TrainingTraining

FINANCEFINANCE

LOCAL SCHOOL ACCOUNTING

Learning the Value of Internal ControlsLearning the Value of Internal Controls

““Make it Important to You”Make it Important to You”

Montgomery Public SchoolsMontgomery Public Schools

IntroductionIntroduction

Internal Controls are necessary to Internal Controls are necessary to ensure that assets are protected, ensure that assets are protected, records are reliable and that records are reliable and that transactions are executed in transactions are executed in accordance with authorized accounting accordance with authorized accounting principles and policiesprinciples and policies

It is Management’s (the Principal) It is Management’s (the Principal) responsibility to establish and maintain responsibility to establish and maintain an effective internal control systeman effective internal control system

Internal Controls must be important to Internal Controls must be important to the Principal or it will not be important the Principal or it will not be important to staff membersto staff members

Introduction (pg 2)Introduction (pg 2) Financial Accountability is all about Financial Accountability is all about

establishing and implementing sound establishing and implementing sound accounting practices and procedures.accounting practices and procedures.

Topics outlined below involve the Topics outlined below involve the bookkeeper, teachers and other staff.bookkeeper, teachers and other staff.

Principals should “TRUST” their Principals should “TRUST” their bookkeepers, teachers and other bookkeepers, teachers and other staff. But it has been proven that staff. But it has been proven that trust is not enough. trust is not enough.

““PRINCIPALS MUST ALSO VERIFY”.PRINCIPALS MUST ALSO VERIFY”.

Topics of DiscussionTopics of Discussion

Audit FindingsAudit Findings RevenuesRevenues

Receipting Procedures Not FollowedReceipting Procedures Not Followed Timeliness of Deposits Not Acceptable Timeliness of Deposits Not Acceptable

ExpensesExpenses Invoices Dated Before the Purchase Order Invoices Dated Before the Purchase Order

DateDate Unallowable ExpendituresUnallowable Expenditures

Accounting ManualAccounting Manual Approved by the State of Alabama June Approved by the State of Alabama June

10, 201010, 2010

Topics of DiscussionTopics of Discussion RevenuesRevenues

ReceiptingReceipting Teacher ReceiptingTeacher Receipting Altered ReceiptsAltered Receipts Voided ReceiptsVoided Receipts Office ReceiptingOffice Receipting Cut-OffsCut-Offs

DepositsDeposits CashCash ChecksChecks FrequencyFrequency

MonitorMonitor Address ProblemsAddress Problems

Topics of DiscussionTopics of Discussion ExpensesExpenses

Purchase Orders (Approval)Purchase Orders (Approval) Activity BalancesActivity Balances Allowable ExpenseAllowable Expense Signature/DateSignature/Date Purchase Order NumberPurchase Order Number

Invoices (Itemized)Invoices (Itemized) DateDate Sales TaxSales Tax Finance ChargesFinance Charges Goods or Services PurchasedGoods or Services Purchased

ChecksChecks Timely PaymentsTimely Payments Two Signatures (One must be the Principal – no Two Signatures (One must be the Principal – no

stamp)stamp) Blank ChecksBlank Checks

MonitorMonitor Address ProblemsAddress Problems

Topics of Topics of DiscussionDiscussion

MiscellaneousMiscellaneous FundraisersFundraisers

ApprovalApproval Types of FundraisersTypes of Fundraisers

Outside OrganizationsOutside Organizations If MPS Employees handle funds, the funds are to be If MPS Employees handle funds, the funds are to be

posted in the school’s books and bank accountposted in the school’s books and bank account Entering into ContractsEntering into Contracts

The hiring and payment of all persons coaching The hiring and payment of all persons coaching athletics or supervising students must go through the athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll MPS Human Resources Office and the MPS Payroll Department.Department.

RevenuesRevenues Teacher ReceiptingTeacher Receipting

THE ORIGINAL TEACHER RECEIPT SHOULD BE THE ORIGINAL TEACHER RECEIPT SHOULD BE GIVEN TO THE INDIVIDUAL DELIVERING THE GIVEN TO THE INDIVIDUAL DELIVERING THE FUNDSFUNDS

Forms of ReceiptsForms of Receipts Receipt Books ($5.01 and over)

All receipts in a book should be issued before another book is put into use.

Daily Activity Purpose Form Receipt ($5.00 and under)

Other Accountability FormOther Accountability Form Teacher Receipt Reconciliation FormTeacher Receipt Reconciliation Form

Office ReceiptingOffice Receipting Master ReceiptMaster Receipt

Master Receipts are to be stapled to the back Master Receipts are to be stapled to the back of the last applicable receipt within the of the last applicable receipt within the teachers’ receipt book and the book is returned teachers’ receipt book and the book is returned to the teacherto the teacher

RevenuesRevenues Voided ReceiptsVoided Receipts

Voided Receipts must be retainedVoided Receipts must be retained ““VOID” must be written on the receipt VOID” must be written on the receipt

and the white copy and the yellow copy and the white copy and the yellow copy must remain in the book (white copy must remain in the book (white copy stapled to yellow copy)stapled to yellow copy)

Altered ReceiptsAltered Receipts Receipts should not be altered (no liquid Receipts should not be altered (no liquid

paper or erasures for mistakes)paper or erasures for mistakes) Mistakes should be crossed through with Mistakes should be crossed through with

one line and the correction should be one line and the correction should be initialed and made beside or above the initialed and made beside or above the errorerror

RevenuesRevenues

Cut-OffsCut-Offs Daily Receipting of MoneyDaily Receipting of Money

(stop the collection of funds 15 min. (stop the collection of funds 15 min. after the last period begins – secondary after the last period begins – secondary only)only)

School Year Receipting of MoneySchool Year Receipting of Money (stop the collection of funds 3 days to 1 (stop the collection of funds 3 days to 1

week before the last day of school)week before the last day of school) Fiscal Year Receipting of MoneyFiscal Year Receipting of Money

(stop the collection of funds 3 days to 1 (stop the collection of funds 3 days to 1 week before September 30)week before September 30)

RevenuesRevenues DepositsDeposits

CashCash IntactIntact (Do not make change from cash that has been (Do not make change from cash that has been

receipted)receipted) ChecksChecks

Checks made payable to the school should be Checks made payable to the school should be recorded, copied or notated before depositingrecorded, copied or notated before depositing

Checks are not to be cashed (Checks are not to be cashed (the school is not a bank))

Frequency of DepositsFrequency of Deposits ““IN A TIMELY MANNER, IN A TIMELY MANNER, USUALLY DAILYUSUALLY DAILY””

The longer money stays in the school, the greater The longer money stays in the school, the greater the chances for something happening to it.the chances for something happening to it.

RevenuesRevenues MAKE IT IMPORTANT TO YOUMAKE IT IMPORTANT TO YOU

Monitor Accuracy & Completeness of:Monitor Accuracy & Completeness of: Teacher Receipt BooksTeacher Receipt Books Daily Purpose FormsDaily Purpose Forms Teacher Receipt Reconciliation FormsTeacher Receipt Reconciliation Forms Office Master ReceiptsOffice Master Receipts

Monitor Frequency of:Monitor Frequency of: DepositsDeposits When data is posted into McAleerWhen data is posted into McAleer

Print out a weekly or semi-monthly “Principal Print out a weekly or semi-monthly “Principal Report”Report”

Address ProblemsAddress Problems

ExpensesExpenses Purchase Orders (Approval of Purchase Orders (Approval of

Purchase)Purchase) Activity Balance – Money to cover expenseActivity Balance – Money to cover expense

Activity must have a positive balanceActivity must have a positive balance Allowable Expense – Can the good or service beAllowable Expense – Can the good or service be

purchased with the purchased with the fundsfunds

Consider whether the activity is public or non-publicConsider whether the activity is public or non-public Consider what is not allowable paid from public fundsConsider what is not allowable paid from public funds

Consider whether the money has an earmarkConsider whether the money has an earmark Consider who has discretion of the fundsConsider who has discretion of the funds Consider whether the good or service should be bidConsider whether the good or service should be bid

The purchase order must be signed to approve The purchase order must be signed to approve the purchasethe purchase

The purchase order must be numbered (0395-The purchase order must be numbered (0395-111)111)

The number before the hyphen is the cost centerThe number before the hyphen is the cost center The number after the hyphen represents the school The number after the hyphen represents the school

year and the number of the purchase order.year and the number of the purchase order.

ExpensesExpenses

InvoicesInvoices Dates – Dates – Date of the invoice must be dated Date of the invoice must be dated

on or after the purchase order dateon or after the purchase order date Sales Tax – There should not be sales tax Sales Tax – There should not be sales tax

charged to the school except in the case charged to the school except in the case of food and lodging reimbursementsof food and lodging reimbursements

Finance Charges – There should no Finance Charges – There should no finance charges (pay bills on time)finance charges (pay bills on time)

Goods or Services Purchased – Goods and Goods or Services Purchased – Goods and services should match the purchase orderservices should match the purchase order

ExpensesExpenses ChecksChecks

Timely Payments – Vendors should be paid in Timely Payments – Vendors should be paid in a timely manner a timely manner

Two Signatures – There must be two signatures on a Two Signatures – There must be two signatures on a check (one signature must be check (one signature must be

the the Principal – no stamp) Principal – no stamp)

Blank Checks – The bookkeeper or another Blank Checks – The bookkeeper or another administrator should not be administrator should not be asked to sign asked to sign a blank check. All a blank check. All checks should be checks should be presented to presented to the Principal along with the the Principal along with the invoice invoice and the purchase order to pay for and the purchase order to pay for items that have arrived at the schoolitems that have arrived at the school

ExpensesExpenses MAKE IT IMPORTANT TO YOUMAKE IT IMPORTANT TO YOU

Monitor Completeness and Details of:Monitor Completeness and Details of: Purchase OrdersPurchase Orders InvoicesInvoices

Monitor Frequency and Policies Monitor Frequency and Policies Concerning:Concerning: Paying VendorsPaying Vendors Writing ChecksWriting Checks

Designate specific times to pay billsDesignate specific times to pay bills Address ProblemsAddress Problems

MiscellaneousMiscellaneous FundraisingFundraising

The Principal must approve each The Principal must approve each school fundraising activity before it school fundraising activity before it begins. Additional approval from begins. Additional approval from the Central Office may be required the Central Office may be required in the future.in the future. Safety and consideration should be Safety and consideration should be

considered when approving a considered when approving a fundraiser that involves students fundraiser that involves students (supervision of car washes)(supervision of car washes)

Per the State Guide, a form Per the State Guide, a form requesting authorization for a requesting authorization for a fundraising activity to be held must fundraising activity to be held must be submitted to the Principal.be submitted to the Principal.

MiscellaneousMiscellaneous Fundraising (continued)Fundraising (continued)

The form is to include: The form is to include: Date of requestDate of request Name of the individual making the requestName of the individual making the request Activity account to receive proceeds from Activity account to receive proceeds from

fundraiserfundraiser Class, club, or organization that will conduct the Class, club, or organization that will conduct the

activity activity Name of projectName of project Beginning and ending dates of fundraiserBeginning and ending dates of fundraiser Name of company supplying items for saleName of company supplying items for sale Description of items for saleDescription of items for sale Estimated cost of items for saleEstimated cost of items for sale Sales price of itemsSales price of items Description and estimated cost of related Description and estimated cost of related

fundraiser expensesfundraiser expenses Estimated profit from fundraiserEstimated profit from fundraiser

MiscellaneousMiscellaneous

Outside OrganizationsOutside Organizations Booster OrganizationsBooster Organizations

If a school employee is associated with the If a school employee is associated with the activity supported by the booster activity supported by the booster organization, serves/holds a leadership organization, serves/holds a leadership position in the organization or leads fund-position in the organization or leads fund-raising or maintains the accounting records raising or maintains the accounting records for the organization, the money should be for the organization, the money should be run through the schoolrun through the school

Parent OrganizationsParent Organizations If a school employee leads fund-raising or If a school employee leads fund-raising or

maintains the accounting records for the maintains the accounting records for the organization, the money should be run organization, the money should be run through the schoolthrough the school

MiscellaneousMiscellaneous Outside OrganizationsOutside Organizations

Booster Organizations (continued)Booster Organizations (continued) Activities of a booster organization may come Activities of a booster organization may come

under the control of a school principal if:under the control of a school principal if: Organization collects admissions to school Organization collects admissions to school

functionfunction Organization operates concessions on school Organization operates concessions on school

property at the school functionproperty at the school function Organization collects parking fees for school Organization collects parking fees for school

functionsfunctions Organization operates a training camp including Organization operates a training camp including

students of the activity is supportsstudents of the activity is supports Organization operates exhibitions or Organization operates exhibitions or

competitions that includes students of the competitions that includes students of the activity it supportsactivity it supports

MiscellaneousMiscellaneous Outside OrganizationsOutside Organizations

Specific Requirements for Boosters and Parent Specific Requirements for Boosters and Parent OrganizationsOrganizations

Organizations must obtain an employee identification Organizations must obtain an employee identification number from the IRSnumber from the IRS

Organizations must provide a report of an annual Organizations must provide a report of an annual audit of the organization to the schoolaudit of the organization to the school

Organization must make its financial records Organization must make its financial records available to the school’s auditors and authorized available to the school’s auditors and authorized school employees upon requestschool employees upon request

Organization must provide required financial reportsOrganization must provide required financial reports Organization must provide proof of a fidelity bond for Organization must provide proof of a fidelity bond for

the treasurerthe treasurer Organization will not provide any payment or benefit Organization will not provide any payment or benefit

to a school employee in violation of the State Ethics to a school employee in violation of the State Ethics Law.Law.

MiscellaneousMiscellaneous

Entering into ContractsEntering into Contracts

The hiring and payment of all personsThe hiring and payment of all persons

coaching athletics or supervising studentscoaching athletics or supervising students

must go through the MPS Human must go through the MPS Human ResourcesResources

Office and the MPS Payroll Department.Office and the MPS Payroll Department.

Contracts for those people must beContracts for those people must be

establishedestablished

SummarySummary Since the 2003 audit, we have been cited Since the 2003 audit, we have been cited

by Examiners for the same thingsby Examiners for the same things

““MAKE IT IMPORTANT TO YOU”MAKE IT IMPORTANT TO YOU”

CONDUCT AN AUDIT OF YOUR SCHOOL TO SEE CONDUCT AN AUDIT OF YOUR SCHOOL TO SEE IF THE REQUIREMENTS ARE MET IF THE REQUIREMENTS ARE MET

PERIODICALLY MONITORPERIODICALLY MONITOR

We welcome any feedback that you might We welcome any feedback that you might have on the topics that we have gone over.have on the topics that we have gone over.