1. Activity Fund Accounting ACT301 Campus & Student Activity Accounts Presented by: Deborah Ottmers, Fredericksburg ISD deboraho@fisd.org ASBO

2. Contents Activity Fund Presentation Slides FASRG – Account Codes FASRG - Cash Management FASRG - SBDM Activity Fund Accounting Exhibits - Sample forms Audit Programs Sales Tax Issues Updated: Jan 2010

3. Two Types of Activity Funds SAF = Student Activity Funds CAF = Campus Activity Funds Often times, both use the same accounting system at the school, but they are very different types of funds Updated: Jan 2010

4. How do I distinguish between the two types? Do other persons besides the students decide how to spend the money? If yes, funds are CAF - Fund 199 or 461. Do the students have sole responsibility for deciding how to spend the money? If yes, funds are SAF - Fund 865 Updated: Jan 2010

5. CAF Present Assets and Liabilities Present Revenues and Expenditures Report with Governmental Funds Report as part of Government-wide Financial Statements SAF Present Assets and Liabilities ONLY Report with Fiduciary Funds Activity Fund Presentation in Financial Statements Updated: Jan 2010

8. Policy Requirement Updated: Jan 2010

9. BOARD POLICIES (CFD) Updated: Jan 2010

10. CAF CAMPUS Activity Funds: Belong to the Campus/District Money raised locally at the school or donated to the school Accounts include school office and departmental accounts Sponsors for CAF accounts include the Principal as well as departmental people Updated: Jan 2010

11. CAF Expenditures must benefit student body Like General Funds: Must adhere to State and Board policy and District regulation Subject to purchasing and bid laws Updated: Jan 2010

13. ALLOWABLE EXPENDITURES (Examples) General operation of the school Public purpose in the realm of education Direct or indirect benefit to students Field trips - admission fees Perfect attendance incentives for students Teacher appreciation & awards Classroom and office supplies Refreshments & snacks (for inservices, staff meetings, retirement receptions). Updated: Jan 2010

14. PROHIBITED EXPENDITURES (Examples) Individual membership fees Gifts (i.e., flowers, Christmas turkeys, gift certificates, bonuses) of public funds Donations Abuse of staff appreciation meals, parties for staff, including food, decorations, favors Extravagant expenditures Refer to Exhibits for expanded list (Sample) Updated: Jan 2010

15. STUDENT FUNDS = CLUB FUNDS = AGENCY FUNDS Belong to various student groups; not to the campus or district Money spent by the students in the SAF organization SAF Updated: Jan 2010

16. STUDENT FUNDS = CLUB FUNDS = AGENCY FUNDS Belong to various student groups; not to the campus or district - “trust” funds Spending decisions rest “solely” with the students Not subject to purchasing & bid laws Class, club or student groups must have elected officers (in order to qualify for tax free days) SAF Updated: Jan 2010

17. REVIEW OF BUDGET CODES Financial Accounting System Resource Guide (FASRG) Review of Account Codes Ensure that fund, function, & object match the purchase Updated: Jan 2010

18. Accounting Methods Centralized Funds are controlled and disbursed through the school district’s accounting department Decentralized Funds are accounted for and controlled at the various school sites Combination of the two Updated: Jan 2010

19. Centralized Accounting Method Advantages Better internal controls by using one central system Easier access to information and records for performing audits Consistent & efficient cash management Less accounting responsibility at the campus level - district management Updated: Jan 2010

20. Centralized Accounting Method Disadvantages Less control at the school site Possible delay in information and reporting to the school site Possible delay in obtaining checks for planned disbursements Possible delay in ordering supplies, equipment, etc. Updated: Jan 2010

21. Chain of Responsibility Updated: Jan 2010

22. RESPONSIBILITY of SPONSOR Attends annual meeting and obtains information booklet Spends money in accordance with guidelines Maintains records to support financial activities Reconciles account to reports monthly; turns in reconciliation. Updated: Jan 2010

23. RESPONSIBILITY of SECRETARY/BOOKKEEPER Records SAF & CAF transactions to include receipts, deposits, disbursements, and journal entries Assists sponsors Informs Principal of problems and concerns Updated: Jan 2010

24. RESPONSIBILITY of District Accounting Department Trains Bookkeepers Provides Help Desk Distributes reports Reviews bookkeepers’ monthly bank reconciliations and sales tax reports Updated: Jan 2010

25. RESPONSIBILITY OF PRINCIPAL ULTIMATE responsibility for: SAF & CAF funds and transactions Safekeeping money Proper accounting and administration Approval of disbursements in accordance with procedures manual. Updated: Jan 2010

26. CASH MANAGEMENT Updated: Jan 2010 FASRG 8.5.1.3

27. Cash Management Separation of Duties If possible, at least two persons should be involved in cash handling & deposits High Risk Area Flow of money must be supported by receipt books and bank deposits Updated: Jan 2010

28. Cash Management - Deposits Procedures should include: All funds collected must be deposited Cash collected should not be disbursed by cashing personal checks Deposits should match the amount collected and should be supported by receipts or listings of collections Deposits to district office and bank should be timely - daily if possible Updated: Jan 2010

29. Cash Management - Receipts Procedures should include: Both the sponsor and secretary/bookkeeper should be present when the money is counted & receipted An official receipt book with pre-numbered, bound receipts in triplicate should be used if an electronic system of receipts is not available A copy of the receipt must be given to the person paying (sponsor) A copy of the receipt must remain in the receipt book A copy of the receipt should be attached to the deposit documentation Updated: Jan 2010

30. Cash Management - Receipts Procedures should include: Receipts are not to be pre-dated or pre-signed Receipt numbers must be used consecutively Receipt numbers should be written on the bank deposit slip for documentation Receipts should not be altered Voided receipts must be re-attached to the receipt book Updated: Jan 2010

31. Bank Account Reconciliations All accounts must be reconciled on a monthly basis Banks allow for 10 - 30 days for discovery of errors Sealed Bank statements should be routed to someone other than the person who deposits funds Excess funds should be invested Updated: Jan 2010

32. CHECK DISBURSEMENTS Updated: Jan 2010

33. Check Disbursements Use District’s depository bank Pre-numbered checks must be used Two signers should sign each check No checks for “Cash” Sufficient funds must exist in the appropriate activity account(s) Updated: Jan 2010

34. Check Disbursements All expenditures must be supported by original invoices Pre-payments should not be made for goods or services Original invoices should be stamped “Paid” to avoid duplicate payments Disbursement records must be maintained for five (5) years Updated: Jan 2010

35. Payments to Individuals No payments for services should be made to district employees - all payments should be made by the Payroll Department (Exception if they have their own business) Payments for services: Check your district’s policies A SSN or TIN is required – W-9 Form 1099 issues Updated: Jan 2010

36. Recordkeeping Requirements All receipt books, deposit slips, and checks must be maintained for audit Supporting documentation for Fund Raisers: Fund Raiser authorization form Fund Raiser Profit/Loss Statement (Recap) Fund Raiser Collections Record Fund Raiser Merchandise Distribution Log Updated: Jan 2010

37. Other Issues Donations Received -Check local policy for limit before Board or Superintendent approval is required Equipment purchases - CAF Fixed assets should be tagged Retention of records - Five (5) years Collect records from sponsors at year- end as part of check-out procedures Updated: Jan 2010

38. Other Issues – No Raffles Updated: Jan 2010

39. Other Issues - FMNV Often times, fundraisers are food sales Can’t have competing food sales Foods of Minimal Nutritional Value (FMNV) Federal regs prohibit the sale of certain foods to students during the school day Elementary: May not serve FMNV at any time, anywhere on the school campus during the school day. Snacks can only be during nutritional breaks. Middle School: May not serve FMNV during meal times. Nutritional snacks can only be after lunch. HS: May not serve FMNV during meal times. FMNV during school holiday celebrations are ok to an extent Updated: Jan 2010

40. Other Issues – FMNV Penalties Texas Dept. of Agriculture (TDA) will monitor and enforce the policy to ensure compliance TDA will disallow all meal reimbursements for the day and require the school to reimburse the food service account for the lost reimbursement Documented corrective action plan will be required and monitored for compliance Updated: Jan 2010

42. CAMPUS and STUDENT ACTIVITY FUNDS PROCEDURES MANUAL Procedures governing activity fund accounts Controls to help prevent misappropriation of funds violations of Federal, State, & District regulations acts of fraud or negligence Distribute to sponsors, bookkeepers, & principals - Provide training! Updated: Jan 2010

44. Manuals on the Internet Use TASBO’s Member’s Best Practices Go to a specific ISD’s website and look Google “Activity Fund Manuals Texas School Districts” Updated: Jan 2010

45. Common Audit Findings and Recommendations Audit to ensure funds are in compliance with policies and procedures Updated: Jan 2010

46. AUDIT FINDINGS “Broken” audit trail Money collected doesn’t equal the money deposited Inventory of goods purchased and money deposited doesn’t equal the total merchandise purchased [vendor invoice] Receipting of funds - missing void receipts, changes to receipts, etc. Lack of documentation for checks Updated: Jan 2010

47. AUDIT FINDINGS “Weaknesses in Internal Control” Lack of dual signature of authorized check signers, when required Improper receipting of cash (incomplete or missing receipts, etc.) Lack of supporting documentation for check disbursements, such as vendor invoices Violation of District’s policies regarding timely bank deposits Updated: Jan 2010

48. Other Audit Findings Violation of District’s policies and procedures over activity funds Lack of reconciliation between Sponsor’s records and campus bookkeepers Updated: Jan 2010

49. RESOURCES TEA Website www.tea.state.tx.us Financial Accountability System Resource Guide (FASRG v14) FAR - Account Codes Purchasing SBDM - Activity Fund Accounting Management - Cash Management Updated: Jan 2010

50. QUESTIONS & ANSWERS Updated: Jan 2010

51. Activity Fund Accounting ACT301 Campus & Student Activity Accounts Presented by: Deborah Ottmers, Fredericksburg ISD deboraho@fisd.org ASBO