PDF State of Tennessee Department of Education

State of Tennessee

Department of Education

Office of Local Finance

Effective July 2011

Tennessee Internal School Uniform Accounting Policy

ANUAL

Table of Contents

Preface................................................................................................................................... ii-1 Section 1: Introduction

Title 1 History of Internal School Accounting................................................................ 1-1 1959 Internal School Accounting Law................................................................ 1-1 Tennessee Internal School Uniform Accounting Policy Manual ........................ 1-1

Title 2 The Internal School Accounting Act ................................................................... 1-3

Title 3 Purpose, Revisions and Waivers, Exemptions .................................................... 1-4 Purpose and Applicability of the Manual ............................................................ 1-4 Revisions and Waivers ........................................................................................ 1-4 Exemptions .......................................................................................................... 1-4

Title 4 Accountability and General Principles................................................................ 1-5 Accountability ..................................................................................................... 1-5 General Principles ............................................................................................... 1-5

Section 2: Audit Requirements

Title 1 School Audit Requirements................................................................................. 2-1 Purpose and Frequency of Audits........................................................................ 2-1 Auditors ............................................................................................................... 2-1 Audit Standards and Approval ............................................................................ 2-1 Contract to Audit Accounts ................................................................................. 2-2

Section 3: Duties and Responsibilities

Title 1 Local Boards of Education .................................................................................. 3-1

Title 2 Directors of Schools ............................................................................................ 3-2

Title 3 School Principals ................................................................................................. 3-4

Title 4 Tennessee Department of Education ................................................................... 3-4

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Title 5 Comptroller of the Treasury ................................................................................ 3-6

Title 6 Commissioner of Finance and Administration.................................................... 3-7

Section 4: Administration of Internal School Funds

Title 1 Internal School Funds.......................................................................................... 4-1 Background.......................................................................................................... 4-1 Internal School Funds.......................................................................................... 4-1 Student Activity Funds ........................................................................................ 4-1 General Fund ....................................................................................................... 4-2 Restricted Fund.................................................................................................... 4-3 Local Education Agency ? School Nutrition Fund ............................................. 4-3 Accounting for Athletics ..................................................................................... 4-4

Title 2 Internal Control ................................................................................................... 4-5 Objectives of Internal Control Systems............................................................... 4-5 Controls Surrounding Electronic Files and Equipment....................................... 4-6 Revenue/Collection Cycle ................................................................................... 4-6 Purchasing/Disbursement Cycle.......................................................................... 4-8 Payroll Cycle ....................................................................................................... 4-15 Capital Asset Cycle ............................................................................................. 4-16 Inventory Cycle ................................................................................................... 4-18 Reporting Cycle................................................................................................... 4-19

Title 3 Insurance/Bonding of Employees........................................................................ 4-21

Title 4 Safekeeping of Cash ............................................................................................ 4-22

Title 5 Property Acquisition and Management ............................................................... 4-23 Definition............................................................................................................. 4-23 Property Acquisition............................................................................................ 4-23 Property Management.......................................................................................... 4-24

Title 6 Retention and Disposal of Records ..................................................................... 4-26 Retention of Records ........................................................................................... 4-26 Disposal of Records............................................................................................. 4-27

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Title 7 Cooperative and Noncooperative Activities........................................................ 4-28 Cooperative Activities ......................................................................................... 4-28 Non-cooperative Activities.................................................................................. 4-28

Title 8 Fundraising and Resale Activities ....................................................................... 4-30 Resale Activities .................................................................................................. 4-30 Fundraising Activities ......................................................................................... 4-31 State Sales Tax..................................................................................................... 4-35 Emphasized Internal Control Features ................................................................ 4-36

Title 9 Donations & Other Miscellaneous Revenues/Receipts....................................... 4-37 Donations............................................................................................................. 4-37 Premiums (Bonus Incentives).............................................................................. 4-37 Returned Check Fees ........................................................................................... 4-37 Interest Earned on Bank and Investment Accounts............................................. 4-38 Teachers' Materials and Supplies Funds............................................................. 4-38 Grants................................................................................................................... 4-39 Student Fees/Fee Waiver ..................................................................................... 4-39 Extended School Program (ESP)......................................................................... 4-40 Student Deposits and Fines Collected for the Board of Education ..................... 4-40

Title 10 Loans and Accommodations ............................................................................... 4-41

Title 11 Budgets for Internal School Funds ...................................................................... 4-42

Section 5: Operating Procedures

Title 1 Recording Transactions and Documentation....................................................... 5-1

Title 2 Revenues/Receipts............................................................................................... 5-2 Definitions ........................................................................................................... 5-2 Separation of Duties ........................................................................................... 5-2 General................................................................................................................. 5-2 Collection of Money by Teachers/Others............................................................ 5-3 Collection of Money by Cashier.......................................................................... 5-7 Recording of Collections by Bookkeeper............................................................ 5-9

Title 3 Purchasing ........................................................................................................... 5-10

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Purchase Authorization ....................................................................................... 5-10 Purchasing Procedures for Teachers/Others........................................................ 5-11 Purchasing Procedures for Bookkeeper............................................................... 5-11 Purchasing Procedures by Principal or Designee................................................ 5-13 Bid Process and Required Documented Quotes .................................................. 5-14 Prior Authorization Required .............................................................................. 5-14 Limitations on Disbursements ............................................................................. 5-15 Expenditures Made by Pupils and Employees .................................................... 5-15

Title 4 Petty Cash ............................................................................................................ 5-16 Authorization ....................................................................................................... 5-16 Establishment of Account.................................................................................... 5-16 Petty Cash Vouchers/Invoices ............................................................................. 5-16 Replenishing Petty Cash and Recording Expenditures ....................................... 5-16 Emphasized Internal Control Procedures ............................................................ 5-17

Title 5 Refunds and Travel.............................................................................................. 5-18 Refunds................................................................................................................ 5-18 Travel and Conferences ....................................................................................... 5-18 Other Travel......................................................................................................... 5-18 Travel Advances .................................................................................................. 5-18

Title 6 Salary Supplements, Substitute Teachers, and Contracted Services................... 5-20 Salary Supplements ............................................................................................. 5-20 Substitute Teachers.............................................................................................. 5-20 Contracted Services ............................................................................................. 5-20

Title 7 Borrowing, Lending, and Transfers..................................................................... 5-22 Borrowing and Lending....................................................................................... 5-22 Transfers of Money from One School Account to Another ................................ 5-22 Prohibited Transfers ............................................................................................ 5-22

Title 8 Club and Class Accounts..................................................................................... 5-23 General................................................................................................................. 5-23 Unexpended Account Balances ........................................................................... 5-23

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