MANAGEMENT OF STUDENT ACTIVITY FUNDS HOUSTON INDEPENDENT SCHOOL DISTRICT – A CONTROLLER’S OFFICE PRESENTATION Presented by: Internal Service Funds Department April 4, 2012

What will be covered today ….. –Activity Funds(Definition and Purpose) –Principal’s Responsibility –Types of Student Activity Funds –Banking Policies and Procedures –Cash Receipting –Preventive Controls –Tools of Protection Student Activity Fund Overview 2

What will be covered today ….. –Disbursements –Financial Reports –How to Access Financial Reports –Record Retention –Annual Audits/Special Audits –Q&A Student Activity Fund Overview 3

Definition & Purpose  Student Activity Funds (SAF) consists of money that is received and held by the school as trustee.  Individual student groups raise these funds and their disbursement is controlled by that group as long as the decisions regarding the use of funds do not conflict with Board policy and/or legal regulations or restrictions.  Student activity funds are accounted for by the district as agency funds in compliance with the TEA Financial Accountability System Resource Guide (FASRG). 4

Definition & Purpose  The basic purpose for the collecting or raising and expending of activity funds must be for the direct benefit of the students or for the general benefit of the school.  Within this scope, funds are to be used to finance activities that supplement the educational curriculum of the District.  Fund raising activities shall in general contribute to the educational experience of pupils and shall not conflict with the instructional programs. 5

Principal’s Responsibility  The Principal is responsible for the overall administration of the SAF including the bookkeeping, monthly reporting and compliance with the policies and procedures manual. He/she is accountable for monies which is lost due to carelessness, fraud, or theft.  The Principal shall approve all fundraising activities in advance and shall monitor the activities by reviewing and signing all reports/forms.  Other responsibilities include: –Proper accounting and administration of fund transactions; and –Adequate training and supervision of all personnel designated to handle Activity Funds. 6

Types of Student Activity Fund  Student activities should be operated through a Student Activity Fund with separate budget accounts for different activities based on the following accounts: –Specific Activity Fund Accounts are operated by student organizations and class/clubs under the supervision of sponsors. –Activity Fund Accounts that are not generated through a specific account source: Examples are –Interest –General Revenue –Principal Discretionary Fund –Hospitality Fund –Donations 7

Banking Policies and Procedures –Elementary schools should have only one bank checking account. The bank must be insured as a member of the FDIC. The checking account should have three authorizing check signers, one of which must be the principal. –Secondary schools have one central depository bank account that is maintained by the District. All banking transactions are monitored by the Controller’s Office. 8

Cash Receipting  It is essential to have segregation of duties to prevent one individual from having the responsibility of the entire cash handling process.  The four components of the cash handling process are as follows: collecting, receipting, depositing, and reconciling. –In order to maintain effective cash controls, at least two persons must be involved in the function of collecting and receipting cash. –Daily deposits must be reconciled to the receipt by two persons to verify the accuracy of the deposit. 9

Preventative Controls of Cash Receipting  Preventive controls attempt to prevent and/or deter undesirable acts from occurring. There are proactive controls, designed to prevent a loss, error, or omissions. Examples of preventive controls are: –Control – Conscious Environment –Separation of duties –Proper authorizations –Adequate documentation –Security  Detective controls are as follows: –Regular supervisory review of activity and reports –Routine spot-checking –Monitor cash receipt inventory –Internal audit 10

Preventative Controls of Cash Receipting  Preventive controls attempt to prevent and/or deter undesirable acts from occurring. There are proactive controls, designed to prevent a loss, error, or omissions. Examples of preventive controls are: –Control – Conscious Environment –Separation of duties –Proper authorizations –Adequate documentation –Security  Detective controls are as follows: –Regular supervisory review of activity and reports –Routine spot-checking –Monitor cash receipt inventory –Internal audit 11

Cash Management -Tools of Protection Reduce Risk of Fraud  Reduce “opportunity with: –Segregation of Duties. –Internal Control Procedures. –Environment.  Segregation of Duties –Someone other than person collecting money compares items sold to money collected (concession stand, school festival, movie theatre example). –Person collecting money is not person preparing deposit. –Person collecting money receives periodic report of deposits. –Second person approves all voids/refunds. –Small departments: involve other employees. 12

Tools of Protection – cont’d  Build in Double Checks –One person does not control an entire transaction. –No employee school be in a position to commit fraud and then conceal it. –Cross-training (assignment/job rotation). –“Trust but verify”. 13

Disbursement of Checks  Elementary schools prepare the checks to be distributed or mailed.  Secondary schools prepare the disbursement voucher with the approved documentation and submit to the ISF department for check preparation and mailing. –Authority to Purchase Goods & Services form must be completed by the staff and approved by the principal prior to any purchases. –Failure to submit an approved form, prior to the purchase, may jeopardize the reimbursement. 14

Disbursement of Checks - cont’d –HISD employees can only be paid for services through the HISD PeopleSoft Payroll System, regardless of funding source. –Employee reimbursements will be direct deposit and non-employee reimbursements will be mailed. –A teacher’s trip expenses cannot be paid out of Activity Funds unless the teacher is serving as a sponsor/chaperone for a student trip. 15

Financial Reports  Financial reports for Student Activity Funds should be prepared by the secretary, and must be inspected and verified by the principal.  The following reports to access detail activity fund accounts are: –SAP Z003 (Secondary) –Combined Cash Journal (Elementary) 16

 All records should be kept current and in good order for a period of five (5) years after the conclusion of the fiscal year and must be available for audit at any time.  The following records should be kept: Monthly financial reports, copies of receipts, tabulations of monies collected, invoices, disbursement vouchers, fundraising request, detail records by student of fundraising proceeds, and minutes of the meetings regarding fundraising activities. Record Retention 21

Annual Audits/Special Audits  In June, Elementary schools must submit all Activity Fund records to the Internal Audit Department for the school year ended May 31st.  Annual audits will be conducted during the summer months. –All Activity Funds records must be audited when a change of the school principal occurs. –Incoming principal should read and discuss results of the audit with internal auditors before assuming financial responsibility. 22

Annual Audits/Special Audits - cont’d –A principal may request in writing a special audit of his/her Activity Funds if a situation or event warrants it. –In addition to being subject to an audit at any given time by the Internal Auditors, Activity Funds are also subject to audits by External Auditors. 23

Contact Information Internal Service Funds Trudy Linden-Craft, Accounting Budgeting Clerk(713) Lisa Clark, Accounting Budgeting Clerk (713) Lien Tran, Accountant (713) Loan Duong, Accountant (713) Debra Taylor, Accountant Team Leader(713) Malinda Sims, Accounting Manager(713) Finance and Business Services Kathi D. Redricks, Assistant Controller Kenneth Huewitt, Controller Melinda Garrett, Chief Financial Officer 24

Q & A 25