1. Training FINANCE LOCAL SCHOOL ACCOUNTING Learning the Value of Internal Controls “Make it Important to You” Montgomery Public Schools

2. Introduction Internal Controls are necessary to ensure that assets are protected, records are reliable and that transactions are executed in accordance with authorized accounting principles and policies Internal Controls are necessary to ensure that assets are protected, records are reliable and that transactions are executed in accordance with authorized accounting principles and policies It is Management’s (the Principal) responsibility to establish and maintain an effective internal control system It is Management’s (the Principal) responsibility to establish and maintain an effective internal control system Internal Controls must be important to the Principal or it will not be important to staff members Internal Controls must be important to the Principal or it will not be important to staff members

3. Introduction (pg 2) Financial Accountability is all about establishing and implementing sound accounting practices and procedures. Financial Accountability is all about establishing and implementing sound accounting practices and procedures. Topics outlined below involve the bookkeeper, teachers and other staff. Topics outlined below involve the bookkeeper, teachers and other staff. Principals should “TRUST” their bookkeepers, teachers and other staff. But it has been proven that trust is not enough. Principals should “TRUST” their bookkeepers, teachers and other staff. But it has been proven that trust is not enough. “PRINCIPALS MUST ALSO VERIFY”. “PRINCIPALS MUST ALSO VERIFY”.

4. Topics of Discussion Audit Findings Audit Findings Revenues Revenues Receipting Procedures Not Followed Receipting Procedures Not Followed Timeliness of Deposits Not Acceptable Timeliness of Deposits Not Acceptable Expenses Expenses Invoices Dated Before the Purchase Order Date Invoices Dated Before the Purchase Order Date Unallowable Expenditures Unallowable Expenditures Accounting Manual Accounting Manual Approved by the State of Alabama June 10, 2010 Approved by the State of Alabama June 10, 2010

5. Topics of Discussion Revenues Revenues Receipting Receipting Teacher Receipting Teacher Receipting Altered Receipts Altered Receipts Voided Receipts Voided Receipts Office Receipting Office Receipting Cut-Offs Cut-Offs Deposits Deposits Cash Cash Checks Checks Frequency Frequency Monitor Monitor Address Problems Address Problems

6. Topics of Discussion Expenses Expenses Purchase Orders (Approval) Purchase Orders (Approval) Activity Balances Activity Balances Allowable Expense Allowable Expense Signature/Date Signature/Date Purchase Order Number Purchase Order Number Invoices (Itemized) Invoices (Itemized) Date Date Sales Tax Sales Tax Finance Charges Finance Charges Goods or Services Purchased Goods or Services Purchased Checks Checks Timely Payments Timely Payments Two Signatures (One must be the Principal – no stamp) Two Signatures (One must be the Principal – no stamp) Blank Checks Blank Checks Monitor Monitor Address Problems Address Problems

7. Topics of Discussion Miscellaneous Miscellaneous Fundraisers Fundraisers Approval Approval Types of Fundraisers Types of Fundraisers Outside Organizations Outside Organizations If MPS Employees handle funds, the funds are to be posted in the school’s books and bank account If MPS Employees handle funds, the funds are to be posted in the school’s books and bank account Entering into Contracts Entering into Contracts The hiring and payment of all persons coaching athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll Department. The hiring and payment of all persons coaching athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll Department.

8. Revenues Teacher Receipting Teacher Receipting THE ORIGINAL TEACHER RECEIPT SHOULD BE GIVEN TO THE INDIVIDUAL DELIVERING THE FUNDS THE ORIGINAL TEACHER RECEIPT SHOULD BE GIVEN TO THE INDIVIDUAL DELIVERING THE FUNDS Forms of Receipts Forms of Receipts Receipt Books ($5.01 and over) All receipts in a book should be issued before another book is put into use. Daily Activity Purpose Form Receipt ($5.00 and under) Other Accountability Form Other Accountability Form Teacher Receipt Reconciliation Form Teacher Receipt Reconciliation Form Office Receipting Office Receipting Master Receipt Master Receipt Master Receipts are to be stapled to the back of the last applicable receipt within the teachers’ receipt book and the book is returned to the teacher Master Receipts are to be stapled to the back of the last applicable receipt within the teachers’ receipt book and the book is returned to the teacher

9. Revenues Voided Receipts Voided Receipts Voided Receipts must be retained Voided Receipts must be retained “VOID” must be written on the receipt and the white copy and the yellow copy must remain in the book (white copy stapled to yellow copy) “VOID” must be written on the receipt and the white copy and the yellow copy must remain in the book (white copy stapled to yellow copy) Altered Receipts Altered Receipts Receipts should not be altered (no liquid paper or erasures for mistakes) Receipts should not be altered (no liquid paper or erasures for mistakes) Mistakes should be crossed through with one line and the correction should be initialed and made beside or above the error Mistakes should be crossed through with one line and the correction should be initialed and made beside or above the error

10. Revenues Cut-Offs Cut-Offs Daily Receipting of Money Daily Receipting of Money (stop the collection of funds 15 min. after the last period begins – secondary only) (stop the collection of funds 15 min. after the last period begins – secondary only) School Year Receipting of Money School Year Receipting of Money (stop the collection of funds 3 days to 1 week before the last day of school) (stop the collection of funds 3 days to 1 week before the last day of school) Fiscal Year Receipting of Money Fiscal Year Receipting of Money (stop the collection of funds 3 days to 1 week before September 30) (stop the collection of funds 3 days to 1 week before September 30)

11. Revenues Deposits Deposits Cash Cash Intact (Do not make change from cash that has been receipted) Intact (Do not make change from cash that has been receipted) Checks Checks Checks made payable to the school should be recorded, copied or notated before depositing Checks made payable to the school should be recorded, copied or notated before depositing Checks are not to be cashed () Checks are not to be cashed (the school is not a bank) Frequency of Deposits Frequency of Deposits “IN A TIMELY MANNER, USUALLY DAILY” “IN A TIMELY MANNER, USUALLY DAILY” The longer money stays in the school, the greater the chances for something happening to it. The longer money stays in the school, the greater the chances for something happening to it.

12. Revenues MAKE IT IMPORTANT TO YOU MAKE IT IMPORTANT TO YOU Monitor Accuracy & Completeness of: Monitor Accuracy & Completeness of: Teacher Receipt Books Teacher Receipt Books Daily Purpose Forms Daily Purpose Forms Teacher Receipt Reconciliation Forms Teacher Receipt Reconciliation Forms Office Master Receipts Office Master Receipts Monitor Frequency of: Monitor Frequency of: Deposits Deposits When data is posted into McAleer When data is posted into McAleer Print out a weekly or semi-monthly “Principal Report” Print out a weekly or semi-monthly “Principal Report” Address Problems Address Problems

13. Expenses Purchase Orders (Approval of Purchase) Purchase Orders (Approval of Purchase) Activity Balance – Money to cover expense Activity Balance – Money to cover expense Activity must have a positive balance Activity must have a positive balance Allowable Expense – Can the good or service be purchased with the funds Allowable Expense – Can the good or service be purchased with the funds Consider whether the activity is public or non-public Consider whether the activity is public or non-public Consider what is not allowable paid from public funds Consider what is not allowable paid from public funds Consider whether the money has an earmark Consider whether the money has an earmark Consider who has discretion of the funds Consider who has discretion of the funds Consider whether the good or service should be bid Consider whether the good or service should be bid The purchase order must be signed to approve the purchase The purchase order must be signed to approve the purchase The purchase order must be numbered (0395-111) The purchase order must be numbered (0395-111) The number before the hyphen is the cost center The number before the hyphen is the cost center The number after the hyphen represents the school year and the number of the purchase order. The number after the hyphen represents the school year and the number of the purchase order.

14. Expenses Invoices Invoices Dates – Date of the invoice must be dated on or after the purchase order date Dates – Date of the invoice must be dated on or after the purchase order date Sales Tax – There should not be sales tax charged to the school except in the case of food and lodging reimbursements Sales Tax – There should not be sales tax charged to the school except in the case of food and lodging reimbursements Finance Charges – There should no finance charges (pay bills on time) Finance Charges – There should no finance charges (pay bills on time) Goods or Services Purchased – Goods and services should match the purchase order Goods or Services Purchased – Goods and services should match the purchase order

15. Expenses Checks Checks Timely Payments – Vendors should be paid in a timely manner Timely Payments – Vendors should be paid in a timely manner Two Signatures – There must be two signatures on a check (one signature must be the Principal – no stamp) Two Signatures – There must be two signatures on a check (one signature must be the Principal – no stamp) Blank Checks – The bookkeeper or another administrator should not be asked to sign a blank check. All checks should be presented to the Principal along with the invoice and the purchase order to pay for items that have arrived at the school Blank Checks – The bookkeeper or another administrator should not be asked to sign a blank check. All checks should be presented to the Principal along with the invoice and the purchase order to pay for items that have arrived at the school

16. Expenses MAKE IT IMPORTANT TO YOU MAKE IT IMPORTANT TO YOU Monitor Completeness and Details of: Monitor Completeness and Details of: Purchase Orders Purchase Orders Invoices Invoices Monitor Frequency and Policies Concerning: Monitor Frequency and Policies Concerning: Paying Vendors Paying Vendors Writing Checks Writing Checks Designate specific times to pay bills Designate specific times to pay bills Address Problems Address Problems

17. Miscellaneous Fundraising Fundraising The Principal must approve each school fundraising activity before it begins. Additional approval from the Central Office may be required in the future. The Principal must approve each school fundraising activity before it begins. Additional approval from the Central Office may be required in the future. Safety and consideration should be considered when approving a fundraiser that involves students (supervision of car washes) Safety and consideration should be considered when approving a fundraiser that involves students (supervision of car washes) Per the State Guide, a form requesting authorization for a fundraising activity to be held must be submitted to the Principal. Per the State Guide, a form requesting authorization for a fundraising activity to be held must be submitted to the Principal.

18. Miscellaneous Fundraising (continued) Fundraising (continued) The form is to include: The form is to include: Date of request Date of request Name of the individual making the request Name of the individual making the request Activity account to receive proceeds from fundraiser Activity account to receive proceeds from fundraiser Class, club, or organization that will conduct the activity Class, club, or organization that will conduct the activity Name of project Name of project Beginning and ending dates of fundraiser Beginning and ending dates of fundraiser Name of company supplying items for sale Name of company supplying items for sale Description of items for sale Description of items for sale Estimated cost of items for sale Estimated cost of items for sale Sales price of items Sales price of items Description and estimated cost of related fundraiser expenses Description and estimated cost of related fundraiser expenses Estimated profit from fundraiser Estimated profit from fundraiser

19. Miscellaneous Outside Organizations Outside Organizations Booster Organizations Booster Organizations If a school employee is associated with the activity supported by the booster organization, serves/holds a leadership position in the organization or leads fund-raising or maintains the accounting records for the organization, the money should be run through the school If a school employee is associated with the activity supported by the booster organization, serves/holds a leadership position in the organization or leads fund-raising or maintains the accounting records for the organization, the money should be run through the school Parent Organizations Parent Organizations If a school employee leads fund-raising or maintains the accounting records for the organization, the money should be run through the school If a school employee leads fund-raising or maintains the accounting records for the organization, the money should be run through the school

20. Miscellaneous Outside Organizations Outside Organizations Booster Organizations (continued) Booster Organizations (continued) Activities of a booster organization may come under the control of a school principal if: Activities of a booster organization may come under the control of a school principal if: Organization collects admissions to school function Organization collects admissions to school function Organization operates concessions on school property at the school function Organization operates concessions on school property at the school function Organization collects parking fees for school functions Organization collects parking fees for school functions Organization operates a training camp including students of the activity is supports Organization operates a training camp including students of the activity is supports Organization operates exhibitions or competitions that includes students of the activity it supports Organization operates exhibitions or competitions that includes students of the activity it supports

21. Miscellaneous Outside Organizations Outside Organizations Specific Requirements for Boosters and Parent Organizations Specific Requirements for Boosters and Parent Organizations Organizations must obtain an employee identification number from the IRS Organizations must obtain an employee identification number from the IRS Organizations must provide a report of an annual audit of the organization to the school Organizations must provide a report of an annual audit of the organization to the school Organization must make its financial records available to the school’s auditors and authorized school employees upon request Organization must make its financial records available to the school’s auditors and authorized school employees upon request Organization must provide required financial reports Organization must provide required financial reports Organization must provide proof of a fidelity bond for the treasurer Organization must provide proof of a fidelity bond for the treasurer Organization will not provide any payment or benefit to a school employee in violation of the State Ethics Law. Organization will not provide any payment or benefit to a school employee in violation of the State Ethics Law.

22. Miscellaneous Entering into Contracts The hiring and payment of all persons coaching athletics or supervising students must go through the MPS Human Resources Office and the MPS Payroll Department. Contracts for those people must be established

23. Summary Since the 2003 audit, we have been cited by Examiners for the same things Since the 2003 audit, we have been cited by Examiners for the same things “MAKE IT IMPORTANT TO YOU” “MAKE IT IMPORTANT TO YOU” CONDUCT AN AUDIT OF YOUR SCHOOL TO SEE IF THE REQUIREMENTS ARE MET CONDUCT AN AUDIT OF YOUR SCHOOL TO SEE IF THE REQUIREMENTS ARE MET PERIODICALLY MONITOR PERIODICALLY MONITOR We welcome any feedback that you might have on the topics that we have gone over. We welcome any feedback that you might have on the topics that we have gone over.