1. THE OFFICE OF INTERNAL AUDIT HAS RESPONSIBILITY FOR AUDIT OF ASB. Office of Internal Audit 1

2. 3 TYPES OF ASB AUDITS SURPRISE CASH COUNTS. ASB AUDITS - SITE IS ADVISED IN ADVANCE. ASB FOLLOW-UP AUDITS – ARE UNSCHEDULED TO REVIEW THAT CORRECTIVE ACTION HAS BEEN TAKEN. Office of Internal Audit 2

3. FINDINGS THE ASB AUDITS REFLECT A CONSISTENT IDENTIFICATION OF EXCEPTIONS BASED ON NOT FOLLOWING THE ADMINISTRATIVE PROCEDURES THAT GOVERN ORGANIZATION, REVENUES, EXPENDITURES, PROCEDURES, AND THE SPIRIT OF ASB. THIS PRESENTATION IS DESIGNED TO INFORM AND THEREFORE REDUCE THE NUMBER OF FINDINGS. Office of Internal Audit 3

4. WEB BASED RESOURCES AND SUPPORT TOP TEN ASB THINGS YOU NEED TO KNOW – VIDEO AND POWERPOINT. ASB GUIDELINES FOR INTERNAL CONTROL- MOST COMMON AUDIT FINDINGS. THE CLUB ADVISOR CHECKLIST. FCMAT ASSOCIATED STUDENT BODY ACCOUNTING MANUAL. Office of Internal Audit 4

5. ADDITIONAL RESOURCES ASB MANUAL ADMINISTRATIVE PROCEDURES YOUR SITE ASSIGNED AUDITOR AND THE OFFICE OF INTERNAL AUDIT Office of Internal Audit 5

6. Today we are providing support to effect an understanding of ASB that assures the district’s schools are conducting ASB operations in accordance with district expectations through teamwork between central office oversight, review of site operations, and site conduct of ASB. 6

7. Office of Internal Audit August, a meeting was held with the ASB presidents and attendant ASB officers to present to them an understanding of prudent financial practices and to provide them a basis for taking ownership of ASB. This presentation also established with them an understanding that they own ASB and ASB is to operate within authority that is presented in law and district procedure. 7

8. Office of Internal Audit Authority For ASB The California Education Code is one of 29 sets of code in the state and is the primary body of law for kindergarten through community college governance. ASB management is referenced in many of the code’s sections. Example Ed Code 48933- The funds of any student body organization established in the public schools of any school district - (b) The funds shall be expended subject to such procedure as may be established by the student body organization subject to the approval of each of the following three persons, which shall be obtained each time before any of the funds may be expended: an employee or official of the school district designated by the governing board, the certificated employee who is the designated adviser of the particular student body organization, and a representative of the particular student body organization. 8

9. Office of Internal Audit Authority For ASB California Code of Regulations – Title 5 A regulation is a rule adopted by a state regulatory agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure. The California Code of Regulations (CCR), also known as the California Administrative Code, has the force of law. Example Title 5 CCR 15500 and 15501 require the board to approve the sale of food items by student organizations. The board may delegate this authority to the superintendent or designee as provided in the following paragraph. Other conditions regarding the nutritional quality of foods and beverages, the number of items sold, and the preparation of the food must also be satisfied; see the accompanying administrative regulation.*** 9

10. Office of Internal Audit Authority For ASB California Constitution In the absence of a statute granting public local educational agencies (LEAs) the legal authority to make a spe­cial expenditure (i.e., for food, clothing, awards, etc.), the legality of any expenditure is determined by the “gift of public funds” provision in the California Constitution, Article 16, section 6. This constitutional provision prohibits making any gift of public money to any individual (including public employees), corporation, or other government agency…. 10

11. Office of Internal Audit ASB is for the students Administrative Procedure 2225,Administration of Student Body Funds C. General 5. Principles Governing Study Body Funds a. Basic assumption. Projects and activities of student bodies have only two purposes: (1) to promote the general welfare, education, and morale of students; and (2) to finance approved extracurricular activities. b. General principles (5) Student body representation shall be required in the management of funds raised by, and expended for, the student body. e. Expenditures for faculty. Faculty funds may be accepted as earmarked funds, such as faculty social fund, but expenditures must be limited to amount deposited by the faculty. Under no conditions shall student body money be expended for the benefit of faculty. 11

12. Office of Internal Audit Principal Administrative Procedure 6240, School Clubs, C. General 3. Laws and Regulations Affecting Clubs Generally c. Responsibility for supervision and control of school clubs. Accountability and responsibility for supervision and control of school clubs rests with the principal, who operates under delegated authority of the superintendent and the Board of Education. Administrative Procedure 2225, Administration of Student Body Funds C. General 4. Responsibilities for Supervision of Funds b. Principal. As trustee, shall be directly responsible for the conduct of student financial activities in accordance with this procedure. 12

13. Office of Internal Audit Principal / ASB Advisor Administrative Procedure 2225, Administration of Student Body Funds C. General 4. Responsibilities for Supervision of Funds c. Associated Student Body (ASB) advisor. Under the principal’s direction, shall be responsible for all student body activities. Administrative Procedure 6240, School C.2.d. Faculty Advisor. Faculty advisor: A certificated member of the school faculty who supervises and is responsible for the school club activities. Ed Code 48933 (b) the certificated employee who is the designated adviser of the particular student body organization, and a representative of the particular student body organization. General Club Advisor Checklist School ASB Revenue Potential Analysis Deposit Slip 13

14. Office of Internal Audit Principal / Club Advisor Administrative Procedure 6240, School Clubs, General 4. Regulations Governing Relationships Between ASB, School Clubs, and the School. e. The school club's faculty advisor must be approved by the principal. No school club shall be approved or be permitted to function on school premises without a faculty advisor. Such advisory assistance is entirely voluntary on part of the employee; however, once advisory assistance is accepted, the employee assumes responsibility for supervision of the club's activities as required by law and district. Ed Code 48933 (b) the certificated employee who is the designated adviser of the particular student body organization…. 14

15. Office of Internal Audit Principal / Financial Clerk Administrative Procedure 2225, Administration of Student Body Funds C. General 4. Responsibilities for Supervision of Funds e. Secondary schools (1) Financial clerk. Shall be responsible, under the principal’s direction, for all student activity funds; shall maintain control records; and shall follow prescribed accounting procedures. 15

16. Office of Internal Audit Principal / ASB Advisor / Students Administrative Procedure 2225, Administration of Student Body Funds C. General 4. Responsibilities for Supervision of Funds e. Secondary schools (2) Student/faculty budget committee. Composed of faculty members and elected students, shall recommend budgets, expenditures, and fund-raising activities in conformance with established policies (Procedure 2227). 16

17. Office of Internal Audit ASB Operations Principal / ASB Advisor / Students 4. Responsibilities for Supervision of Funds (3) Student body governing board. Shall have control of all student body activities and funds, and shall have the power to approve or disapprove budgets, unbudgeted expenditures, and activities. (a) Principal shall have the power to veto any action taken by the student governing board. (b) Expenditures of student body funds shall have approval of all of the following: a representative of the student body organization, the ASB adviser or sponsor, and the principal. 17

18. Office of Internal Audit Principal / ASB Advisor / Students Administrative Procedure 4353, Associated Student Body, General C. General 2. Regulations Governing Student Body Organizations e. Activities. All activities must have educational value and contribute to the achievement of general objectives of public education, promote the general welfare of students, and contribute to building a high morale among the majority of students. f. Special supervision of activities. No organization of students composed largely of individuals under eighteen years of age shall meet or conduct any activity except under immediate supervision of an adult approved by the principal or designee responsible. g. Faculty adviser. Principal shall appoint one or more faculty advisers to work with the student governing body in management of its affairs. 18

19. Office of Internal Audit Administrative Procedure 2225, Administration of Student Body Funds C. General 4. Responsibilities for Supervision of Funds f. Operation auditors, Internal Audit Department, Office of the Superintendent, are responsible for auditing student body funds and accounts. 19

20. Office of Internal Audit ASB Operations Why ASB’s Are An Issue Decentralized Non-Bookkeepers Many Cash Transactions Lack of Applying Internal Controls 20

21. Office of Internal Audit ASB Operations Main Problem Areas Lack of Knowledge of Regulations Untrained Players Questionable Expenditures Uncontrolled Fund Raisers Missing Monies Misuse of Funds by Principals, Advisors and Club Sponsors 21

22. Office of Internal Audit ASB Operations How to Avoid Trouble Understand the Rules and Regulations Question – Questionable Expenditures Control Fund Raisers Have Proper Internal Controls – Examples: Staff understand Approval - Before Event Staff maintain SEPARATE ACCOUNTING 22

23. Office of Internal Audit ASB Operations Education Code 48930 A student body shall have as its purpose the conduct of activities on behalf of the students approved by the school authorities and not in conflict with the authority and responsibilities of the public school officials. 23

24. Office of Internal Audit ASB Operations Organized ASB vs Unorganized Elementary ASB is by the principal for the students and can be unorganized. Unorganized is directed by the principal. Secondary ASB is by the students for the students and only organized. Organized requires the structure of constitution and student administration. 24

25. Office of Internal Audit ASB Operations Principles Governing Study Body Funds a. Basic assumption. Projects and activities of student bodies have only two purposes: (1) to promote the general welfare, education, and morale of students; and (2) to finance approved extracurricular activities. 25

26. Office of Internal Audit ASB Operations b. General principles (1) Student body funds are to be used to finance noncurricular activities beyond those provided by the district. Note: In elementary schools, funds may be used to finance activities for noninstructional periods or to enrich programs provided by the district. (2) In general, projects for raising student body funds shall contribute to the educational experience of students without undue hindrance of the instructional program. (3) Fund-raising projects should be conducted for specific activities consistent with the educational goals of the district; large student body reserves are discouraged. (4) In general, student body funds shall be expended for the benefit of students currently in the school, since they contributed to the accumulation of funds. (5) Student body representation shall be required in the management of funds raised by, and expended for, the student body. 26

27. Office of Internal Audit ASB Operations Class Organizations (Secondary schools only) a. A class organization may be formed after a charter, constitution, or statement of purpose has been approved by the principal and the student governing group. Purposes, policies, and plans must be in keeping with standards, policies, and ideals of the school and must not be in conflict with constitution of the student body organization. 27

28. Office of Internal Audit ASB Operations Findings - Not Meeting the Requirements ASB should have a properly approved constitution and bylaws consistent with District Procedure 4353. Minutes are kept for all meetings of the ASB officers and signed by the ASB secretary. Minutes are current and kept on file in the school office. Student classes and clubs are properly approved (Request for Organization of School Club) and copies of their charter, constitution or statement of purpose and objectives are on file in the school office. Solution Verify with the Finance Clerk that the proper documentation is on file for entities having accounts. 28

29. Office of Internal Audit ASB Operations Standard Student Body Receipts AP 2235 b. All financial transactions made in any school, except as noted below, must pass through the school office. The principal shall control all collections, deposits, and expenditures of monies made by the school, whether in the form of cash or checks. Exceptions: (1) School-initiated responses to requests by nondistrict organizations for collections and drives (Procedure 9325). (2) Transactions handled directly for ROTC Brigade Headquarters by ROTC instructors. (3) PTA collections. 29

30. Office of Internal Audit ASB Operations Standard Student Body Receipts AP 2235 Exceptions noted to these requirements: All collections receipted upon accepting the deposit. Pre-numbered receipts used. Sub-receipt books being monitored and controlled. Club deposits must have a club deposit slip signed by the depositor and verified by the financial clerk. Collections must be counted in the presence of the depositor. Solution Staff understand that they are to obtain, retain and agree receipts to their records independent of the Financial Clerk. Minimum, monthly obtain financial accounting statement. Refer to the Club Advisor’s Checklist 30

31. Office of Internal Audit ASB Operations Standard Student Body Receipts AP 2235 Exceptions noted to this requirement: c. Donations of money, unless accompanied by a written statement of the use intended, shall be credited to the general fund; such statement shall be kept on active file. The written statement should contain instructions for disposition of residual funds after the purpose has been accomplished or the purpose for which a donation was made no longer exists. Solution Obtain a Donation Intent Letter at the point in time when the donation is received. Not After Receipt 31

32. Office of Internal Audit ASB Operations Administration of Student Body Funds AP 2225 Limitations (Elementary and Secondary Schools) a. Expending funds. Student body general funds shall be expended only for purposes that benefit the entire student body. (3) Student body governing board. Shall have control of all student body activities and funds, and shall have the power to approve or disapprove budgets, unbudgeted expenditures, and activities. (a) Principal shall have the power to veto any action taken by the student governing board. (b) Expenditures of student body funds shall have approval of all of the following: a representative of the student organization, the ASB adviser or sponsor, and the principal. Under no conditions shall student body money be expended for the benefit of faculty. 32

33. Office of Internal Audit ASB Operations Student Body Requisitions and Purchase Orders AP: 2437 C. GENERAL 2. Definitions a. Student body requisition: A serially-numbered, original internal control form which must be completed as authorization for drawing a student body check. Approvals of a representative of the student body organization, the ASB adviser or sponsor, and the principal are required. b. Student body purchase order: A secondary control form, numbered with same number as the requisition and issued to a vendor for completion of a purchase. (Not required for every requisition.) 3. Prior to any purchase, a student body requisition shall be completed and approved by a student body organization representative and the principal. 4. Governing board of the student body shall approve all purchases/expenditures not previously approved in the budget (Procedure 2227). 33

34. Office of Internal Audit ASB Operations Administration of Student Body Funds AP 2225 Limitations (Elementary/Secondary Schools) and AP 2437 Exceptions noted to these requirements: All checks must be accounted. Checks must be adequately safeguarded. Student Body Requisition must be approved before checks are issued. All checks issued must have an original invoice to support the expenditures. The student council must approve all expenditures. Solution Staff understand that they have support and ASB/Club approval. Refer to the Club Advisor’s Checklist 34

35. Office of Internal Audit ASB Operations Student Body Fundraising AP 2265 b. Student organizations wishing to collect funds for any purpose shall obtain advance approval of the principal or designee and the ASB council. School Clubs, General AP 6240 C. GENERAL 6. Rules and Regulations Governing Operation of School Clubs a. Finances. All moneys collected by an organization must be deposited with the school's account clerk, and disbursed according to school and district regulations. All groups having funds deposited in the student body account, with exception of classes using materials for instructional purposes, shall submit a request for fund-raising activities and/or budget allocation. 35

36. Office of Internal Audit ASB Operations Fundraising AP 2265 and AP 6240 Exceptions noted to these requirements: Approval of fundraising activities is obtained from the principal and ASB. Collections from fundraising must be turned in promptly to the finance office. Revenue potential is prepared before the fundraising activity and completed at the end. Lotteries and raffles are not permitted. Tickets must be controlled and accounted. Ticket recaps must be prepared. Solution Principal at the start of the school year discuss with ASB and Club Advisors the fundraising requirements. Have them sign annually, the Club Advisor’s Checklist. 36

37. Office of Internal Audit ASB Operations Fund Raising AP 9325 NONPROFIT ORGANIZATIONS, FOUNDATIONS OR BOOSTER CLUBS i. Fundraising activities held at a school for the benefit, in whole or in part, of that school: (1) Nondistrict organizations may raise funds and donate those funds to the district or purchase items with their funds for donation or assistance to the district. (2) Nondistrict organizations may donate funds to the student organization(s); however, after they do so, only the student organizations can control how the funds will be used. (3) School fundraisers operated by the school through the support of parent groups that are not officially organized are fundraisers of the school and all financial transactions must pass through the school office. The principal shall control all collections, deposits, and expenditures of monies, whether the transaction is by cash or by check. (4) Fundraising activities should be conducted for a specific goal and not simply to raise money for the nondistrict organization. 37

38. Office of Internal Audit ASB Operations Fund Raising AP 9325 NONPROFIT ORGANIZATIONS, FOUNDATIONS OR BOOSTER CLUBS 1. Approval of fundraising activities is obtained from the principal. 2. Annually, the principal shall obtain a copy of the nonprofit organization’s determination letter or certificate of nonprofit status pursuant to Internal Revenue Service Code Section 501. 3. The district’s tax-exempt status and Federal Identification number are not for the nonprofit organizations, foundations or booster club’s use. 4. The nonprofit organizations, foundations or booster club’s funds and accounts shall be kept completely separate from Associated Student Body accounts. 5. Will not be employed by a nondistrict organization defined herein without prior approval from the district’s Human Resource Services Division. 38

39. Office of Internal Audit ASB Operations Fund Raising AP 9325 NONPROFIT ORGANIZATIONS, FOUNDATIONS OR BOOSTER CLUBS Exceptions noted to these requirements: Approval of fundraising activities is obtained from the principal. Annually, the principal shall obtain a copy of the nonprofit organization’s determination letter or certificate of nonprofit status pursuant to Internal Revenue Service Code Section 501. The district’s tax-exempt status and Federal Identification number are not for the nonprofit organizations, foundations or booster club’s use. The nonprofit organizations, foundations or booster club’s funds and accounts shall be kept completely separate from Associated Student Body accounts. Will not be employed by a nondistrict organization defined herein without prior approval from the district’s Human Resource Services Division. Solution - Principals Meet with nondistrict president, officers, and advisors at the beginning of school year. 39

40. Office of Internal Audit ASB Operations Fund Raising AP 9325 NONPROFIT ORGANIZATIONS, FOUNDATIONS OR BOOSTER CLUBS Solution - Principals Obtain a copy of the nondistrict organization’s determination letter or certificate of nonprofit status pursuant to Internal Revenue Code section 501. Explain how the school’s calendar of activities operates, who must be contacted to place events on the calendar, and when and how events are placed on the calendar. Explain school regulations regarding use of facilities as stated under Procedure 9205. Explain district regulations and procedures related to fundraising activities. (1) Explain fundraisers may only be conducted by nondistrict organizations with nonprofit status that is verified by the site principal. (2) Explain that nondistrict organization funds and accounts are to be kept completely separate from student body account. 40

41. Office of Internal Audit ASB Operations Associated Student Body, AP 4353 General 3. Constitution and bylaws shall contain: e. Regulations for inventorying merchandise purchased for resale. Inventory of Student Body Merchandise AP 2360 2. Regulations a. At close of every school year, each student body activity shall take an inventory of all merchandise on hand which was purchased for resale, including shop materials. b. Actual invoice cost (including tax and shipping) of these inventories is recorded on student body books before closing entries for the fiscal year. c. All merchandise belonging to the general student body may be listed on one inventory. 3. Responsibility. Sponsor or financial clerk is responsible for supervising annual inventory count. Inventory should be taken by students, preferably those not working in the student store. 41

42. Office of Internal Audit ASB Operations Associated Student Body, AP 4353 Inventory of Student Body Merchandise AP 2360 Exceptions noted to these requirements: Goods are adequately safeguarded against loss by theft. Goods are adequately protected against physical deterioration. Physical inventories are taken at least annually. Physical inventory is recorded at cost. Solution Principal effect a process to conduct inventories and monitor to assure students and staff conduct the inventories. 42

43. Office of Internal Audit ASB Operations Contracts  Strategic Sourcing and Contracts Officer is authorized to sign the contract.  Dollar limit on contracts  Greater than $1,500 requires 3 bids  Contract terms and conditions  Intake form process for business office and legal counsel review, if necessary, requires advanced planning according to deadlines  Budget for the contract 43

44. Office of Internal Audit ASB Operations ASB Consultant Forms  Copy of completed and signed form must be sent to the Accounts Payable department immediately after services are received. For services received and paid in December, the form must be submitted to Accounts Payable prior to Winter break.  District employees (current or retired) cannot be hired through the ASB and must be paid through the Payroll department. 44

45. Office of Internal Audit ASB Operations Record Retention  Perpetuity  ASB constitution and bylaws  ASB Student Council minutes  Financial Documents  Prior 3 years and current year records must be kept at site. 45