Financial Management
Alabama CNP Directors
October 2014
Financial Management
SECTION I: UNDERSTANDING THE SDE ACCOUNTING
SYSTEM
MOST COMMON ACCOUNTING CODES FOR CNP (Not
all inclusive, most commonly used)
DEFINITIONS OF ASSET CODES
DEFINITIONS OF LIABILITY CODES
DEFINITIONS OF FUND EQUITY CODES
DEFINITIONS OF REVENUE CODES
DEFINITIONS OF FUNCTION OF EXPENDITURE
ACCOUNT CODES
DEFINITIONS OF OBJECT OF EXPENDITURE CODES
DEFINITIONS OF FUND SOURCE CODES
DEFINITIONS OF PROGRAM CODES
DEFINITIONS OF SPECIAL USE CODES
Financial Management
Goal of a Financial Management System
is to provide reliable information to the user
in order that decisions might be made
confidently.
Financial Management
• Uniformity –
all data is recorded the same way
each time so that the results may
be compared from one accounting
period to the next, one budget
year to the next, or among schools
or even districts.
Financial Management
• Accurate comparison –
the ability to compare like items
or like facilities (apples to apples)
will provide credible information.
Financial Management
• Valid and reliable benchmarking –
school districts can make a
comparison of their data to that
of recognized best practices
facilities/districts
Steps to Effective
Financial Management
• What is the SDE Accounting System?
• How transactions are recorded.
• How the accounting reports and printout present
the financial results and position of the CNP.
• How to interpret the accounting reports.
• The types of revenue and expenditures of the CNP.
• How to measure the CNP’s productivity and
efficiency.
• How to Budget and “Stick” to it.
The SDE Accounting
System
• A 27-digit accounting code is used to
identify each transaction and to
provide uniformity of accounting and
reporting information.
Accounting System Components &
Definitions
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General Ledger and Special Reporting Codes
1. Fund Type & Account Group (2 digits)fund types and two account groups.
USDA programs recorded as Fund Type 12 (Special Revenue Fund) for
specific revenue sources that are legally restricted to expenditures
for specific purposes. CNP funds fall in this category since separate
budget and financial reporting requirement by state and federal gov.
Accounting System Components &
Definitions
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General Ledger and Special Reporting Codes
2. Account Type ( 1 digit) –
designates five (5) major account types ( Assets-1; Liability-2;
Fund Equity-3; Revenues-4; Expenditures-5)
3. Account Code ( Function indicated by four (4) digits)
used to designate balance sheet (assets, liabilities, and fund equity), revenue
and expenditure accounts. For example, Cash (0110-0119), Investments (01200129), Receivables (0130-1239), Inventories (0140-0149),
Other Assets (0150-0159).liability ( 0200-0299); fund equity (0300-0399),
Revenue( 4 used for identification) Expenditures ( 5 used for identification)
Accounting System Components &
Definitions
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4. Object (3 digits) —
used to classify in detail the services or commodities bought or paid
for. For example, Food Service Director 117, Manager 115, Food
service Assistants 109, Garbage Removal 348, Telephone 361.
5. Cost Center (4 digits)
Code for cost center is determined by each School System. Each
school and Child Nutrition Central office has a different number .
Central office may be 0010, HS 0031, elementary 0040, elementary
0020, middle school, 0056
Accounting System Components &
Definitions
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6. Fund Source (4 digits) — identifies the sources of the money. Funds
received from USDA-Food and Nutrition are coded 5100-5199,
School Lunch Section 11 (5110), School Lunch Section 4 (5120),
School Breakfast (5130), Commodities (5160). However, use 5101
as default except for 5170 for Summer Feeding sponsors.
7. Appropriation year (1 digit) —
used to route activities to specific fund year; current yr. = 0; LEA
carryover = 1
8. Program (4 digits) —
code for a plan of activities and procedures designed to accomplish a
pre-determined set of objectives. CNP uses 8420 only.
9. Special Use (4 digits) —
used to further breakdown for any other codes – (8000-8999)
Equipment Budget
Equipment Purchase Request
System Name:
System Number:
SDE Use Only
Date
School Name
Equipment Item
Quantity
Cost / Item
Total Cost
To Complete
Approval
Approved By
Date
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$0.00
$0.00
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$0.00
$0.00
$0.00
$0.00
Sheet Total:
SIGNATURES REQUIRED
$0.00
Summary from previous sheets:
$0.00
CNP DIRECTOR:
Submission Date:
CSFO:
SUPERINTENDENT:
REVISED
7-2014
Equipment Approvals
• $5,000 or greater must have written
approval
• Funds must available
• Superintendent approval
• Anticipated completion date
Emergency Purchases
• Prevents the production or service of
the meal
• Cannot be a custom designed/built
item
• Declared an emergency by the board
• Must document all prices/all contacts
Bidding Equipment
• Must make a comparison of relevant features to
eliminate inadequate items
• Verify size requirements
• Verify utility requirements
• Delivery/set up requirements
• Demonstration of equipment
• Warranty contract
• Repair contract
Capital Improvement
• May not purchase land or buildings
• May not pay for construction that
increases the square footage
• Renovations or improvements that improve
the facility but do not increase the size
are potentially allowable
• Cannot use CNP funds if not properly
procured
Capital Improvements
• Fund balance must not drop below 2.0
months by AL
• All schools must have basic large
equipment
• USDA gives the State the responsibility
for determining if the capital project
expenditure is an allowable cost
• Unapproved capital expenditures are
unallowable costs
Uniforms
• Only allowable if the LEA has an established
board-approved policy to provide uniforms to all
support personnel, not just CNP
• Non-taxable fringe benefit if the uniforms are
required to be worn as a condition of employment,
are clearly identified as a uniform and not
suitable for everyday wear
• If a cash allowance is given and is considered as
compensation, then the amount is taxable and to
be included on the W-2
Adult Meals
• Excess costs associated with sales or
services to adults not covered by the sale
price of the meal or item are not allowable
expenses
• Payments and reimbursement received for
all children’s meals may not be used to
offset the cost of adult meals
Adult Meals
• Meals served to non-program adults must be
priced to cover all costs of the meal
• Adults should receive portions comparable to the
high school student
• The cost of extra servings or oversized servings
must be added to the price of the meal
• Beverage with meal is milk- other beverage
selected to be charged at ala carte established
price
CNP Staff Meals
• Meals may be served without charge
to full time staff directly involved in
the production and/or service of the
meal to children
• Does not include principals, coaches,
band directors, board members, or
superintendents
Program Incentives
• Allowable only if promoting specific
program purposes of outreach and
nutrition education
• Unallowable:
– Staff morale boosters
– Personal items for staff
– Items not related to outreach or
nutrition education
Worthless (NSF) Checks
• Worthless checks are an unallowable cost
to the CNP-cannot be written off
• Each school district must have a worthless
check policy
• A fee can be charged for all returned
checks to cover expenses
• Non-public funds must be used to cover any
NSF check
• Can use a collection agency to recover NSF
check (rebate)
Indirect cost
• Calculated each year by the CSFO
• Each school district is different
• May not be charge or direct bill CNP
for items calculated in indirect cost
rate
Pass Thru Calculations
• Required to be completed and submitted to CNP
Audit Manager on or before 09/30 each year
• Worksheet located in the audit section of child
nutrition
• State funding for non certificated staff as
authorized by the State Legislature for increases
in annual salaries and fringe benefits since 1993
Property Inventory
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School districts will prepare CNP physical property inventory
Yearly accountability of items purchased with CNP funds required
Information needed for each cost center and central office
– Serial numbers, model numbers and cost of initial purchase
price
– Disposal of property- track all items to include how and when
disposal was made; transfer information is required to account
for use of federal funds for allowable purchases
• Disposal may be by auction, request for proposal or
scrapped
• Income earned from disposal is CNP revenue and
required to be deposited to CNP
Best Practices
• Complete monthly food/non-food inventory by
cost center
• Monitor absenteeism
• Monitor on job injuries
• Evaluate cost center equipment needs
• Run monthly trial balance by cost center to
determine financial status
– Check revenue and expenditures
Best Practices
• Complete yearly lunch and breakfast
school audits prior to January 1
• After school snack evaluations – 2
– First within the first 4 weeks of start
– Second at another time in the year
– Must request permission prior to start
Best Practices
• Complete food costs
• Complete non food costs
• Complete meals per labor hour per
school
• Compete all purchases – either by
written or price quotes
Best Practices
• What are your best practices?
Financial Management