Best Practices - Student Activity Funds

Oversight

1. All activity funds must be audited and subject to well-defined procedures for internal and external auditing.*

   1. In addition to annual internal and external audits (at least every 3 years), both principals and the District have real-time access to all activity transactions.

      1. iPrincipals should regularly review random transactions, checking to make sure policies are being followed. Special attention should be given to enforcing policies are followed when handling cash. See “Handling Cash” below.

      2. Districts should review random and larger transactions on a regular basis to ensure policies and procedures are properly followed. If and when issues arise, contact the principal and the clerk to make sure they understand the policy/procedure and how to correct the issue going forward.

Segregation of Duties

1. Three critical duties should be segregated for internal control purposes: (1) signing checks, (2) maintaining fund accounting records, and (3) reconciling bank statements.*

   1. It is worth noting that in AcctTree the District has real-time view-only access to every transaction in the district.

      1. A district user cannot change or alter any transactions.

      2. A district user can “Lock” a transaction from being changed when they are ready to reconcile. This is to prevent changes to transactions that have been reconciled.

   2. Signing Checks: AcctTree recommends two signatures be required for signing checks - Principals and someone other than the activity fund bookkeeper.

   3. Maintaining fund accounting records: This person is usually one of the School Clerks. Responsibilities typically include collecting funds, depositing funds, and maintaining fund activities (bookkeeping).

   4. Reconciling Bank Statements: AcctTree recommends someone at the District level reconcile bank statements.

2. Segregation of Duties is key in preventing fraud. No single individual should be able to initiate, approve, and complete any transaction.

Monthly Activity Fund Reporting

1. Monthly financial reports on all activity funds should be prepared and submitted to the administration and the board of education.*

   1. AcctTree recommends that the School Clerk notify the activity fund sponsor to review the month’s activity for accuracy (for funds with activity that month). When approved by the activity fund sponsors, the Fund Balance report should be sent to the principal.

      1. Note 1: Principals have the same access as Clerks, so they can dig deeper should they have questions.

      2. Note 2: AcctTree has “View Only” access for “Activity Fund Sponsors”. These users only have access to the funds they sponsor.

   2. AcctTree recommends Districts regularly review this information at least monthly (we recommend more often - especially during times with a large number of transactions).

Handling Cash (Currency)

1. All employees responsible for handling and recording activity fund monies should be bonded by the district.

2. Safeguarding Cash - Cash should be stored securely until deposited (in a safe or locked drawer).

3. Cash (and all other forms of payment) should be deposited daily.

4. Deposit slips should be used for all deposits and should include:

   1. The source of the funds being deposited

   2. The deposit date

   3. The amount being deposited

   4. A signature of the person making the deposit

5. Cash should not be stored on school premises overnight (unless it’s unsafe to deposit at the time of receipt).

6. Cash should never be brought anywhere except directly to the bank (it should Never be brought home).

7. When cash is received an acceptable form of receipt should be used.

8. Two people should count cash in the presence of on another. A receipt with the total should be signed by both counters.

Class Accounts after Graduation

1. Once a class has graduated, funds in the Class Account can no longer be kept in a Student Activity Fund account as the beneficiaries are no longer students at the school. Districts should allow a period of time for final invoices to be paid, and create a policy of how to disperse any funds remaining

1099s

1. 1. Any vendor that earns $600.00 or more - in a calendar year - from a school or schools in the district should receive an IRS Form 1099 from the school district.

   1. Exceptions include:

      1. Tax Exempt Organizations

      2. Corporations (and LLCs taxed as a corporation)

      3. Wage payments

      4. Reimbursements

2. AcctTree recommends Districts require vendors to complete IRS form W-9, primarily to capture the vendor’s legal name, FEIN or SS#, and address.

* - Excerpts from IES National Center for Education Statistics