Policies and Procedures s5

Policies and Procedures

For

Local School Accounting

Hoover City Board of Education

2810 Metropolitan Way

Hoover, Alabama 35243

(205) 439-1000

Local School Accounting Manual

Hoover City Board of Education

November 14, 2011

LOCAL SCHOOL ACCOUNTING MANUAL

Table of Contents Page

Introduction 5

Section 1 Public and Non-Public Funds 8

Section 2 Banking 12

Section 3 Receipting Funds 13

Section 4 Returned Checks 22

Section 5 Transfers 25

Section 6 Theft of School Funds 26

Section 7 Ticket Sales 27

Section 8 Purchases 29

Section 9 Expenditures 34

Section 10 Payments to Individuals for Services Rendered 39

Section 11 Monthly Reporting 41

Section 12 Donations & Gifts 42

Section 13 Travel Expense Reimbursements 44

Section 14 Field Trips 46

Section 15 Fund Raising Activities 48

Section 16 Clubs 52

Section 17 Fixed Assets 53

Section 18 Budgeting Requirements 61

Section 19 Data Back-Up 64

Section 20 Non-Compliance 65

Section 21 Financial Records Retention 66

Section 22 Electronic Data Disposal 67

Section 23 Extracurricular Camps, Tournaments, Jamborees

and Similar Activities 69

Section 24 Facility Use 76

Acknowledgement of Policies and Procedures 78

Table of Contents - Exhibits 79

Table of Contents - Forms 80

Hoover City Board of Education

LOCAL SCHOOL ACCOUNTING MANUAL

To: Principals and Bookkeepers

The principalship carries with it the full responsibility for all financial matters relating to the school. It is imperative that the Principal give his or her personal attention to the collection, expending, documenting, recording and overall supervision of all areas relating to the financial affairs of the school. The Principal has the responsibility for collecting and disbursing all monies in a manner approved by the Hoover City Board of Education and in accordance with generally accepted accounting principles and procedures. Although the school’s teachers and bookkeeper may handle these funds initially and personally, the overall responsibility for safe-guarding all funds rests with the principal. This responsibility cannot be delegated.

The following are some general rules regarding the financial affairs of the schools. These rules, as well as the accompanying policies and procedures, are to be followed completely and will be subject to continual audits by the Superintendent, the Chief Financial Officer, the internal and external auditors of the Hoover City Board of Education, and the State Department of Examiners.

ALL money collected at the school by any employee or group for any purpose must be receipted and deposited in the school bank account on a timely basis.

All fundraising activities must conform to policies of the Hoover City Board of Education.

ALL expenditures must be paid by check, processed through the accounting program and supported by a valid invoice based on a purchase order issued and signed by the Principal before the purchase is made.

Authority to enter into a contract or a lease for one year or more must be executed by the Chief Financial Officer or the Superintendent. Copies of any contracts entered into must be on file at the Hoover City Board of Education.

All purchases must conform to policies of the Hoover City Board of Education and the State Bid Law.

Bank statements must be reconciled monthly.

Monthly financial reports reflecting accurate balances and activities of the accounts of the school must be reviewed and approved by the principal.

The Principal must be familiar with all local school financial policies of the Hoover City Board of Education so that he or she will not permit practices which are contrary to policy or which would cause embarrassment to his or her school or to the school system. The Principal is directly responsible in the handling of monies received at the school. It is the ultimate responsibility of the Principal for any shortages resulting from the failure to follow, or to require others to follow, the financial procedures for the handling of school monies.

The Finance Department should be consulted if accounting problems are encountered.

The attached policies and procedures for local school financial operations relate to the safeguarding of assets and are subject to the requirements of generally accepted accounting principles, compliance with state and federal laws and internal accounting controls. They should be read carefully and followed closely.

Respectfully,

Cathy M. Antee

Chief Financial Officer

Hoover City Board of Education

LOCAL SCHOOL ACCOUNTING MANUAL

The following policies and procedures pertain to the handling of financial records for local schools of the Hoover City Board of Education (HCBOE).

The computerized accounting system is designed to record the receipts and disbursements of each school and to establish control measures over cash and other assets. The local schools practice the ‘Modified Accrual Basis’ method of accounting.

· All monies received from any source in or about the school by any employee or group is regarded as School Funds.

· Funds are received, receipted, deposited, and then recorded in the TES Accounting Program on a daily basis.

· Expenditures are incurred only under the authorization of the Principal. Such authorized expenses are paid by checks disbursed at the local school level.

· The activity at the local school is summarized at the end of every month and compiled into monthly financial statements. The financial statements report on transactions that affect accounts throughout the month. These monthly financial statements must be submitted to the Board of Education by the 15th day of the month following the month reconciled.

· All school accounting and record keeping shall be subject to audit annually by an auditor(s) designated by the Hoover City Board of Education (HCBOE).

The monthly financial reports serve as the source of information necessary for the Principals to properly manage the schools. Because records are the basis of the monthly financial reports, it is essential that each school’s records are accurate, current, and they exhibit the true financial position of the school funds.

Section 1

PUBLIC AND NON-PUBLIC FUNDS

Funds maintained at the local schools are generated from many sources and for many purposes, but can generally be divided into two main categories: Public Funds and Non-Public Funds. Various factors must be considered in determining the proper classification, which affects the degree of expenditure restriction.

Public Funds (referred to as Fund 12)

Funds are generally classified as public funds when the following criteria are met:

· Funds generated school-wide

· Funds that can be used for all students

· Funds controlled by the Principal or any school employee

Some specific examples of Public Funds include:

· Federal, State, and County Tax Revenues (Restricted)

· General Office Fund – interest income

· Grants (application submitted) from any Governmental Entity

· Donations

· Commissions – pictures

· Library Fund – lost book fees and late fines

· Athletic Fund – gate receipts and parking receipts from athletic events (a reasonable portion (25%) of the parking receipts may be allocated to the booster club (a non-public activity) as payment for working the parking lot, the remainder is to be receipted to the athletic activity)

· Concessions Fund – IF the school purchases the supplies and retains the proceeds

· Dues and Fees REQUIRED by the School or for a Specific Class - lab fees for science class, parking fees, locker maintenance fees, etc.

· Vending Machines (regardless of the accessibility/location)

· Fundraisers designated for School Operation

· Non-Public Funds when co-mingled with Public Funds

Some examples of ALLOWABLE expenditures of Public Funds include:

· Refreshments for an Open House where the public will attend

· Meals/Refreshments for faculty and staff during a meeting that extended into lunch and food had to be provided for the meeting to continue (CANNOT be a planned faculty and staff meeting during a meal)

· Meals/Refreshments for teachers on non-work day (summer retreat/workshop)

· Meals/Refreshments for all-day professional development

· Pre-game meals for athletic participants and coaches ONLY

· Uniforms for students to participate in school activities

· Student recognition in form of trophies, plaques, and academic banquets (must promote academic excellence and recognize special deeds that strengthen public education)

· Professional development

· Membership in professional organizations

· Honorariums

· Transportation to school-sponsored activity

· School landscaping, maintenance, furnishings, and decorations

Some examples of UNALLOWABLE expenditures of Public Funds include:

· Food and supplies for teachers’ lounge

· Food for faculty and staff holiday luncheon and graduation celebration

· Meals/Refreshments for teachers on work day when receiving pay (new teacher workshop in August)

· Meals/Refreshments for volunteers or bus drivers as sign of appreciation

· Meals/Refreshments for team meetings and principal meetings

· Meals/Refreshments for Visiting Review Committee (Accreditation Team)

· Refreshments for Kindergarten Kickoff

· Clothing for faculty/coaches and staff

· Ad infinitum/favors for faculty and staff

· Gifts/Flowers for faculty and staff

· Gifts/Donations to an individual or organization

Non-Public Funds (referred to as Fund 32)

Non-Public funds are restricted for expenditures subject to the intent and authorization of the organization’s sponsors and officers and not used for general operations of the school. The principal does not direct the use of these funds but does have the authority to prohibit inappropriate expenditures.

Funds are generally classified as non-public funds when the following criteria are met:

· Funds generated by a particular group (Athletics, Clubs, Teams (Math, BLT), Boosters (Football, Band, PTO))

· Funds used for that particular group (Athletics, Clubs, Teams (Math, BLT), Boosters (Football, Band, PTO))

· Funds controlled by the students and/or a support organization

Some specific examples of Non-Public Funds include:

· Club Dues and Fees (self-imposed)

· Donations

· Fundraisers NOT designated for School Operation

· Concessions Fund – IF a particular group purchases the supplies and retains the proceeds

· Funds from Faculty for “Sunshine/Empathy Fund” or “Coffee Club”

Some examples of ALLOWABLE expenditures of Non-Public Funds include expenditures that are not allowable purchases from public funds:

· Food for social gatherings

· Entertainment for prom

· T-shirts for faculty and staff

· Gifts of appreciation

· Flowers for visitation/funeral

· Championship rings

· Scholarships

· Donations to various organizations

(However, the State Ethics Law limits purchases for school employees and their families.)

Some examples of UNALLOWABLE expenditures of Non-Public Funds include:

· Illegal use of funds (alcoholic beverages, etc.)

Regulations concerning public and non-public funds are as follows:

· Public funds cannot be transferred to non-public fund activities. If funds are transferred from a public account to a non-public account, then funds are considered co-mingled and the non-public activity becomes a public activity.

· Non-public funds can be transferred to a public account. HOWEVER, once transferred, they become public funds incurring all the legal restrictions.

· Check with the custodian of funds, local auditor, or SDE if in doubt about the classification of a receipt or an expenditure.

· When in doubt, consider the receipt or the expenditure PUBLIC FUNDS.

Section 2

BANKING

The selection of a banking institution for school funds involves a comparison of the operating features of various banks. Although proximity to the school is important for accessibility of funds, bank charges and other banking procedures can create problems in managing school funds. The HCBOE selects banking institutions with a willingness to cooperate in meeting the unique operations of its local schools.

School funds must be maintained in a Qualified Public Depository (QPD). A QPD is an Alabama banking institution that provides protection for school funds under the Security for Alabama Funds Enhancement Program (SAFE), administered by the Alabama State Treasurer’s office. At the end of each fiscal year, the bank should be required to provide a letter confirming that all school funds are listed on the bank’s records as SAFE Program Accounts.

A school should have no more than one checking account. Establishing separate bank accounts is not necessary to avoid the co-mingling of public and non-public funds. Funds not needed for current operations, whether invested in CD’s, money market accounts, or savings accounts, must be recorded in the school’s accounting records and included in the school’s financial statements.

Principals may not establish a bank account or investment account in the name of the school or an organization pertaining to it, unless prior authorization by the Chief Financial Officer is obtained.

IMPORTANT - The school bookkeeper should under no circumstances be a signatory on any school bank account or investment account.

Section 3 RECEIPTING FUNDS

Audits show that the management of incoming funds in local schools is the primary weakness of internal controls for local school financial operations. Because a number of people are often involved in the collection of school funds, establishing enforceable procedures for the variety of income sources becomes an integral part of the accountability for local school funds. Master receipts, reports of ticket sales, teacher receipts, and multiple receipt listings (MRL) are all important documentation for the assurance that all funds collected for the school are deposited in the school’s account.

The Alabama Legislature has stated that excessive paperwork required of teachers and other public education employees hinders the prime responsibility of public education: The education of the children of Alabama. The Legislature declared that it is imperative that all unnecessary paperwork be eliminated from our public schools and necessary paperwork be automated to the maximum practical extent. Because the documentation needed to protect the funds collected is vital, the collection of funds by teachers should be limited or eliminated.

Elimination of unnecessary paperwork is not the only benefit of developing alternative procedures for collecting school funds. The simple fact is “The more people you have involved in the collection of school funds the more chances you have for something to go wrong”. Consolidating the collection of school funds makes the automation of receipting even more beneficial. The automation of receipting reduces the time and mistakes of manually entering receipt information into the school’s accounting records.

The security of the collection documents (i.e. master receipts, reports of ticket sales, teacher receipts, multiple receipt listings, or electronic receipts) is often overlooked in providing these documents to the individuals collecting school funds. Pre-numbered documents and log sheets to track the assignment of these documents are part of assuring the security of school funds.