how to avoid pitfalls in student activity accounting€¦ · how to avoid pitfalls in student...

PASBO 2015 Conference

How to Avoid Pitfalls in Student Activities Accounting 1

How to Avoid Pitfalls in Student Activity

AccountingPASBO Conference

March 12, 2015

Agenda and Purpose

Review common pitfalls in student activity accountsAuditor perspective on internal controlsBusiness Manager perspective on targeted, practical review proceduresSample forms/reports



Common Pitfalls

#1 - Deposits#2 - Ticket Receipts#3 - Expenses

Example 1-Theft of Receipts

Situations:In a Texas School District, a high school bookkeeper was accused of stealing more than $68,000 in student activity funds. The bookkeeper was responsible for collecting, accounting for, and depositing all cash and checks received for club and activity fees.

In a Connecticut School District, an accounting clerk was charged with embezzling $114,000 collected for the prom, yearbooks, and a senior class trip. The clerk handled the student activity accounts and was responsible for submitting bank deposits.




What went wrong?:

1) No segregation of duties.

1) No oversight by management


Auditor Recommendations:1) Anyone who handles money should maintain accurate and systematic

records of all cash receipts. All amounts collected should be logged. Supporting documentation for all receipts should be maintained and attached to the log.

2) The log should allow for identification of the account number and activity name, and a description of exactly what the payments were for.

3) The log list every person from whom money was collected, and the amount collected from each individual.

4) The log should be signed by the sponsor collecting the money, the bookkeeper/secretary to whom the deposit is given, and the individual making the bank deposit. Each person should keep a copy of the log for their files




Recommendation #1 - Example Deposit Form


Auditor Recommendations:2) Management should oversee the student activity funds.

a) Activities tend to be cyclical. A monthly review of revenues and expenses, by activity fund, comparing the current year to the prior year may indicate unusual fluctuations.

b) Randomly selecting a few days each month and reviewing the deposit logs and bank deposits helps to ensure procedures are being followed.

c) Making inquiries of teachers/activity sponsors regarding certain deposits or activities, however random, makes it known that there is someone else actively examining transactions and activities.

d) Review the bank statements and reconciliations



District Recommendations

● Select “random” sample of deposits each month○ 3-10 per month○ Focus on one school or all schools

● Request documentation that supports deposit○ Check for proper signatures○ Review timeliness of deposit, cash handling

Example 2-Theft of Ticket ReceiptsSituations:In Washington DC, $3,200 in football gate receipts were found during an audit, a year later, under an employee’s desk.

In Oregon, an employee was caught stealing cash from ticket money for a high school basketball game. Tickets were not numbered and the attendant worked alone.

In New Jersey, a university production manager for the school theater department was found guilty of embezzling $87,000 from box office receipts. The individual was responsible for the receipts and deposit of funds.



Example 2-Theft of Ticket Receipts

What went wrong?:

1) Lack of a segregation of duties.

1) Lack of procedures to account for admission fees charged for event

1) Lack of oversight by management

Example 2-Theft of Ticket ReceiptsAuditor Recommendations:1) All admission fees for athletic events/ticketed events should be accounted

for. Fees should be controlled through the use of sequential, pre-numbered tickets for each event, with different colors and number series used for each different price group.

2) Ticket rolls should be secured and tracked3) When funds are collected by a ticket seller, the event supervisor should

then complete a receipt log, reconciling the pre-numbered tickets sold for each price group and the ticket price to arrive at the total collections. Unsold tickets should be reconciled to the log as well.



Example 2-Theft of Ticket ReceiptsAuditor Recommendations (continued):4) The receipt log should be signed by the ticket seller and event sponsor,

with both indicating all ticket receipts are accounted for based on the log and ticket numbers. These deposits should then be given to a secretary/bookkeeper who records the deposit on the books and deposits the funds.

5) Management should oversee the activity fundsa) Activities tend to be cyclical. A monthly review of revenues and

expenses, by activity, comparing the current year to the prior year may indicate unusual fluctuations.

b) Review the bank statements and reconciliations. Ensure deposits are being made when expected

Example 2-Theft of Ticket ReceiptsAuditor Recommendations (continued):6) Reports should be completed in duplicate. The coach or event sponsor

managing the event should maintain one copy. Once copy should kept by the schools bookkeeper or secretary. A final copy should be sent to the business office.




Sample form - Gate Ticket Sales Report

A gate ticket sales report should initially summarize the event, the gate name or number, the ticket sellers name, and the cash initially provided to the ticket seller for change. The ticket seller should sign the form to acknowledge these items are accurate.


Sample form - Gate Ticket Sales ReportThe report should reconcile total sales based on tickets issued, remaining, and price. This should be done for each different price group offered.




Sample form - Gate Ticket Sales ReportThe report should then add up total sales for any different price groups. This is added to initial gate funds to arrive at total expected cash on hand. Actual cash is reconciled to the expectation. All parties sign to acknowledge results.


Deposit ReconciliationA final report should be completed summarizing the results for the individual gates, if necessary. This report should reconcile to the total bank deposit.




● Hire a ticket seller AND ticket taker● Purchase standard tickets (and destroy

others)● Gate receipts deposited the same night

o Obtain locking deposit bags from banko Night drop access

● Game reports turned in to Business Office next day

Example 3 - Inappropriate SpendingSituations:In California, student funds were used to fund a staff appreciation breakfast, repair a district golf cart, purchase teacher lunches, and for tile construction to prevent skateboarding. Lack of oversight and recordkeeping was blamed.

In Illinois, a principal used activity funds to purchase high-end neckties, banquet and theater tickets for personal use, and other expenditures.

In Washington DC, a principal spent thousands of dollars buying lobster, veal, a Palm Pilot and DVDs. In another instance, approx. $70,000 was raised for a chess club trip. After the trip $50-60,000 remained. Over the next 5 months, about $48,000 of these funds were withdrawn at bank windows and ATMs. Chaotic management, ineffective oversight, and lack of accountability were blamed



Example 3 - Inappropriate Spending

What went wrong?:

1) Lack of controls

1) No segregation of duties

1) No oversight by management

1) No one is held accountable


Auditor Recommendations:1) Expenditures from school activity funds should be pre-approved by a

designee appointed by the club/team, and the school principal. 2) A standard form or purchase order should be used to document the goods

or services being purchased and amount to be spent, or indicate an amount that should not be exceeded. Form should also indicate the activity funds account to be used.

3) All disbursements should be made using pre-numbered checks after receipt of detailed invoices or other supporting documentation showing goods or services were received.

4) The secretary/bookkeeper should immediately post the the disbursement of funds to the accounting system

5) Petty cash use should be minimal and restricted to emergencies.




Auditor Recommendations:6) Blank checks and ATM cards should be secured. If possible, the

authorized check signer/ATM card user should not have uncontrolled access

7) Bank reconciliations should be completed on a timely basis by the secretary/bookkeeper. They should then be reviewed by the principal. A copy of the bank reconciliation and statement should then be forwarded to the business office.

8) For each school activity account, the secretary/bookkeeper should provide a reconciliation of monthly activity to the activity designee/sponsor and to the school principal. The designee/sponsor should reconcile this report to their copies of receipt and disbursement documents.

9) A policy should exist outlining the outcomes and disciplinary action to be taken should procedures not be followed.

Example 3 - Inappropriate SpendingSample Disbursement Form - to be completed before goods or services are received




● Conduct similar spot checking procedures as for receipts

● Select “random” sample of paymentso Review checks cashed on bank statement o Focus on teacher/employee reimbursementso Obtain back-up documentation

Student officer signatures? Sufficient supporting evidence (e.g., receipts)? Appropriateness of purchase?

Other “Audit” Procedures

● Yearbook saleso Completeness test - online vs. school saleso Allow for cash sales?o Monthly account reconciliation



Other “Audit” Procedures

● Cash boxes (e.g., athletics)o Surprise money countso Compare year-to-year receipts by sporto Query AD about attendance trends

Team performance Day and time of games Weather

Final Thoughts

During our research into real life examples and from actual experience, theft of activity funds most often happens when one person has a large amount of control over the process, with no supervision.

Creating a process that involves 2 or 3 individuals, with each person signing off on receipts or disbursements, will greatly reduce the risk of misappropriation or theft.

A written procedure that everyone in every activity has to follow will reduce confusion and allow for easier corrective action should the procedures not be followed.



Final Thoughts

Management, either the school principal or, more preferably, the business office, should be reviewing activity on no less than a monthly basis. That this review is conducted should be communicated to everyone involved in the process.

Any questionable activity should be reported and investigated immediately.

If they know you check, they may not misbehave

Contact Info

Chris Herr, CPAManagerMaillie LLPPO Box 680Oaks, PA [email protected]

Bill StoneDirector of Business AffairsSouderton Area School [email protected]

PRIOR APPROVAL ACCOUNT #

DISBURSEMENT NOT TO EXCEED $ ACTIVITY NAME

PAYMENT TO BE ISSUED TO: NAME

ADDRESS

DETAILED EXPLANATION OF PURCHASE AND PURPOSE:

DESIGNEE/SPONSOR SIGNATURE: DATE:

PRINCIPAL SIGNATURE: DATE:

Note: before payment, all invoices or receipts should be attached to this request.

DATE SUBMITTED FOR PAYMENT

ACTUAL AMOUNT REQUESTED $

CHECK NUMBER

AMOUNT $

DATE ISSUED BOOKKEEPERS SIGNATURE

STUDENT ACTIVITY FUND DISBURSEMENT REQUEST

FOR SECRETARY/BOOKKEEPER USE ONLY

Souderton Area High School Athletic Contest Ticket Record

SPORT: __________________________________________ DATE: _________________ OPPONENT: _________________________________________

Gate: Lower Road Halteman Road Main Lobby

TICKET SALES

Number tickets @ $$$$ $ Amount Total $ Adult Ticket’s Sold ___________@ $5.00 $_____________ $_____________ Student Ticket’s Sold ___________@ $4.00 $

_____________

TICKET ACCOUNTING

Adult Ticket

Last unsold Ticket _____________ 1 ST Unsold Ticket _____________ Sub Total: _____________ -1 Total Sold: ______________

Student Ticket Student Ticket

Total $ in Ending Box $ _______________

Minus Starting Box $ _______________

Proceeds $________________

Game Worker Signature _____________________________________

Game Manager Signature _____________________________________ Fund Custodian Signature _____________________________________

Last unsold Ticket _____________ 1ST Unsold Ticket _____________ Sub Total: _____________ -1 Total Sold: ______________

tknappenberger

Cross-Out

Fund Custodian’s Signature:

SOUDERTON AREA SCHOOL DISTRICT

ATHLETIC FUND CASH SETTLEMENT SHEET

TICKET SALES

Event: Date:

Opponent:

CASH

Ones: $

Fives: $

Tens: $

Twenties: $

Fifties: $

Hundreds: $

Coin: $

Checks: $

Total Cash: $

Total Checks: $ Total Deposit: $______________________

tknappenberger

Typewritten Text

tknappenberger

Typewritten Text

tknappenberger

Typewritten Text

EVENT

TICKET SELLER NAME GATE NAME/NO.

GATE CHANGE $

SIGNATURE OF TICKET SELLER RECEIVING CHANGE AND TICKETS

Non‐student ticket sales

First # Ending # Ticket Color

on roll on roll

1. Tickets issued

2. Tickets remaining after event

3. Tickets sold (line 2‐line1)

4. Price per ticket $

5. Ticket Sales (line 3 X line 4) $

15. Total ticket sales $

16. Gate change provided $

17. Total cash due (line 15 + line 16) $

18. Total cash counted in box $

19. Cash over/(short) (line 18 ‐ line 17) $

Ticket Seller Signature:

Coach / Event Sponsor Signature:

Secretary / Bookkeeper Signature:

NOTE: Student ticket sales and other, differently price groups should be separately calculated, following the method

above

GATE TICKET SALES REPORT

TICKETS PURCHASED FROM: DATE:

TICKET NUMBERS PURCHASED: FROM: TO: COLOR:

Date

Initial Issued

TICKET CONTROL LOG

Range of Tickets

Issued Issued To Event

Range of Tickets

Unused

Yearbook Accounting Reconciliation

For the month of:

Beginning Book Balance in Yearbook Account

Total Number of Yearbooks OrderedAdditional Yearbooks Ordered/Received

Sales Information

Quantity Price Ext CostOnline Sales $0.00School Sales $0.00TOTAL 0 $0.00

Provide backup documentation to support sales information

Payment Information

Payee Date Invoice # Amount

TOTAL $0.00

Ending Book Balance in Yearbook Account

Provide documentation to support yearbooks ordered from publisher to be sold to students. Include any yearbooks that are "donated" to the school that can be sold to students.

PRIOR APPROVAL ACCOUNT #

DISBURSEMENT NOT TO EXCEED $ ACTIVITY NAME

PAYMENT TO BE ISSUED TO: NAME

ADDRESS

DETAILED EXPLANATION OF PURCHASE AND PURPOSE:

DESIGNEE/SPONSOR SIGNATURE: DATE:

PRINCIPAL SIGNATURE: DATE:

Note: before payment, all invoices or receipts should be attached to this request.

DATE SUBMITTED FOR PAYMENT

ACTUAL AMOUNT REQUESTED $

CHECK NUMBER

AMOUNT $

DATE ISSUED BOOKKEEPERS SIGNATURE

STUDENT ACTIVITY FUND DISBURSEMENT REQUEST

FOR SECRETARY/BOOKKEEPER USE ONLY



Gate: Lower Road Halteman Road Main Lobby

TICKET SALES


_____________

TICKET ACCOUNTING

Adult Ticket

Last unsold Ticket _____________ 1 ST Unsold Ticket _____________ Sub Total: _____________ -1 Total Sold: ______________

Student Ticket Student Ticket



Proceeds $________________

Game Worker Signature _____________________________________

Game Manager Signature _____________________________________ Fund Custodian Signature _____________________________________

Last unsold Ticket _____________ 1ST Unsold Ticket _____________ Sub Total: _____________ -1 Total Sold: ______________

tknappenberger

Cross-Out



ATHLETIC FUND CASH SETTLEMENT SHEET

TICKET SALES

Event: Date:

Opponent:

CASH

Ones: $

Fives: $

Tens: $

Twenties: $

Fifties: $

Hundreds: $

Coin: $

Checks: $

Total Cash: $


tknappenberger

Typewritten Text

tknappenberger

Typewritten Text

tknappenberger

Typewritten Text

EVENT

TICKET SELLER NAME GATE NAME/NO.

GATE CHANGE $

SIGNATURE OF TICKET SELLER RECEIVING CHANGE AND TICKETS

Non‐student ticket sales

First # Ending # Ticket Color

on roll on roll

1. Tickets issued

2. Tickets remaining after event

3. Tickets sold (line 2‐line1)

4. Price per ticket $

5. Ticket Sales (line 3 X line 4) $

15. Total ticket sales $

16. Gate change provided $

17. Total cash due (line 15 + line 16) $

18. Total cash counted in box $

19. Cash over/(short) (line 18 ‐ line 17) $

Ticket Seller Signature:

Coach / Event Sponsor Signature:

Secretary / Bookkeeper Signature:

NOTE: Student ticket sales and other, differently price groups should be separately calculated, following the method

above

GATE TICKET SALES REPORT

TICKETS PURCHASED FROM: DATE:

TICKET NUMBERS PURCHASED: FROM: TO: COLOR:

Date

Initial Issued

TICKET CONTROL LOG

Range of Tickets

Issued Issued To Event

Range of Tickets

Unused


For the month of:



Sales Information



Payment Information


TOTAL $0.00



PRIOR�APPROVAL ACCOUNT�#DISBURSEMENT�NOT�TO�EXCEED $ ACTIVITY�NAME

PAYMENT�TO�BE�ISSUED�TO: NAMEADDRESS

DETAILED�EXPLANATION�OF�PURCHASE�AND�PURPOSE:

DESIGNEE/SPONSOR�SIGNATURE: DATE:PRINCIPAL�SIGNATURE: DATE:

Note:�before�payment,�all�invoices�or�receipts�should�be�attached�to�this�request.

DATE�SUBMITTED�FOR�PAYMENT �

ACTUAL�AMOUNT�REQUESTED $

CHECK�NUMBER

AMOUNT $

DATE�ISSUED BOOKKEEPERS�SIGNATURE

STUDENT�ACTIVITY�FUND�DISBURSEMENT�REQUEST

FOR�SECRETARY/BOOKKEEPER�USE�ONLY



Gate:��Lower Road �� Halteman Road ��Main Lobby

TICKET SALES


_____________

TICKET ACCOUNTING

Adult Ticket

Last unsold Ticket _____________ �� 1 ST Unsold Ticket _____________ ��

Sub Total: _____________

-1

Total Sold: ______________

��

�� Student Ticket ��

��



Proceeds $________________

Game �orker �ignature _____________________________________

Game �anage� �ignature _____________________________________ Fund �ustodian �ignature _____________________________________��

Last unsold Ticket _____________ 1ST Unsold Ticket _____________ �� Sub Total: _____________

-1

Total Sold: ______________



ATHLETIC FUND CASH SETTLEMENT SHEET TICKET SALES

Event: Date: Opponent:

CASH

Ones: $ Fives: $ Tens: $ Twenties: $ Fifties: $ Hundreds: $ Coin: $ Checks: $

Total Cash: $


��

EVENT

TICKET�SELLER�NAME GATE�NAME/NO.

GATE�CHANGE $

SIGNATURE�OF�TICKET�SELLER�RECEIVING�CHANGE�AND�TICKETS

Non�student�ticket�salesFirst�# Ending�# Ticket�Coloron�roll on�roll

1.��Tickets�issued2.��Tickets�remaining�after�event3.��Tickets�sold�(line�2�line1)4.��Price�per�ticket $

5.��Ticket�Sales�(line�3�X�line�4) $

�15.��Total�ticket�sales $16.��Gate�change�provided $17.��Total�cash�due�(line�15�+�line�16) $18.��Total�cash�counted�in�box $19.��Cash�over/(short)�(line�18��line�17) $

Ticket�Seller�Signature:Coach�/�Event�Sponsor�Signature:Secretary�/�Bookkeeper�Signature:

NOTE:�Student�ticket�sales�and�other,�differently�price�groups�should�be�separately�calculated,�following�the�method�above

GATE�TICKET�SALES�REPORT

TICKETS�PURCHASED�FROM: DATE:

TICKET�NUMBERS�PURCHASED: FROM: TO: COLOR:

DateInitial Issued

�

TICKET�CONTROL�LOG

Range�of�TicketsIssued Issued�To Event

Range�of�TicketsUnused


For the month of:



Sales Information



Payment Information


TOTAL $0.00



how to avoid pitfalls in student activity accounting€¦ · how to avoid pitfalls in student...

Documents