ACCOUNTING PROCEDURES FOR KENTUCKY SCHOOL ACTIVITY FUNDS “REDBOOK” Curtis A. Hall March 21, 2013 Disclaimer • Incorporated by Reference into 702 KAR 3:130 • Information from this presentation is taken from the Kentucky Department of Education version of “Accounting Procedures for Kentucky School Activity Funds (“Redbook”) • Proposed Effective Date of approval; July 1, 2013 • State Board has approved the changes submitted after public comment period; General Assembly has not given final approval. • Content presented is meant to be an overview of Revised “Redbook” and does not replace any concept or requirement of document. Welcome Pre-Assessment New Environment of Accountability Today’s Overview 1 • Familiarize yourself with the enhanced requirements of the Redbook 2 • Begin to consider necessary changes at the school and district level 3 • Begin to develop a plan for implementation NEW REQUIREMENTS Receipts • School Treasurer shall never collect money directly from a student or parent. • The school treasurer shall not issue a receipt and make the deposits of the funds • Students third grade and above must sign the multiple Receipt forms (two part carbon recommended). • Deposit slips shall not the receipt numbers in the deposit. • One interest bearing account at board approved bank. (Exception: Charitable gaming – Separate bank account required) Fundraising • Fundraising must benefit students; Payroll, operational costs prohibited. • Proceeds must benefit the entire group; No fundraising tracked by individual students. • Sponsor complete Fundraiser Worksheet form and submit to principal one week after conclusion of fundraising event. Ticket Sales • School Treasurer shall not sell tickets. • Two people (ticket seller, ticket taker) are required to work the gates. Seller give the entire ticket to the customer as fee is collected. • Ticket taker tears the ticket in half, gives half of ticket to customer and retains half. • Person in charge of ticket sales, ticket taker, and school treasurer sign the Requisition and Report of Ticket Sales form (3 signatures) Charitable Gaming • A cake walk is now considered charitable gaming. • Licensing Requirements KRS 238.535 and applications are available at the Department of Charitable Gaming website. • One checking account exclusive to gaming receipts • Applies to schools and external support/booster clubs. Donations • The Donation Acceptance Form (new form) shall be completed stating the purpose of and any restrictions on the funds received. • Equipment or other property donations will remain at the school and be included on school inventory records and becomes property of the local board. • Cash donations shall be maintained in a separate activity account and expended as the indicated by the donor Expenditures • • • • Use of Pre-numbered checks required No Signature stamps School Treasurer shall be bonded School exempt from the payment of sales tax in Kentucky; employees cannot be reimbursed for payment of sales tax • Purchase Orders required to initiate purchase • Standard invoice must have confirmation signature of the person receiving the goods. Expenditures Continued • School treasurer matches purchase order, shipping document, and invoice. • School treasurer shall post to the disbursement to the Principal’s Combined Activity Fund Ledger. • Proper Segregation of duties (Appendix A) Payment for Services • Determination of worker status: Employees of the District or as Independent Contractor • IRS provides guidance • Twenty Factors (Pages 12-13) • Payment for services shall be made by school check with an accompanying invoice. • Federal Employer Indentification numbeer (FEIN) or social security number submitted to board office; Issuing 1099; Need for w-9 on file prior to payment Credit Cards • Credit Cards may be used only if allowed by board policy. • No employee personal purchases using the school credit cards. • Follow Board policies and procedures!!! Allowable and Disallowed Expenditures • A guideline appearing on page 16-17 in not all inclusive but serves as examples. Inactive Account Balances • Process of closing inactive student organizations, clubs or activity accounts included on page 17-18 Electronic Receipts and Payments • See page 18 for guidelines • Establish detailed policies and procedures Reporting Requirements • Account Balances – Prior year – July 1 – Negative Balances – Individual accounts and whole fund cannot end with negative balance. – If negative after considering payables and receiveables, written request to district finance officer to cover deficit by transfer general fund (district) submitted by principal with signature. Reporting Continued • Bank Statement Reconciliation (monthly and Annual Financial Report) • Monthly Reports submitted to District Finance Officer (See page 20) • Annual Audit by Certified Public Accountant • Maintain records three years. External Support/Booster Organizations (Pages 21-24; All new) • Must use external bank account and obtain own FEIN number. • Tax Exempt if obtains own tax exempt certificate • Written by-laws with officers and terms of office • Must submit FEIN number, names of officers to the principal at the beginning of school year or within 30 days of the first transaction of the organization • Local board members nor district employees shall serve as treasurer or other officer with check signing authority • External Support Organizations/Booster Clubs Booster clubs shallContinued not • Treasurers of external enhance or pay for the salaries or stipends for any district employee • Disassociation permissible (see #16) organizations should be bonded. • Separate insurance for general liability • Proof of insurance coverage must be submitted prior to commencing any fundraising activities External Support/Booster Organizations Continued • Reporting requirements (see page 23) – Annual Budget Worksheet required – Annual Financial Report to principal by July 15 • Benefits provided by boosters are viewed under Title IX as being provided by the school and the school’s principal is responsible for ensuring equity. School Banks (Pages 24-25) • A financial institution that participates in school banking shall be licensed to conduct banking in the Commonwealth of Kentucky. • All School Banks are to be created/operated under the FEIN of the supporting bank. • Any dividends/interest for school bank accounts shall be subject to IRS Form 1099 reporting requirements. • Written partnership agreement with local school board • Written parental permission required New Forms (compared to 2008 Redbook) • F-SA-14 Student Refund/Disbursement Form (Page 48) • F-SA-18 Donation Acceptance Form (Page 52) Resources • http://education.ky.gov/pages/search.aspx?s =EDUCATION&k=Redbook • This slide deck and related resources: http://www.curtisahall.net QUESTIONS?