Accounting Manual for Public School Districts in the State of Washington

Randy I. Dorn State Superintendent of

Public Instruction September 2011

Brian Sonntag State Auditor

Office of Superintendent of Public Instruction Old Capitol Building

P.O. Box 47200 Olympia, WA 98504-7200

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Accounting Manual for Public School Districts in the State of

Washington

School Apportionment, Financial Services, and Finance Reform Office of Superintendent of Public Instruction Calvin W. Brodie, Director

Randy I. Dorn Superintendent of Public Instruction

Brian Sonntag

Washington State Auditor

Ken Kanikeberg Chief of Staff

Shawn Lewis

Chief Financial Officer

September 2011

Effective Date: 9-1-11

SCHOOL DISTRICT ACCOUNTING ADVISORY COMMITTEE (SDAAC) CURRENT MEMBERS AS OF JANUARY 2011

Washington Association of School Administrators

Harvey Erickson, Chief Financial Officer Bethel School District Mark Flatau, Superintendent Cle Elum-Roslyn School District

Washington Association of School Business Officials

Brian Aiken, Assistant Superintendent, Business Services Cheney School District Holly Burlingame, Director of Accounting Northshore School District Rosann Lassman, Business Manager Washougal School District Susan Smith Leland, Exec. Director, Business Services Highline School District Doug Matson, CPA, Deputy Superintendent, Operations West Valley (Spokane) School District Becky Montgomery, Business Manager Ephrata School District Kim Scott, Business Manager Kiona-Benton School District Angela Watts, Asst. Superintendent, Business and Operations West Valley (Yakima) School District

Large School Districts Cindy Coleman, Director of Accounting Spokane Public Schools Patricia Luat, Direct of Financial Services Tacoma School District Kathie Technow, Accounting Manager Seattle School District Association of Educational Service Districts

Chuck Hole, Director Accounting and School Finance Educational Service District 121 Marilyn Sollers, Fiscal Services Coordinator Educational Service District 189 Bill Tilton, Fiscal Services and Data Coop Director Educational Service District 105

Washington Association for Career and Technical Education

Kevin Plambeck, Director, Career and Technical Education Stanwood-Camano School District Gerry Ringwood, Director Tri-Tech Skills Center (Kennewick)

Washington School Information Processing Cooperative (WSIPC)

Jean Deming, Fiscal Product Manager At Large Members

Jody Hockaday, Finance Supervisor Pasco School District State Auditors Office

Rick Bonner, CPA, Audit Manager School Programs Office of the State Treasurer

Darrel Jensen, Accounting Services Director Office of Superintendent of Public Instruction

Calvin W. Brodie, Director, School Apportionment, Financial Services, and Finance Reform; Committee Chairperson Michael Dooley, Supervisor, School District and ESD Budgeting Ramona Garner, Supervisor, School District and ESD Financial Reporting Daniel Lunghofer, Supervisor, School District and ESD Accounting

Effective Date: 9-1-11

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Accounting Manual for Public School Districts

INTRODUCTION The classified system of accounts presented herein was developed by the Washington State School District Accounting Advisory Committee under the joint direction of the Superintendent of Public Instruction and the State Auditor. In general, the manual follows established principles of governmental accounting as adopted by the Governmental Accounting Standards Board. Revisions have been made where necessary in order to conform to state law. Authority for the Accounting Manual is provided under WAC 392-123-010. The manual provides for a basic double entry modified accrual system of accounting with general ledger controls over revenues, expenditures, receivables, inventories, liabilities, fund balance, and budgetary accounts. School districts with an average FTE (full-time equivalent) enrollment of less than 1,000 pupils for the preceding fiscal year may use a cash basis system of accounting per RCW 28A.505.020. The accounting principles and procedures included in the manual represent basic minimums necessary for the achievement of school district reporting objectives. It is intended that the school districts maintain detailed revenue and expenditure accounts as well as required periodic reports. The use of these systems will (1) promote uniformity in the presentation and comparison of financial data; (2) make available to the local school superintendents and school boards complete and up-to-date data for their guidance and information; (3) furnish the means for effective budgetary control; and (4) provide a method for school districts to present their fiscal operating results and financial needs to the state Legislature, the Superintendent of Public Instruction, and the general public. Members who serve on the committee represent the Office of Superintendent of Public Instruction, the State Auditors Office, the Washington Association of School Administrators, the Washington Association of School Business Officials, the Association of Educational Service Districts, the Washington Association for Career and Technical Education, the Washington State Treasurers Office, the Washington State Association of County Treasurers, and the Washington School Information Processing Cooperative. Since the initial publication of this manual in March 1968, the committee has met regularly to discuss the application of various parts of the manual to specific situations affecting each fund. Subsequent revisions of the manual reflect many of the generally accepted accounting principles (GAAP) affirmed by the Governmental Accounting Standards Board in Statement 1, Authoritative Status of NCGA Pronouncements and AICPA Industry Audit Guide. Legal references provided in this edition are those in effect as of December 2010. Appreciation is hereby expressed for the time and assistance given to this endeavor by all members of the manual committee and others whose efforts made this publication possible. NOTE: Boxes surrounding information throughout this manual indicate information needed only by those districts preparing financial reporting in compliance with generally accepted accounting principles (GAAP).

Effective Date: 9-1-11

Accounting Manual for Public School Districts

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_______________________________________________________ Accounting Manual for Public School Districts

Accounting Manual Table of Contents i Effective Date: 9-1-10

ACCOUNTING MANUAL - Table of Contents Chapter 1 Principles of Accounting Table of Contents ................................................................................................................ 1-i Principles of Accounting ................................................................................................... 1-1 Chapter 2 Budgeting Table of Contents ................................................................................................................ 2-i Budgeting ........................................................................................................................... 2-1 Chapter 3 Accounting Guidelines Table of Contents ................................................................................................................ 3-i Internal Control Structure ................................................................................................. 3-1 Payroll Process .................................................................................................................. 3-3 Revenues and Receipts ..................................................................................................... 3-5 Expenditures and Disbursements .................................................................................... 3-9 Inventory ........................................................................................................................... 3-14 Capital Assets .................................................................................................................. 3-16 Investments ...................................................................................................................... 3-20 Debt and Lea