Training FINANCE LOCAL SCHOOL ACCOUNTING Learning the Value of Internal Controls “Make it Important to You” Montgomery Public Schools
Introduction • Internal Controls are necessary to ensure that assets are protected, records are reliable and that transactions are executed in accordance with authorized accounting principles and policies • It is Management’s (the Principal) responsibility to establish and maintain an effective internal control system • Internal Controls must be important to the Principal or it will not be important to staff members
Introduction (pg 2) • Financial Accountability is all about establishing and implementing sound accounting practices and procedures. • Topics outlined below involve the bookkeeper, teachers and other staff. • Principals should “TRUST” their bookkeepers, teachers and other staff. But it has been proven that trust is not enough. • “PRINCIPALS MUST ALSO VERIFY”.
Topics of Discussion • Audit Findings • Revenues • Receipting Procedures Not Followed • Timeliness of Deposits Not Acceptable • Expenses • Invoices Dated Before the Purchase Order Date • Unallowable Expenditures • Accounting Manual • Approved by the State of Alabama June 10, 2010
Topics of Discussion • Revenues • Receipting • Teacher Receipting • Altered Receipts • Voided Receipts • Office Receipting • Cut-Offs • Deposits • Cash • Checks • Frequency • Monitor • Address Problems
Topics of Discussion • Expenses • Purchase Orders (Approval) • Activity Balances • Allowable Expense • Signature/Date • Purchase Order Number • Invoices (Itemized) • Date • Sales Tax • Finance Charges • Goods or Services Purchased • Checks • Timely Payments • Two Signatures (One must be the Principal – no stamp) • Blank Checks • Monitor • Address Problems
Topics of Discussion • Miscellaneous • Fundraisers • Approval • Types of Fundraisers • Outside Organizations • If MPS Employees handle funds, the funds are to be posted in the school’s books and bank account • Entering into Contracts • The hiring and payment of all persons coaching athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll Department.
Revenues • Teacher Receipting • THE ORIGINAL TEACHER RECEIPT SHOULD BE GIVEN TO THE INDIVIDUAL DELIVERING THE FUNDS • Forms 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 Form • Teacher Receipt Reconciliation Form • Office Receipting • Master Receipt • Master Receipts are to be stapled to the back of the last applicable receipt within the teachers’ receipt book and the book is returned to the teacher
Revenues • Voided Receipts • Voided Receipts must be retained • “VOID” must be written on the receipt and the white copy and the yellow copy must remain in the book (white copy stapled to yellow copy) • Altered Receipts • Receipts should not be altered (no liquid paper or erasures for mistakes) • Mistakes should be crossed through with one line and the correction should be initialed and made beside or above the error
Revenues • Cut-Offs • Daily Receipting of Money • (stop the collection of funds 15 min. after the last period begins – secondary only) • School Year Receipting of Money • (stop the collection of funds 3 days to 1 week before the last day of school) • Fiscal Year Receipting of Money • (stop the collection of funds 3 days to 1 week before September 30)
Revenues • Deposits • Cash • Intact(Do not make change from cash that has been receipted) • Checks • Checks made payable to the school should be recorded, copied or notated before depositing • Checks are not to be cashed (the school is not a bank) • Frequency of Deposits • “IN A TIMELY MANNER, USUALLY DAILY” • The longer money stays in the school, the greater the chances for something happening to it.
Revenues • MAKE IT IMPORTANT TO YOU • Monitor Accuracy & Completeness of: • Teacher Receipt Books • Daily Purpose Forms • Teacher Receipt Reconciliation Forms • Office Master Receipts • Monitor Frequency of: • Deposits • When data is posted into McAleer • Print out a weekly or semi-monthly “Principal Report” • Address Problems
Expenses • Purchase Orders (Approval of Purchase) • Activity Balance – Money to cover expense • Activity must have a positive balance • Allowable Expense – Can the good or service be purchased with the funds • Consider whether the activity is public or non-public • Consider what is not allowable paid from public funds • Consider whether the money has an earmark • Consider who has discretion of the funds • Consider whether the good or service should be bid • The purchase order must be signed to approve the purchase • The purchase order must be numbered (0395-111) • The number before the hyphen is the cost center • The number after the hyphen represents the school year and the number of the purchase order.
Expenses • Invoices • Dates – Date of the invoice must be dated on or after the purchase order date • Sales Tax – There should not be sales tax charged to the school except in the case of food and lodging reimbursements • Finance Charges – There should no finance charges (pay bills on time) • Goods or Services Purchased – Goods and services should match the purchase order
Expenses • Checks • Timely Payments – Vendors should be paid in a timely manner • Two Signatures – There must be two signatures on a check (one signature must be the Principal – no stamp) • Blank Checks – The bookkeeper or another administrator should not be asked to sign a blank check. All checks should be presented to the Principal along with the invoice and the purchase order to pay for items that have arrived at the school
Expenses • MAKE IT IMPORTANT TO YOU • Monitor Completeness and Details of: • Purchase Orders • Invoices • Monitor Frequency and Policies Concerning: • Paying Vendors • Writing Checks • Designate specific times to pay bills • Address Problems
Miscellaneous • Fundraising • The Principal must approve each school fundraising activity before it begins. Additional approval from the Central Office may be required in the future. • Safety and consideration should be considered when approving a fundraiser that involves students (supervision of car washes) • Per the State Guide, a form requesting authorization for a fundraising activity to be held must be submitted to the Principal.
Miscellaneous • Fundraising (continued) • The form is to include: • Date of request • Name of the individual making the request • Activity account to receive proceeds from fundraiser • Class, club, or organization that will conduct the activity • Name of project • Beginning and ending dates of fundraiser • Name of company supplying items for sale • Description of items for sale • Estimated cost of items for sale • Sales price of items • Description and estimated cost of related fundraiser expenses • Estimated profit from fundraiser
Miscellaneous • Outside Organizations • Booster Organizations • If a school employee is associated with the activity supported by the booster organization, serves/holds a leadership position in the organization or leads fund-raising or maintains the accounting records for the organization, the money should be run through the school • Parent Organizations • If a school employee leads fund-raising or maintains the accounting records for the organization, the money should be run through the school
Miscellaneous • Outside Organizations • Booster Organizations (continued) • Activities of a booster organization may come under the control of a school principal if: • Organization collects admissions to school function • Organization operates concessions on school property at the school function • Organization collects parking fees for school functions • Organization operates a training camp including students of the activity is supports • Organization operates exhibitions or competitions that includes students of the activity it supports
Miscellaneous • Outside Organizations • Specific Requirements for Boosters and Parent Organizations • Organizations must obtain an employee identification number from the IRS • Organizations must provide a report of an annual audit of the organization to the school • Organization must make its financial records available to the school’s auditors and authorized school employees upon request • Organization must provide required financial reports • Organization must provide proof of a fidelity bond for the treasurer • Organization will not provide any payment or benefit to a school employee in violation of the State Ethics Law.
Miscellaneous Entering into Contracts The hiring and payment of all persons coaching athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll Department. Contracts for those people must be established
Summary • Since the 2003 audit, we have been cited by Examiners for the same things • “MAKE IT IMPORTANT TO YOU” • CONDUCT AN AUDIT OF YOUR SCHOOL TO SEE IF THE REQUIREMENTS ARE MET • PERIODICALLY MONITOR • We welcome any feedback that you might have on the topics that we have gone over.