GUIDE FOR SCHOOL PRINCIPALS - ACTIVITY FUNDS & OTHER BUSINESS I. Principals are responsible for all funds in the school s activity account. Ensure that you are aware of all items that you sign. II. Always sign financial forms. Do not use a signature stamp. III. Familiarize yourself with the bookkeeping procedures. Read JCPS s Activity Fund Accounting Manual and KDE s Accounting Procedures for Kentucky School Activity Funds (the Red Book ), and have copies available for reference. IV. Review and Approval of Financial Documents by the Principal: a. Purchase Requests (FSA-8) should be signed before purchases are made. Before signing, ensure that model procurement documentation looks adequate. b. Standard Invoices (FSA-12) should be signed at the same time you sign the attached check. c. Daily Activity Fund Deposit Slip and Daily List of Receipts should be initialed after ascertaining that: i. Deposit slip has been stamped by the bank. The total stamped by the bank agrees with the total amount listed on the List of Receipts. d. The Monthly Bank Statement and the Schedule of Balances report should be reviewed and approved by the principal as follows: i. The monthly bank statement should be delivered unopened to the principal. i The principal should open the bank statement and review for reasonableness of deposits and check sequences. Review cancelled checks for appropriateness. Make sure that Line 7 of the Schedule of Balances agrees with the ending bank statement balance. Review the Schedule of Balances for reasonableness of reconciling items. For example, deposits in transit (deposits made but not yet included in the bank balance) should never be dated any earlier than the last few days in a month. v. Scan the bank statement for frequency of deposits or unusual entries. vi. Making sure that lines 5, 6, and 13 of the Schedule of Balances agree. 1
e. Monthly Financial Report Please note that the report is due to Internal Audit Department by the 15 th of the subsequent month (e.g. the November 30 report is due on or before December 15). i. The Monthly Financial Report must be reviewed and approved by the principal. Consider initialing each page of the report and attachments. If the report is late, please obtain an explanation from the bookkeeper. If necessary, ask for Internal Audit assistance to balance and finalize the report. Monthly reports that are continuously late are an indicator of problems. i Monthly report totals for each school are listed in a monthly activity fund report to the Superintendent. (Any missing schools must be noted.) f. Activity Fund Checks require two signatures. One of these signatures must be an administrator. (Preferably the principal). V. Vending Machine Sales a. Normally, vending machine sales are an important source of revenue to a school and should be closely monitored. b. A profit and loss report is prepared during the annual audit. If the annual audit reveals a large shortage or overage in receipts, the bookkeeper will be encouraged to prepare a monthly sales report to help locate the problem. c. A shortage on the profit and loss report may be due to the following: i. Incorrect inventory counts. i Legitimate giveaways to students, volunteer workers, etc. not being recorded. No soft drinks should be given away without documenting the number of cans or bottles and giving that information to the bookkeeper. Theft of inventory due to inadequate security of storage place. Money and/or merchandise stolen from machines. v. Merchandise delivered being less than the amount invoiced. (All delivered merchandise should be counted before signing and accepting delivery.) VI. Fund-Raisers a. All fund-raisers should be pre-approved by the Superintendent. A copy of the signed Fund-Raiser Approval Form should be given to the bookkeeper to be kept on file for audit purposes. 2
b. All persons involved with the Fund-Raisers are representing your school and therefore should conduct themselves according to your directions. Fund-Raisers should be conducted in a business-like manner., e.g.: i. Providing the bookkeeper with collected funds and appropriate documentation (i.e. copies of receipts or multiple receipt forms) on the same day as received. i Keeping adequate records of merchandise given to students and receipts expected from each student. (Plan in advance on a procedure to follow when the funds and/or the merchandise are not returned by a student.) Encouraging the teachers/sponsors to work closely with the bookkeeper to prepare a Fund-Raiser Summary (FSA-2) properly after the fund-raiser is over. (A Fund-Raiser Summary must be prepared for each and every fund-raiser held during the school year.) Adequately explaining shortages (i.e. lost or stolen goods or money not turned in the by the students.) There is a place on the Fund-Raiser Summary to explain the shortage. v. Promptly sending returned merchandise back to vendors and receiving credit. c. Sponsors should be informed that no personal compensation should be received by them from a selected vendor. This is considered a kickback and is illegal. VII. Responsibilities of Teachers/Staff regarding Financial Records. The Bookkeeper, with the backing of the Principal, should inform teachers/staff of the following: a. A completed Purchase Request (FSA-8), approved by the Principal and Department Head, should be filed with the bookkeeper prior to purchasing an item. b. The bookkeeper should not have to prepare model procurement determination after the items have been purchased. All documentation (D&Fs) should be attached to purchase requests. c. When collecting money from several students, teachers should head up a Multiple Receipt Form (FSA-18), verify amounts received from students, write receipted amounts on form, ensure that students sign the form and total the day s collection and enter the total in the current day s column before taking the Multiple Receipt and the money to the bookkeeper. d. While, at times, it may be necessary to reimburse staff for purchases made in the school s behalf, this should normally be discouraged since there is usually inadequate model procurement documentation for such purchases. Sales tax should not be reimbursed on purchases. Purchaser should use the Sales Tax Exemption #B-160. 3
e. It is the teacher s responsibility to ensure that no fees are collected from at-risk students whose parents have signed a feewaiver form. Teachers should not ask for donations from students. VIII. PTAs and Booster Clubs a. The principal should not sign checks for organizations such as Booster Clubs or PTAs. b. The principal should monitor controls over funds of these organizations. IX. Allowable Expenditures from Activity Funds a. Basic Principle: Funds collected from or generated by students should be expended to benefit those students. (Fund-Raiser profits and extra field trip funds should be used on students before the school year ends. Funds should not be carried over to the next year.) b. Gifts to Adults (staff members, bus drivers, etc.) should not be made from funds generated by students. This includes items such as food, flowers, gifts, birthday cakes, retirement gifts, etc. We recommend that a faculty activity account be established to be funded by contributions from faculty and staff and profits from the faculty vending machines. c. Individual Memberships in Professional Organizations should not be expended from school activity funds. d. Purchases made by a school for a staff member s own personal use should not be allowed. X. Miscellaneous a. Ensure that all communications of a financial nature are shared with your bookkeeper. b. When you receive annual activity audit reports, review comments with your bookkeeper and develop plans for corrective action. c. Generally, Senior Class activity funds should be spent before graduation. Before the school can spend any leftover funds from a class, a signed statement from the class officers should be on file indicating how the funds should be spent. A principal should not agree to hold these funds for future reunions. XI. Summary While it is Internal Audit s responsibility to audit the schools, we would much rather address problems as they arise, before our annual audit. Call Cheryl Cook at 3225 or Carol Lincoln at 3177 to help train new bookkeepers and answer questions throughout the year. a. Please listen to your bookkeeper s problems and give them your support as needed. 4
XII. Sample Copies of Forms and Reports used daily and monthly. XIII. Annual Activity Fund Audits A. Annual audits are required by the state of Kentucky. B. Bookkeepers questionnaire. C. Audit program. D. Soft drink, concession, bookstore profit and loss analysis and expected sales analysis. E. Audit report sample. F. Inclusion of school audit results in District annual audited financial statements (sample report) 5