ACTIVITY
FUNDS
RESPONSIBILITY
v
If you are here
today you have probably been assigned one or more tasks in the maintenance of
the Activity Funds on your campus.
v
The principal of
your campus is responsible for the proper collection, disbursement and control
of all activity funds to include:
Ø
physical
safeguard of all cash on campus
Ø
accounting for
all receipts and disbursements
Ø
administration of
all related recordkeeping
in
compliance with all related District policies and procedures.
v
You are responsible
for the proper, accurate and timely completion of the Activity Fund task you
have been assigned.
v
If, for any
reason, you are unable to perform/complete your task successfully, it is your
responsibility to immediately discuss the reasons/problems with your principal
so that these issues can be resolved. If
for any reason the problem is not resolved through the principal, it is your
responsibility to report the issue to the business manager.
TYPE:
ACTIVITY FUNDS
v
Campus activity
funds –
Ø
benefit the
entire school body;
Ø
received from
sale of school pictures, class rings, vending machines, etc.;
Ø
liability
accounts titled administrative, general, hospitality, etc.;
Ø
disbursed at the discretion of the principal.
v
Student activity
funds –
Ø
benefit a
specific club or organization, ie, band,
cheerleading, choir, math, science, etc.;
Ø
raised by the
organization’s members;
Ø
liability
accounts titled band, cheerleaders, science club, etc.;
Ø disbursed at the discretion of the student members under sponsor supervision.
PROCEDURES:
CASH HANDLING
v
No petty cash
funds are allowed.
v
At least 2 people
should be assigned the handling of activity funds: one for
collecting/receipting; the other for preparing and making deposits.
v
Only pre-numbered
receipt books can be used.
v
A receipt must be
written for all collections at the time of collection.
v
Cash should be
counted by the collector in the presence of the sponsor at the time of
collection.
v
The original
receipt should be written immediately and given to the sponsor.
v
Cash is to be
kept in a locked, secure place, ie, file cabinet,
drawer, safe.
v
Only authorized
personnel should have access to the locked area.
v
Cash received is
not to be used for making change or cashing checks for any one or any purpose.
v
Checks written to
schools should be for the amount of purchase only.
v
Postdated checks
are not to be accepted. Checks are not to be held.
v
Checks written to
schools are accepted under the same guidelines as checks written in the
“outside world” and subject to the same penalties if returned by the bank for
any reason.
v
Checks should be
restrictively endorsed with the activity fund account number and “For deposit
only” immediately upon receipt.
v
Receipt numbers
must be listed on the front of each deposit ticket.
v
Checks must be
listed individually on the back of the deposit ticket or on a list or tape
attached. As many deposit tickets can be used as are needed to list all checks
included in a deposit.
v
Receipt copies
and deposit tickets are to be kept intact in the receipt/deposit book.
v
If the tasks of
collecting/receipting and depositing are assigned to 2 staff, the money should
be counted/verified by both at the time the
collections are given to the 2nd staff for deposit. The 2nd staff should total all the
receipts being included in the deposit and make sure the total agrees with the
amount of money being deposited.
v
If it is
necessary to void a receipt, put “VOID” on the receipt along with the receipt
number which replaces the voided receipt.
v
If it is
necessary to void a receipt and there is no replacement receipt, an explanation
should be written on the receipt marked “VOID”.
v
Deposit ticket
copies should include a copy of the list of checks included with the original,
as applicable.
v
Deposits are to
be made on a daily basis. Cash should NEVER be held overnight.
v
The bank customer
receipt validated by the bank should be stapled to the back of the appropriate
deposit ticket, after review for accuracy.
v
Any discrepancies
found at any step in the process should be reported to the principal for
immediate investigation and resolution.
v
Collection
efforts, ie, calls, letters, etc., should be started
immediately upon return of any check from the bank for any reason.
v
In the event that
it is determined that a check is uncollectible, documentation of collection
efforts must be adequate and available prior to filing a check with the county
office for collection.
v
Being out of
authorized receipt books, deposit tickets or deposit bags is not an acceptable
reason for noncompliance with collection and deposit procedures.
PROCEDURES:
CASH DISBURSEMENTS
v
The authorized
signature card filed at the bank for the activity fund bank account should have
2 signatures: principal and the staff delegated the task of writing checks.
v
All check
requests should have proper documentation attached prior to being taken to the
principal for approval.
v
A blank check
should never be requested or signed.
v
A disbursement should
never be made for an amount greater than the balance in an organization’s fund.
v
The balance in an
organization’s fund should be verified prior to a check request being completed
and a current print-out of the category account included as part of the check
request documentation presented to the principal for review and approval.
v
The balance in
the entire activity fund should be monitored regularly in order to ensure that
sufficient funds are available at the time any check is issued.
INTERNAL CONTROL:
DO’S AND DON’TS
v
The authorized
signature card filed at the bank for the activity fund bank account should be
kept current at all times.
v
If at all
possible there should be 2 people assigned to activity fund tasks:
collecting/receipting; depositing; posting and reconciling Quicken and bank
statement. If only 2 people assigned,
the first and third tasks should be combined for a better segregation of
duties.
v
ALL bank
correspondence should be delivered unopened directly to the principal prior to
forwarding to applicable staff.
v
Bank statements
should be reviewed for regular deposits; reasonable balance; other
credits/debits.
v
Bank statement
enclosures should be reviewed for check signatures, expected payees and
reasonable amounts.
v
Bank
correspondence for notices on returned checks and deposit errors/discrepancies
should be reviewed as received and any unresolved issues brought to the
attention of the principal for resolution.
v
Documentation
should be available for any deposit error/discrepancy that occurred on the
school’s side.
v
In reviewing the
bank statement or correspondence, anything that does not agree with the
school’s records/documentation should be brought to the attention of the
principal to be addressed and immediately resolved.
v
Receipt books and
receipts should be used in sequential and date order.
v
Receipt copies
should be left intact in the receipt book.
v
Receipts should
be completed with all required information, ie, date,
payee/club, amount, type of collection (cash/check), legible initials, etc.
v
A receipt book
should be used in its entirety prior to another book being started.
v
Keep a log of
receipt books and deposit ticket books in your office showing date and to whom
issued, ie, school office, organization, etc.
v
Before issuing a
new receipt book require that the prior book be returned and check to make sure
that it has been completely used and all copies are intact.
v
Keep a log of
ongoing fundraisers and review transaction listings for collections that would
be expected during that time.
v
Provide your
principal with a print-out of the Quicken transaction listing for the Activity
Fund account at the beginning or end of each week.
v
Never print-out a
Quicken transaction listing that does not include a balance after each
transaction.
v
Make sure that
the transaction listing shows splits for all deposits.
v
Make sure that
all receipt numbers for each deposit are recorded in Quicken.
v
Make sure that
each entry in Quicken has a description which readily identifies the type of
transaction and the liability account affected.
v
Have
documentation available for all transfers, adjustments, unusual or infrequent
transactions/postings.
v
Make sure that
transfers between funds have been approved by both sponsors of the
organizations involved before requesting the approval of the principal.
v
Verify the
balance in the organization from which the transfer is to be made prior to
requesting the principal’s approval.
v
Print-out a
Quicken transaction listing for each category account, ie,
organization/club, must be printed on a monthly basis.
v
Distribute the
category account listing to the appropriate sponsor; require that the sponsor
review the listing and return a signed copy to you indicating that the listing
agrees with the sponsor’s records.
v
Review monthly
Activity Fund reconciliations before giving to the principal for review.
v
Prepare Activity
Fund reconciliations on a monthly basis and give to your principal for review
and approval prior to forwarding to the business manager. A copy of the bank reconciliation and bank
statement are MUST be submitted to
the business manager by the 15th of the following month.
v
Never take
Activity Fund records home for any reason.
v
If you need help
or do not understand something, ask your principal or call the Finance
Department.
v
If you are not
receiving proper documentation and/or adequate cooperation from anyone involved
in the activity fund process, discuss the problem with your principal.
v
If you are asked
to do anything you do not believe is correct or proper, notify your principal
and/or the Finance Department.
THINGS TO KNOW:
v
Principals are
required to have written procedures for activity fund management.
v
PTA money is
never to be handled by school personnel.
v
PTA money is
never to be commingled with Activity Fund money.
v
If your school’s
PTA uses the school’s address for mail, you need to provide a secure mailbox
where all PTA correspondence can be placed, unopened until pick-up by an
appropriate PTA officer.
v
PTA, Booster
Clubs and other associated organizations must have their own tax-exempt status
and employer identification number (EIN/TIN). They must not use the school
district’s EIN.
v
PTA, Booster
Clubs and other associated organizations are not eligible for the tax-free days
until an exemption has been obtained from the Internal Revenue Service.
v
Any payment to a
District employee for any reason other than reimbursement for an allowable
expenditure must be processed through Payroll and be accompanied by an extra
help authorization form. No exceptions are applicable.
v
Sales tax is not
to be paid on an original invoice or on a reimbursement;
v
In the case of
reimbursements, the tax exempt certificate should be sent with the school
employee making the purchase; these employees should be told which stores honor
the certificate upon presentation.
v
Any payment to a
consultant can be made only with a completed and current W-9 on file and
completion of a consultant agreement form.
v
All gifts must be
reported to Administration.
v
Purchases of
fixed assets – items over $500 are not allowed with campus activity funds.
v
All purchases
become the property of the District.
v
Purchases made
with activity funds are subject to the District’s competitive bidding requirements
and conflict of interest guidelines.
v
All school
facility rentals require a completed school facility rental agreement, payment
of the rental fee and Administration approval prior to the event.
v
School facility
rental collections are not to be deposited into the Activity Fund bank account,
but are to be sent to the Finance Department for deposit into the appropriate
District bank account.
v
District
employees are considered to be public servants and are subject to Title VIII of
the Penal Code regarding offenses against public administration.
v
The designation
of public servant increases an offense of theft, for purpose of punishment, to
the next higher category of offense if at trial it is established that the
actor was a public servant at the time of the offense and the property
appropriated came into actor’s custody, possession or control by virtue of this
status (Section 31.01, Texas Penal Code).
v
Activity Fund
records are to be retained at the school for a period of 3 years in accordance
with the Local Government Records Act.
v
All records and
documents of the District are considered to be governmental records and the
intentional destruction, concealment, removal or other impairment of a
governmental record which renders the record untrue, illegible or unavailable
is an offense. (Section 37.10,
v
Tampering with
governmental records is considered a felony of the third degree if it is shown
at trial that the governmental record was a public school record, report or
assessment instrument required under Chapter 39, Education Code.
STUDENT ORGANIZATIONS
v
A student
organization must have a sponsor.
v
A student
organization must have bylaws and officers and hold regular meetings.
v
Minutes of the
organization’s meetings must be written and retained.
v
The funds raised
by a student organization are to be expended at the discretion of the students
and documented in the minutes.
v
Sponsors must
keep detailed records of the organization’s activities and collection and
disbursement of the organization’s funds.
v
An organization
to be disbanded may determine the use of the remaining balance in its activity
fund.
v
Funds remaining
from an organization which made no such documented determination may be transferred
by the principal to the campus activity fund and used at the principal’s
discretion.
FUNDRAISING
v
Sponsors are to
initiate the request for approval of fundraising activities via a completed
approval form to the principal for review and approval.
v
A specific
purpose for the funds to be raised should be determined prior to the fundraiser
being requested.
v
v
PTAs are allowed
to hold raffles; however, raffle tickets must be numbered and show the name of
the sponsoring organization.
v
A prize to be
given away in a PTA raffle must either be in the possession of the PTA at the
time of the raffle or adequate funds must be held in the PTA bank account to
purchase the prize.
v
Two tax-free
sales are allowed in a school year: one in the fall; one in the spring.
v
Material or
merchandise for a fundraising project may not be ordered prior to receiving
written approval for the fundraiser from Administration.
v
Any person who
orders merchandise without prior approval of the fundraiser will assume full
responsibility for the bill.
A
The majority of Activity Fund
collections are derived from transactions which fall into one of two
categories:
The first question to be
asked and answered: Is the revenue a result of a sale or not?
v
Ø
Admission –
athletic, dances, dance performances, drama performances;
Ø
Admission –
summer camps, clinics, workshops, project graduation;
Ø
Donated items
that are not sold;
Ø
Fundraisers where
we are the seller, not just the middleman;
Ø
Rental of items;
Ø
Rental of
facilities;
Ø
Sales of food;
Ø
Sales of
merchandise – including items made by students;
Ø
Sales of
services;
Ø
School publication
sales.
v Not a
Ø Collection of money from students to pay a company for
admission or services, ie, Sea World, Six Flags, PSAT
test;
Ø Commissions received;
Ø Donations of money to the school or school group or
donations for a commemorative brick;
Ø Dues received for clubs;
Ø Fees – musical instrument maintenance, lab, uniform
cleaning, transcripts;
Ø Fieldtrip collections;
Ø Fines received – textbooks, library books, parking,
locker, uniforms, calculators, obligations;
Ø Fundraisers when the school group merely receives a
commission, ie, library book fairs, some author
sales, recycling;
Ø Lost payments – books, handbooks, calculators, locks,
ID cards;
Ø
Ø Non-sufficient check redeposit;
Ø Summer school, Saturday school, Community Education
tuition and fees.
A sale is a transfer of title or possession of
tangible personal property for consideration (usually money). A sale also includes the performance of a taxable
service for consideration.
In some fundraising activities, the school or school
organization is merely acting as a sales representative for a vendor and tax
must be collected. The tax would be
remitted to the vendor and the vendor would claim it as their sale; and they
would compute and remit the necessary sales tax to the Comptroller’s
office. The school would not report this
type revenue as a sale. Examples are
vending machine sales where the vendor services the machine, school pictures,
and library book sales. In addition vendors will ask if the school wants them
to collect the tax (included in the sales price) to be remitted to the
state. The answer should be a
resounding, Yes!
The school is the seller when the school or school
organization purchases the merchandise and then resells these items to
customers. The school should then
provide a resale certificate to the retailer and the school is responsible for
remitting the sales tax collected, with proper documentation to the state
comptroller. Each campus is responsible
for reporting and remitting sales tax to the Comptroller’s office.
TO TAX OR WHAT
Once the activity has been
determined to be a sale, the issue then becomes: to tax or not to tax.
v
Non-Taxable Sales
–
Ø
Ad sales –
yearbooks, athletic programs, newspapers, posters;
Ø
Admission –
athletic events, dances, dance performances, drama and musical performances;
Ø
Admission –
summer camps, clinics, workshops, project graduation;
Ø
Admission –
banquet fees;
Ø
Admission – bids,
prom, homecoming;
Ø
Admission –
tournament fees, academic competition fees;
Ø
Bake sales
Ø
Cosmetology
services – (note: products sold to customers are taxable);
Ø
Discount/Entertainment
cards and books;
Ø
Facility rentals
for school groups;
Ø
Food items sold
during fundraisers – time or day does not matter; seller does not matter;
(note: all net proceeds must go to the organization for its exclusive use).
Ø
Food sold during
regular school hours by school district;
Ø
Labor –
automotive, upholstery classes (note: parts are taxable);
Ø
Magazine
subscriptions greater than 6 months;
Ø
Parking permits;
Ø
Services – car
wash, cleaning.
v
Taxable Sales –
Ø
Agenda books;
Ø
Agricultural
sales;
Ø
Art – supplies
and works of art;
Ø
Artistic – CDs,
tapes videos;
Ø
Athletic event
concession sales – unless part of a fundraiser;
Ø
Auction items
sold;
Ø
Automotive –
parts and supplies;
Ø
Band – equipment,
supplies, patches, badges, uniform sales or rentals;
Ø
Books –
workbooks, vocabulary, library, author (when we are the seller);
Ø
Brochure items;
Ø
Calculators;
Ø
Calendars;
Ø
Candles;
Ø
Car – painting,
pin striping;
Ø
Catered food
sales by the school district’s food service – unless sold to the district;
Ø
Clothing –
school, club, class, spirit;
Ø
Computer –
supplies, mouse pads;
Ø
Cosmetology
products sold to customers;
Ø
Cups – glass,
plastic, paper;
Ø
Decals;
Ø
Directories –
student, faculty;
Ø
Drafting –
supplies;
Ø
Family and
Consumer Science –supplies and sewing kits;
Ø
Fees – copies,
printing, laminating;
Ø
Flowers – roses,
carnations, arrangements;
Ø
Food sold by a
school district – if outside the school’s regular school day;
Ø
Greeting Cards;
Ø
Handicrafts;
Ø
Horticulture
items;
Ø
Hygiene supplies;
Ø
Identification
cards – when sold to entire student body (not just the fine for a lost ID
card);
Ø
Locks - sales and
rentals;
Ø
Lumber;
Ø
Merchandise,
tangible personal property;
Ø
Magazines –
subscriptions less than 6 months;
Ø
Magazines – when
sold individually;
Ø
Musical supplies
– recorders, reeds;
Ø
Parts – career
& technology classes (not to include products used in cosmetology);
Ø
Parts –
upholstery;
Ø
PE – uniforms,
supplies;
Ø
Pennants;
Ø
Pictures –
school, group (if school is seller);
Ø
Plants – holiday
greenery and poinsettias;
Ø
Rentals –
equipment of any kind;
Ø
Rentals –
uniforms of any kind, towels;
Ø
Repairs to
tangible person property – computer repair, remodeling;
Ø
Rings and other
school jewelry;
Ø
Rummage, yard,
and garage sales;
Ø
Safety supplies;
Ø
School
publications – athletic programs, posters;
Ø
School
publications – brochures;
Ø
School
publications – magazines (unless more than 6 month subscription;
Ø
School publications
– newsletters, newspapers;
Ø
School
publications – reading books;
Ø
School
publications – sheet music, hymnals;
Ø
School
publications – yearbooks;
Ø
School store –
all items except food;
Ø
Science – science
kits, boards, supplies;
Ø
Spirit items;
Ø
Stadium seats;
Ø
Stationery;
Ø
Supplies – any
sold to students;
Ø
Uniforms – any
type to include PE, dance team, drill team, cheerleaders, athletic, club
shirts;
Ø
Vending – pencils
and other non-edible supplies when the school services the machine;
Ø
Woodworking
crafts – entire sale to include parts and labor;
Ø
Yard signs.
School
districts, schools and school groups making sales of taxable items that do not
have a specific exemption must collect and remit the tax. The items or activities on the lists above have
been identified as being taxable or non-taxable by the Comptrollers’ Office
when these items are sold or sponsored by a school, by an organization within a
school, PTAs, Booster Clubs and employee associations. Whether taxable or not, all sales are reportable
as sales on line 1 of the Texas Sales and Use Tax Return. These lists are not all-inclusive but may
help determine the tax status of other similar sales.
THE
EXCEPTION:
TAX – FREE DAYS
Each
school district, each school and each bona fide chapter of each school is
allowed to have two, one-day tax-free sales each calendar year. During these
tax-free sales, the organization may sell any taxable item tax-free when the
price of the item is $5,000 or less. There is no limit on the number of bona
fide groups at a school or school district.
v
The school
district qualifies for a tax-free day;
v
The school-wide
fundraiser qualifies for a tax-free day;
v
The Basketball
Club qualifies, but the basketball team does not.
v
The Cheerleader
Club qualifies, but not the cheerleader team.
v
The Debate Club
qualifies, but debate teams and classes do not.
v
The French Club
qualifies, but the French classes do not.
v
The Senior Class
qualifies, but not one particular class that has seniors in it.
A
bona fide chapter is a group that must be organized for some business or
activity other than instruction or a participatory group. Essentially any student group that is
recognized by the school and is organized by electing officers (not just
participatory captains), holding meetings and conducting business are bona fide
chapters of the school and each group may have two, one-day, tax-free sales in
a calendar year. Groups meeting for
classroom instruction or team sports are not categorized as bona fide chapters
and do not qualify for the tax-free day sales.
One-day
means 24 consecutive hours; the delivery should be made on a single day. Generally title passes to the purchaser when
the item is given to the purchaser. In the case of preordered and prepaid
sales, title can transfer as soon as the seller (school) receives the order. Therefore, the date the items are delivered by
the vendor to the seller is designated as the one-day for the purposes of the
tax-free sales. However, persons buying
from surplus stock on subsequent dates after the tax-free day owe tax on the
items.
When
the school or school group receives a commission, the tax-free day sale
provisions cannot apply because the sale is the vendor’s sale, not the school’s
sale. The school group would collect and
remit tax to the vendor, and the vendor would report the sale and remit tax to
the Comptroller’s office.
THE
FUNDS:
PROPER USE
Allowable expenditures:
v
Contracted
Services, ie, story teller, reading consultant,
engraving;
v
Supplies, ie, trophies, certificates, dance decorations, school
store;
v
Student travel;
v
Sponsor/chaperone
travel;
v
Beautification;
v
Camps.
Prohibited expenditures:
v
Sales tax – original invoice or reimbursements;
v
Gifts for
faculty;
v
Donations to
charitable organizations;
v
Attendance
incentives;
v
Personal gifts to
employees;
v
Payments for employee
services;
v
Purchase of items
for individual use.
THE
FLAGS:
v
Deposits not
being made on a timely basis, ie, daily.
v
Irregular
deposits, ie, large amounts infrequently.
v
Receipt books are
missing.
v
Receipt copies
have been torn out.
v
Voided receipts
for which there is no replacement.
v
Receipt books are
not being completed or are not being completed in sequence, either date or
number.
v
New receipt books
are not being requested.
v
Notices from bank
of deposit error/discrepancy.
v
Notice from bank
of non-sufficient funds.
v
No collections
from organizations with ongoing fundraisers.
v
No check requests
being brought for your approval.
v
Sponsors asking
about check requests not being approved and/or invoices not being paid on a
timely basis.
v
Receipt of past
due invoices.
v
Parents asking
about checks which have not cleared their bank account in a timely manner.
v
Negative balance
in an organization’s fund.
v
Lower than
expected balance in the activity fund.
v
No
documentation/receipt with check request.
v
Request for
approval of blank check.
v
Monthly
reconciliations not being completed on time.
v
Excuses for not
writing receipts, making deposits, preparing check requests on time; or
completing reconciliations when due.
v
Disorganized
office, ie, to the point of not being able to readily
provide any documentation request.
v
Any type of
documentation not being readily available.
v
Voided checks
shown as deposit in transit for more than one month under outstanding items on
monthly Activity Fund reconciliation.
v
Stale-dated
checks, ie, with dates more than a month old, being
shown as not cleared under outstanding items on monthly Activity Fund
reconciliation.
v
Anything that
does not appear reasonable or make sense.
v
Explanations that
do not explain or answer question being asked, ie,
the run around.
THE
UNINVITED:
v
All activity fund
records are subject to review at any time.
v
Unannounced and
surprise visits are normal, although invitations are accepted.
v
The purpose of
internal audit is to help identify risks and make recommendations to minimize
those risks.
v
Any unresolved
cash discrepancy must be reported to the Finance Department.
v
Any cash problem
resulting in a loss of funds must be reported immediately to Business Manager.
v
Yes, all reviews
result in a report to the Board.
v
However, with
rare exception, you will first be asked/allowed to
respond to the report, documenting the procedures which you have implemented to
address the problem and to help prevent recurrence.
v
A report to the
Board with the problem shown as being addressed is much better than being
tomorrow’s headline.
v
The key word is
“Internal”. It means we work for the
same team in pursuit of the same goal – an efficient and effective underlying
operation designed to allow our educators to concentrate their efforts on the
education of our children.