An important end-of-school year activity for May before many staff depart for the summer break is to request copies of the latest completed and signed monthly reconciliations for all activity funds across all campuses. Because it’s probably safe to say that in some districts no one in the central office has a complete list of all of the campus fundraisers happening across the district, this internal control will also be an opportunity to address training opportunities on select campuses to help improve consistency in activity fund procedures and processes across all campuses.
Internal controls related to activity funds covering (1.) authorization; (2.) review and approval; (3.) verification; (4.) reconciliations; (5.) physical security over assets; (6.) segregation of duties; (7.) education, training and mentoring; (8.) performance evaluations; and (9.) periodic tests of controls include:
- Require approval in writing from the principal and central business office before a new fundraiser is started;
- Establish caps on the number of fundraisers per group, club or activity per school year;
- Require financial reports be filed with the principal and business office at the conclusion of each fund raising activity;
- Ensure all campuses and club sponsors have a copy of the campus activity manual and business procedure manual;
- Require consistent practices in recording ALL exchanges of money on either a tabulation sheet and receipt book;
- Require use of only authorized receipt books with pre-numbered receipts;
- Require consistent cash handling and financial management practices by ALL campuses and sponsors as specified in the campus activity manual;
- Require consistent use of the same accounting system on all campuses for recording financial transactions;
- Require someone separate from the activity fund accountant or bookkeeper to receive cash receipts;
- Require nightly or prompt deposits by someone separate from the activity fund accountant or bookkeeper;
- Require separation of duties between receiving and depositing money;
- Prohibit cash-on-hand being used as a “local bank” to cover purchases, check cashing, loans, advances or reimbursements;
- Require all fundraiser financial records, including used receipt books, be consistently stored for safe keeping in accordance with the district’s record retention procedures;
- Require monthly reconciliations of all activity funds across all campuses;
- Require principal or designee to review, initial and date all activity fund reconciliations;
- Require principals, club and group sponsors, and athletic staff attend periodic training on financial management practices for campus activity funds;
- Identify expectations in job descriptions for roles and responsibilities and address in annual performance evaluations;
- Implement a local policy that upon dissolution of any “Agency Fund” organization that any remaining cash balance be transferred to the campus principal’s activity fund or other designated account(s);
- Consider centralized accounting for campus activity funds; and
- Randomly visit different campuses at various times of the year to test adherence with activity fund procedures and processes.
Principals on different campuses may be following their own procedures, and each group or club sponsor on individual campuses may also be following their own procedures, resulting in considerable variations in practices across a district. Variations in established processes are important to identify as priorities for follow-up and additional review during the summer, before too much time elapses and employees receive their last payroll distribution in August for the prior school year. Although newspaper articles may mention relatively small amounts associated with financial malfeasance, these events invariably end in adverse personnel actions, costly investigations, and legal expenses to ensure all adverse personnel actions follow the district’s due process procedures and policies.