ACCOUNTING PROCEDURES FOR KENTUCKY SCHOOL

ACTIVITY FUNDS “REDBOOK”

Curtis A. HallMarch 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

• Familiarize yourself with the enhanced requirements of the Redbook

1

• Begin to consider necessary changes at the school and district level

2

• Begin to develop a plan for implementation3

Today’s Overview

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 Continued

• Booster clubs shall not enhance or pay for the salaries or stipends for any district employee

• Disassociation permissible (see #16)

• Treasurers of external 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?