Governmental Accounting and Budgeting

Transcription

1 Governmental Accounting and Budgeting School Finance and Operations (SFO) Exam Prep with Virginia Emphasis Facilitators: Dr. Jesse Hughes And Deborah White October

2 Practice Exam Resources on ASBO International website ation/practice Questions for the Exam Part 1_Accounting.pdf ASBO/SFO Exam: Part 1 Accounting: The knowledge and skills covered in this exam represent what this professional should know at the time he or she is first hired for a position in school business management. 70 questions 2 hours allowed 2

3 Manage Accounting Systems (28 33% of exam) 3

4 Maintain Accounting Software Recording transactions/journal entries Increase expenses increase debit Increase revenue increase credit Many transactions happen in a special journal with just the total recorded in the General Ledger Password control is essential 4

5 Maintain Accounting Software Legacy Systems System Upgrades Data Recovery Back up Off site location (best practice for payroll) Verify backup data regularly Communication options Local area network (LAN) local computers, printers, databases Wide area network (WAN) many users and LANs integrated into one Browsers Intranet internal Internet password protected, controlled by own staff Extranet public access, use trusted partnerships to store 5

6 Maintain Chart of Accounts Balance Sheet (assets = liabilities + fund equity) Assets Current and Long Term (fixed assets) Liabilities Current and Long Term (Pensions & OPEB, new GASB 68 and 72) Fund Balance (GASB 54) Nonspendable, Restricted Committed, Assigned, Unassigned Income Statement (defined by VDOE/federal govt) Revenue Expenditures Encumbrances Typical order: Transaction type Fund Function/Department Object Cost Ctr Program 6

7 Internal Controls Sarbanes Oxley Act of 2002 set the standard Documentation Written procedures (also new employee training) Flowcharts (both data flow and systems/processes) Fraud triangle Recognize red flags and test for them staff who won t take day off Prevention measures dual controls, integrity at the top, hot line External audit is not to prevent fraud need internal audit function and other ways to notice anomalies 7

8 Create Annual Budgets Funds (governmental, proprietary/enterprise, fiduciary/agency) Preparing Annual Budget (estimate) Balanced vs. Deficit Budget, educational plan Options: student based, zero based, incremental, etc. Revenue: Federal, State, and Local Sources (tax cap? Rent facilities? Private sector grants); bond issues Expenditures: watch irregular needs (textbook, technology, capital, SPED); trend analysis, enrollment changes, look to current YTD and not just previous budget Budget reductions: defer spending, re evaluate services and contracts, eliminate non essential services, reduce programs/positions, strategic abandonment, efficiencies 8

9 Manage Annual Budgets Budget Execution Compare budget estimates to actual YTD Look at true encumbrances Limit overrides (do budget transfers) Budget Amendments (when necessary) Budget Supplements (new funding) Budget Reporting Transparency how much/how often do stakeholders want to see Current year budget actual YTD encumbrances = balance remaining Annual budget report consider applying for national award programs 9

10 Manage Accounting Functions (67 72% of exam) 10

11 Manage Cash Flows Cash Forecast review historical trends, economic forecast (recession?) Cash Controls what is cash on hand requirements/liquidity test (projected estimate of days Division could meet operating expenses with no additional revenue received) Board policies? Plan to build reserves? Daily Balancing Investing Spending Bank Reconciliation monthly 11

12 Manage Payroll Functions 75 90% of most school budgets (enrollment changes can directly effect staffing levels, may need demographer to help estimate, don t hire if there is no budget to support it) Position control/payroll register Review of payroll changes Compensation & benefits (30% more) Pay table and deduction code accuracy Written documentation Budget Authority Time worked Rate of Pay Recording leave / pay docks Special problems different contract days and start dates (work schedules), accrued payrolls (July/August run in June), ghost employees 12

13 Manage Payroll Functions Understand federal laws Fair Labor Standards Act who s exempt or non exempt (categories) Wage and Labor Standards minimum wage, minimum overtime rules IRS Fringe Benefit rules (no cash gifts EVER) Know federal and state compliance rules and deadlines Strict payment of taxes day before payroll W 2 vs 1099 (non corporate service vendors who were paid more than $600 for year) 940 and monthly/quarterly state reports State retention rules for payroll (and other financial records); watch that federal grant and bond issuance requirements may be longer 13

14 Manage Grants and Accounts Receivable Make sure procedures in place to accumulate, categorize, report and control revenues (modify accrual) Controlling Grants (Operating and Capital) quarterly reimbursements Issuing Invoices (miscellaneous receivables) Cash Collection Controls Aging schedule monitor collection process Allowance for Uncollectible Accounts and Bad Debt write off practices Separation of duties between collection and accounting 14

15 Manage Purchasing Procedures Controlling, Coding, and Consolidating Requisitions (where possible) Request for Proposals (services, insure due date and fair rating system ) Controlling Invitation for Bids (materials, construction) public notice period days Open or sealed bids have 2 staff during public opening where bids announced Awarded to lowest responsible bidder who conforms in all material aspects to the requirements and criteria set in the written IFB Other options (quotes for small purchases, state contracts, national and local purchasing cooperatives) Issuing Purchase Orders or Contracts who can sign? 15

16 Manage Accounts Payable Process Know who has budget authority within purchasing thresholds Requisitions detail request for services or specific items to purchase or get out of central stores warehouse verify budget authority, get quotes (responsible entities, fair competition) Purchase Orders (legal authority) Receiving Reports Cash Payment Controls Separation of duties between authorization and payment 16

17 Track Fixed Assets Develop capital asset policy Dollar threshold One year or more (or other timeframe) Fixed Asset Register to safeguard assets Control Procedures for Acquisition and Disposal Dispose when no longer usable Auction is most efficient way to dispose Don t just delete of register, record disposal date Register can be used for annual audit and developing depreciation schedules 17

18 Reconcile General Ledger Accounts Cash basis vs. accrual basis vs. modified accrual Accrual revenue earned and expenditures incurred Monthly update due to/due from (internal service funds, field trip costs) Trial Balance (balance sheet and income statement items together, balanced if 0) Closing Entries Financial Statements use to inform Board. Post on public site to be transparent 18

19 Prepare Annual Financial Reports Comprehensive Annual Financial Report for Governmental Activities and Business Type Activities (Primary Government) as well as Component Units Transmittal Letter Management Discussion and Analysis Government wide Statements: Statement of Financial Position and Statement of Activities Fund Financial Statements including Statement of Cash Flows (for proprietary funds), Reconciliations to Government wide statements and Fiduciary Fund statements Statement of Budget to Actual Comparison Notes to the Financial Statements Required Supplemental Information Statistical Section Federal Compliance Reports Virginia: Annual School Report School Activity Fund Report 19

20 Monitoring Student Activity Accounts Activity accounts only for students Under guidance of faculty member Convenience accounts Faculty/staff watch that receipts are not from student generated receipts (acceptable: coke machine, Jeans day ) Parent organizations shouldn t normally flow through schools; need own bank account Must be consistent with School Board policies and be established by School Board; establish student activity fund manual as written documentation for internal controls and establishing responsibilities Separate audit in Virginia 20

21 Taking the SFO Exam Part 1: Accounting Read through all candidate materials to make sure you are eligible Requires an initial application with resume and fee through ASBO International ($150 member, $225 non member of ASBO) ASBO reviews for meeting eligibility requirement (approximately 2 weeks later) Pay Exam 1 fees through ASBO International ($195) Schedule test at a Pearson Vue center (approximately 5 days later) Take the exam and get results immediately Pass/fail only no numerical score when passing it Can retake test within a required time frame, with new fee payment 21