FS-06-SF3 School Funds Receipt Log; FS-04-SF2 Schools Funds Payment Request; FS-04-SF1 School Funds: Advance of Funds

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1 Administrative SCHOOL FUNDS Responsibility: Legal References: Related References: Executive Superintendent of Business Services Nil FS-04-SF4 School Funds: Receipts; FS-06-SF3 School Funds Receipt Log; FS-04-SF2 Schools Funds Payment Request; FS-04-SF1 School Funds: Advance of Funds 1. Preamble The following procedures provide guidelines and expectations regarding the handling of school funds, banking and management of school funds, and the maintenance of records and required reporting of school funds. 2. General 2.1 There are three types of funds that are school based School Operating Funds are known as Schedule A and Schedule B money and are the budget funds received by the board from provincial grants and allocated to the schools. The actual funds are kept on deposit in the Board s central account. Each school has accounts as part of the Board s overall financial system. Spending decisions are made and controlled by the school School Funds arise from fundraising, collections, commissions and rebates at the school itself. The actual money is under the control of employees and school administration. Normally a separate bank account is kept at a local bank in the name of the school. Disbursement decisions are made by school administration and records are kept at the school School Council Funds arise from fundraising, collections, commissions and rebates at the school itself. The money is normally under the control of the school council members. Funds can either be combined with school funds in #2 above where they must be kept in the school s bank account or alternately must be kept in a separate bank account. In either case, a separate accounting is maintained for council funds. Disbursement decisions are made by school council. Records are kept by the school or the school council. 2.2 These Guidelines and Procedures for School Funds apply to both #2 and #3 above, School Funds and School Council Funds. 3. School Funds Cash Handling Guidelines 3.1 In all cases, accounting for school funds must follow accepted procedures and practices for the care and custody of cash. School Funds - Cash Handling Guidelines is included in this Handbook as a convenient summary of important components of handling cash A bank account (or accounts) must be utilized for all school fundraising activities Bank accounts must be set up in the name of the Board as follows: Waterloo Region District School Board name of school or school council plus activity or initiative if applicable All bank accounts must have at least two signing officers, one of whom must be the Principal (or Vice-Principal if designated by the Principal) All disbursements must be made by cheque The school or school council will maintain a ledger detailing all activity in each bank account. Where appropriate (i.e., school council) a separate accounting May 2007 Page 1 of 8

2 4. School Funds To Be Reviewed should be kept. On a monthly basis a reconciliation of bank statements and the school's or school council s records should be completed, signed by the principal and forwarded to the Financial Services Department. (This also enables the Board to claim a GST rebate on eligible purchases.) Receipts, invoices, cancelled cheques, and related information are to be kept in a file at each school for audit purposes Any money collected or retained in excess of $ must be deposited daily. Any funds retained must not be kept in desks or classrooms and should be locked in a vault or secure location When there are cash proceeds, the money should be counted and verified (with a signature) by two people and deposited promptly In general, the Principal is accountable for all funds in the school and should ensure that all financial activity is reasonable and complies with Board policies and procedures Additional references can be found in the Administrative Services Procedures Manual. 4.1 These procedures detail the steps required by individuals involved in the handling of school funds to ensure the proper collection, accounting and security of school funds. 4.2 Following these procedures ensures that the appropriate liability coverage will be in place for all individuals involved in the handling of cash. 4.3 As an added benefit, proper completion and submission of financial reports allows the school and board to claim the GST rebate to which the board is entitled and for which each site is registered. 4.4 Roles and Responsibilities: School and school council funds are held separately from school operating funds. They are generated by collections from students and parents and through fund raising activities on the part of the school or school council. School funds are controlled and accounted for at the school level. The segregation of school funds from Board funds recognizes the accountability of the principal to the Board while acknowledging the responsibility of the Board for all financial activity. Similarly, the executive committee of the school council is responsible and accountable for school council funds. The appropriate sections of the following procedures will assist the principal and/or school council executive in fulfilling their responsibilities for school funds The school principal is accountable for school funds collected at the school. The executive of the school council is accountable for school council funds. In each case they should: ensure compliance with procedures and directives; ensure processes are in place to protect and control the use of school funds; act as a signing officer on the bank account; review the bank account balances periodically to determine the need to invest surplus funds; review the fund s financial records and reports on an on-going basis; initial and date records and reports to indicate review; review income and expenditure activities; notify the Superintendent of Financial Services and the Superintendent of Instruction if any problems arise A person designated as the fund administrator is responsible for maintaining the books of account and preparing reports. Accordingly the fund administrator should: record transactions on a timely basis; administer the funds on a daily basis as required; maintain appropriate supporting documentation, such as invoices, receipts, or approved cheque requisition, for all transactions; reconcile the bank statement to school records (sometimes referred to as books of account) on a timely basis; prepare reports and account balance information as required; prepare bank deposits and issue cheques as required; May 2007 Page 2 of 8

3 deposit funds on a regular basis; ensure supporting documentation with appropriate approvals A person responsible for collecting money and cheques should: collect and count money from students; complete a deposit form and seal the envelope containing the cash and cheques; take money to the office on a timely basis (money must not be kept in the classroom); complete all related forms as required Staff in Accounting Services fulfill the following responsibilities with respect to school funds: maintain the list of affiliates (or schools) on the Board s GST number; receive and review school funds bank reconciliations and monthly summaries of disbursements; file GST rebate claims and distribute to the appropriate school; ensure that schools file reconciliations and summaries on a timely basis; assist fund administrators and principals with accounting and reporting issues related to school funds. 4.5 Cash Handling and Receipts The person who receives the funds should: count and total all cash and cheques; stamp all cheques For Deposit Only to the credit of the school; complete a listing of all bills, coins, and cheques using the form School Funds: Receipts; include the names and amounts of all cheques in the listing or prepare a separate list; present the cash and record of the cash count to the fund administrator in a deposit envelope; fill in the appropriate sections of the receipt log indicating the amount of the submission, the date the funds were submitted, and the account to which the funds are to be credited; assign the next consecutive number to the receipt log; initial the receipt log The fund administrator who receives the funds for deposit should: secure the funds for deposit by locking them in a vault or drawer with limited access; deposit the funds to the bank at the earliest opportunity; on the day that the funds will be deposited to the bank, extract any postdated cheques and count the cash to confirm the amounts recorded in the receipt log; if there are any discrepancies, including post-dated cheques, have the depositor, (the person who submitted the funds) count the cash with you or note the post-dated cheques and initial changes on the cash record and the receipt log; complete a new School Funds: Receipts form for any post-dated cheques, attach the cheques and set aside for deposit on the date recorded on the cheque(s); when the post-dated cheque date arrives, record the amount as a separate line on the cash receipts log and deposit to the bank at the earliest opportunity; note that amounts over $500 must not be kept on-site over-night; fill in the receipt log number if not already completed; fill in the appropriate sections of the receipt log indicating the date of the deposit, the amount verified, and your signature or initials. 4.6 Deposit of cash and cheques Preparation of the deposit: May 2007 Page 3 of 8

4 open a single deposit envelope and verify the amounts recorded on the School Funds: Receipts form; note the amount you have verified on the envelope or School Funds: Receipts form and on the appropriate line of the School Funds Receipt Log; if the amount on the deposit envelope does not agree with your count, notify the person who submitted the funds and have the changes checked and initialed (See above.); note the receipt log number on the back of each cheque (this will assist you in accounting for returned cheques, note the receipt log number on the back of every cheque then, any cheques, such as NSF, returned by the bank can be charged to the correct school funds account); fill in the amount of each submission on the School Funds Receipt Log (See above.); repeat the steps noted above for every deposit envelope; prepare the deposit slip for the bank; prepare an adding machine tape of all cheques for deposit and attach the tape to the school s copy of the deposit slip; stamp each cheque with a bank stamp, For Deposit Only, with bank account number as well; check that the bank deposit slip total agrees to the total of all the School Funds Receipts. You may wish to keep a running total on the School Funds Receipt Log. Record the deposit: a) enter the amount of each submission deposited under the appropriate revenue/receipts account; b) enter the total bank deposit to the school fund s cash account. 4.7 Disbursement of Funds Make all payments by cheque Note the following: cheques should never be payable to Cash (if the cheque is lost, anyone can deposit the cheque - a cheque that specifies a payee has to be endorsed prior to deposit and this provides evidence that identifies the recipient); do not make payments from cash receipts (this practice can cause confusion in the school records); deposit all funds intact (this provides an audit trail and entries in the accounting records are easily matched to the bank statement) Expenditures - Information and Procedures - General points to keep in mind: expenditures should be for the benefit of the school and its students; expenditures should not exceed the revenue for any given activity or event unless prior approval is received (the approval mechanism will be specific to each site); school funds cannot be used to defray operating deficits of Schedule A and Schedule B funds; all disbursements should be supported by a school fund Payment Request and an invoice or receipt; consider the following question carefully before committing to an expenditure- Will your disbursement appear appropriate to a third party does it bear public scrutiny? Disbursement process: check that the Payment Request is accompanied by a third party invoice or receipt; verify that the request has been approved by the person with authorization to expend funds from the account; prepare all information on the cheque; note the cheque number on the Payment Request and record payment details on the invoice or receipt to ensure that it is not paid a second time; May 2007 Page 4 of 8

5 write the cheque number and date on the receipt or invoice or mark a bold line across the page to indicate that it is paid; present the cheque and supporting documentation to the signing authorities for authorization. Record the transaction: a) record each disbursement as a charge against the appropriate account; b) enter the corresponding credit to the cash account; c) enter the payment on the monthly record of expenditures noting the GST amount and rebate separately Advance of funds: a Payment Request must be completed to obtain an advance of funds; upon receipt of a properly authorized payment request, a cheque may be issued in advance; an Advance of Funds form should be completed and signed by the recipient prior to releasing the cheque; supporting receipts to substantiate amounts disbursed together with any remaining funds must be returned immediately following the activity; and, the Advance of Funds forms together with the appropriate supporting documentation and a School Funds Receipts form for any remaining cash should be attached to the original Payment Request. 5. Banking and Management 5.1 Current Bank Account A school may have two bank accounts, one for school funds and, if it is desirable to segregate these funds, one for school council funds. The following points should be noted: the bank account should be one that provides a monthly bank statement and cancelled cheques - don t open a passbook account; be sure that all cheque stock is pre-numbered - this helps you to keep track of your school s cheques; deposit all cash receipts and cheques on a timely basis - don t keep more than $500 on school premises; assign signing authority to three people, one of whom must be the principal; each cheque should be signed by two of the three designated signing authorities; cheque stock should have the school s name imprinted and, if space allows, the Board s name should also be included. 5.2 Investments Excess funds not required for day-to-day operations may be invested in a term deposit. The deposit must be held by a major bank or reputable credit union. Copies of any investment certificates will be sent to Accounting Services with the annual summary of disbursements and receipts Record investments in a separate account called, for example, Cash Balances, Investments. As interest is earned on the account, increase the amount of the investment in the journal account and record the interest in the appropriate revenue account. 5.3 Bank Reconciliations Reconcile the bank to your records promptly each month when the statement arrives: make a note of the cash balance, excluding any investments, from your records; compare and check cancelled cheques returned with your statement to the cheques issued since the date of the last bank statement; make a list of outstanding cheques, noting the payee, the cheque number, the date the cheque was issued, and the amount of the cheque; May 2007 Page 5 of 8

6 compare and check all deposits noted on your statement to your deposit records; make a list of any deposits made and not recorded on the bank statement; make a list of all cheques returned as NSF (non-sufficient funds). 5.4 Managing School Funds Segregate activities: assign accounts to each club, class, or activity wherever appropriate; prepare a description of each account noting the name of the account and include the signatures of the individuals with the authority to approve disbursements from the account; maintain these descriptions and ensure they are current; do not spend more from any account than the revenue received - if necessary, transfer funds from another account providing appropriate authorization has been received Restrict access: be sure to restrict access to school funds and cash; keep cheque stock locked in a secure location; do not sign blank cheques; ensure there is supporting documentation for every cheque signed; designate one person with the principal as the alternate for depositing funds to the bank; ensure that cash and cheques are locked in a secure location until deposited to the bank Reduce risk of loss: deposit at least once a week during the school year; make more frequent deposits during periods when there is a high volume of receipts; the frequency of deposits should ensure that no more than $500 cash is kept overnight; secure all money and cheques in a locked and secured drawer, cabinet, or safe in the office until it is deposited to the bank; do not disburse cash; cash that has been accepted for deposit to the bank must be deposited intact and should not be used for payments Segregate duties and check transactions: where possible deposits should be prepared by someone who does not also issue cheques or record transactions; the bank reconciliation and other records should be checked by someone other than the person who deposits funds and issues cheques; when reviewing the bank reconciliation a) check that the balance on the bank statement agrees with the amount reflected in the bank reconciliation; b) ensure that the amount reflected on the bank reconciliation agrees with the amount in the school records; c) review all adjustments such as late deposits, outstanding cheques, and miscellaneous charges; d) make sure that NSF cheques are taken into account in the bank reconciliation; e) be sure the School Funds Receipt Log is completed on a timely basis, both by the individual submitting funds and by the administrator depositing funds to the bank; f) review all payments to ensure there is supporting documentation for each one Accounting for school funds-software: ITS has developed a FileMaker Pro application called School Funds; this application allows you to segregate accounts, keep track of expenditures and deposits and assists you in reconciling the bank; May 2007 Page 6 of 8

7 the application is easy to use, fully supported, available free of charge, and updates are readily and easily available; contact ITS to learn about the application and training Staff benevolent funds: do not include staff benevolent funds in the school funds accounts; collections from staff should fund expenditures that provide support for staff in the form of retirement gifts and parties, bereavement acknowledgements, seasonal gifts and parties. 6. Records and Reporting 6.1 Records Requirements and Retention Schedule The following records must be kept to support transactions and reports: monthly bank statements; bank deposit records; monthly bank reconciliations with supporting documentation if appropriate; cancelled cheques - that is, cheques that have been cashed and returned to the school with the monthly bank statement; void cheques - that is, cheques that were never issued or were completed erroneously; School Funds: Receipts forms and School Funds Receipt Logs; copies of the monthly summary of disbursements together with Transaction Request forms and supporting third party invoices or receipts For ease of access, the following system is suggested: keep the following records together and file in chronological order by month and year - a) bank statements; b) deposit slips; c) bank reconciliations; d) cancelled cheques; e) School Funds: Receipts; f) School Funds Receipt Logs. cheque stubs or cheque copies are best stored sequentially by cheque number; Transaction Requests with supporting invoices and receipts attached can be kept in chronological order by month and year; keep copies of the monthly summary of disbursements and the related Transaction Requests together in chronological order The records noted above are maintained in accordance with the Board s retention schedule: bank statements, bank reconciliations, deposit records, investment records, cancelled cheques, void cheques, and cheque stubs/copies for the current year plus the previous seven years; invoices, receipts, vouchers, and other disbursement records for the current year plus the previous seven years It is recommended that items not included in the list above, such as cash receipts logs and school funds receipts forms, be kept for the current year plus the previous year. Accounting Services keeps your disbursement summary only for the current year plus the previous seven years. 6.2 Reporting School Fund Weekly or as required: receipt log and bank deposit slips presented to principal for review; reconciliation of receipt log to bank deposits, if required, attached to receipt log; schedule of disbursements for the week presented to principal for review Monthly: May 2007 Page 7 of 8

8 bank reconciliation presented to principal for signature and sent to Accounting Services; schedule of disbursements noting GST amounts and total expenditures for the period sent to Accounting Services Annually: summary of deposits and receipts for the year ending August 31; report on cash and investments at August 31 of each year May 2007 Page 8 of 8