Presented by Beth Marrone, CPA, Treasurer
Peggy Smith, CPA, Assistant Treasurer
Debbie McCauley, General Accountant
December 12, 2012
1
SO
WHAT
??
2
INCENTIVE/MOTIVE
.
OPPORTUNITY
FRAUD
TRIANGLE
RATIONALIZATION
3
4
5
This manual’s
purpose is to
describe the
minimum system
of accounting
practices and
procedures
WVDE Policy 1224.1
6
1-4. Responsibility:
The school principal is responsible
for the financial management of
the school.
7
“All moneys received by a school are
considered quasi-public funds and are to
be expended for the benefit of the students
at the school.”
8
D
O
C
U
M
E
N
T
9
I KNOW WHAT WE NEED TO BUY.
I CAN TELL YOU WHO GAVE US
MONEY AND HOW MUCH.
I KNOW WHY WE WROTE THAT
CHECK.
10
DOCUMENTATION:
 DEMONSTRATES COMPLIANCE
 PREVENTS ERRORS AND WORSE
 AIDS IN TRANSFER OF
KNOWLEDGE AND INFORMATION
11
Incentive/Motive:
Financial need such as gambling
problem, debt, other monetary
pressures
Incentive/Motive
12
Rationalization:
Person committing fraud frequently
rationalizes the fraud - “I’ll pay the
money back”, “They will never miss the
funds”, or “They don’t pay me
enough.”
Rationalization
13
Opportunity:
Person committing fraud sees an
internal control weakness and begins
the fraud with a small amount of
money. If no one notices, the amount
will usually grow larger.
Opportunity
14
I trust my
farmer!!
It can’t happen
to me!!
That would be
impossible!
Only at that
“other” farm!!
15
FINANCIAL IRREGULARITIES THAT
HAVE OCCURRED IN WV
 Failure to receipt and deposit all monies
 Forgery of signature
 Payment of personal expenditures
 Opening separate bank account and
writing personal checks
16
In any organization, the risk of fraud
can be reduced.
Internal control procedures can
diminish the “opportunity” point of the
Fraud Triangle.
17
INTERNAL CONTROLS SHOULD:
 Make sure the cash is used as
intended
 Make sure information is accurate
 Make it difficult to “beat the system”
18
INTERNAL CONTROLS:
PREVENTIVE:
 Approvals
 Authorizations
 Verifications
 Security of equipment, cash, etc.
 Segregation of duties
19
INTERNAL CONTROLS:
DETECTIVE:
 Reviews
 Inventory
 Reconciliations
20
RECEIPTS:
 Pre-numbered
 Prepared in duplicate
 For all collections - classroom collections
must have supporting details
 Include date, amount, name of person from
whom received, purpose and account
 Use pre-numbered tickets at events; prepare
and reconcile ticket report to cash
21
DEPOSIT ALL FUNDS INTACT IN BANK
ACCOUNT:
 At least weekly or
 When collections on hand exceed $500
 No cash disbursed from collections
 No personal checks cashed
 Segregate collection /deposit duties as
much as possible
 Safeguard undeposited funds
22
USE PURCHASE ORDER:
 Pre-numbered
 Approve in writing
 Approve prior to purchase or order
placement
 Approve only when sufficient funds
available
 No purchase order – individual
personally liable
23
DISBURSEMENTS:
 With check - two signatures required
(payee cannot sign check)
 For itemized invoice showing date,
items or services provided, quantity,
amount due – schools cannot expend
funds without this
 Approved prior to payment
 Invoice stamped as paid
24
FUND RAISING:
 Deposit all proceeds intact in bank
 Purchases made by check
 Profit and loss statement showing gross
proceeds, cost of goods sold and net
proceeds for each activity including
concessions operated by school
 Safeguard inventory of goods being sold
 Follow sales tax rules
25
REVIEW FINANCIAL RECORDS:
Principal:

Sign bank envelope and open bank statement as soon as
received

Bank reconciliation – completed as soon as statement has been
reviewed

Deposits in Transit

Outstanding Checks

Open purchase order report

Receipts and Disbursements Detail

Check, Receipt, Deposit and Journal Entry registers

Trial Balance

Fundraiser Profit and Loss Statement
26
UPDATED MONTHLY CHECKLIST:
Secretary:
 Prepare monthly reports for Principal’s review
(see Monthly Financial Report Checklist)
 Send to Finance to scan OR scan originals in
the following order and forward to
finance.jeff@access.k12.wv.us:
 Signed “Monthly School Financial Statement
Review Verification Form”
 Signed bank reconciliation
 Signed deposits in transit
27
UPDATED MONTHLY CHECKLIST: (cont)
Secretary:
 Signed outstanding check listing
 Signed journal entries
 Signed receipts and disbursements detail
 Signed bank statement including cancelled
checks
 Finance will return the original statements
and reports to the school to maintain in
school financial files
28
MONTHLY CHECKLIST:
Principal:
 Receipt Register
 Check Register
 Journal Entry Register
 Open Purchase Order Report
 Trial Balance
 Receipts and Disbursements Detail
 Bank Reconciliation
 Deposit in Transit
 Outstanding Checks
29
30
THINGS TO LOOK FOR:
 Signatures on cleared checks
 Vendors on cleared checks
 Deposits in transit – these should be
reflected on subsequent bank statement
early in month
 Dates on outstanding checks
 Total of receipts–reasonableness for
school activities; consecutive numbers
31
SchoolFunds Online for Principals
http://sfohost.com/jefferson
You can get to the system from any
computer with internet access.
You have a user ID and Password that will
gain you view access to your school’s
financial data.
32
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-3: Schools aren’t legal entities; cannot enter
into contracts
1-8: Receipts and checks entered daily
1-9: No signature stamps or preprinted
signatures
1-10: Support organizations prohibited from
using the Board’s FEIN unless funds are
accounted for in the school’s ledger
33
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-10: Only one checking account
1-10: CSBO and principal must have signature
authority on every account with school
funds
1-12: Checks must be made payable to school
except third party fundraisers
34
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-15: Receipts must show the form of
payment
1-15: Receipts must have valid signature –
electronic signatures are acceptable if
password protected
1-18: Funds must be raised specifically for
parent, teacher, community recognition
programs; must be publicized as such;
must be accounted for separately
35
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-19: Schools required to follow bid thresholds in
State Board Policy 8200
1-20: Schools permitted to make “deposits” for
field trip buses, etc but require written
documentation from vendor - amount and
terms
1-20: Use a “verification” stamp and initials to
prove invoice reviewed for accuracy
1-20: Schools must pay invoices in timely manner
36
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-20: Need W-9 form for all vendors
1-21: All credit cards must comply with State
Board Policy 8200
1-23: Blank checks are never pre-signed
1-27: Report unclaimed property to State
Treasurer’s Office
1-28: Bank reconciliations must be signed by
the preparer and the principal
37
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-29: Pre-numbered tickets are to be used at
any event where fee charged or donation
accepted – dances, sporting events,
theatre productions, choir performances,
etc.
1-29: No individual should be used to sell
tickets more than 5 times per year
1-29: Unused ticket stock must be kept in
secure location and issued immediately
prior to event
38
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-29: No cash disbursements from event
collections
1-29: Maintain ticket log for all ticket stock used
by school
1-33: Remaining balances in class accounts
after class no longer in school must be a)
used for general operations of school, b)
used for specific purpose at school, c)
transferred to subsequent class
39
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-34: All profit and loss statements must be
signed by preparer and school principal
1-34: Fund raising activity must be covered by
liability insurance
2-1:
Volunteers must be acting on behalf of
the school when participating in
fundraising activities in order to be
covered by the board’s liability
insurance. Money must then be
deposited into the school’s account
40
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
1-36: Vending machine items must comply with
State Board Policies and federal regulations
regarding nutritional guidelines
1-37: Items purchased with faculty senate funds
are the property of the school and do not
follow the teacher if he/she transfers
1-37: A vote must be taken and recorded in the
minutes at the beginning of the school year
if the faculty senate wants to allow individual
teachers to carry over balances
41
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
2-2: All school support organizations must be
approved annually by the board
2-4: School support organizations must have
their own Federal Identification Number
(FEIN)
2-4: Two different signatures are required on
every check issued by a school support
organization (payee cannot be signer)
42
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
2-6: All disbursements must be made by check
2-9: A profit and loss statement must be
prepared for each fund raising activity
conducted by a school support
organization
43
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
2-9: Donors must be made aware of the taxexempt status at the time of donation.
Donations are tax exempt only if the
school support organization obtained its
own tax-exempt designation from IRS or
maintains funds in school account
44
UPDATES and CLARIFICATIONS to
ACCOUNTING GUIDELINES
2-10: School support organizations must use
pre-numbered tickets and prepare ticket
reconciliation report for all activities held
on school property at which a fee or
donation is accepted for admission
2-11: School support organizations must
reconcile bank accounts monthly
45
TRUE or FALSE:
RECEIPT IS ONLY NEEDED IF SOMEONE
REQUESTS ONE.
1-15: A PRE-NUMBERED RECEIPT MUST
BE ISSUED FOR ALL COLLECTIONS AT
THE TIME THE FUNDS ARE COLLECTED.
46
TRUE or FALSE:
THE SCHOOL SECRETARY HANDLES ALL
THE FINANCIAL TRANSACTIONS.
1-2: SOME OF THE CHARACTERISTICS OF
A GOOD INTERNAL CONTROL SYSTEM
INCLUDE ADEQUATE SEGREGATION OF
DUTIES.
47
TRUE or FALSE:
IF A VENDOR SENDS A STATEMENT
SHOWING OUTSTANDING INVOICE
AMOUNTS, A SCHOOL CAN ISSUE A
PAYMENT TO SETTLE THE ACCOUNT.
1-20: SCHOOLS ARE NOT PERMITTED TO
EXPEND ANY FUNDS UNLESS AN ITEMIZED
CLAIM (INVOICE) FOR PAYMENT IS FILED
BY THE CLAIMANT.
48
TRUE or FALSE
IF A TEACHER SEES A GREAT DEAL AT A
STORE ON A PRINTER FOR THE
CLASSROOM, THEY CAN MAKE THE
PURCHASE AND BE REIMBURSED BY THE
SCHOOL.
THERE ARE NO PROVISIONS FOR
REIMBURSEMENTS OTHER THAN TRAVEL
AND FACULTY SENATE $100 ALLOCATION.
49
TRUE or FALSE
AS LONG AS MONEY IS KEPT IN A SAFE
PLACE AT THE SCHOOL, A DEPOSIT CAN
BE MADE AT THE BANK WHEN IT IS
CONVENIENT TO GO.
1-16: RECOMMENDED DAILY. HOWEVER,
DEPOSIT MUST BE MADE WHENEVER
TOTAL ON HAND EXCEEDS $500. MUST BE
MADE AT LEAST WEEKLY, REGARDLESS OF
AMOUNT.
50
TRUE or FALSE
PROFIT AND LOSS STATEMENTS DON’T
NEED TO BE PREPARED FOR EVERY
FUNDRAISER.
1-34: A PROFIT AND LOSS STATEMENT
MUST BE PREPARED AND MADE
AVAILABLE FOR PUBLIC INSPECTION FOR
EACH FUND RAISING ACTIVITY
CONDUCTED BY A SCHOOL.
51
TRUE or FALSE:
BANK RECONCILIATIONS NEED TO BE
DONE ANNUALLY.
1-28: EVERY BANK ACCOUNT MUST BE
RECONCILED MONTHLY AS SOON AS
POSSIBLE AFTER THE BANK STATEMENT
IS RECEIVED, INCLUDING ANY CD AND
INVESTMENT ACCOUNTS.
52
TRUE or FALSE:
EMPLOYEES WHO TAKE TICKETS AT AN
EVENT OR PLAY THE PIANO AT A
CONCERT CAN RECEIVE A CHECK FROM
THE SCHOOL.
1-22: ALL PAYMENTS MADE BY A SCHOOL
TO AN INDIVIDUAL FOR SERVICES ARE TO
BE CONSIDERED WAGES AND ARE TO BE
PAID THROUGH PAYROLL. ATHLETIC
OFFICIALS ARE THE ONLY EXCEPTION.
53
BE
AWARE
54
DOCUMENT
55
USE THE TOOLS
Accounting Procedures Manual
http://wvde.state.wv.us/finance
Click on POLICIES, Policy 1224.1
West Virginia Purchasing Policy
http://wvde.state.wv.us/finance
Click on POLICIES, Policy 8200
School Funds Online
http://sfohost.com/jefferson
Central Finance Personnel
56
QUESTIONS ? ? ? ?
57