Loudoun County Public Schools Student Activity Funds Administrative and Accounting Manual December Table of Contents. Introduction...

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1 Loudoun County Public Schools Student Activity Funds December 2005 Table of Contents Introduction...2 Section 1 General Accounting Principles 1.1 Purpose General Information General Accounting Principles Principles for School Activity Funds Basis of Accounting Internal Control Fiscal Year Audits Duties and Responsibilities Conflict of Interest Fundraisers Grants...14 Section 2 Activity Fund Account Structure 2.1 Classification of Accounts Types of Funds Types of Accounts Establishing an Account Overview of Accounting Transactions Social/Sunshine Funds...17 Section 3 Activity Fund Accounting Procedures 3.1 Accounting Procedures Receipts Cash Transmittals Bank Deposits Disbursements Transfers Procurement of Goods or Services Donations to School Activity Fund Per Diem Payments Activity Sponsored Travel Advances Cash on Hand Bank Reconciliations

2 Introduction The Loudoun County School Board endorses and encourages all schools to utilize the financial resources of activity funds in the school s educational program. Activity funds differ from public funds raised from traditional local taxing sources. They are neither subject to appropriation nor are they under the direct control of the budgetary process. Most of the accounting principles governing activity funds are comparable to those pertaining to the use of public funds. With proper guidance and accountability, the additional funds made available to a school through its activity funds can mean the difference between offering a student an adequate or a superior educational experience. The purpose of this administrative manual goes beyond the mere endorsement of activity funds. It sets forth a uniform set of administrative and accounting guidelines for the Loudoun County Public Schools. Consideration has been given to the inherent differences between schools because of size, grade level, complexity and staffing. The guidelines contained in this publication offer flexibility in certain accounting methods, while this manual is not intended to be all-inclusive of circumstances encountered. Hopefully, the procedures will aid each school in establishing the most efficient manner to manage the activity funds. The Loudoun County School Board Superintendent is expressly authorized through both state and local policy to develop, implement and monitor all policies and rules pertaining to school activity funds. Individual school principals are directly responsible for overseeing the school activity funds of their respective schools. While many of the duties and routines necessary to appropriately maintain the funds may be delegated to subordinates the responsibility for managing the funds remain with the principal. The Loudoun County School Board, by enforcing this policy, acknowledges the vital roles performed by all school employees in insuring that school activity funds are properly organized, administered and controlled. 3

3 Section 1: General Accounting Principles 1.1 PURPOSE To provide guidelines for the management of school activity funds. 1.2 SCHOOL ACTIVITY FUND DEFINITION According to the regulations of the Virginia Board of Education school activity funds are defined as All funds received from extra curricular school activities, such as entertainment, athletic events, cafeteria, clubs dues, etc., and from any and all activities of the school involving school personnel, students or property are hereby classified as school activity funds. Each school should keep an accurate record of all receipts and disbursements so that a clear and concise statement of the condition of each fund may be determined at all times. It shall be the duty of each principal to see that such records are maintained in accordance with these regulations, and rules promulgated by the local school board. The principal or person designated by the principal shall perform the duties of school finance officer or central treasurer. The term student activity funds is synonymous with the term school activity funds. 1.3 GENERAL ACCOUNTING PRINCIPLES Accounting principles are rules that have been adopted to guide activities necessary to the practice of accounting. Consistency: Accounting information shall be maintained and reported from period to period in a consistent manner. For example, indiscriminately changing fund entries from month to month or completely altering the school s fund structure from year to year devalues the use of a school s financial reports. Through consistent application of accounting information, comparability and decision making processes are improved. Timeliness: Accounting data should be entered into the accounting cycle and financial information reported to decision makers in a timely manner. When important financial information about the activity funds is withheld, the ability to manage the school s financial accounts is impaired. 4

4 Reliability: The accounting information must represent the entity s economic condition. This objective is only accomplished by having complete and verifiable information. A bookkeeper s accountability is dependent on adequate accounting documentation. Completeness: Financial presentations are determined to be a complete disclosure of all significant financial information unless so stated. The matching process is essential to completeness. Recording all revenues and any corresponding disbursement in the same period constitutes an example of completeness. For example, collecting various revenues from picture sales during the year, but failure to remit and record the offsetting expenses for the cost of the pictures, would be an incomplete financial presentation for an activity fund because the inflated balance in the cash account would, in effect, be misleading. 1.4 ADMINISTRATIVE PRINCIPLES FOR SCHOOL ACTIVITY FUNDS 1. School activity funds shall be used solely in accordance with the purpose for which such funds are collected. No school activity shall be conducted for the sole purpose of producing revenue. It is intended that school activities shall be self-supporting. 2. Projects that generate school activity funds shall, in general, contribute to the educational experiences of pupils and shall not conflict with the instructional program. 3. Funds derived from the student body, as a whole shall be expended to benefit the student body as a whole either directly or indirectly. 4. School activity funds shall, in general, be expended in ways that benefit those pupils currently in school who have contributed to the accumulation of such funds. 5. Student body representation should be encouraged in the management of funds raised by the student body and expended for its benefit, subject to faculty supervision. 6. The management of school activity funds shall be in accordance with the best business practices, including sound budgetary and accounting procedures. 7. The Assistant Superintendent of Business and Financial Services determines and sets activity fund accounting procedures. 8. Principals, through their representatives, shall participate in the preparation, modification, and interpretation of policies, regulations, and procedures affecting student body affairs. 5

5 1.5 BASIS OF ACCOUNTING Basis of Accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The accounts and records of the activity funds are maintained on a cash basis of accounting, reflecting only cash received and cash disbursed. Therefore, receivables and payables, inventories, accrued income and accrued expenses; equipment and depreciation are not reflected in the accounting records. Minor additions and replacements of furniture and equipment intended to be paid for out of normally recurring income are included in costs and expenses. Because the cash basis of accounting does not record an expense until an invoice is paid or record revenue until cash is deposited, the following methodologies are used to capture additional financial information and ensure the accuracy of the Activity Fund Financial Statements. All invoices should be approved by the principal and paid by the bookkeeper prior to the end of each month in which the invoice was received. Any invoices received, but unpaid because of a valid business reason at the end of the fiscal year (June 30), should be listed out individually and accompany the standard monthly financial statement for June 30 and submitted to the Accounting Division. All cash receipts shall be deposited intact on a daily basis, unless the total deposit amount is less than $ If the daily amount is less than $25.00, the principal may retain the daily cash receipts in a secure location until the total receipts reach $25.00 or until the last working day of the week, whichever occurs first. 1.6 INTERNAL CONTROL The State Comptroller has defined internal control as: The conscious inclusion in an agency s operations of a series of actions to achieve certain specified objectives relating to control over assets and over accounting and record keeping practices. Broadly, the objectives of internal control are to give management reasonable, but not absolute, assurances that assets are safeguarded from unauthorized use or disposition and those financial records are reliable to permit the preparation of financial statements and make meaningful decisions regarding the allocation and use of financial resources. 6

6 Internal control encompasses continuous and qualified supervision by the Principal to ensure that approved procedures are followed and that the levels of responsibility and accountability are clearly defined. Within this context, reasonable care shall be taken to ensure, through education and training, that key personnel have high levels of competence and integrity. The basic standards of internal control, as defined by the State Department of Education can be summarized as follows: 1. Recording of Transactions: Transactions shall be recorded as executed and shall be properly classified. 2. Separation of Duties: Key duties such as authorizing, approving, and reporting transactions, issuing or receiving checks, making payments, and reviewing or auditing such transactions shall be assigned to separate individuals to maximize the effectiveness of internal control and to minimize the risk of loss. Internal control depends largely on the elimination of opportunities to conceal errors or irregularities. Such control, in turn, depends on the assignment of work to such a manner that no one individual is responsible for all phases of an activity or transaction, thereby creating a situation that would permit errors or irregularities to go undetected. 3. Access to Resources: Access to resources shall be limited to authorized personnel. Access includes both direct physical access and indirect access through the preparation or processing of documents that authorize the use and disposition of resources. 4. Records: Procedures shall be implemented to ensure that records, regardless of media, be secure from unauthorized use, alteration or destruction, and be retained in accordance with the policies of the State Archive, and be readily auditable. 1.7 FISCAL YEAR The fiscal year for all activity funds within LCPS is July 1 through June 30. The reporting period shall be the traditional calendar month. Schools shall include all financial transactions through the end of each month. The accounting records, including business documents, books of original entry, and ledgers shall be closed at the end of the month with in five working days. All corresponding monthly reports shall cover a complete month. 7

7 1.8 AUDITS Loudoun County Public Schools coordinates internal audit practices with the external audit requirements by independent certified public accountants A. External Audits The Virginia Board of Education mandates an annual external audit conducted by a certified public accountant. The basic objectives of the audit is to provide reasonable assurance, through the examination of sufficient, competent evidential matter, that: 1. The cash basis financial statements of the school activity funds are presented in accordance with Generally Accepted Accounting Principles, are a fair presentation of the school s financial condition, and are free from material misstatements. 2. The school s financial activities are in compliance with applicable laws and regulations. 3. Adequate internal controls have been developed and maintained to determine the character and extent of audit procedures which will afford a sufficient basis for an expression of an opinion as to the credibility and fairness of the financial statements 4. Cash balances, as stated in the books and records, were actually on deposit or on hand at the balance sheet date. 5. Fund balances are properly described and classified at the balance sheet date. 6. Collections of the school have been properly receipted, recorded, classified and deposited promptly. 7. Disbursements are properly authorized and recorded, and remittances are made on a timely basis. Supporting documentation for the disbursements are maintained and easily identified. The principal and bookkeeper should facilitate the auditors, in all regard, so as to minimize the time, expense and scheduling of the audit. 8

8 B. Internal Audits The objectives of the internal auditing function are the following: 1. Review of the reliability and integrity of financial operating information and the means used to identify, measure, classify and report such information. 2. Review of the systems established to ensure compliance with the policies, plans, procedures, laws, and regulations, which could have a significant impact on operations and reports, and should determine whether the school is in compliance. 3. Review the means of safeguarding assets and, as appropriate, verify the existence of such assets. 4. Review the operations to ascertain whether results are consistent with established objectives and goals and whether the operations are being carried out as planned. 5. Communicate any findings or deficiencies found during the internal audit in such a way as to enhance the objective of improving the school s operation and management of activity funds. Internal audits are performed at each school that has a termination of its principal and/or bookkeeper, other than at the school s year end or fiscal year end. In addition, Random internal audits of activity funds will be conducted to enhance the internal control structure of activity funds. 1.9 DUTIES AND RESPONSIBILITIES The principal s responsibility is for safeguarding, accounting for, and managing the school activity funds. The duties that must be performed in providing proper accounting management and security may be designated to the degree desired by the principal, but the responsibility shall remain with the principal. The fund sponsor manages a defined activity fund project such as a school club or a general fundraising project. The Accounting Division has financial oversight responsibilities for all activity funds. 9

9 The duties that must be performed by the principal or others in order to achieve proper security and management are specified below: A. Principals Principals shall use, at a minimum, the following management practices: 1. Be familiar with and enforce the provisions of the accounting manual 2. Instruct the bookkeeper or secretary as to duties to be performed and provide adequate supervision and guidance. 3. Obtain accurate and timely monthly reports from the bookkeeper or secretary covering the results of operations and the status of school activity funds. 4. Discuss proper financial practices periodically with staff members and responsible students (treasurers or other involved in financial operations) to include the following: a. proper budget planning b. prior approval before committing school activity funds c. need for receiving reports d. ticket control e. proper control of funds collected through use of receipts and daily submission to the bookkeeper or secretary. 5. Personally opens and reviews the monthly bank statement prior to presenting it to the bookkeeper for a monthly financial reconciliation. 6. Review and analyze, at least monthly, the status and operations of the school activity funds. The review process should involve the bookkeeper or secretary, department heads and fund sponsors to the extent considered appropriate. 7. Review supporting accounts to ensure that purchases and expenditures are authorized and supported properly. 8. Ensure that adequate facilities and physical controls are available and are used for protection of cash and other assets. Principals should have access to all accounting records and assets at all times, independent of the bookkeeper. 10

10 9. Monitor the operation of revenue-producing activities to avoid unanticipated losses. 10. Monitor implementation of approved audit recommendations and management decisions. 11. Approve all annual school activity budgets. 12. Ensure that other personnel are cross-trained in bookkeeping procedures to perform those functions in the absence of the bookkeeper. B. Assistant Principal Assistant principals should be familiar with the provisions of this manual. C. Bookkeepers and Secretaries Under the supervision of the principal or delegate, the bookkeeper or secretary shall receive receipts, deposit, account for, and disburse all funds flowing through the school activity fund accounts, except as otherwise directed by the principal. 1. Deposit all funds promptly and intact. 2. Maintain all required records on a current and accurate basis and ensure that the principal has access to all accounting records and school assets at all times. 3. Submit reports promptly and accurately in all transactions for school activity funds at least monthly or more frequently as required. 4. Keep the principal informed of all actual or potential problems. Document the problems for the principal and document the principal s instructions concerning resolutions. 5. Cross-train other personnel designated by the principal in daily bookkeeping procedures. 6. Perform other duties as specified by the principal. D. Fund Sponsors and Other School Personnel The principal of each school must appoint a staff member to supervise each activity fund account. Each sponsor shall become familiar with and ensure compliance with the administrative and accounting portion of this manual pertaining to his/her duties and responsibilities. Sponsors who are responsible for activities will review the financial operations and condition of the account periodically. Sponsors are obligated 11

11 to coordinate with school bookkeepers to ensure that proper accounting procedures are enforced. 1. Ensuring that the billings pertinent to the fund, and received by the bookkeeper are correct (including sales tax provisions) prior to final payment. 2. Providing the bookkeeper with copies of contract agreements, etc that are applicable to obligations of the activity account. 3. Collecting and documenting funds received from students. 4. Transferring such funds promptly to the bookkeeper. 5. Controlling inventories of salable merchandise. This control includes accurate records of quantity and adequate measures for safeguarding the assets. 6. Enforce ticket control requirements and reporting for events requiring ticket admission. 7. Providing necessary training to students who are assigned responsibilities for handling funds to and provide oversight responsibility to those students. E. Business and Financial Services The Business and Financial Services department develops, implements, and maintains a school fund activity system. 1. Trains principals, bookkeepers, and other staff in school fund accounting procedures. 2. Selects, implements, and maintains the school activity fund automated accounting software. 3. Ensures compliance with accounting procedures through an internal audit program. 4. Coordinates the annual external audit of school activity funds. 5. Prepares annual financial reports consolidating school activity fund activities. 6. Provides principals with written communication describing the findings of internal and external audits at least annually. 12

12 1.10 CONFLICT OF INTEREST The principals, directors, department heads, supervisors, teachers, secretaries or bookkeepers shall not authorize or enter into any personal financial transactions with the school that provides a commercial service or product to the school. These prohibited transactions apply to the related parties of the principal including his/her mother, father, brother, sister, spouse, son, daughter, son-in-law, daughter-in-law, brother-in-law, sister-inlaw or any member of his/her household. Exceptions to this rule may be granted by the Director of Finance where public exigency is served. Request for either an interpretation or an exception to this rule should be made in writing to the Director of Finance. Further, the above noted parties shall not authorize or permit School Activity Fund monies to be used for loans or to cash personal checks for faculty, staff or students of the school FUNDRAISERS Fundraising (fundraisers) are activities performed by students with the intent of earning money to support their particular organization through the sale of goods or performance of services. Each principal shall establish specific rules to be followed at his/her particular school within the scope of the following guidelines: A. Authorization of Fundraisers All fundraisers must be approved by the principal or a designated person and comply with Section 8-4 of the School Board Policy Manual. Requests and authorizations must be written. Each request, should as a minimum, provide the following information: 1. Club or organization undertaking the activity. 2. Staff sponsor. 3. Description of the fundraising activity. 4. Justification/reasons for the fundraiser. 5. The name of and prior experience with the vendor(s) providing the product(s) for resale (if applicable). 6. Beginning, ending and other significant dates. 13

13 7. The location and provision for product or services pick up, delivery and other logistical considerations. 8. A financial summary including expected total net income including estimated revenues, expenses. B. Evaluation of Fundraiser Request The principal must evaluate each fundraiser request and decide whether the request should be approved or disapproved. The following provides the principal with guidelines on evaluating the request: 1. The quality of the vendor(s) and product(s). 2. The appropriateness of the service or product. 3. The duration of the fundraiser. 4. The frequency and number of other fundraisers by the same organization and school. 5. The level of funds necessary to support the organization s program. 6. The activity earnings potential. 7. The requisite student effort versus earnings return, other administrative considerations (i.e. staff time and building usage). C. Administration of Fundraisers The operation of a successful fundraiser offers each participating student a valuable learning opportunity. All aspects of managing an economic enterprise are present and must be considered. Plans and goals for the fundraiser must be made prior to its approval. Each fundraiser must be executed, in accordance, with the approved plan. Each fundraiser shall have a plan that: 1. Contains a budget including the cost of product, other expenses and anticipated sales volume and income. 2. Identifies parties responsible for general oversight, product procurement and delivery, and other significant functions. 14

14 3. Identifies the method, time and place for: the sale for taking of order(s) of the product or service, the delivery (performance) of the product or service, and the collection of payment for the product or service.. 4. Requires a final accounting and establishes specific monetary goals with which to measure success. D. Other Fundraiser Considerations 1.12 Grants The following concerns all fundraising activities, but are directly applicable to those programs involved with the students' resale of products purchased at wholesale" from a commercial vendor. 1. Student order forms should be reconciled and records maintained with respect to product distribution and the remittance of funds. 2. The sponsor must secure and control all funds collected by each student. 3. Regardless of an individual s total sales, limits should be established with respect to the quantity of product or amount of money in the possession (or responsibility of) an individual at any given time. 4. Sponsors must monitor and ensure compliance with deadlines for product selling and distribution and collection of money. 5. Neither faculty nor staff should receive any monetary or other benefit from product vendors. 6. Generally, one fundraiser per activity per year is sufficient. Two may be authorized after considering the scope of an organization s program and resources. All grants or donations exceeding $5,000 should be transferred to the Division of Accounting to be recorded in Financial Accounting System. 15

15 Section 2: Activity Fund Account Structure 2.1 CLASSIFICATION OF ACCOUNTS The activity funds are organized on the basis of fund accounting, whereby each school is considered a separate accounting entity. The operation of each school is accounted for with a separate set of self-balancing accounts that are comprised of assets, fund balance, receipts and disbursements. Resources are accounted for in individual schools based upon the activity funds accounting structure. 2.2 TYPES OF FUNDS The activity fund is that which each school allocates its resources based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The fund structure employed by LCPS groups each activity account within each school into the following funds: 1. Athletic Activities The athletic activity fund is used to account for the athletic and related activities of each school. This fund is maintained by the high schools only and provides cumulative information concerning the high school s athletic receipts, disbursements, transfers and balances. 2. Class Activities The class activity fund accumulates all grade-related resources. At the elementary level, class activities represents grades kindergarten through five and other special classes such as special education and pre-school. In the middle schools, class activities represents grades six through eight and other special class activities, while at the high schools class activities are accounted for by the graduation year. 3. Contributions & Donations This activity fund accumulates all donated funds to the schools. In some cases the donated funds are restricted to be used for specific purposes. Such restrictions include memorial funds, grants, scholarships and endowments. The portion of funds restricted for specific purposes are a reservation of fund balance. 4. Fundraising Activities The fundraising activities fund accounts for all school related fundraising events. Some of the fundraisers occur annually, while other fundraisers occur on an ad-hoc basis. This fund tracks the receipts and disbursements of the fundraiser and provides the school with a profit/loss analysis of the event. The excess of receipts over disbursements are then transferred to and used by other activities. 16

16 5. Operating Activities The operating activities fund encompasses many accounts that are necessary to maintain the school s activity funds. Many of the receipts and disbursements from this fund are reimbursable to the School Board or represent operating costs of other activities. 6. Student Activities The student activities fund represents accounts within each school that are specifically for the students. Academic, club, and social activities are examples of student activity accounts that are accumulated in this fund. 7. Technology Education The technology education fund represents all of the resources generated at the Monroe Technology Center. Because these activities are both student and adult related and are for a specific purpose concerning technology training, the accounts are accumulated separately. 8. Other Activities The other activities fund is used to record receipts, disbursements, transfers and balances of those activities that do not fall within the definition of the other activities (items 1-7). 2.3 TYPES OF ACCOUNTS The accounting structure incorporates a chart of accounts that is the standard for all LCPS Schools. Within the chart of accounts are two major account categories, Activity Accounts and Control Accounts. Each standard activity account number begins with the activity fund number to which it belongs. Control Accounts represent the assets held by the school. Since activity funds are accounted for on the cash basis of accounting the only asset held by activity funds are cash and investments. 2.4 ESTABLISHING AN ACCOUNT An activity account may be established at the discretion of the school principal, but must be approved by the Accounting Division. The establishment of new activity accounts should strongly depend on the need and level of accountability. Under no circumstances may the standard chart of accounts be changed. Provisions have been made to allow each school flexibility to account for school specific activities within the standard chart of accounts. All activity accounts will be under the control and direction of the principal. Each account will have its individual general ledger where all receipts, disbursements, transfers and adjustments, for each account are recorded. 17

17 2.5 OVERVIEW OF ACCOUNTING TRANSACTIONS Each accounting event requires the bookkeeper to record a transaction(s) within the accounting system. Once transactions have been recorded (posted), the correction deletion of the transaction requires an additional transaction(s). All activity fund transactions are based upon one of the following events: 1. Cash being received by an activity. 2. Cash being disbursed from an activity. 3. Corrections made to a transaction previously posted incorrectly. 4. Receipts and disbursements reported on the bank statement. 5. Recording the movement of cash between bank accounts. 6. Recording the movement of funds between activity accounts. 2.6 SOCIAL/SUNSHINE FUNDS These funds may be collected by staff to pay for the social activities for the staff. For example, funds are collected to pay for flowers in the event a faculty member has an illness or death in the family. These funds may be controlled by rules set by the participants. However, if these funds are recorded on the School Activity Fund Accounting Records, LCPS School Activity Funds guidelines apply and must be followed. 18

18 Section 3: Activity Fund Accounting Procedures 3.1 ACCOUNTING PROCEDURES Accounting procedures are the rules for recording and documenting all financial transactions. Strict adherence to accounting procedures is mandatory. 3.2 RECEIPTS Processing receipts in a timely manner is the most important function that a bookkeeper performs. Since most of the receipts are collected in cash, performing the routines for receipts is critical to safeguarding the school s assets. A. Organizing Receipt Information 1. Whenever cash is transmitted from one person to another, the receiver shall verify the amount of cash, sign the receipt and issue a copy of the signed receipt to the provider. 2. Depending upon each school s volume of transactions, the bookkeeper will organize daily routines that best meets the school s needs. In all schools, the minimum organization of receipts will ensure that undeposited cash and receipts are kept in a safe and secure location. 3. The bookkeeper will gather reconciled cash transmittal forms from sponsors, teachers, athletic directors and others that have submitted daily cash. 4. The bookkeeper will organize transmittal forms and other individual receipt information in chronological order for each bank deposit. 5. The cash and cash equivalents for each cash transmittal form will be stored in an envelope, cash box or other storage device pending the processing of the daily deposit(s). Each individual receipt must reconcile to the amount of cash and cash equivalents. 6. If the bookkeeper has entered the receipt information into the accounting system when it was received into the office, a printed receipt will accompany all other receipt information. If the bookkeeper enters and prints receipts in the accounting system at a later time, the daily receipt information will be incomplete until such time that the information is entered. 19

19 B. Processing Receipts The bookkeeper has several choices to make when processing receipts, a) enter receipt information as it becomes available to the bookkeeper or b) enter receipt information in a batch mode, after the information becomes available. Following are the procedures required to process receipts: 1. Cash receipts should be counted in the presence of the person turning in the money before the receipt is issued. If this is not possible, the funds should be placed in a sealed envelope by the person turning in the money indicating amount enclosed, activity account, and person s name. The person turning in the receipts should sign and date across the seal. Receipts counted at a later time shall be in the presence of another person. 2. The receipt, if hand written, should be filled out completely and signed by the bookkeeper before the original is given to the person turning in the funds. If computerized, the receipt information must be entered, verified and posted prior to printing the receipt. In this case, the original signed receipt may be delivered to the person turning in the funds, at a later time. 3. A signed receipt must be issued for all money received, whether collected in the school or received by mail. 4. An original signed receipt shall be given to the person turning in the funds. A duplicate receipt may be retained by the bookkeeper on a daily basis or printed later, if needed. 5. Receipts shall be made to the individual from whom the money is received, rather than to a fund, account, or organization. 6. The composition of money turned in (checks, cash) should be indicated on the cash transmittal form. When completing the transmittal/deposit form, list each check separately, and maintain currency and coin in the same composition as received, list the total amount of each denomination, (One s, Five s, etc.). Coin deposited can be listed as one amount for total of all coin for the deposit. CASH RECEIPTS SHALL NOT BE USED TO CASH CHECKS, MAKE CHANGE OR OTHERWISE BE USED AS A PETTY CASH FUND AT ANYTIME. 20

20 7. Receipts shall be issued in chronological order of the date of the receipt. The accounting system will automatically assign the receipt number in sequential order, so entering the receipts in chronological order is critical. 8. A physical count of all cash and cash equivalents (checks and money orders) received must equal all receipts. C. Athletic & Other Events Charging Admission Special rules are applicable to the sale of tickets to school events. 1. Tickets are cash items (they represent money to the school) and should normally be in the custody of the school s bookkeeper and locked in the school vault/safe. A ticket inventory should be taken at least three times a year (beginning and end of the year, end of semester break) for each ticket color and sequence. 2. For each event requiring ticket sales, the bookkeeper should prepare ticket box(es) with pre-numbered tickets and sufficient cash to make change. To establish the required cash, the bookkeeper shall obtain a properly authorized check from the principal, cash the check, issue a receipt to the custodian of the account and record the advance as an asset. The numbers of the first ticket and last ticket on the roll and the cash provided in the change fund should be recorded by the bookkeeper on a reconciliation sheet and retain a copy. 3. The ticket box(es) are delivered to the school athletic director or the responsible party, as approved by the principal (see 1.11A-Authorization of Fund Raiser), will confirm the cash count and ticket numbers. 4. After completion of the event, the event s responsible party will complete the reconciliation by recording the beginning and ending numbers remaining on the ticket roll and count the cash. 5. Each ticket seller shall count and reconcile the cash and tickets in the ticket box in the presence of another person upon receipt and prior to returning the box. 6. The box(es) with tickets, cash and reconciliation is to be returned to the bookkeeper who will follow the appropriate receipting procedure (noted above). Note: Expenses associated with the any event, must be paid by check. No expenses shall be paid out of cash gate receipts. Gate receipts are to be deposited intact with the bookkeeper. 21

21 D. Voiding Receipts If a receipt is issued in error or if a receipt is posted to the accounting system in error, the bookkeeper may need to void the receipt. The following should be followed when voiding receipts. 1. If a mistake is made in writing a manual receipt, the original and the duplicate should be clearly marked VOID and both retained by the bookkeeper. 2. If a computerized receipt has a mistake and has been posted, the recorded transaction must be reversed. 3. If the error is caught before additional receipts are entered with a difference date, the bookkeeper would re-enter the information as a new receipt and void the incorrect receipt. 4. If the error is not found immediately, the bookkeeper will not void the incorrect receipt, since the re-entering of a new receipt will cause the receipt number to be out of chronological order. Rather, an adjustment entry must be recorded to correct the original receipt. E. Returned Checks If a receipt is deposited to the bank and later returned by the bank due to non-sufficient funds (NSF), account closed, stale date or any other reason, the bookkeeper must record a reversing transaction of the original receipt. The following procedure must be used: 1. The bookkeeper must identify the original receipt that is now being returned by the bank. 2. Using the information from the original receipt, the bookkeeper will record an adjusting entry in the accounting system to reverse the original transaction. 3. The same account numbers and sub-account numbers must be used to record the reversing transaction. The bank account number used to record the original deposit will be used in the reversing transaction. 4. The transaction will be recorded in the accounting system as an adjustment and more specifically, as a negative receipt. The bank account number used to make the original deposit will also be used as a negative receipt. 22

22 5. The bookkeeper will follow up with the individual or company that issued the check to the school and request that the amount be paid to the school by cash, cashier s check or money order. 6. The amount of fees charged by the bank for the returned check, if any, should also be collected from the individual or company. 7. The bookkeeper will track all returned checks for eventual payment (manually). 8. When the replacement cash or cash equivalent, plus bank fees, is collected, the bookkeeper will record the receipt and deposit as if it were a new receipt. 3.3 CASH TRANSMITTALS Activity funds are derived from numerous cash transactions of students, staff and the general public. In order to provide a reasonable level of assurance that the cash derived from the activities reach the bookkeeper and in turn, the bank, many procedures and internal control practices have been adopted. The transmittal of cash to and from sponsors, staff, volunteers, the public and the bookkeeper is critical. The following cash transmittal procedure shall be followed by those who are transmitting cash that has been collected from more than one source or individual. This procedure must be followed by all sponsors, athletic directors, teachers, librarians and others, that submit cash collected from more than one student or individual for ticket sales, field trips, fundraising sales, copier charges, and other events, where the actual control and collection of monies has been performed by someone other than the school bookkeeper. If the school bookkeeper collects monies from the student or individual, this procedure does not apply, but rather the bookkeeper will follow the cash receipts procedures. A. Submitting Cash Transmittals 1. The individual submitting cash must count all coins, paper currency, checks and other forms of cash (cashier s checks, money orders, etc.). A grand total of all forms of cash (and cash equivalents) must be totaled and submitted. The Cash Transmittal Form provides for the tabulation and submission described above. 2. The activity submitting the cash must be identified. 3. The person submitting the cash must be named. 4. The date of the collection of the cash must be provided. 5. A list, roster, count sheet or other reconciliation must accompany the cash transmittal to substantiate the amount collected and where possible, the individuals that have paid for the activity 23

23 6. The person submitting the cash and cash equivalents must sign and date the cash transmittal form. 7. All cash transmittal information must be placed in an envelope and submitted to the bookkeeper. 8. Copies of the cash transmittal information shall be retained by the person submitting the cash and verified against the receipt that will be provided by the bookkeeper. If variances exist, a conference with the bookkeeper should be requested to provide a reconciliation and eventual resolution of the variance. B. Receiving Cash Transmittals 1. The bookkeeper will designate a safe and secure area to receive all cash transmittals. 2. Upon receipt of the cash transmittals, the bookkeeper will verify all cash and cash equivalents received against the amounts indicated on the cash transmittal form and the physical count of the cash submitted and provide a signed receipt to the person submitting the transmittal. 3. Any discrepancies will be addressed immediately with the person submitting the cash transmittal. 4. If no discrepancies exist, the bookkeeper will process the cash transmittal during the processing of daily receipts. C. Other Cash Transmittals The transmittal of cash to and from individuals involving cash on hand accounts and petty cash accounts, require the use of a cash transmittal form. When the control and responsibility for cash has transferred, physical counts of the monies being transferred must be performed by both the person submitting the monies and the person receiving the monies. Generally, the following procedure must be followed: 1. The individual submitting cash must count all coins and paper currency by the number of each denomination times the denomination value to equal the amount for each description. A grand total of all cash must be totaled and submitted. The Cash Transmittal Form provides for the tabulation and submission described above. 2. The activity submitting the cash must be identified. 3. The person submitting the cash must be named. 24

24 3.4 BANK DEPOSITS 4. The date of the transmittal must be provided. 5. The signature of the individual submitting the cash must be provided. 6. The recipient of the cash will verify the cash transmittal information by counting all denominations and calculating the totals. 7. If the amounts agree, the recipient will sign and date the cash transmittal form and provide a copy of the transmittal to the person submitting the transmittal form. If the amounts do not agree, the recipient and person submitting the cash will physically count all cash for verification. 8. If the physical count of cash does not reconcile, the recipient will note cash over or cash short on the cash transmittal form, sign and date the form, and have the person submitting the cash to initial the cash transmittal form. 9. This procedure must be followed each and every time the cash on hand or petty cash accounts are transmitted to a different individual. 10. All cash transmittal forms must remain with the cash account in its locked cash box. All monies collected must be deposited in the school bank account(s) according to policy. The money should be deposited in the same form (e.g., cash, check, money order) it was received. Under no circumstances should purchases be made or invoices paid or used as a change fund from undeposited cash receipts. No checks shall be cashed from undeposited cash on hand. A. Processing Bank Deposits 1. All checks received should be immediately endorsed on the back of the check with a restrictive endorsement such as For Deposit Only, To the Account of (name of school) Checks should be endorsed exactly as drawn. If it is drawn incorrectly, endorse it exactly as drawn on the Payee line, then write or stamp the correct endorsement beneath the first endorsement. 2. Currency and checks collected throughout the day, along with cash transmittal forms, receipts (either printed or hand written) or other receipt information should be used to prepare the bank deposit slip. 3. The bookkeeper shall review all of the receipt information and verify the amounts, account number, sub-account number, dates and other information. If 25

25 entered into the accounting system, (but not posted) a deposit edit list must be used to verify this information for each individual deposit prior to posting the receipts. (This is preferred.) 4. Prepare a bank deposit ticket in duplicate. Two copies must be taken to the bank for validation. The bank keeps the original and the validated duplicate deposit ticket is attached to the deposit register, with copies of the receipts, cash transmittal forms and other receipt information. 5. Indicate the total currency and total coin included in the deposit on the deposit ticket. List all checks included in the deposit separately on the deposit ticket by the name of the payer. In most cases, the individual checks should be listed. However, if there are numerous checks included, the bookkeeper may insert see attached tape and provide the total of all checks on the deposit ticket. If checks are not listed separately, two adding machine tapes of the checks included should be prepared. One tape is given to the bank with the validated copy of the deposit ticket. The other tape is to be kept with the deposit records at the school. 6. The total for each deposit ticket must agree with the total of all receipts, cash transmittals and other receipt information. 7. The bookkeeper will deposit the funds to the bank and retain the validated deposit ticket, which is to be attached to the deposit register, receipts, cash transmittal forms, adding machine tape of checks and filed in the cash receipts folder. B. Reconciling Bank Deposit 1. The deposit edit list or deposit register should agree to each individual deposit ticket. A deposit edit list can be run once the receipts are entered and should match to each deposit ticket. 2. Once all receipts have been entered into the accounting system and the deposit edit list has been verified, the bookkeeper will post cash receipts. 3. The bookkeeper may verify that all transactions posted correctly by using the receipts journal report, the receipts register report and/or the deposit register report. At a minimum, the deposit register for the deposit date should be produced and accompany all other deposit information (the deposit register should be the same as the deposit edit list). 4. If all cash receipts are entered correctly, the deposit register report will indicate each receipt number within each individual deposit for each day. 26

26 5. If the deposit register report does not match exactly to each deposit ticket for each day, perhaps the bank date or the deposit number was entered incorrectly. As long as the total of all receipts reported on the deposit register agrees to the total of all deposits made for the month, the bank reconciliation process will be correct for all deposits. Correctly entering each receipt by deposit number, if you have more than one deposit for a day, and by the deposit date will ensure the accuracy of the deposit records 6. When the bank statement arrives, it shall be first delivered to the principal, unopened for review. The bookkeeper will then review each deposit listed on the statement should be matched to the deposit register for the month. 7. If missing receipts are detected during the bank reconciliation process, the bookkeeper must enter the missing receipts as adjustments in the accounting system and make auditing notes that fully explain the transactions. 3.5 DISBURSEMENTS All disbursements from activity funds must be supported with complete documentation, have approval of the principal and follow procurement policies as defined in the Loudoun County Public Schools Procurement Manual. The internal control over disbursements from activity funds provide reasonable assurance that funds are not misused or misappropriated. A. Processing Disbursements The following procedures must be followed for all disbursements of activity funds: 1. The bookkeeper, sponsor, athletic director, librarian or other responsible staff member will ensure that the appropriate activity funds are available for the procurement or ordering of goods and/or services prior to such commitment. 2. The responsible staff member will follow all procurement policies and submit procurement information (phone quotes, written quotes, etc.) to the bookkeeper when submitting other disbursement information. 3. All disbursements will be supported by the original invoice, sales receipt, or other documentation that describes the goods or services received, the date received, the activity account responsible and the amount being disbursed. 4. Supporting documentation will be checked as to extensions, totals, pricing, and evidence that goods or services have been received. 5. The bookkeeper will record all invoice information in the accounting system. 27