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Accounting Procedures Manual for the Public Schools in the State

of West Virginia

Presented by Beth Marrone, CPA, TreasurerPeggy Smith, CPA, Assistant TreasurerDebbie McCauley, General Accountant

December 12, 2012

SO WHAT

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FRAUD TRIANGL

E

INCENTIVE/MOTIVE

RATIONALIZATIONOPPORTUNITY

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SCHOOL FINANCE PLAIN AND SIMPLE

CPA

This manual’s purpose is to describe the minimum system of accounting practices and procedures

WVDE Policy 1224.1

  

1-4.  Responsibility: The school principal is responsible for the financial management of the school. 

“All moneys received by a school are considered quasi-public funds and are to be expended for the benefit of the students at the school.”

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DOCUMENT

I KNOW WHAT WE NEED TO BUY. I CAN TELL YOU WHO GAVE US MONEY AND HOW MUCH.

I KNOW WHY WE WROTE THAT CHECK.

DOCUMENTATION:

DEMONSTRATES COMPLIANCE

PREVENTS ERRORS AND WORSE

AIDS IN TRANSFER OF KNOWLEDGE AND INFORMATION

Incentive/Motive:

Financial need such as gambling problem, debt, other monetary pressures

Incentive/Motive

Rationalization:

Person committing fraud frequently rationalizes the fraud - “I’ll pay the money back”, “They will never miss the funds”, or “They don’t pay me enough.”

Rationalization

Opportunity:

Person committing fraud sees an internal control weakness and begins the fraud with a small amount of money. If no one notices, the amount will usually grow larger.

Opportunity

It can’t happen to me!!

I trust my farmer!!

That would be impossible!

Only at that “other” farm!!

Failure to receipt and deposit all monies

Forgery of signature

Payment of personal expenditures

Opening separate bank account and writing personal checks

FINANCIAL IRREGULARITIES THAT HAVE OCCURRED IN WV

In any organization, the risk of fraud can be reduced.

Internal control procedures can diminish the “opportunity” point of the Fraud Triangle.

INTERNAL CONTROLS SHOULD:

Make sure the cash is used as intended

Make sure information is accurate

Make it difficult to “beat the system”

INTERNAL CONTROLS:

PREVENTIVE:

Approvals

Authorizations

Verifications

Security of equipment, cash, etc.

Segregation of duties

INTERNAL CONTROLS:

DETECTIVE:

Reviews

Inventory

Reconciliations

RECEIPTS: Pre-numbered

Prepared in duplicate

For all collections - classroom collections must have supporting details

Include date, amount, name of person from whom received, purpose and account

Use pre-numbered tickets at events; prepare and reconcile ticket report to cash

DEPOSIT ALL FUNDS INTACT IN BANK ACCOUNT:

At least weekly or When collections on hand exceed $500 No cash disbursed from collections No personal checks cashed Segregate collection /deposit duties as

much as possible Safeguard undeposited funds

USE PURCHASE ORDER: Pre-numbered Approve in writing Approve prior to purchase or order

placement Approve only when sufficient funds

available No purchase order – individual

personally liable

DISBURSEMENTS: With check - two signatures required

(payee cannot sign check) For itemized invoice showing date,

items or services provided, quantity, amount due – schools cannot expend funds without this

Approved prior to payment Invoice stamped as paid

FUND RAISING: Deposit all proceeds intact in bank

Purchases made by check

Profit and loss statement showing gross proceeds, cost of goods sold and net proceeds for each activity including concessions operated by school

Safeguard inventory of goods being sold

Follow sales tax rules

REVIEW FINANCIAL RECORDS:Principal: Sign bank envelope and open bank statement as soon as

received

Bank reconciliation – completed as soon as statement has been reviewed

Deposits in Transit

Outstanding Checks

Open purchase order report

Receipts and Disbursements Detail

Check, Receipt, Deposit and Journal Entry registers

Trial Balance

Fundraiser Profit and Loss Statement

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UPDATED MONTHLY CHECKLIST:Secretary: Prepare monthly reports for Principal’s review

(see Monthly Financial Report Checklist) Send to Finance to scan OR scan originals in

the following order and forward to finance.jeff@access.k12.wv.us: Signed “Monthly School Financial Statement

Review Verification Form” Signed bank reconciliation Signed deposits in transit

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UPDATED MONTHLY CHECKLIST: (cont)Secretary:

Signed outstanding check listing Signed journal entries Signed receipts and disbursements detail Signed bank statement including cancelled

checks Finance will return the original statements

and reports to the school to maintain in school financial files

MONTHLY CHECKLIST:Principal:

Receipt Register

Check Register

Journal Entry Register

Open Purchase Order Report

Trial Balance

Receipts and Disbursements Detail

Bank Reconciliation

Deposit in Transit

Outstanding Checks

THINGS TO LOOK FOR:

Signatures on cleared checks Vendors on cleared checks Deposits in transit – these should be

reflected on subsequent bank statement early in month

Dates on outstanding checks Total of receipts–reasonableness for

school activities; consecutive numbers

SchoolFunds Online for Principals   http://sfohost.com/jefferson  You can get to the system from any computer with internet access.   You have a user ID and Password that will gain you view access to your school’s financial data.  

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-3: Schools aren’t legal entities; cannot enter into contracts

1-8: Receipts and checks entered daily

1-9: No signature stamps or preprinted signatures

1-10: Support organizations prohibited from using the Board’s FEIN unless funds are accounted for in the school’s ledger

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-10: Only one checking account

1-10: CSBO and principal must have signature authority on every account with school funds

1-12: Checks must be made payable to school except third party fundraisers

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-15: Receipts must show the form of payment

1-15: Receipts must have valid signature – electronic signatures are acceptable if password protected

1-18: Funds must be raised specifically for parent, teacher, community recognition programs; must be publicized as such; must be accounted for separately

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-19: Schools required to follow bid thresholds in State Board Policy 8200

1-20: Schools permitted to make “deposits” for field trip buses, etc but require written documentation from vendor - amount and terms

1-20: Use a “verification” stamp and initials to prove invoice reviewed for accuracy

1-20: Schools must pay invoices in timely manner

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-20: Need W-9 form for all vendors

1-21: All credit cards must comply with State Board Policy 8200

1-23: Blank checks are never pre-signed

1-27: Report unclaimed property to State Treasurer’s Office

1-28: Bank reconciliations must be signed by the preparer and the principal

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-29: Pre-numbered tickets are to be used at any event where fee charged or donation accepted – dances, sporting events,

theatre productions, choir performances, etc.

1-29: No individual should be used to sell tickets more than 5 times per year

1-29: Unused ticket stock must be kept in secure location and issued immediately prior to event

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-29: No cash disbursements from event collections

1-29: Maintain ticket log for all ticket stock used by school

1-33: Remaining balances in class accounts after class no longer in school must be a) used for general operations of school, b) used for specific purpose at school, c) transferred to subsequent class

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-34: All profit and loss statements must be signed by preparer and school principal

1-34: Fund raising activity must be covered by liability insurance

2-1: Volunteers must be acting on behalf of the school when participating in

fundraising activities in order to be covered by the board’s liability insurance. Money must then be deposited into the school’s account

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

1-36: Vending machine items must comply with State Board Policies and federal regulations regarding nutritional guidelines

1-37: Items purchased with faculty senate funds are the property of the school and do not follow the teacher if he/she transfers

1-37: A vote must be taken and recorded in the minutes at the beginning of the school year if the faculty senate wants to allow individual teachers to carry over balances

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

2-2: All school support organizations must be approved annually by the board

2-4: School support organizations must have their own Federal Identification Number (FEIN)

2-4: Two different signatures are required on every check issued by a school support organization (payee cannot be signer)

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

2-6: All disbursements must be made by check

2-9: A profit and loss statement must be prepared for each fund raising activity conducted by a school support organization

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

2-9: Donors must be made aware of the tax-exempt status at the time of donation. Donations are tax exempt only if the

school support organization obtained its own tax-exempt designation from IRS or maintains funds in school account

UPDATES and CLARIFICATIONS to ACCOUNTING GUIDELINES

2-10: School support organizations must use pre-numbered tickets and prepare ticket reconciliation report for all activities held on school property at which a fee or

donation is accepted for admission

2-11: School support organizations must reconcile bank accounts monthly

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TRUE or FALSE:

RECEIPT IS ONLY NEEDED IF SOMEONE REQUESTS ONE.

FALSE1-15: A PRE-NUMBERED RECEIPT MUST BE ISSUED FOR ALL COLLECTIONS AT THE TIME THE FUNDS ARE COLLECTED.

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TRUE or FALSE:

THE SCHOOL SECRETARY HANDLES ALL THE FINANCIAL TRANSACTIONS.

FALSE1-2: SOME OF THE CHARACTERISTICS OF A GOOD INTERNAL CONTROL SYSTEM INCLUDE ADEQUATE SEGREGATION OF DUTIES.

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IF A VENDOR SENDS A STATEMENT SHOWING OUTSTANDING INVOICE AMOUNTS, A SCHOOL CAN ISSUE A PAYMENT TO SETTLE THE ACCOUNT.

TRUE or FALSE:

FALSE1-20: SCHOOLS ARE NOT PERMITTED TO EXPEND ANY FUNDS UNLESS AN ITEMIZED CLAIM (INVOICE) FOR PAYMENT IS FILED BY THE CLAIMANT.

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IF A TEACHER SEES A GREAT DEAL AT A STORE ON A PRINTER FOR THE CLASSROOM, THEY CAN MAKE THE PURCHASE AND BE REIMBURSED BY THE SCHOOL.

TRUE or FALSE

FALSETHERE ARE NO PROVISIONS FOR REIMBURSEMENTS OTHER THAN TRAVEL AND FACULTY SENATE $100 ALLOCATION.

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AS LONG AS MONEY IS KEPT IN A SAFE PLACE AT THE SCHOOL, A DEPOSIT CAN BE MADE AT THE BANK WHEN IT IS CONVENIENT TO GO.

TRUE or FALSE

FALSE1-16: RECOMMENDED DAILY. HOWEVER, DEPOSIT MUST BE MADE WHENEVER TOTAL ON HAND EXCEEDS $500. MUST BE MADE AT LEAST WEEKLY, REGARDLESS OF AMOUNT.

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TRUE or FALSE

PROFIT AND LOSS STATEMENTS DON’T NEED TO BE PREPARED FOR EVERY FUNDRAISER.

FALSE1-34: A PROFIT AND LOSS STATEMENT MUST BE PREPARED AND MADE AVAILABLE FOR PUBLIC INSPECTION FOR EACH FUND RAISING ACTIVITY CONDUCTED BY A SCHOOL.

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BANK RECONCILIATIONS NEED TO BE DONE ANNUALLY.

TRUE or FALSE:

FALSE1-28: EVERY BANK ACCOUNT MUST BE RECONCILED MONTHLY AS SOON AS POSSIBLE AFTER THE BANK STATEMENT IS RECEIVED, INCLUDING ANY CD AND INVESTMENT ACCOUNTS.

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EMPLOYEES WHO TAKE TICKETS AT AN EVENT OR PLAY THE PIANO AT A CONCERT CAN RECEIVE A CHECK FROM THE SCHOOL.

TRUE or FALSE:

FALSE1-22: ALL PAYMENTS MADE BY A SCHOOL TO AN INDIVIDUAL FOR SERVICES ARE TO BE CONSIDERED WAGES AND ARE TO BE PAID THROUGH PAYROLL. ATHLETIC OFFICIALS ARE THE ONLY EXCEPTION.

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BE AWARE

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DOCUMENT

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USE THE TOOLSAccounting Procedures Manualhttp://wvde.state.wv.us/financeClick on POLICIES, Policy 1224.1

West Virginia Purchasing Policyhttp://wvde.state.wv.us/financeClick on POLICIES, Policy 8200

School Funds Onlinehttp://sfohost.com/jefferson

Central Finance Personnel

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QUESTIONS ? ? ? ?