Extracurricular Accounts

Pursuant to Indiana Code (IC) 5-11-1-24, the State Board of Accounts is required to “establish in writing uniform compliance guidelines… [that] include the standards that an entity must observe to avoid a finding that is critical of the audited entity for a reason other than the audited entity’s failure to comply with a specific law.” Currently, these guidelines are found in SBOA Accounting and Uniform Compliance Guidelines Manuals (Manual), Bulletins, and State Examiner Directives. All guidelines are published on our website with the pertinent guidelines for a particular unit type identified through links.

The Manuals provide the most comprehensive uniform compliance guidelines, including audit positions general to all units, minimum requirements specific to particular units, and topical general standards.

The Bulletins are designed to supplement certain Manuals. Bulletins are published quarterly for Cities & Towns, County, Non-Governmental Entities, Schools, and Townships. The Bulletins typically supply a schedule of upcoming deadlines, new or updated audit positions, and information that local officials need to be aware of. The Manuals are updated annually for new or updated positions that were included in the Bulletins through the course of the year.

A Directive is a pronouncement by the State Board of Accounts (the Board) that sets forth a policy or procedure that the Board will use to enforce a law or Uniform Compliance Guideline (UCG) to conduct audits, and to carry out its duties as set forth by the Indiana legislature. A Directive is based on the general authority of the Board to carry out its responsibilities under IC 5-11-1 and other laws, and may be a form of the UCGs authorized by IC 5-11-1-24. The Board has the authority to direct public officers in keeping the accounts of their offices, including the use of forms, records, and systems of accounting and reporting adopted by the Board. A person who refuses to follow a Directive is subject to a civil action for an infraction.

If you have any questions for our office, whether it be about these UCGs, or otherwise, please don’t hesitate to call our office at (317) 232-2513 or send an email to one of the following:

• Cities.Towns@sboa.in.gov
• Communications@sboa.in.gov
• Counties@sboa.in.gov
• Libraries@sboa.in.gov
• NotForProfit@sboa.in.gov
• Schools.Townships@sboa.in.gov
• SpecialDistricts@sboa.in.gov

Paul D. Joyce, CPA, State Examiner

Michael H. Bozymski, CPA, Deputy State Examiner

Tammy R. White, CPA, Deputy State Examiner

Introduction

Recording Financial Transactions

Custody and Control

Subsidiary Ledgers - Reconciling

Funds, Records, Accounts, Reports

Booster Groups

Overdrawn Funds

Recording School Corporation Financial Transactions

Extracurricular Mileage Claims

Equipment Purchases

Witholding Tax, Social Security and Retirement

Accounting for Gifts, Donations

Approval of Expenditures

INTRODUCTION

The accounting system and procedures detailed herein are based on IC 20-41-1-1 et seq..

Activity or activities as used herein has reference to conducting any athletic, social, class, or other school function and the collection, custody and disbursement of any money in connection therewith, other than functions conducted solely by any organization of parents and teachers, which does not include public money. The collection, custody, and disbursement of the money for an activity are represented in the accounting records by a fund and the control account for all of the activity funds is designated as the "School Extracurricular Account."

The information contained herein is intended to assist you and does not represent legal advice, or a legal opinion, references to statutes or other authoritative materials may not be all inclusive.

RECORDING FINANCIAL TRANSACTIONS

Please note from the definition above, that the extracurricular account is to be used only for functions which are not educational in nature. Accounts for educational functions must be maintained in the school corporation records.

Separate funds are required for each class or activity.

IC 20-41-1-4 provides that forms and records used shall be prescribed or approved by the State Board of Accounts and that the State Board of Accounts may examine the records and affairs of the extracurricular activities when in the judgment of the State Examiner such examination is necessary.

IC 20-41-1-4 further provides that no money shall be transferred from the fund of any organization, class or activity except by a majority vote of its members, if any, and by the approval of the principal, sponsor and treasurer of the organization, class or activity; except that in the case of athletic funds, approval of the transfer shall be made by the athletic director, principal and treasurer. However, see Approval of Expenditures, Page 1-4. Payments should not be made to any member.

CUSTODY AND CONTROL

IC 20-41-1-5 provides that a treasurer shall be appointed for each public school, that such treasurer shall be the superintendent or principal or some clerk of the school corporation or member of the faculty appointed by the superintendent or principal. "Treasurer", as used in IC 20-41-1 includes an assistant or deputy treasurer. The designation of the treasurer must be made immediately upon the opening of the school term or upon the occurrence of a vacancy in the office. A school corporation may appoint one (1) or more assistant or deputy treasurers.

The cost of prescribed or approved records shall also be paid from the operation fund of the school corporation.

Bonds

IC 20-41-1-6 provides for the requirements of bonding the Treasurer. The treasurer of each extracurricular account shall provide a faithful performance of duty bond for one year, the term of the office. The amount of the bond shall be fixed and approved by the school superintendent and principal approximating the total amount of anticipated funds which will come into the hands of the treasurer at anyone time during the regular school year. The statute goes on to provide the option to bond individuals separately or use a single blanket position bond for all individuals required to obtain a bond. The blanket bond must cover all employees listed and include aggregate coverage for all amounts approved for each individual.

Premium on the official bond is payable from the Operations fund of the school corporation. The requirement for giving bond and requirement to deposit receipts in a separate bank account do not apply where the receipts, as estimated by the principal, will not exceed $300.00 during the school year.

IC 20-26-4-5 provides additional bond requirements for individuals whose official duties include receiving, processing, depositing, disbursing, or otherwise having access to funds that will exceed $5,000 in a single year.

SUBSIDIARY LEDGERS - RECONCILING

Subsidiary ledger balances must reconcile to the control ledger fund balance. Every transaction should be posted to the control ledger and to the appropriate subsidiary ledger. Fund balances should reconcile between the control ledger and the subsidiary ledger.

FUNDS, RECORDS, ACCOUNTS, REPORTS

The treasurer shall deposit without unreasonable delay, all receipts in one bank account to be known as the "(name of school) School Extracurricular Account." Accordingly, when funds are lawfully deposited, all disbursements must necessarily be made by check.

IC 5-13-6-1(c) states in part: "Public funds deposited . . . shall be deposited in the same form in which they were received."

Payments may be made only upon approval by the principal or teacher in charge of the school. However, see Approval of Expenditures in this section. As a method of internal control, we recommended that the appointed treasurer be someone other than the principal of the school so that the principal may countersign all extracurricular checks as a means of showing approval of the expenditure.

The extracurricular treasurer is required to keep an accurate account of all money received and expended, showing the source of each receipt, the purpose of each disbursement and the overall balance on hand, which is the control account for all of the activity funds. A separate fund must be maintained in the ledger to record the transactions of each class, organization or activity so that the balance in each fund may be known at all times. The money in the "School Extracurricular Account" may be invested under the conditions specified in IC 5-13 for investment of school corporation money; however, investments under the section are at the discretion of the principal. The interest earned from any investment may be credited proportionately to each separate extracurricular fund or be credited to an "Investment Income Fund." The interest earned from such investments may be used for any school purpose upon approval by the principal in charge of the school. The interest earned from the investment may be used in addition to the appropriation under IC 20-26-5-4(3). However, see Approval of Expenditures in this section.

The ledger forms prescribed for use by school extracurricular account treasurers include a control account, "Extracurricular Account," in which to record all receipts, all disbursements and the balance of all activity funds combined. Posting to the control should be made each day from the receipt and check registers in individual amounts or accumulated by receipt and check number. There shall also be kept a record of the transactions of each activity, showing each receipt, each disbursement and the balance of each particular fund. Posting to the fund of each individual activity should be made from the receipt and check registers by recording each transaction separately or by grouping receipts with consecutive serial numbers and checks with consecutive serial numbers if such are issued for the same source or purpose respectively.

A financial report must be made within two weeks after the close of the school year, of all activity funds. Bank statements should be dated as of the last day of school. Forms for making the report have been prescribed; they are Forms SA5-1, SA5-2, SA5-3 and SA5-4. The report shall be made in detail on the prescribed forms showing the source of all receipts, the purpose of all disbursements and the balance remaining in the fund of each activity. The SA forms shall be filed with the school board within two weeks after the close of each school year together with the records and files of the activities. Schools having two (2) or more semesters in any one school year are required to have the treasurer of such school file a copy of the financial report of receipts and disbursements within two (2) weeks after the close of each semester. The law also requires that a copy of the report shall be filed with the superintendent of schools.

These records shall be permanent records for five years, after which time they may be destroyed. [IC 20-41-1-8] See Preservation and Destruction of Public Records in this chapter.

OUTSIDE ORGANIZATION'S RECORDS – BOOSTER GROUPS

IC 20-41-1-7 states in part: "The treasurer has charge of the custody and disbursement of any funds . . . incurred in conducting any athletic, social, or other school function (other than functions conducted solely by any organization of parents and teachers) . . ." Therefore, activities and organizations which are not extracurricular in nature should be responsible for their own accounting and cash handling systems. The extracurricular account should not collect, receipt, remit, or disburse outside organization's monies.

OVERDRAWN FUNDS

Overdrafts may not be created or exist in any fund. The extracurricular treasurer should advise the activity sponsor and student treasurer periodically, preferably monthly, of the current balance in the fund of their activity. Therefore, comparisons can be made and differences reconciled before transactions become past due or particulars are difficult to recall.

RECORDING SCHOOL CORPORATION FINANCIAL TRANSACTIONS

All financial transactions related to the school corporation should be accounted for in the School Corporation Records.

EXTRACURRICULAR MILEAGE CLAIMS

Individuals requesting reimbursement for driving personal vehicles for extracurricular purposes should properly complete a Mileage Claim, General Form 101, prior to receiving reimbursement.

EQUIPMENT PURCHASES

IC 20-26-5-4 states in part: "In carrying out the school purposes of a school corporation, the governing body acting on the school corporation's behalf has the . . . specific powers . . . to acquire personal property or an interest in personal property as the governing body considers necessary for school purposes . . ." Therefore, extracurricular equipment purchases should be approved prior to purchase by the Board of School Trustees.

WITHHOLDING TAX, SOCIAL SECURITY AND RETIREMENT

When salaries are paid which are subject to withholding tax, social security, or retirement, the following procedure is suggested:

A check is written to the employee for the net amount (gross pay less tax, social security or retirement) and posted to the control account. The gross amount of the check is posted as a disbursement from the individual activity fund; and, the federal tax and state gross income tax deductions are posted as receipts to clearing accounts for these items. Likewise, social security deductions are posted as a receipt to a social security clearing account and, retirement deductions are posted as a receipt to a retirement clearing account. This method disburses the amounts of tax, social security and retirement as salary and transfer the deductions to a clearing account for each deduction.

Governmental funds generally are exempt for the payment of sales tax on qualifying purchases. Respective tax agencies should always be contacted concerning tax exemptions and payments.

Due to numerous and continuing changes in payroll withholding requirements and payment dates, we are unable to print dates that will be usable for any length of time. The following agencies and circulars should be consulted for the various regulations and due dates:

Indiana Department of Revenue

Indiana Public Retirement System

Federal Internal Revenue Service

For an Employees' Earnings Record, General Form 99B, should be used in connection with salaries and deductions. Form 99B and all forms for reporting deductions are the same as those used by the Treasurer of the School Corporation. The deductions in some instances, may be deposited with the school corporation for transmittal to the proper agency with deductions from the school corporation payrolls.

ACCOUNTING FOR GIFTS, DONATIONS

Cash donations that are extracurricular in nature may be accounted for in the Extracurricular Account. Any School Corporation donations shall be accounted for in the school corporation records. The acceptance of these donations shall have prior approval by the Board of School Trustees. Either the School Corporation Treasurer or Extracurricular Treasurer will be responsible for the accounting of these funds as applicable.

APPROVAL OF EXPENDITURES

Expenditures by the treasurer of the extracurricular account are limited to those approved by the principal of the school and they should be in accordance with the general administration policies of the school corporation since the law provides that all expenditures shall be subject to review by the local school board.

Distribution of extracurricular funds to students, teachers or others should not occur unless authorized by statute.

Pay of teachers and other personnel for service at interscholastic athletic events such as ticket takers, scoreboard personnel, etc., are expenses of the Athletic Fund of the Extracurricular Account. Pay of concession stand supervisors and of ticket takers, etc., for fine arts events should be paid from the proceeds of the activity sponsoring these events. Payment to all such personnel must be by way of a payroll. If an extracurricular payroll is not maintained, the payments may be made a part of the school corporation payroll and charged to an applicable school corporation fund appropriation; however, the school corporation fund must be reimbursed for such payment by the activity which the employees served.

Forms and Records

Purchase Order and the Accounts Payable Voucher

Check and Register of Checks

Receipt and Register of Receipts

Ticket Sales

Tickets

Extracurricular Financial Report

Cash Reconcilement

Detail of Receipts and Expenditures by Fund

Report Certificate

Extracurricular Ledger

Claim for Payment

Summary Collection

Accountable Items

APPENDIX (PICTURES OF FORMS)

FORMS AND RECORDS

The forms and records prescribed for use are:

All Extracurricular Activities

• SA-1     Purchase Order and Accounts Payable Voucher
• SA-2     Check and Register of Checks
• SA-3     Receipt and Register of Receipts
• SA-4     Ticket Sales
• SA-5-1  Financial Report (School Extracurricular Account)
• SA-5-2  Cash Reconcilement and Outstanding Check List
• SA-5-3  Detail of Receipts and Expenditures by Funds
• SA-5-4  Report Certificate
• SA-6     Extracurricular Ledger
• SA-7     Claim for Payment
• SA-8     Summary Collection
• SA-9     Accountable Items Review
• General Form 370      Receipt Register
• Various other General Forms as applicable.

General Forms

• 101 Mileage Claim
• 350 Register of Investments

PURCHASE ORDER AND ACCOUNTS PAYABLE VOUCHER (SA-1)

The Purchase Order and Accounts Payable Voucher (SA-1) is to be used when a purchase is made for delivery at a later date. The form is to be executed in full and signed by the person authorized to purchase for the particular activity concerned. Before the activity is permitted to use the Purchase Order and Accounts Payable Voucher (SA-1), the extracurricular account treasurer must determine if there is sufficient balance in the fund of the activity to make payment upon receipt of the merchandise. The treasurer is required to certify as to the unobligated balance. The sponsor must also know that approval for the purchase has been given by the membership of the activity, as applicable, except in the case of athletic purchases.

The Purchase Order and Accounts Payable Voucher (SA-1) is to be prenumbered in triplicate, printed in single sets and packaged for storage, or padded 60 to 120 sheets to a pad. An original and two carbon copies (1 set) are to be prepared for each transaction. These must either be prepared by the Treasurer of the extracurricular account, or issued by pads to the activities, or by set as required for their immediate needs. When the form is prepared, the original is to be given to the vendor. The receiving copy (duplicate) and the file copy (triplicate) shall be retained by the treasurer of the extracurricular account and filed in an obligation file by fund and serves notice that an expense has been incurred against that particular fund, and also enables the treasurer to see that no further purchase orders are issued against a particular fund if that fund balance is depleted.

When shipment is made, the vendor shall send an invoice to the school. Shipments received by an activity must be verified with the invoice and voucher (duplicate copy) as to quantity and price by the person who made the purchase and received the items. The person receiving the shipment indicates on the voucher that they have received and checked the shipment and the voucher is to be forwarded to the treasurer who makes the payment after signing the certification required on the form SA-1. After payment is made, the check number and date the voucher is paid are entered on the duplicate copy before filing. The duplicate may be filed in a Vendor file if desired. The date and check number must also be entered on the file copy (triplicate). The file copy must then be removed from the obligation file and placed in a numerical file along with the vendor invoice.

A requisition form may be used in conjunction with the Purchase Order and Accounts Payable Voucher (SA-1) if desired.

CHECK AND REGISTER OF CHECKS (SA-2)

The Check and Register of Checks (SA-2) form is to be prenumbered and printed in duplicate, three checks to the page if checkbook bound and five checks to the page if printed loose-leaf. If loose-leaf, the duplicate shall be contained in a post binder as a permanent record. The check form shall be used to make disbursements for any activity whether such disbursement is for accounts payable or direct purchases. If used for accounts payable, the tear strip at the top is removed by the treasurer before presentation to the payee; however, if used for payroll purposes, the strip serves as a statement of earnings and deductions for the employee and is removed by the employee before cashing the check. The check provides for making all types of disbursements through the use of one printed form bearing one series of numbers.

The duplicate copy serves as a permanent check register from which all disbursements are posted to the proper activity funds and to the control account. Checks to be properly issued shall show the date, the payee, the amount, the purchase order number, the activity fund to be charged and the purpose for which the check was issued. Space is provided for entering the invoice number, if desired. The check is to be signed by the treasurer and countersigned by the principal or other designated official of the school. Posting to the control account will be made from the duplicate checks either by individual items or by daily totals, showing by reference the serial numbers of the checks included in such total posting. If each check is posted individually to the control, the fund number should be entered as well as t he check number. Posting to the separate activity funds will be made from the check register, individually or in total.

RECEIPT AND REGISTER OF RECEIPTS (SA-3)

The receipt form is to be prenumbered and printed in duplicate, three receipts to the page if bound and five receipts to the page if printed loose-leaf. If printed loose-leaf, the duplicate shall be contained in a post binder as a permanent record. The receipt is to be issued for any and all money received. A separate receipt shall be issued for each amount of money received. The duplicate serves as a register of receipts from which all receipts are posted to the proper activity funds and the control account.

The receipt, to be properly issued, shall show the date, the name of the person from whom the money was received, the payment type, the activity fund for which it was received, the amount and the source of the receipt. The receipt form must be signed by the treasurer of the extracurricular account or collecting authority. The cash receipts collected by and for the benefit of any activity fund should be in charge of some designated official or sponsor of the activity, until turned over to the treasurer of the extracurricular account. Posting to the control account and the activity funds will be made from the duplicate receipts (Register of Receipts) in the same manner as previously outlined for the posting of checks.

TICKET SALES (SA-4)

Ticket sales conducted by any activity should be accounted for as follows:

The treasurer should be responsible for the proper accounting for all tickets and should keep a record of the number purchased, the number issued for sale, and the number returned. The treasurer should see that proper accounting is made for the cash received from those sold. All tickets shall be prenumbered, with a different ticket color and numerical series for each price group. When cash for ticket sales is deposited with the treasurer, the treasurer's receipt issued therefore should show the number of tickets issued to the seller, the number returned unsold and the balance remitted in cash. All tickets (including free or reduced) must be listed and accounted for on the SA-4 Ticket Sales Form.

TICKETS

Serially prenumbered tickets by the printing supplier should be used for all athletic and other extracurricular activities and events for which admission is charged. Part of the prenumbered ticket should be given to the person paying for the ticket upon admission to the event. The other part of the ticket (which should also be prenumbered, referred to as the stub) should be retained. All tickets (unused tickets and stubs) should be retained for audit.

Tickets for each price group should be different colors and/or different in their series number.

FINANCIAL REPORT OF SCHOOL EXTRACURRICULAR ACCOUNTS (SA-5-1)

The Financial Report of School Extracurricular Accounts (SA 5-1) should begin with the close of the last report and cover the school year. The report should be made in triplicate. One copy shall be filed in the school business office, a copy shall be filed with the school board and the third copy shall be filed with the superintendent of schools. The report is to be filed as an official record and must be preserved for a period of five years. All bank statements, canceled checks, duplicate checks, duplicate receipts, invoices, purchase orders, payment authorizations, claims and ledger accounts from which the report is pre- pared must be filed with that year-end report and preserved for five years. The law permits an audit of the records of the school extracurricular treasurer by the State Board of Accounts and an appreciable amount of time can be saved by an orderly preservation of all records.

The report is of all the individual activity funds and includes the name of each fund, beginning balances (column 1), receipts during the report period (column 2), expenditures during the report period (column 3), and closing balances at the end of the period (column 4). In column 1, enter the closing fund balances as reported in column 4 of the report for the prior year. Do not alter these balances. The column 1 balances on the report for this year should be exactly the same as the column 4 balances shown in the report for the prior year. If there have been adjustments to any of these balances, they should be shown in the detail by funds report, Form SA-5-3.

When column 1 has been checked against the preceding report, a Form SA-5-3 should be prepared for each fund. The total receipts of each fund should then be placed in the proper area in column 2 on Form SA-5-1.

The total expenditures of each fund as shown on Form SA-5-3 should then be recorded in the proper place in column 3 on Form SA-5-1. The amount to be entered in column 4 is the result obtained by adding columns 1 and 2 and deducting the amount in column 3. The total of column 1 must agree with the beginning balance of the control account; the total of column 2 must agree with the total receipts for the period as shown in the control account; the total of column 3 must agree with the total disbursements as shown in the control account; and, the total of column 4 must agree with the ending balance as shown in the control account and is the amount which must be reconciled to the depository balance as shown on the bank statement. The column totals should be cross balanced to verify the correctness of the total in column 4.

CASH RECONCILEMENT (SA-5-2)

The Cash Reconcilement (SA 5-2) is a cash reconcilement and list of outstanding checks. The law provides that all funds be promptly placed in a depository. The bank statements showing the bank balances of the extracurricular account should be carefully preserved. The name of the bank and balance should be listed according to the statement; also all outstanding checks should be listed, showing the date, check number and amount. The amounts should then be totaled and the total entered in the proper space. When this total of the outstanding checks is deducted from the balance as shown on the bank statement, the remainder (plus cash on hand, if any) should equal the record balance as shown in the control account and as the total of column 4 in the Form SA 5-1 report. A bank statement should be secured showing the bank balance as of the same date as the closing date of the report.

DETAIL OF RECEIPTS AND EXPENDITURES BY FUND (S-A 5-3)

The Detail of Receipts and Expenditures by Fund (SA-5-3) must be used to prepare a detail of each activity fund reported in Form SA-5-1. A minute detail is not necessary since receipts may be grouped according to their source and nature and expenditures may be grouped according to their purposes. An example would be the athletic fund receipts may be grouped as game receipts, tournament receipts, game contracts, season tickets, tourney tickets, schedules, I.H.S.A.A. distributions, etc. Addit- ionally, expenditures may be grouped as dues, officials, transportation, meals, tourney tickets, medical expense, insurance, repair of equipment, laundry and cleaning, equipment, etc. Do not combine items of either receipts or disbursements to the extent that the report will be incomprehensible. Neither receipts nor expenditures should be combined and listed as miscellaneous items.

REPORT CERTIFICATE (SA-5-4)

The Report Certificate (SA-5-4) includes vital information, such as the name and location of the bank, date of closing school, and the official bond of the treasurer of the extracurricular account. The Report Certificate (SA-5-4) also includes the certificate of the treasurer and principal of the school extracurricular account.

EXTRACURRICULAR LEDGER (SA-6)

The Extracurricular Ledger (SA-6) is a 9 1/4" x 11 7/8" stock ledger form which provides separate amount columns for posting receipts and disbursements and a third amount column for entering the balance. The same form is to be used for the control account and for each of the individual funds. The Extracurricular Ledger (SA-6) is designed to be contained in a standard post binder. The form also provides space for entering the date and receipt or check numbers as well as an item or description column.

A ledger sheet is to be opened for the "Extracurricular Account" as a control account. Daily totals of receipt transactions are to be posted to the left hand amount (debit) column and the daily totals of disbursements to the right hand amount (credit) column each day. These daily totals will be obtained from the register of receipts (duplicate receipts) and from the register of checks (duplicate checks), respectively. Each entry will show the serial numbers of the receipts or checks whose amounts are included to arrive at the total for that day. A new balance will be entered after the posting of the daily transactions.

A ledger sheet is to be opened for each individual activity fund to maintain a separate accounting of the receipts, disbursements and balances for each activity as required by law. The name of the activity shall be entered on the upper margin of the ledger sheet as a title of the fund. Each receipt and each disbursement transaction will be posted individually to the ledger sheet of the fund whose balance is affected or by grouping like items consecutively numbered if for the same source or purpose. The posting will include the date, any necessary description, the receipt or check number, the amount of the receipt in the left hand amount (debit) column or the amount of the disbursement in the right hand amount (credit) column, as the case may be. A new balance will be entered on the ledger sheet for each fund following the posting of all transactions affecting that fund each day.

A proof of posting may be obtained by adding together the balances of all funds in the ledger and comparing the total with the balance in the control account (Extracurricular Account). A favorable comparison will prove accuracy in posting to both areas; any differences must be located and corrected immediately. At the close of each month, the balance in the Extracurricular Account (control) shall be reconciled to the balance on the bank statement. The reconcilement will prove the accuracy of the records to those of the bank as maintained for the cash account. Any outstanding checks (those which have not cleared the bank and returned with the statement) must be considered in making these reconcilements. A list of outstanding checks may be obtained by comparing the canceled checks returned with the bank statement, to the duplicate checks in the check register. List those not returned and total the amounts. If an analysis or breakdown of receipts and disbursements is to be kept for any one activity, a subsidiary ledger may be established by setting up a ledger sheet for each classification of receipts and disbursements within that activity's fund. These sheets may be carried in the ledger immediately following the fund for that activity or a subsidiary ledger in a separate binding may be used. The analysis may be maintained on a stock form columnar sheet, which will fit the same binder as that used for the ledger, by using a column for each classification of receipts and disbursements. The amount of each receipt or check should be posted daily and distribution made to the proper classification at the time of posting. The classifications should each be totaled periodically and the total of all classifications of receipts should equal the total of the receipts column in the fund for that activity. The same comparison should be made for the disbursements.

Maintaining a breakdown of receipts and disbursements will facilitate the preparation of report form SA5-3 as discussed in this section.

CLAIM FOR PAYMENT (SA-7)

The Claim for Payment (SA-7) is to be printed and print ruled, original only, and gathered in pads of 50. The Claim for Payment (SA-7) shall be used for claiming payment by anyone in situations where purchase orders are not used; for example, purchases from delivery salesmen, services of officials at athletic events, etc.

Signatures are required by the person authorized to purchase and the person acknowledging the receipt of the good or services. Additionally, the extracurricular treasurer is to sign the required certification on the form SA-7.

The claims shall be prenumbered and filed in numerical sequence.

SUMMARY COLLECTION FORM (SA-8)

Summary Collection Form (SA-8) is prenumbered and to be prepared in duplicate by the sponsor. The original is to the extracurricular treasurer to be retained in numerical order and the duplicate is to be retained in numerical order by the sponsor.

A sponsor for the purpose of Form (SA-8) is the teacher or other person in charge of a classroom or function collecting money. Form SA-8 is to be used as a transmittal document each time fundraiser or field trip money is reported from the sponsor to the extracurricular treasurer. From SA-8 can be used at the discretion of school officials to account for other items. Space is provided to list check numbers and amounts as applicable.

ACCOUNTABLE ITEMS REVIEW FORM (SA-9)

Accountable Items Review Form (SA-9) is prenumbered and to be prepared in duplicate by the treasurer. The original copy goes to the principal with the duplicate to be retained in numerical order by the treasurer.

Form SA-9 is to be used at least once a year at the end of the school year. The form is to be used to help account for beverages sold from vending machines. However, the form can be used at the discretion of school officials to account for other items such as, concessions, books, etc.

Form SA-9 is not designed to account for revenue from "exclusive or franchise contracts".

This chapter has been moved to the Accounting and Uniform Compliance Guidelines for Indiana Public School Corporations.

This chapter has been rescinded.

Extracurricular Investments

Investment Losses

Interest on Investments

Accounting for Investments

EXTRACURRICULAR INVESTMENTS

IC 20-41-1-9 concerning the school extracurricular account provides the money in the school extracurricular account may be invested under the conditions specified in IC 5-13-10 and IC 5-13-10.5 for investment of state money. However, investments under this section are at the discretion of the principal. The interest earned from any investment may be credited to the school extracurricular account and need not be credited proportionately to each separate extracurricular fund. The interest earned from the investment may be used for any of the following:

(1) Any school purpose approved by the principal

(2) An extracurricular purpose approved by the principal.

After a decision has been made to purchase an investment from the bank account balance (and not credit the interest to individual funds), a necessity exists for accounting purposes, to establish an In- vestment Income fund in the extracurricular account records to which any earnings (the aforementioned procedure) are receipted and from which expenditures are made. A check will be issued for the purchase of the investment, but the check will not be posted to any fund. A dual control will also be necessary to be kept instead of the usual single control for the extracurricular account. One control, the normal control fund which is a memorandum type of entry will be used to record the transactions of the checking account, and another will be used to account for the investment from the total monies on deposit which would be referred to as an investment control, which is a memorandum type of entry. The balances of these two controls when added together must always equal the total of the balances of all the individual extracurricular funds .

Purchases of equipment which become part of the school facilities is the direct responsibility of the school board; therefore, the specific equipment must be approved by the board before being purchased from the Investment Income fund.

Since the School Board is the employing authority in a school corporation and IC 20-41-1-4 does provide in part concerning extracurricular expenditures, ". . . shall be subject to review by the local school board", the school board should have a policy for all buildings concerning whether investments should be by fund or with an investment income fund as provided herein.

INVESTMENT LOSSES

Losses related to investments and investment procedures which are not authorized in IC 5-13 may be the personal responsibility of the investing officer.

INTEREST ON INVESTMENTS

Interest on investments should not be automatically added into the investment. Instead, interest on investments should be paid to the governmental unit at each maturity date and posted to the appropriate fund.

ACCOUNTING FOR INVESTMENTS

General Form Number 350, Register of Investments is the prescribed form for recording investments and all investments should be recorded on Form 350.

The following is an example of recording an investment transaction made from a specific fund (for example - athletic). Disburse the cost (purchase price) of the investment from the athletic fund and from the Control of All Funds. On the Register of Investments, General Form No. 350, identified with the athletic fund, record the purchase price (cost).

If interest is received while the security is held by the school, record the amount received on General Form Number 350 on the same line as that on which the investment is recorded; also receipt the interest received to the athletic fund and to the Control of All Funds.

When the investment is sold or matures, receipt the sale price to the athletic fund and to the Control of All Funds. Earnings from Investments would be receipted either to the athletic fund or to the investment income fund as might be provided by school board policy. Record the sale (purchase price) on the Register of Investments - Athletic Fund (General Form 350) on the same line as the purchase was recorded. Investments from other "Fund" accounts will be accounted for in the same manner as illustrated for the athletic fund.

Where investment is made from "total monies on deposit", the warrant issued will not be posted in the ledger, but a memorandum account should be set up in a separate section of the ledger to which investment transactions will be posted.

The Investment Register, General Form 350, should be used for keeping a record of all investments purchased by the political subdivision.

Renewal or Rollovers of Investments

A certificate of deposit may or other investments be renewed for an additional term if authorized, without the original certificate of deposit being paid by the depository and a warrant being issued for the purchase of a new certificate of deposit if all applicable statutory provisions have been complied with by the political subdivision or other investments if all applicable statutory provisions have been complied with by the political subdivision. However, if renewed, the interest due the political subdivision shall be paid to the fiscal officer at each maturity date, or the records should show transactions which will reflect the t rue financial condition and the amount invested at all times. The interest shall not be added to the original deposit and reinvested by the depository without being recorded in the records.

Grant Funds and Educational Fees

Receipting of Educational Fees

Membership Dues

General Fund (Student Activity Funds)

Cafeteria Vending Machines

Cash Change Fund

GRANT FUNDS AND EDUCATIONAL FEES

IC 20-26-4-1 concerning duties of the School Corporation Treasurer, provides in part: "The treasurer is the official custodian of all funds of the school corporation and is responsible for the proper safeguarding and accounting for the funds."  Therefore, all grant monies and properly authorized fees at an individual building should be transferred to the School Corporation Central Office on a timely and regular basis for receipting into the appropriate school corporation fund.

We have developed an audit opinion that we will not take exception to the school board approving fees for items that the school corporation attorney has provided a written opinion that the educational fee does not violate the Indiana Constitutional provisions.

RECEIPTING OF EDUCATIONAL FEES

The following types of items should not be assessed, collected or receipted to a school extracurricular account:

• Air Conditioning Fees
• Parking Fees
• Instructional Fees
• Bus Rider Fees
• Fees for Payroll Positions (Nurses, Principals, Counselors, etc.)

The Attorney General of the State of Indiana on June 15, 2001 issued Official Opinion 2001-4 concerning "Health Service Fees." The conclusion of Official Opinion 2001-4 states: "Indiana Constitution Article 8 § 1 and the Indiana General Assembly provide for 'Common school systems wherein tuition shall be without charge.' Also, the General Assembly has provided for funding of schools and a method for calculating tuition. Health services, because they include instruction and education are tuition. Therefore, a school corporation may not charge a separate fee for health services."

Additionally, the following items are outside of corporation or extracurricular records and should only be maintained by private groups or individuals and not in the extracurricular account:

• PTO Band Boosters
• PTA Athletic Boosters

Extracurricular activities are defined in IC 20-41-1-4 as athletic, social or other school functions, the cost of which is not paid from public funds. These activities do not include functions conducted solely by any organization of parents and/or teachers. Note that this statutory definition does not include any curricular or educational functions. IC 20-26-5-4 provides that all educational functions are the specific responsibility of the governing body (board of school trustees, etc.) of the school corporation acting on its behalf, including providing the facilities and equipment therefore. All monies received for educational purposes, including those related to educational programs or facilities must be receipted to school corporation funds. The following items erroneously appear in funds of the extracurricular account. Accounting for them should be in the general fund of the school corporation. Examples are:

• Adult Education Fees
• Rent of School Facilities
• Apples in Education
• Science Fees
• Art Fees
• Special Education
• Distributive Education
• Driver Education Fees
• Equipment Sale or Rental
• Summer School Fees
• Facilities Rental
• Supplies
• Grants (State, Federal and Other)
• Towel Fees (when towels are purchased from corporation funds)
• Kindergarten Fees
• Library Fines and Fees
• Typing Fees
• Visual Education Fees
• Visual Education Fees
• Locker Fees
• Vocational Education Fees
• Night School Fees
• Vocational Evening School Fees

All authorized educational fees (the School Board should be able to justify any educational fees and ensure Constitutional problems do not exist) must be receipted to the Education Fund of the school corporation and included as miscellaneous revenues when preparing the school corporation budget. IC 20-33-10-4(c) provides that an official recruiting representative may be required to pay a fee for copying and mailing the high school student directory information described in an amount that is not more than the actual cost incurred by the high school. The anticipated expenditure of these fees for educational materials and supplies shall be included in the appropriation for that purpose. If done in this manner, provisions will be made for the furnishing of the materials and supplies by the board of school trustees in the prescribed manner and will not affect the tax rate if the collections are sufficient to offset the expenditures as estimated. However, proper educational fees belong in the school corporation Education fund and should be transferred timely.

Any dues collected for the support of classes or social organizations shall be receipted to the extracurricular fund for that organization to support the activities. If a student in a vocational (shop, home economics, etc.) class, voluntarily begins a project for which special materials are necessary and which will result in a product which the student will take home for personal use, an amount equal to the actual cost of the special materials may be collected from the student and receipted to a fund in the extracurricular account for the specific purpose of providing the special materials. Any extracurricular fund established for this purpose should contain no balance at the end of the school year since the collections from students equals the expenditures for the materials.

Accordingly, with the above references to receipts, all disbursements for educational purposes must be made from school corporation funds and not from extracurricular funds. (See General Fund, Student Activity Fund and Investments and Investment Income Fund) These include disbursements for building equipment, repairs and maintenance; educational and library materials, supplies and equipment; meeting and conference expense of employees; copiers; and, the repair and maintenance of same. Curricular and extracurricular, though associated, are totally separate functions and each has a purpose and authorizing statute and must be treated separately.

MEMBERSHIP DUES

IC 20-26-5-8 states in part: "The governing body of a school corporation may appropriate necessary funds to provide membership of the school corporation in state and national associations of an educational nature that have as the associations' purpose the improvement of school governmental operations." Accordingly, the State Board of Accounts is of the audit position that dues, memberships and subscriptions should be institutional memberships; i.e., in the name of the school corporation or school building, not an individual's name.

GENERAL FUND (STUDENT ACTIVITY FUNDS)

The State Board of Accounts consistently has been of the audit position to not take an audit exception to a school extracurricular account having a general fund if the fund consists of revenues received from functions (vending machines or sales of a similar nature, etc.) not generated by students for a specific class or organization (for which a fund should be established). Our audit position has been with the provision that the functions for which the expenditures are made benefit the student body as a whole (as opposed to a select group of students, school employees or administrators). Examples of appropriate expenditures in the past would be convocations, field trips which the entire student body has the opportunity to take during the course of the school year, etc. Our audit position has been based in part upon the substance of the transaction (the revenues are primarily from students or parents paying into vending machines, picture money, etc.). Naturally, we would not take audit exception to a public policy of a school corporation which would provide that a general fund does not exist and that money from these type of functions be used to offset the cost of the function (reduced prices of vending machine items, reduce the costs of pictures, etc.).

IC 20-41-1-9 concerning investment income funds (interest income funds) specifically provides authorization for either corporation or extracurricular type of expenditures. The General School Powers Act (IC 20-26-5-4) provides general, as well as specific, powers and duties of the governing board in carrying out the school purposes of the school corporation which they govern. Included in the specific powers with which the board is charged is the responsibility to ". . . take charge of, manage, and conduct the educational affairs of the school corporation and to establish, locate, and provide the necessary schools, school libraries, and other libraries where permitted by law, other buildings, facilities, property, and equipment." IC 20-41-1-4 provides in part, concerning extracurricular funds: "Funds may not be transferred from the accounts of any organization, class or activity except by a majority vote of its members . . ." IC 20-41-1-4 also provides, concerning extracurricular expenditures: "All expenditures shall be subject to review by the local school board."

Inquiries have questioned the use of a general fund or student activity fund for educational expenditures (copy machines, computers, educational materials, supplies, etc.) which would normally be from school corporation funds. The State Board of Accounts' audit position is as stated above. However, we will not take audit exception to a school having disbursements from an extracurricular "general fund" or "student activity fund" for authorized school corporation type expenditures, such as equipment, supplies, etc., with the following conditions:

1.  A policy has been adopted by a school board in a public meeting authorizing these types of expenditures.

2.  Providing there are no objections from a majority of an applicable student body to these types of expenditures.

3.  Equipment purchases would still require separate approval from the local school board.

Since alternatives exist for funding educational expenditures (i.e., taxes, authorized investment income expenditures, etc.) and other alternatives for the use of a general fund are available (i.e., reducing the cost of items to students and/or parents), we must emphasize the adoption of the aforementioned would be a public policy decision for which the local board of school trustees must accept any and all responsibility.

CAFETERIA VENDING MACHINES

The Division of School and Community Nutrition of the Department of Education policy regarding vending machines states that vending machines containing foods of minimal nutritional value cannot be sold in the food service area during the breakfast and/or lunch periods. These foods (carbonated beverages, candy, etc.) may, however, be sold outside the food service area during meal periods. The policy goes on to state that the sale of competitive foods (which meet certain nutritional requirements) may, at the discretion of the state agency and school food authority, be allowed in the food service area during the breakfast or lunch periods only if the income from the sale of such foods accrues to the benefit of the nonprofit food service or the school or student organizations approved by the school.

The Division of School and Community Nutrition allows the school food authority to determine where the income from the sale of competitive foods shall go as long as it conforms to the above policy.

The State Board of Accounts is of the audit position that as long as the Division of School and Community Nutrition policy allows for a choice, the decision of which fund will account for the vending revenue is as follows:

1.  If a particular student group or organization manages the vending function, the proceeds should accrue to that group's extracurricular fund.

2.  If the vending in question is located at athletic events and managed by athletes or athletic department individuals, the proceeds may go to the athletic fund.

3.  If no particular student group manages the vending function, the proceeds should go to the Extracurricular General Fund, Student Activity Fund or Concession Fund for the benefit of all students.

The Board of School Trustees should document their preference in the board minutes.

CASH CHANGE FUND

A Cash Change Fund may be established in any school corporation with the approval of the governing body (board of school trustees), where any officer or employee of the corporation is charged with the duty of collecting fees or other cash revenues. When authorized by the governing body, such Cash Change Fund shall be established by a check drawn on the General Fund (or other appropriate fund) of the extracurricular in an amount to be determined by the governing body. The check is drawn in favor of the officer or employee who has been designated as custodian of the Cash Change Fund. The custodian shall convert same to cash and be held responsible for the safekeeping of such cash and the proper accounting thereof in the same manner as required for other funds of the school corporation. The governing board shall have authority to increase or decrease such fund and shall require the entire Cash Change Fund to be returned to the General Fund if and when it is no longer needed for the purpose established or when a change is made in the custodian of the fund.

Prescribed Forms

State and Federal Taxes

General Information

PRESCRIBED FORMS

IC 5-11-1-2 requires the State Board of Accounts with the responsibility of prescribing and installing a system of accounting and reporting which shall be uniform for every public office and every public account of the same class.

A prescribed form is one which is put into general use for all offices of the same class, whereas an approved form is a computerized form for special use in a particular office.

Although the State Board of Accounts prescribes forms, copies of the forms must be purchased from a public printer or other source.

A list of the prescribed forms and some examples of the prescribed forms are contained in the Appendix Section of this Manual.

Exact Replica

As a result of advances in computer technology, some computer hardware, software, and application systems can now produce exact replicas of the forms prescribed by the State Board of Accounts.

The State Board of Accounts prescribes the required accounting system forms, but does not specify the source from which the forms must be obtained. Therefore, the State Board of Accounts will not take exception to the use of forms which provide exact replications of the prescribed forms created by computer printer or utilizing continuous form computer paper. These exact replications must be identical to the prescribed forms in format, titles and locations of data. The exact replicas are not required to be submitted to the State Board of Accounts for approval and each form should be identified as "Prescribed by the State Board of Accounts" in the same location as is printed on the prescribed forms.

The use of computer-generated prescribed forms should be brought to the attention of the Field Examiner during the next regularly scheduled audit. The forms and computer system generating the forms are subject to a technical computer audit based upon the results of the Field Examiner's risk assessment.

Approved Forms

Governments are required by law to use the forms prescribed by this department. However, if it is desirable to use a form other than the prescribed manual form, that is not an exact replica; the new form must be approved by State Board of Accounts. All forms previously approved by sending copies to State Board of Accounts and receiving a form approval letter are approved with the conditions contained with the letter.

If a government implements, consistent with the provisions of Indiana Code and Uniform Compliance Guidelines, an automated accounting system that is to be considered for approval, the responsible official is not required to maintain the prescribed forms replaced by the automated system while awaiting the approval. New forms must be in place during at least one (1) State Board of Accounts audit and must not be an element of an audit finding or audit result and comment that is responsible or partially responsible for an exception found during an audit to be considered approved. The government is responsible for placing on new forms the year of installation in the upper right corner. This reference should be similar to “Installed in     School Corporation, (Year).” The School Corporation must maintain and present for audit a log of forms installed with the year installed for all forms that replace forms prescribed by State Board of Accounts.

The government agrees to comply with the following conditions, if applicable, for any new forms installed.

1.  The forms and system installed are subject to review and/or recommendations during audits of the government to ensure compliance with current statutes and uniform compliance guidelines.

2.  The government shall continue to maintain all prescribed forms not otherwise covered by an approval.

3.  All transactions that occur in the accounting system must be recorded and accessible upon proper request. Transactions can be maintained electronically, with proper backups, microfilmed, or printed on hardcopy. These transactions include, but are not limited to, all input transactions, transactions that generate receipts, transactions that generate checks, master file updates, and all transactions that affect the ledgers in any way. The system must be designed so that changes to a transaction file cannot occur without being processed through an application.

4.  The ability must not exist to change data after it is posted. If an error is discovered after the entry has been posted, then a separate correcting entry must be made. Both the correcting entry and the original entry must be maintained.

5.  If the government owns the source code, sufficient controls must exist to prevent unauthorized modification. If the government does not own the source code, the vendor shall provide representatives of the State Board of Accounts with access to all computer source codes for the system upon request for audit purposes. In addition, the vendor shall provide representatives of the State Board of Accounts with a document describing the operating system used, the language that the source code is written in, the name of the compiler used, and the structure of the data files including data file names, data file descriptions, field names, and field descriptions for the system.

6.  Any receipts, checks, purchase orders, or other forms that require numbering shall be either prenumbered by an outside printing supplier or numbered by the government's computer system with sufficient controls installed in the system to prevent unauthorized generation of the form or duplication of numbers.

7.  All receipts must be either in duplicate or recorded in a prescribed or approved register of receipts.

8.  All checks must be either in duplicate or recorded in a register of checks generated by the computer.

9.  Recap sheets for each deposit for deposit advices, if applicable, will be maintained indicating direct deposits. Individual wage assignment agreements will be kept on file to support direct deposit.

10. "Installed by   School Corporation, (Year)" shall be printed, in the upper right corner, on each approved form furnished by a printing supplier and, when practical, on those printed from accounting systems at the unit. Upon the installation of a new form the form will be entered on a log for this purpose with the date of installation; and the name and number of the prescribed form replaced. The log must be available for audit.

11. The government officials are responsible to ensure that forms and accounting systems installed comply with the uniform compliance guidelines for information technology services published in the School Administrator and accounting manuals. This includes ensuring that customization of the system done by the vendor for implementation at the government is done in such a manner that the system remains compliant.

12. In the event a change is required due to the passage of a State or Federal law, the government agrees to implement the change in a timely manner.

Use of Prescribed or Approved Forms

Officials and employees are required to use State Board of Accounts prescribed or approved forms in the manner prescribed.

STATE AND FEDERAL TAXES

Federal and State Agencies - Compliance Requirements

Units are required to comply with all grant agreements, rules, regulations, bulletins, directives, letters, letter rulings, court decisions, and filing requirements concerning reports and other procedural matters of federal and state agencies. Units must file accurate reports required by federal and state agencies. Noncompliance may require corrective action.

Federal Income Taxes

All political subdivisions are exempt from federal income taxes under the Internal Revenue Code.

Federal Excise Taxes

As a general rule, governmental units are exempt from and should not pay any federal excise tax. To obtain the exemption, a properly executed exemption certificate must be filed with the vendor from whom the purchase is made. This exemption certificate may be prepared at the time the order is placed or at the time payment is made. The exemption certificate may be a printed or mimeographed form and should be substantially in the form currently used. For information concerning the form of exemption certificate, contact the Internal Revenue Service.

Claims and invoices should be carefully audited to see that no federal excise taxes are included and paid. Disbursing officers should require that invoices show separately the gross price, the amount of the excise tax, and the final price to the governmental unit.

Any questions concerning federal excise tax should be directed to the Internal Revenue Service.

Tax Refunds

In some instances, governmental units may have erroneously paid the excise taxes from which they are exempt. In such instances, the unit has three years from the date tax was paid to the federal government in which to file for a refund.

To obtain a refund, the governmental unit should submit to the seller an exemption certificate for each item on which excise tax was paid accompanied with documentary evidence that the exemption had not been claimed or received. Such evidence may be copies of invoices, affidavits, records, etc.

The Internal Revenue Service will provide forms on which the original taxpayer may claim reimbursement for excise tax erroneously paid by a governmental unit.

State Sales Tax

Governmental units are eligible for an exemption from the state sales tax on some purchases. To obtain the exemption for a Sales Tax Exemption Certificate, application should be made to the Sales Tax Division of the Indiana Department of Revenue. This certificate must be presented at the time a purchase is made to avoid paying sales tax. If sales tax is paid erroneously, a refund application may be obtained from the Sales Tax Division.

Not all expenditures are exempted from sales tax charges, for example lodging for individuals in hotels and motels. Therefore, reimbursements for items or services that are not tax exempt may include state sales tax. However, it should be kept in mind that claims for all such reimbursements must be supported by a fully itemized supporting documentation.

Governmental funds generally are exempt from the payment of sales tax on qualifying purchases. Respective tax agencies should always be contacted concerning tax exemptions and payments.

Penalties and Interest

Officials and employees have the duty to pay claims and remit taxes in a timely fashion. Failure to pay claims or remit taxes in a timely manner could be an indicator of serious financial problems which should be investigated by the unit. Additionally, officials and employees have a responsibility to perform duties in a manner which would not result in any unreasonable fees being assessed against the unit. Any penalties, interest, or other charges paid by the unit may be the personal obligation of the responsible official or employee.

GENERAL INFORMATION

Advance Payments

Compensation and any other payments for goods and services must not be paid in advance of receipts of the goods or services unless specifically authorized by law. Payments made for goods or services which are not received may be the personal obligation of the responsible official or employee.

Alcohol Purchases

The governing body of a unit must have a written policy concerning the purchase of alcohol using public funds. This policy must address the exact situations in which alcohol can be purchased and outline any liability issues that may arise with using public funds to purchase alcohol.

Asset Ownership

Assets purchased must be titled in the name of the unit. In instances where multiple units are purchasing an asset jointly, the asset must be titled in accordance with an interlocal agreement between the units.

Audit Costs

Audit costs incurred because of poor records, nonexistent records, or any other inadequate bookkeeping practices, or because of theft or a shortage may be the personal obligation of the responsible official or employee.

Any audit costs paid without the prior approval of the SBOA when the SBOA has the statutory requirement to perform the audit of the unit may be considered a duplication of service and an unnecessary expense. These payments may be the personal obligation of the responsible official or employee.

Bad Debts and Uncollectible Accounts

The governing body of a unit must have a written policy concerning a procedure for the writing off of bad debts, uncollectible accounts receivable, or any adjustments to record balance. Documentation must exist for all efforts made by the unit to collect amounts owed prior to any write-offs. Write-offs or adjustments to records which are not documented or warranted may be the personal obligation of the responsible official or employee.

Capital Assets Inventory

Every unit must have a capital assets policy that details the threshold at which an item is considered a capital asset. Every unit must have a complete detail listing of all capital assets owned which reflects their acquisition value. Capital Asset Ledger (Form 369) has been prescribed for this purpose. A complete physical inventory must be taken at least every two years, unless more stringent requirements exist, to verify account balances carried in the accounting records.

Cash Disbursements

Disbursements, other than properly authorized petty cash disbursements, shall be by check or warrant, not by cash or other methods unless specifically authorized by law.

Collection of Amounts Due

Units have a responsibility to collect amounts owed to the unit pursuant to procedures authorized by law.

Compensation

All compensation and benefits paid to officials and employees must be included in the labor contract, salary ordinance, resolution, or salary schedule adopted by the governing body unless otherwise authorized by law. Compensation must be paid in a manner that will facilitate compliance with state and federal reporting requirements.

Compensation – Non-Employees

Payments for services provided by an organization must go directly to the organization and not to an individual employee of the organization. All payments for services must be supported by a written contract. Compensation must be paid in a manner that will facilitate compliance with state and federal reporting requirements.

Computer Output

Public records, financial statement information and supporting information generated through a computer system should be printed out on paper, printed to disk or maintained on-line at the end of each reporting year and retained for audit. Information must be maintained in a manner that will allow access for audit and public inquiry on equipment of the governmental unit.

Condition of Records

At all times, the manual and/or computerized records, subsidiary ledgers, control ledger, and reconciled bank balance must agree. If the reconciled bank balance is less than the subsidiary or control ledgers, the amount needed to balance may be the personal obligation of the responsible official or employee.

Contracts

Payments made or received for contractual services must be supported by a written contract. Each unit is responsible for complying with the provisions of its contracts.

Correction of Errors

When it is determined that an error has been posted in the financial records, the error must be corrected in a timely manner. The correction of the error should be dated as of the date that the correction occurred and should not be back dated to the date the error occurred. The adjustment should be labeled as a correcting entry. All documentation of the error and the adjustments must be maintained to support the correction.

Credit Cards

The SBOA will not take exception to the use of credit cards by a unit provided the following criteria are observed:

1.  The governing body must authorize credit card use through an ordinance /resolution, which has been approved in a meeting and documented in the minutes.

2.  Issuance and use must be handled by an official or employee designated by the governing body.

3.  The purposes for which the credit card may be used must be specifically stated in the ordinance/resolution.

4.  When the purpose for which the credit card has been issued has been accomplished, the card must be returned to the custody of the responsible person.

5.  The designated responsible official or employee must maintain an accounting system or log which would include the names of individuals requesting usage of the cards, their position, estimated amounts to be charged, fund and account numbers to be charged, date the card is issued and returned.

6.  Credit cards must not be used to bypass the accounting system. One reason that purchase orders are issued is to provide the fiscal officer with the means to encumber and track appropriations to provide the governing body and other officials with timely and accurate accounting information and monitoring of the accounting system.

7.  Payment cannot be made on the basis of a statement or a credit card slip only. Procedures for payments must be no different than for any other claim. Supporting documents such as paid bills and receipts must be available. Additionally, any interest or penalty incurred due to late filing or furnishing of documentation by an officer or employee may be the personal obligation of the responsible officer or employee.

8.  If authorized, an annual fee may be paid.

Deposit of Accountable Items

Tickets, goods for sale, billings, and other collections, are considered accountable items for which a corresponding deposit must be made in the bank accounts of the unit. The deposit ticket or attached documentation must provide a detailed listing of the deposit, which includes at a minimum, check numbers and corresponding names of the payers.

Donations

We will not take exception to club/organizations donating money to an outside organization based on a majority vote of its members. We would encourage that documentation be retained to provide approval of a majority of the members. Also, the warrant/check should be written to an organization and not an individual.

Electronic and Digital Signatures

The SBOA will not take exception to the use of electronic signatures. Each official is responsible for their own signature, so proper internal controls over the use of electronic signatures should be put into place by the unit.

Excessive or Unreasonable Costs

Every effort should be made by the unit to avoid unreasonable or excessive costs. Unreasonable or excessive costs may be the personal obligation of the responsible official or employee.

Expense Reimbursement Itemization

All claims, invoices, receipts, and accounts payable vouchers, including those presented to the governing body for approval in accordance with IC 5-11-10, must contain adequate detailed documentation. All claims, invoices, receipts, and accounts payable vouchers regarding reimbursement for meals and expenses for individuals must have specific detailed information of the names of all individuals for which amounts are claimed, including the nature, name, and purpose of the business meeting, to enable the governing body to authorize payment. Payments which do not have proper itemization showing the business nature of the claim may be the personal obligation of the responsible official, employee or other person for whom the claim is made.

Fees

Fees can only be collected as specifically authorized by law or properly authorized ordinance/resolution. When a fee is NOT specified by law, but instead through the use of an ordinance/resolution, sufficient authoritative reference should be maintained.

Fundraisers

The SBOA is not aware of any statutes that address who has control over extracurricular fundraising activities. Therefore, we would not take exception to the local school board passing required procedures if the fundraising activity uses school property or is associated with a school event. In the absence of a local policy, our opinion would be that each fundraising activity needs to be looked at individually to determine if the School Corporation is running the activity or if an Outside Organization is running the activity. Things to keep in mind would be that if school employees are participating in the fundraising activity on school time, then the fundraiser activity should be accounted for in the school records or you run the risk of ghost employment issues.

Fund Sources and Uses

Sources and uses of funds must be limited to those authorized by the enabling law, ordinance/resolution, or grant agreement.

Gift Cards

The State Board of Accounts will not take exception to the use of gift cards by an extracurricular account provided the following criteria are observed:

1.  The School Board must authorize gift card purchases through a resolution, which has been approved in the minutes.

2.  The purposes for which gift cards may be issued must be specifically stated in the resolution.

3.  Purchase and issuance of gift cards shall be handled by an official or employee designated by the school principal.

4.  The designated responsible official or employee shall maintain an accounting system or log which includes the name of the business from which the gift cards were purchased, their amounts, fund and account numbers to be charged, date the card was issued, person gift card was issued to, proof that the gift card was received by the person it was issued to, etc.

5.  Gift cards shall not be used to bypass the accounting system. One reason that purchase orders are issued is to provide the fiscal officer with the means to enc umber and track appropriations to provide the governing board and other officials with timely and accurate accounting information and monitoring of the accounting system.

6.  Procedures for payments shall be no different than for any other claim. The school principal must approve the expenditure and supporting documents such as paid bills and receipts must be available. Additionally, any purchase or issuance of gift cards without proper documentation may be the responsibility of that officer or employee.

Indebtedness

A unit may not incur indebtedness unless specifically allowed by law.

Lucrative Office

Any person holding two offices which have been or may be deemed lucrative must obtain the written opinion of the attorney for the unit or units served to determine compliance with Article 2, Section 9 of the Constitution of Indiana.

Malfeasance, Misfeasance or Nonfeasance

Funds misappropriated, diverted or unaccounted for through malfeasance, misfeasance, or nonfeasance in office of any official or employee may be the personal obligation of the responsible official or employee

Ordinances and Resolutions

Each unit is responsible for complying with the ordinances, resolutions, and policies it adopts.

Overdrawn Cash

The cash balance of any fund may not be reduced below zero. Routinely overdrawn funds could be an indicator of serious financial problems which should be investigated by the unit.

In an instance in which a unit receives a reimbursement grant, the unit must be claiming reimbursement in a timely manner. In this case, it would be possible for a fund to be overdrawn for a short period of time.

Overpayment Collections

Units must collect any overpayments made.

Personal Expenses

Public funds may not be used to pay for personal items or for expenses which do not relate to the functions and purposes of the unit. Any personal expenses paid by the unit may be the personal obligation of the responsible official or employee.

Personal Property Use

Assets of the unit may not be used in a manner unrelated to the functions and purposes of the unit.

Political Expenditures

Expenditures for political purposes, contributions to political campaigns, directly or indirectly, which are not authorized by law may be the personal obligation of the responsible official or employee.

Preservation and Destruction of Public Records

The governing board is charged with the duty to preserve, keep, maintain, or file all the official records of the political subdivision pursuant to IC 5-15-1-1. The final decision as to the destruction or disposition of such records rests with the local public records commission. Guidance for the retention of public records can be found in IC 5-15-6.

Private Property

Public funds may not be used to make improvements to property not owned by the unit, unless permitted by law.

Proceeds

Proceeds generated by the sale or rental of property must be receipted into the fund which originally purchased the property unless otherwise provided by law.

Purchasing Bonuses

Any compensation, premium, bonus, or product earned as a result of the purchase of goods or services by the unit becomes the property of the unit. Any amounts received by an official or employee may be the personal obligation of the responsible official or employee.

Receipt Issuance

Receipts shall be issued and recorded at the time of the transaction.

Risk of Loss

The unit must ensure it is adequately protected for all risks of loss Signature Stamps The decision on whether the number of items to be signed justifies the use of a rubber stamp or other device, including computer image signatures, for affixing a signature must be made by each official responsible for signing warrants, claims, and other official documents. A rubber stamp or other signing device should be used only under the direction of the official and should be properly safeguarded when not in use. Each official is responsible for their own signature.

Supporting Documentation

Supporting documentation such as receipts, canceled checks, tickets, invoices, bills, contracts, and other public records must be available for examination to provide supporting information for the validity and accountability of monies disbursed. Payments without supporting documentation may be the personal obligation of the responsible official or employee.

Timely Recordkeeping

All documents and entries to records must be made in a timely manner to ensure that accurate financial information is available to allow the unit to make informed management decisions and to help ensure compliance with IC 5-15-1-1.

Transaction Recording

All financial transactions pertaining to the unit must be recorded in the records of the unit at the time of the transaction.

Travel Policies

Each unit must adopt a written travel policy in conformity with applicable laws. Reimbursement for lodging and meals must be based upon actual receipts for amounts paid unless otherwise authorized by law.

Trusts and Endowments

Each unit is responsible for complying with any requirements of trust agreements or endowments received which are not contrary to state law.

Various Accounting Guides, Manuals and Other Publications

Compliance is required, as applicable, with generally accepted accounting principles, and standards issued by the Governmental Accounting Standards Board, Financial Accounting Standards Board, and other standards setting bodies and also with various accounting guides, manuals and other publications.

Vending, Concessions or Other Sales Controls

Internal controls over vending operations, concessions or other sales should include, at a minimum, a regular reconcilement of the beginning inventory, purchases, distributions, items sold and ending inventory to the amount received. Any discrepancies noted should be immediately documented in writing to proper officials. The reconcilement should provide an accurate accounting.

Persons with access to vending should be properly designated and access should be limited to those designated.

Vending Machine Commissions and/or Profits

There must be a clearly defined procedure adopted by the unit concerning placement, use, maintenance, commissions, and profits of vending machines on their property.

All revenues generated and costs incurred in operating vending machines located on the units premises must be accounted for through the unit's records.

If vending machines are located in restricted areas (areas other than those available to the public) and if the governing body and fiscal officer wish for those revenues to be restricted for the use and benefit of those employees who use the machines and generate the revenues, the SBOA takes no exception to such action in an engagement. The decisions must be authorized by proper resolution/ordinance of the governing body.

If vending machines are located in areas where the public makes use of the machines and generates the resulting revenues, we advise officials to place the revenues in the general fund. Any alternative procedure must be authorized by resolution/ordinance of the governing body.

In the event personnel other than the unit’s personnel maintain, stock, and clean up around vending machines, we take no exception when such persons are paid for these services. A written agreement must be entered into listing the services to be rendered, the amount to be paid for such services, timing of payments, and any other areas deemed necessary by the unit.