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Activity Fund Accounting Procedures

Albuquerque Public Schools currently uses a variety of activity fund accounting systems. These systems are designed to provide conformity with good accounting practices and controls.

Double Entry and various spreadsheets
These systems are primarily used at the elementary school level.

E.P.E.S.© Activity Fund Software
This system is used at high, middle and elementary schools.

The Double Entry System requires each transaction be recorded to show its effect on two or more account balances. Therefore, the following concepts apply:

  • The double sides of activity fund books are Cash accounts and Fund accounts.
  • Cash Accounts include bank accounts (Checking, Savings, Investments, Certificates of Deposit, Petty Cash, Change Funds, and the Non-Sufficient Funds (NSF) account ledgers.
  • Fund Accounts are the ledgers for each club, class, or group conducting activities. Please refer to the examples on Activity Fund Classifications (pages 4-6).
  • Posting is the process of recording the cash activity to the Fund Accounts. If the entries listed below are not made correctly, the books will be out of balance.
a. When a check is written, credit (-) the Bank and debit (-) the fund account(s) by the same (total) amount.

b. When entering a receipt/deposit, debit (+) the Bank, and credit (+) the fund account(s) by the same (total) amount.

EXAMPLES

WRITING A CHECK FOR BAND UNIFORMS -
Decrease (debit) the Band fund and (credit) the Cash/Checking account.

MAKING A DEPOSIT TO THE FACULTY/VENDING ACCOUNT -
Increase (credit) the Faculty fund balance and (debit) the Cash/Checking account.

Debit (DR) and Credit (CR) are accounting terms which relate to activity fund bookkeeping as follows:

• Debit to Cash account increases cash
• Credit to Cash account decreases cash
• Debit to any fund account decreases activity/club funds
• Credit to any fund account increases activity/club funds
  • Every transaction must increase (i.e., a deposit) or decrease (i.e., a check) both a Cash account and one or a sum of Fund accounts by the same amount in order for double entry bookkeeping to balance. Otherwise, a transfer (an equal and offsetting increase and decrease) may occur within the Cash accounts or within the Fund accounts.


EXAMPLES

$100.00 TRANSFERRED FROM SNACK BAR TO ADMINISTRATION
This transaction would increase Administration and decrease Snack Bar.

$500.00 MOVED FROM CHECKING TO SAVINGS
This transaction would decrease Checking and increase Savings with no effect on the total cash. With no checks disbursed or receipts deposited, there is no change in the Fund accounts.

  • At any point in time, the grand total amount of all Cash accounts must match the grand total amount of all Fund accounts. Documentation of this match is referred to as a trial balance and is required for month-end balancing.


BOOKS OF ACCOUNTING

  • General Ledger refers to the entire set of ledger sheets maintained for each school’s accounts, that is, the individual ledgers for all CASH accounts and FUND accounts.
  • General Journal refers to the book of original entry for all receipts and disbursements. This is often referred to as the transaction sheet or Cash in checking ledger.

REQUIRED RECORDS

  • Bank Statement: A monthly document from a financial institution that itemizes all cash activity per the bank records.
  • Checkbook: Detail record used to log cash transactions and maintain a running balance of available cash.
  • Financial Report/Bank Reconciliation: A monthly report of activity fund accounts that is submitted to the APS Finance Department by the 20th of each month. This report is required by the State of New Mexico Department of Finance and Administration and the Public School Finance Division (22-9-10 N.M.S.A., 1978 Compilation, as amended.
  • Trial Balance: The total of all Cash accounts (Checking, Savings, NSF, Petty Cash, Change Fund) must equal the total amount of all Fund accounts. (Admin, library, yearbook, etc.)
  • Invoice: An itemized document from a vendor indicating amount due for goods/services rendered.
  • Vendor Statement: A periodic (i.e., monthly) vendor document which itemizes invoice activity. Payments may not be made from statements unless the invoices are available to support the amounts shown and are reconciled to the statement.
  • Purchase Order: A document issued by the school which directs a vendor to deliver the goods or services indicated. The purchase order is signed by the principal to evidence the appropriate pre-approvals and is required by the State Procurement Code.
  • Voucher: A record used to document principal certification of completion of a transaction. All supporting documents are attached to this cover sheet (i.e., purchase order, vendor invoice, etc.).
  • Office Receipt: A pre-numbered document issued by the bookkeeper for all monies received.
  • Activity Three-Part Receipt: A pre-numbered document issued by a sponsor for all monies received whether from students, parents, vendors, or donors, etc.
  • Purchase Order Log: A document that lists all purchase orders issued. This log must include a date, PO number (in sequential order), vendor, check number.
  • Receipt Inventory Log: A document that lists all receipt books on hand at the school. This includes both unissued and issued receipt books. The signature of the employee that the receipt book was issued to must be obtained.
  • Receipt Tracking Log: A document that itemizes each receipt that has been issued by a staff member, (other than the bookkeeper) and returned to the bookkeeper.

BANK ACCOUNTS

State laws govern the deposit and investment of funds:

  • Section 6-10-16 N.M.S.A., 1978 Compilation, as amended - requires deposits of public monies be secured by United States guaranteed securities or the State of New Mexico if such deposits in an authorized bank exceed the amount insured by the Federal Deposit Insurance Corporation (FDIC).
  • Section 6-10-24 N.M.S.A., 1978 Compilation, as amended, allows a public/educational institution to deposit public funds in the following institutions without requiring them to qualify as public depositories:
1. Banks of the State of New Mexico insured by the FDIC.
2. Credit Unions insured by the NCUA.


FDIC Insurance Limits


Check with your financial institution for the current FDIC limits.

These are subject to change. Schools with money in an activity fund in excess of the FDIC limits must set up an additional bank account (i.e. Savings) at a different banking institute. Activity fund balances must remain at or below the current FDIC limits at any one bank.

Any authorized bank or credit union approved by the Board of Education can be used as an acceptable depository for public funds.

  • New schools: Contact the Finance Department for a packet of materials prior to choosing a financial institution.
  • Established schools: If considering adding or changing financial institutions, contact the Finance Department for authorization prior to any changes.

Albuquerque Public Schools has the following general procedures in place for activity fund bank accounts:

  • Name on Accounts: All checking or investment (Savings, CDs etc.) accounts used by a school should reflect the school’s name, its level, and that it is an Activity Fund account (i.e, Albuquerque HS Activity Fund). Depending upon your bank’s requirements, the account name may also state “Board of Education”. Two signatures are required (one must be the principal or his/her administrative designee). Checks must state, “Void after One Year”.
  • Tax ID Number: All checking and savings accounts should use the district’s tax I.D. number and should reflect that the account is exempt from withholding because the school district is a non-taxable entity. Contact the Finance Department for APS’ tax identification number.
  • Opening New Accounts: Whenever a new bank or savings account is opened, the bank will require proper authorization from the district superintendent. The packet of materials containing the needed authorization should be obtained from the Finance Department each time a new account is opened. When setting up accounts, shop around for the best account options.
  • Change in Principal and/or Secretary/Bookkeeper: Whenever there is a change in principal or secretary/bookkeeper, the signatures on the activity fund Checking and Investments (savings. CDs) accounts must be changed. Contact the bank for instructions. Changes must be made to the signature card within a two week period of any changes in personnel.
  • Interest: Some banks and credit unions pay interest on Checking/Investment accounts. Schools should take advantage of this opportunity to earn additional income. Interest earned must be posted on the school’s books.
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