prepared in the accounting office.

      5. (E)

         1. (i) The original voucher/check is mailed to the vendor.
         2. (ii) Two (2) copies of the voucher/check are retained.
         3. (iii) One (1) is filed with copies of supporting documentation, and the other is filed in a numerical backup binder.
      6. (F) Only the program accountant can issue checks for payment.
      7. (G) Special-issued checks are checks completed by hand and must have the “pay to” completed by the accountant and an invoice to match the check amount.

      8. (H) The accountant records these cash disbursements as follows:

         1. (i) Checks drawn are posted to the automated ledger from the copies of checks; and
         2. (ii) The number and amount of each check drawn is posted to cash disbursements.

   7. (5) Extra help payrolls.

      1. (A)

         1. (i) Extra help payrolls are processed and paid every two (2) weeks.
         2. (ii) If the cost of extra help for a manager is justified, it may be paid from program funds.

      2. (B)

         1. (i) The source documentation for extra help payrolls begins with an Employee Time Sheet, VFP-1, for each person who worked as extra help during the two-week period being processed.
         2. (ii) The information sheet, VFP-1, which shows hours, days, or weeks worked and the rate of pay, is submitted by the specialist who has responsibility over the stand where the extra help employee worked.
         3. (iii) The specialist's signature on an information sheet is the authorization to process payment.

      3. (C)

         1. (i) When payment is authorized, the payroll accounting clerk transcribes key data from the information sheet to the automated system.
         2. (ii)
10. (a) (a) The system prepares the individual checks using prenumbered three-part check/voucher forms (Exhibit C).

11. (b) (b) The original goes to the employee, the second carbon is filed in a numerical backup binder, and the last copy is filed with payroll listing.

    1. (iii) These payroll check/voucher forms are distinguishable from vendor checks by both their color and numbering sequence.

       1. (iv) Consistent with the practice of the four-week report period for sales, the payroll clerk, on a memorandum record, combines two (2) extra help payrolls into one (1) reporting period and separately maintains all related payroll documentation for each four-week period.
       2. (D) The payroll system posts information to employee's individual earnings records and makes the periodic reports for Social Security and income taxes withheld at the intervals required by law.

       3. (E)

          1. (i) The accountant enters extra help payroll information in the automated cash disbursement.
          2. (ii) This is the same procedure as was described for vendor payments and other (SP) payroll processing.
       4. (F) The payroll totals are gathered on the Data Entry Form, VFP-38, for filing.

12. (j) Fixed assets and stock inventory.

    1. (1) Another important accounting function involves the recording of each purchase of stock inventory or fixed assets, as well as maintaining the accumulated total value and location of all assets currently on hand.

    2. (2) For fixed assets (equipment or furniture and fixtures), the source documents for recording a purchase are:

       1. (A) The vendor's invoice;
       2. (B) A copy of the payment check; and
       3. (C) Evidence of a formal bid and acceptance, if required.
    3. (3) For noncapital inventory purchases, formal bidding is not required.

    4. (4)

       1. (A) The purchases of assets and inventory are posted to the automated accounting package by fund (SA, SP, HW) from the copies of the checks issued.
       2. (B) These amounts should balance with the purchase verifications.

13. (k) Liabilities.

    1. (1) Keeping a record of amounts owed (accounts payable) is also an accounting function.

    2. (2) For the program, accounts payable usually include:

       1. (A) Rent for a few stands; and
       2. (B) Social Security and payroll taxes withheld from employees' earnings.
    3. (3) Since most program operations are on a cash basis, the number of accounts payable is small and there is no need for a subsidiary accounts payable ledger.

    4. (4)

       1. (A) The source document of taxes withheld and Social Security matching are the formal payroll listings.
       2. (B) Rent payable is recorded from the rent report (Exhibit D).
       3. (C) The amount of rent is based on a percentage of gross sales.
       4. (D) Any rent expense is deducted from the stand manager's gross profit and ultimately reduces his or her commission.

    5. (5) From the sales report register, the accountant makes entries for rent expense and rent payable in the automated general ledger. Example: Debit: Rent Expense $XXX.XX Credit: Rent Payable $XXX.XX

       1. (l) Equity. The program automatically posts gains and losses to the books.

Codification Notes: “ECM” means elected committee members.