Pub. 9 2019-2020 Issue 2

15 begin to work through the project of financial responsibility. The details will be found in actual experience and working through the checklist and tools. You will develop unique ways of detailing your tasks. The most important thing is to complete the tasks and learn from the experience. Doing something is better than doing nothing. Like the yard clean up scenario, grab a tool, ask some questions and go for it! Below are checklist type items that you should be doing in the realm of overseeing and monitoring the school’s finances: 1. Understand and know the roles of the Board Members. Treasurers should be someone who has a financial background. The Treasurer should be a part of and oversee the Finance Committee. All board members should be a part of general financial happenings and should receive reports. 2. The Finance Committee should review Internal Controls, Fiscal Policies and Financial Procedure Manuals for the school. If you don’t have them or they need updating, do it now. Items may include but not limited to cash procedures, cash on hand goals, meeting and planning for covenants associated with a bond, purchasing policy, fundraiser policy and business ethics policies. These policies and procedures detail out systems and protocols that limit the possibility of fraud and embezzlement. It is a checks and balances system for oversight from the board members. 3. Approve the Annual Budget. 4. Select an External Auditor and review the annual audit. 5. Review at least quarterly the actual vs. budgeted expenses and a financial forecast. 6. Review monthly the school’s financial statement. This should include a balance sheet, income summary (revenue), and statement of cash flows. Charter schools, on occasion, close due to various reasons. One out of five school closures is due to academic failure. Two- thirds of charter schools that close do so because of financial failures. The two biggest financial failures that cause schools to close are fraud and spending funds in the wrong way. When looking at the monthly financial statement, board members need to look for large non-standard purchases. Ask, was the purchase policy followed for these? Is there a paper trail? Ask for the documents. You will become familiar with seeing the regular expenses like payroll, insurance, retirement, supplies, utilities and food. Look for the oddities and ask questions about those items. Boards should be asking questions about restrictive funds every month. Revenues come in restricted and unrestricted fund mechanisms. The easy way to understand the difference is to think of someone donating money to the school and saying, “I want to donate $500 for speed bumps in the pull-through to slow traffic down and make the school safer” (Real example). This donation would then be used only to pay for the speed bump project. It would be unsavory to spend it otherwise. Funds sent to the school for Special Education (restricted fund) are very similar to the speed bump donation. The funds are “donated” to the school for use ONLY in SPED. To spend it elsewhere would also be unsavory. What if we “borrowed” the speed bump money to pay for a new lawnmower because we needed that right way, and then, when other money became available, we get the speed bumps installed? Does this demonstrate that we are respecting the donation? There could be justified arguments to this point. However, when accounting for school funds, things must be done in “real-time” as outlined in Rule R277-113-6-2 establishment of internal controls and procedures to record transactions when they occur in the proper program utilizing the following codes as established by the Board approved chart of accounts: (A) fund; (B) function; (C) location; (D) program; and (E) object or revenue code as applicable. In other words, the “donation” from the State or Federal SPED revenue fund should be placed in the SPED program when they come and not “floated” and used somewhere else to be “made up” later. Boards should be able to see these restrictive fund accounts and ask questions about revenues in and expenses each month. You probably still have questions, and that is a good thing. Simply ask more, and you are there! Char ter schools, on occasion, close due to various reasons. One out of five school closures is due to academic failure. Two-thirds of char ter schools that close do so because of financial failures. The two biggest financial failures that cause schools to close are fraud and spending funds in the wrong way.