Associated Student Body, Booster Clubs, Parent Organization Workshop - - PowerPoint PPT Presentation

Associated Student Body, Booster Clubs, Parent Organization Workshop

Sponsored by: Chino Valley Unified School District

October 20 & 21, 2014

Presented by: Michael W. Ammermon CPA, CFE, DABFA

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The ASB Accounting Manual, Fraud Prevention Guide and Desk Reference – Includes Boosters & Parent Organizations

• Last revised December 2012
• Can be accessed and downloaded for free from

FCMAT’s website at www.fcmat.org

• This revision includes updated useful information

and increases the number of forms and templates available

• Currently being revised for 2015

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ASB Types

• Unorganized
• Elementary and K-8 school sites
• Also: Adult Ed, Special Education, ROP, Continuation
• Usually no student council or student clubs
• Limited student decision making: School Principal/Trustee
• versees raising and spending of funds and CAN make all

decisions

• Note: Although the Principal/Trustee can make the decisions,

this does not change the rules on how and why we raise and spend these ASB funds

• Requirements are not as strict

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ASB Types, cont.

• Organized
• Middle and high schools; community colleges
• Activities are organized around student clubs and a

student council

• Students are the primary authority when making decisions:
• Formal meetings
• Develop budgets
• Plan fund-raisers
• Decide how funds will be spent
• Approve payments
• Advisors and school principal:
• Provide assistance, advice, and

co-approve

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All Clubs Need to be Approved

• All clubs need to be approved, even activity clubs, for liability

reasons

• Each club must have a certificated club advisor assigned

to it, and only that certificated club advisor can approve activities, expenditures and activities

• A formal application should be completed that includes:
• Title, powers and duties of the officers and the manner of

their election

• Scope of proposed activities
• Name of organization
• Endorsed by a certificated club advisor
• New clubs must be approved by:
• Student council
• Principal

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All Booster Clubs and Parent Organizations Need to be Approved

1. Booster/parent organizations are separate organizations from a school district. 2. ASBs are legally considered a part of the school district (they are legal components of the district), while booster/parent organizations are Not. 3. Each booster/parent organization must have its own tax identifica- tion number (TIN). 4. Forming the organization is up to the organization but to operate at the district the organization is subject to the district’s rules. 5. Disbanding a Booster/Parent Organization is separate from the district operations and is subject to how the organization was

• rganized.

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All Booster Clubs and Parent Organizations Need to be Approved

6. Financial records should be transparent, auditable, and very well

• documented. (IRS/State audits, tax return preparation, general

health of the organization) 7. Site administrators are involved in obtaining permission for activities to insure there is no ASB vs. other organization conflicts such as with fundraising and student participation and activities. 8. More about Boosters and parent organizations will be discussed later.

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Most Importantly

• It’s all about students:
• Fund-raising
• Participating
• Doing
• Learning
• Experiencing
• Making decisions (if organized ASB)

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Student Club and Trust Accounts

• So, what is a CLUB?
• Composed of currently enrolled students at that specific

school site

• Certificated employee of the school district must be the

advisor

• Students MUST play a major role
• Students are the primary authority when making decisions**
• Have approved constitution**
• Elected officers**
• Must have a budget**
• Formal meetings**
• Minutes of meetings**
• Clubs report to the student council**

**Optional if unorganized ASB

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Student Club and Trust Accounts, cont.

• Funds held in trust by student council
• ASB constitution or bylaws should state what happens

to funds of inactive clubs

• If constitution or bylaws silent, would revert to general

ASB account

• i.e., Student council or leadership class
• Try to spend money for same reason it was raised
• Define what an inactive club is
• i.e., 18 months

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How Do Boosters & Parent Groups Fit In?

• Booster & Parent group funds cannot be commingled with

district/ASB funds

• Non-student groups cannot deposit funds into the ASB

accounts unless they are being donated to the ASB

• Once the funds are donated to ASB, only the student
• rganizations control how the funds will be used
• Parent groups and student groups must keep their funds and

activities separate The FCMAT ASB Manual gives detailed information about non-student groups in Chapter 21

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What to Do with Funds that Don’t Belong in ASB

• Non-ASB accounts, including, but not limited to, pass-through or

clearing accounts, should be transferred into a district account

• Discontinue accounting for non-ASB activities in the ASB

financial records

• Non-ASB designated donations from parents, students or

community members or groups should be deposited in the school site’s district donation account, not accounted for through the ASB, unless truly supplementing fund-raising

• Only money that should be deposited into ASB:
• Actual ASB funds
• Will be used for appropriate ASB purposes

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District Board Policy and Regulations

Govern:

• Establishment of the student body organization
• Supervision of the organization’s activities
• Operation and management of the organization’s finances
• It is important ASBs, Booster Clubs, and Parent

Organizations are aware of district policy because district policy applies to the ASB and how other organizations are allowed by the district to operate within the district

• District board policies are additional laws that ASB, Booster

Clubs & Parent Organizations must follow

• Failure of Booster Clubs and Parent Organizations to follow

district guidelines may subject them to being banned from the district.

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District Board Policy and Regulations, cont.

Boosters/Parent Organizations:

• Do not assume that all booster/parent groups have applied for
• r have received Federal or State nonprofit status or that they all

have their own tax identification number; do not assume that they are all official groups in the eyes of the California Franchise Tax Board (FTB) or Internal Revenue Service (IRS).

• District or school site officials may require booster/parent
• rganizations to be officially recognized as tax-exempt orga-

nizations under the California Franchise Tax Board and internal revenue code section 501(c)(3) and may require them to provide a copy of their IRS determination letter or certificate of nonprofit status.

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Site Principal:

• Works with district office
• Approves fund-raising events on campus – INCLUDING BOOSTER & PARENT

ORGANIZATIONS.

• Approves expenditures along with students and ASB advisor
• Can be only approver for unorganized ASB
• Appoints the ASB and club advisors
• Supervises ASB bookkeeper and ASB advisors
• Enforces and communicates all laws, policies and procedures
• Ensures that a student council is established and approves club constitutions
• Works with each student organization to develop methods for securing cash

collected after hours and on non-school days

• Ensures proper cash control procedures established and followed at all times
• Ensures minutes are kept of all ASB and club meetings
• Receives and reviews bank statements MONTHLY
• Reviews budgets and financial reports MONTHLY

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ASB Advisor(s):

• Critical link between Principal – Bookkeeper – Students; aka

the Principal’s designee for day-to-day ASB functions

• Must be a CERTIFICATED employee
• Needed to supervise EACH club and student

council/leadership class

• Works directly with students on a day-to-day basis,

supervising the activities and serving as a link between the students and the ASB bookkeeper and the principal

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ASB Advisor(s):, cont.

• Assists the students in preparing the annual budget and

revenue projection estimates for fund-raisers

• Ensures that adequate internal controls are in place
• Approves expenditures along with students and board

designee (for organized ASB)

• Ensures that the clubs are meeting and keeping minutes
• Reviews with the students all budgets, financial reports and

transactions

• Ensures all laws, policies and procedures are followed

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Student Council:

• Represents the students
• Primary authority of how student-raised funds will be spent
• Approves expenditures along with ASB advisor and

board designee (for organized ASB)

• Develops and approves annual budget for student council

and leadership class

• If unorganized, student council is not mandatory; for
• rganized, it is mandatory

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Student Council, cont.

• Authorizes ALL:
• Student clubs
• Student clubs budgets
• Reviews ALL:
• Student club fund-raising events
• Student fund purchases/expenditures
• Reviews ALL:
• Student club financial reports
• Student club reconciliations
• Anything else it would like to review

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ASB Bookkeeper:

• The site ASB bookkeeper safeguards money held at school site –
• Ensures funds get to the ASB bank account in a timely manner
• Responsible for receipts received from ASB advisor until deposited
• Prepares proper financial records of financial transactions in accordance

with established procedures and policies

• Club reports, check registers, deposit registers, etc.
• Provides materials to ASB advisors for fund-raisers, and keeps stock on

hand (change box, receipt books, tickets, etc.)

• Processes purchase orders, payments, and invoices
• Prepares bank reconciliations monthly
• Upholds ASB laws, procedures and policies
• We’ll discuss the bookkeeper’s duties

in much more detail soon!

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FRAUD

Black’s Law Dictionary defines fraud as:

“all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get an advantage over another by false suggestions or suppression of the truth. It includes all surprise, trick, cunning or dissembling, and any unfair way by which another is cheated.”

Allegations of ASB Fraud

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THAT'S A LOT OF WORK!

I THOUGHT IT WAS EASIER TO SPEND MONEY FROM ASB, NOT HARDER!

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ASB Budgets

• Every ASB club must have a budget
• Budget is an ESTIMATE
• If the budget goes off-track during the year, REVISE it
• Budget = Usually one year
• Often Forgotten: AT END OF SCHOOL YEAR, prepare NEXT

YEAR’S budget (needed to conduct business)

• This “next year’s budget” can be as simple as using current year

actual revenue and expenditures

• Students need to participate in the budget process
• Require that a budget is in place and approved BEFORE the club enters

into any commitments (i.e., spends any money)

• No Budget = No Spending!
• If unorganized, budgets are not mandatory
• If organized, budgets are mandatory

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ASB Budgets, cont.

Budget CARRYOVER

• Possible; HOWEVER, students should spend what

they raise

• Seed money for next year = OK
• Reasonable carryover balances = OK
• Multiyear projects with carryover balances = OK
• Get permission to carry over and/or set percentage limits
• There should be a form to get approval to carry over funds

from the prior year

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What Happens When a Class Graduates?

• Funds held in ASB can only be spent on CURRENT students
• If graduating:
• Spend remaining funds prior to graduation
• Gift the funds to another ASB club at the same school site
• Gift the funds to the general ASB at the same school site
• Balances cannot follow students graduating from 8th grade and

going to high school

• Funds stay at same school where they were raised
• If class has already graduated, need to clear funds
• General ASB unless board policy or constitution says otherwise

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What Should We Know About Raising Money?

• Obtain district governing board approval BEFORE the fund-

raiser occurs. This is required by Ed Code

• Best Practice: ASB fund-raising events should be approved

at the beginning of year, by the board or whomever the board delegates to do so, or the governing board should approve policies and administrative regulations that delineate allowable and unallowable fund-raising events

• Ensure that parent organizations coordinate the timing of their

fund-raisers with ASB fund-raisers so they don’t compete with each other

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What Should We Know About Boosters & Parent Organizations

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• 1. Booster/parent organization funds and district funds, including ASB

funds, must never be commingled:

• The booster/parent organization name, address or any other

correspondence should never imply any form of responsibility on the part of the ASB or district.

• The booster/parent organization should never be allowed to use

district or school site letterhead or TIN as part of any booster/parent

• rganization activity. To do so may create some form of nexus

between the booster/parent organization and the district thereby possibly creating some form of direct liability to the district.

What Should We Know About – Boosters & Parent Organizations - continued

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• The district’s tax-exempt status and identification number are not for

use by any non-school organizations or groups.

• Booster/parent organizations are not legal components of the school
• entity. Each booster/parent organization should have its own tax

identification number (TIN); booster/parent organizations are not allowed to use the school entity’s tax identification number in any way.

• Booster/parent organizations are responsible for their own tax

status, accounting and financial records, and must establish their

• wn bank account, accounting and operational policies and

procedures, and make their own arrangements for an audit if one is needed or required by the district. The booster/parent organization is not audited as part of the district’s annual financial audit.

What Should We Know About – Boosters & Parent Organizations - continued

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 Booster/parent organizations should never allow booster/parent

• rganization bank accounts to be opened in the name of an individual
• r organization member. If a booster/parent organization bank account

is opened in the name of an individual, the FTB and IRS may consider those funds earned as personal income to that individual.  Booster/parent organizations may donate funds to the student

• rganization(s); however, after they do so, only the student
• rganizations can control how the funds will be used as the funds no

longer belong to the booster/parent group. Booster/parent organizations may restrict the use of a donation to student organization(s); however, if funds are restricted, the student organization(s), school principal or designee, superintendent, or governing board of the district may choose not to accept a restricted donation.

What Should We Know About – Boosters & Parent Organizations - continued

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 Because booster/parent organizations are separate from the district, they are not under the control of, nor are they the responsibility of, the site administrator, superintendent or governing board. Their funds are not controlled by the district or students, nor should they be involved in the administering or supervising the activities of student organizations.  It is best if school staff members do not hold any official position in nonstudent or non-district-sponsored clubs to avoid the appearance of district sponsorship.

What Should We Know About – Boosters & Parent Organizations - continued

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Governing boards are able to approve guidelines for booster/parent groups to follow, and these organizations’ fund-raising activities should be approved by the governing board. California Education Code section 51521 requires that all organizations that conduct fund- raising to benefit clubs, schools, students or the district at the K-12 level have prior approval from the school district’s governing board or the board-assigned designee.

 The code states the following: No person shall solicit any other person to contribute to any fund or to purchase any item of personal property, upon the representation that the money received is to be used wholly or in part for the benefit of any public school or the student body of any public school, unless such person obtains the prior written approval of either the governing board of the school district in which such solicitation is to be made or the governing board of the school district having jurisdiction over the school or student body represented to be benefited by such solicitation, or the designee of either of such boards.

What Should We Know About – Boosters & Parent Organizations - continued

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To meet this statutory requirement, a school district should adopt board policy and regulations requiring all booster/parent organizations to do the following:  Complete and file an application to form a booster/parent

• rganization.

 Submit for approval annually a copy of the application and an updated plan of activities.  Submit a copy of the organization’s adopted constitution and bylaws with the application.  Ensure that renewal applications include the following: An annual financial statement for the year just ended; the statement is to include all expenditures and all income for all events and fund- raisers.  A budget for the upcoming year.

What Should We Know About – Boosters & Parent Organizations - continued

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 A budget plan for the related activities.  Allow the district to review and/or audit booster/parent organizations’ financial statements to ensure the organizations’ financial integrity.  Authorization of a booster/parent organization should be valid for up to

• ne year; however, if the superintendent considers it necessary, he or

she may revoke a booster/parent organization’s authorization to conduct activities in the district.  Requests for subsequent authorizations should be presented to the superintendent annually.  The booster/parent organization must carry its own liability insurance in an amount equal to or exceeding a minimum determined by the school entity.

What Should We Know About – Boosters & Parent Organizations - continued

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 Booster/parent organizations must prepare and adopt a constitution and bylaws. Booster/parent organization officers should be elected according to the structure and process defined in the bylaws.  Any rules and regulations developed for the organization must conform to the law, the board of education’s policies and regulations, and the school site’s rules and procedures.  All booster/parent organization members must be made aware that no individual should personally benefit from the activities the

• rganization conducts. This concept should be made a part of the

bylaws.  Booster/parent organizations’ ability to use school facilities at K-12 districts is regulated by California Education Code sections 38130- 38139, known as the Civic Center Act.

What Should We Know About – Boosters & Parent Organizations - continued

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 Any profits from fund-raising activities that are not spent for a booster/parent organization’s nonprofit exempt purpose cannot be returned directly to members or their families.  In case the booster/parent organization dissolves or terminates, the booster/parent organization’s constitution should provide for the distribution of any excess funds to another nonprofit organization, the ASB or the district.  All other booster/parent organization activities are outside the control of the district and its governing board.

Boosters & Parent Organizations – Solicitations On School Premises

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California Education Code section 51520, Prohibited Solicitations on School Premises, applies in the case of booster/parent organizations at K-12 districts that wish to have student help with activities and states:

During school hours, and within one hour before the time of opening and within

• ne hour after the time of closing of school, pupils of the public school shall not

be solicited on school premises by teachers or others to subscribe or contribute to the funds of, to become members of, or to work for, any organization not directly under the control of the school authorities, unless the organization is a nonpartisan, charitable organization organized for charitable purposes by an Act

• f Congress or under the laws of the state, the purpose of the solicitation is

nonpartisan and charitable, and the solicitation has been approved by the county board of education or by the Governing Board of the school district in which the school is located. Nothing in this section shall be construed as prohibiting the solicitation of pupils of the public school on school premises by pupils of that school for any otherwise lawful purpose.

Boosters & Parent Organizations – Solicitations On School Premises – continued

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California Education Code section 51521, also for K-12 school entities, discusses solicitations on behalf of a school. Ultimately, the K-12 school district’s superintendent and governing board have complete authority

• ver whether any such activity occurs on school district property. Thus,
• btaining written permission for any such activities is of primary
• importance. The following are general criteria for obtaining permission.
• The purposes of the fund-raising activity, which must be nonpartisan,

nonpolitical, nonsectarian, and nondenominational.

• The manner in which the fund-raising activity will be conducted (for

example, demands made on staff time and district materials must be minimal, and the activity must not encroach on instructional time).

Boosters & Parent Organizations – Solicitations On School Premises – continued

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• Identification of the sponsors, officers and individuals participating in

the fund-raising activity.

• Disclosure of the identity and location of any booster/parent
• rganization with which the soliciting organization is affiliated or of

which it is a subsidiary.

Fund-raisers

• By law:
• Raffles, Bingo, and other games of chance – NOT ASB
• Who can do a raffle:
• Private nonprofit groups (Not ASB) – Boosters Can
• Nonprofit must have a California business license for at least one year
• Own tax ID number
• Must register annually with Attorney General’s Registry of Charitable

Trusts prior to raffle and receive confirmation of the annual registration prior to holding the raffle

• Must distribute at least 90% of proceeds to beneficial or charitable

purposes

• Department of Justice www.caag.state.ca.us
• Should a booster/parent organization decide to operate a bingo or

raffle activity, California Penal Code Sections 326.5 and 320.5 regulate these events. These regulations are enforced by the licensing agency

• f each county. – Must be district approved

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Booster Club/Parent Organization Fund-raisers

• ALL FUND RAISERS NEED TO BE APPROVED BEFORE

THEY HAPPEN

 Fund-raising at any school site is directly under the control of school authorities, such as the site administrator, and must be approved by at least the site administrator prior to any activity. Approval may be granted based on completion of some type of application or form.  Districtwide projects or fund-raising, such as collection drives, must be submitted in writing and authorized in advance by the district’s governing board at a regular board meeting.

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Booster Club/Parent Organization Fund-raisers

All fundraisers need to have a purpose and an approved understanding before they happen of what the funds will be spent on. Fund-raising activities should be conducted for a specific goal and not simply to raise money for the organization. All fund-raising activities conducted on school premises must adhere to the guidelines established by the board of education and each school site’s individual guidelines. Only organizations that have scheduled fund-raising activities and have obtained prior written approval from the ASB council and school site administrator will be authorized to conduct such activities on district or school premises.

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ASB - Unallowable Fund-raisers, cont.

• Due to lack of insurance coverage (pose liability, safety or risk concerns):
• Mechanical or animal rides
• Use of darts, arrows, or other weapons
• Objects thrown at people (i.e., pie toss)
• Dunk tanks
• Destruction of objects (e.g., using a hammer)
• Trampolines
• Ownership issues:
• Rental of district property (equipment or facilities to outside groups)
• Fees not authorized by the Education Code:
• See FCMAT ASB Manual regarding what fees are not allowable
• There are new laws in place per AB 1575
• All public schools are required to publish local policies and procedures to

implement provisions of AB 1575

• Information is to be included in the annual parental

notification

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ASB - Unallowable Fund-raisers, cont.

• Remember: An ASB fund-raiser must be pre-approved and

consist of students raising money in order to purchase “extras” for their educational experience

• It is not legal for teachers to raise funds to increase their site

budgets by fund-raising using the district’s tax ID number. If they do, the funds are considered taxable income to the teacher

• There’s a big difference between students fund-raising using

the district’s tax ID number and teachers fund-raising using the district's tax ID number: One is legal; the other is not!

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Donations

• ASB can gladly accept donations of money or property if the

donation is for appropriate ASB expenditures

• But they can’t be:
• Required
• Mandatory
• A prerequisite to participate in a program or activity
• All ASB rules and guidelines apply to any received donations
• Make sure you know if the district’s board policy on donations

has special provisions/instructions for how ASB donations are to be acknowledged or accepted

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Allowable Expenses

• Must be in compliance with the law and local board policy
• Must promote the students’ general welfare, morale, and

educational experience

• Must be directly linked to the students’ benefit
• Must be pre-approved
• Must be outside of what the school district should provide, or has

provided in past, from their own general funding sources

• Must benefit a group of students (with few exceptions)

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Allowable Expenses, cont.

• Expenses CANNOT be considered a gift of public funds
• Must have a direct or substantial purpose
• Misappropriation of public funds is considered a criminal act,

with no monetary limit specified

• Better to be safe than sorry

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Allowable Expenses, cont.

Gift of Public Funds

• Article 16, Section 6, of the California Constitution
• Expenditures of school funds must be for a direct and primary public

purpose to avoid being a gift of public funds

• Private individuals are benefitted only incidentally to the

promotion of the public purpose

• Approved public purpose must be within the scope of a school

district’s jurisdiction and purpose

• Expenditures that most directly and tangibly benefit students’ education

are more likely justified

• Expenditures driven by personal motive are not justified even if they

have a long-standing custom or are based on benevolent feelings

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Allowable Expenses, cont.

• To justify the expenditure of public funds, the governing board

must determine that the expenditure will benefit the education of its students

• If the governing board has determined that a particular type of

expenditure serves a public purpose, courts will almost always defer to that finding: Put in board policy

• Can be considered a gift of public funds unless in board policy:
• Scholarships to college
• Donations to charity
• Flowers

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Allowable Expenses, cont.

• Examples:
• Student magazines and newspaper subscriptions
• Supplemental equipment for student use not provided by

the school (e.g., telescopes)

• Field trips/excursions/outdoor education camps
• Extracurricular athletics costs
• Social events for students
• Awards if there is a district policy allowing them
• Substitute teacher if the teacher is absent due to an authorized ASB

event

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Unallowable Expenses

Ask these questions:

• Does the expense directly promote the general welfare,

morale or educational experience of the students?

• Does the expense benefit students as a group?
• Are you sure the expense can’t be considered a gift of public

funds?

• If you answer NO to any question above, the expense is

probably unallowable NO = Don’t spend from ASB funds!!!

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Unallowable Expenses, cont.

Include:

• Regular curriculum and classroom supplies
• Salaries/supplies that are the district’s responsibility
• Repair and maintenance of district equipment/facilities
• Items for employee personal use
• Faculty meeting costs
• Parent group costs
• Employee clothing/attire
• Coach uniforms paid by ASB is not recommended
• Large awards unless specifically approved in board policy
• Employee appreciation meals
• Donations to other organizations
• Gifts of any kind

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When Things Go Bad

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Pandora’s Box – Unmailed Hidden Checks

October (20-21) 2014

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Dear Diary – Who Owes Who?

October (20-21) 2014

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Are Awards Allowed?

• Board required to adopt rules and regulations about awards
• If no policy or regulations, no awards allowed
• Authorized by E.C. 44015
• Awards are allowed to employees for exceptional contributions and to

students for excellence

• Only student awards should come from ASB
• Awards cannot exceed $200 in value unless board policy states a higher

amount

• Awards are not authorized to community members, parents, or volunteers
• Awards are not allowed for birthdays, weddings, funerals or holidays

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Are Awards Allowed?, cont.

• Awards to employees for exceptional contributions are allowed if

the employee:

• Proposed procedures or ideas that are adopted and result in

eliminating or reducing district expenditures or improving

• perations
• Performed special acts or special services in the public

interest

• Made exceptional contributions to the efficiency, economy or
• ther improvement in operations of the district
• Should be paid from district funds

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Are Awards Allowed?, cont.

• FCMAT’s recommendation: Awards are only allowed if

there is an approved board policy in place and if award does not violate other district policies (i.e., wellness policy). Only allow student awards from ASB funds.

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Are Gifts Allowable?

• If something is purchased for a specific student or employee and it is not an

award, it is a gift. GIFTS ARE UNALLOWABLE, even if small in amount

• People have tried to say that if a gift’s value is “de minimis,” trivial or of

little value, it would be okay (for example, under $20/person)

• They are wrong! A gift is a gift!
• Gift certificates are ordinarily characterized as gifts of public funds even

when purchased for an event with a public purpose because they confer a tangible private benefit to an individual

• Ask merchants or individuals to donate gift certificates to avoid

making a gift of public funds

• If students want to give gifts, use private funds, not public funds

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Are Gifts Allowable?, cont.

• FCMAT’s recommendation: Gifts are NEVER allowed.

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Are Donations to Other Organizations Allowed?

• Donations are considered a “gift of public funds”
• Remember, the funds have been raised under the district’s non-

taxable status

• Students can still organize fund-raisers to support specific charities

if clearly identified as such

• The checks should be written directly to the organization/charity
• An exception can exist only if district governing board approves

a special fund-raising event with the funds clearly segregated within the ASB account Note: Donations are not allowed for needy families. A legal foundation must be established separate from the district

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Are Donations to Other Organizations Allowed?, cont.

• FCMAT’s recommendation: Donations to other
• rganizations are not allowed from ASB funds unless

specific governing board approval has been obtained

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Are Scholarships to College Allowed?

• Yes, if the following exists:
• Governing board, or authorized designee, approves the

scholarship donation

• Acceptance must be in writing, including all conditions prescribed

by the donor

• Statement must also be included regarding the disposition of any

remaining balance

• Each scholarship and trust account must be established

separately

• The donation cannot be for specific student(s)
• Students may organize fund-raisers to raise money for scholarships
• If the district governing board approves a

special fund-raising event with the funds clearly segregated within the ASB account

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Are Scholarships to College Allowed?, cont.

• If scholarships are going to be allowed from ASB funds,

the following must occur:

• There must be an unbiased committee who selects the

recipients

• The selection criteria must be determined prior to

beginning the fund-raising or acceptance of any donations

• Scholarship check(s) must be made payable directly to

the college

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Are Scholarships to College Allowed?, cont.

• FCMAT’s recommendation: Scholarships to college are

not allowed from ASB funds unless the previous criteria have been approved and established in advance

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Are Employee Appreciation Meals Allowed?

• Appreciation meals do not qualify as awards
• Attorney General says not “actual and necessary” per

E.C. 44032

• Don’t provide a direct and/or substantial purpose -- so

would be a gift of public funds

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Are Employee Appreciation Meals Allowed?, cont.

• FCMAT’s recommendation: Employee appreciation

meals are not allowed

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Contracts for ASB

• Contract - legally binding document
• Those who are authorized to sign contracts under

district policy are the same individuals that are allowed to sign ASB contracts

• Unless board policy states otherwise
• District contract policies and procedures protect the

ASB, the students, and their assets

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What’s a Consultant?

• Not an employee
• Independent from the district
• Disk jockey
• Photographer
• Is not paid as an employee in ANY other capacity
• If the proposed consultant is already a district employee,

they cannot be paid as a consultant for this work

• ASB must pre-approve the expense before the work occurs
• Paid directly by ASB with a vendor check
• Fills out W-9 prior to working
• Income reported on IRS Form 1099 annually

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What Happens When a District Employee Does Consultant Work for ASB?

• The consultant-type work is paid through district

payroll and the ASB then reimburses the district

• ASB must pre-approve the expense before the work
• ccurs
• The extra work will be reported on the employee’s

annual W-2 issued by the district

• This is because the same person can’t be paid as an

employee and a consultant by the same employer

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What are Internal Controls?

• Policies and procedures designed to provide the governing board

and management with reasonable assurance that the district, including ASB, achieves its objectives and goals. They include:

• Segregation of duties
• Limiting access to assets
• Management review and approval
• Reconciliations
• Maintaining established policies, procedures and standards of

conduct

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AGAIN: WHY ARE ASB’S SUCH TARGETS FOR FRAUD???

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Why Are ASB’s Such Fraud Targets ??? What does an ASB or Booster Club have that is highly liquid, transports easily, derived from numerous sources, difficult to trace, and is easily removed???????

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Cash

• Cash from Fund-raising – (Candy Drives,

Auctions)

• Cash from Events – (Football Gate Receipts,

Dances, Bake Sales)

• Cash from Donations

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Booster Club Fraud

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What are Internal Controls?, cont.

• Appropriate management tone – “tone at the top”
• Performance evaluations
• Training programs
• Efficient and effective accounting and business

practices, policies and procedures

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What are Internal Controls?, cont.

• Principal mechanism for preventing and/or deterring fraud or

illegal acts, misappropriation of assets, or other fraudulent activities

• Can include an array of irregularities characterized by intentional

deception and misrepresentation of material facts

• Effective internal control processes provide reasonable

assurance that the district’s/ASB’s/Boosters/Parent Organizations operations are effective and efficient, that the financial information produced is reliable, and that the

• rganization operates in compliance with all applicable laws and

regulations

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Internal Controls Help Prevent

• Paying vendor “buddies” for no work product
• Purchasing supply items for personal use
• Failure to adequately segregate duties
• Failure to limit access to assets or sensitive data
• Not recording transactions, resulting in lack of accountability

and the possibility of theft

• Unauthorized transactions, resulting in skimming,

embezzlement or larceny

• Collusion among employees where little or no supervision

exists

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Examples of Internal Controls in ASB/Boosters/Parent Organizations

• Segregation of duties according to their functions so that one

person does not handle a transaction from beginning to end

• Those who initiate, authorize or approve transactions
• Those who execute the transactions
• Those who record the transactions
• Those who reconcile the transactions
• Those responsible for the item resulting from the

transactions

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Examples of Internal Controls in ASB/Boosters/Parent Organizations-cont.

• Purchase order/requisition completed prior to purchase or

ASB/school is not obligated to pay for the expenditure

• Never pay expenses out of cash receipts
• Deposit cash and then write a check
• Keep the checkbook and extra check stock in a safe, secure

place

• Void checks that are incorrect or not issued
• Never sign checks in advance -- have at least one backup

signer (but can be more)

• Use checks in proper sequence
• Never make check out to “cash”
• Check should have two signatures

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Examples of Internal Controls in ASB/Boosters/Parent Organizations-cont.

• Disbursed or paid ONLY if original documents/receipts exist (i.e.,

proof of purchase)

• Service/product/goods MUST be RECEIVED and authorized

before payment is made

• ASB Student council and each club prepares and maintains a

record of each meeting and the action(s) taken in them

• Bank reconciliations done within two weeks of receiving bank

statement, with proper review and approval afterward

• Always use pre-numbered receipt books or tickets
• Adequately control where pre-numbered tickets and receipt forms

are stored

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Examples of Internal Controls in ASB/Boosters/Parent Organizations-cont.

• Dual cash counts
• Always count funds with a witness and countersign the proper deposit

forms

• Endorse all checks – “For Deposit Only …”
• Do not leave funds unattended on a desk
• If the office manager or bookkeeper who normally receives cash is

not available, assign another individual to receive the deposit and sign for the received funds in their absence. The cash should be double counted by this person

• Timely deposits (2-3 days)
• Make the bank deposit THAT DAY, if possible!
• Never leave undeposited money at a school over weekends or

holidays

• Report overages and shortages
• Loss of tickets is the same as loss of cash

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Slide 85 l8

Examples of Internal Controls in ASB/Boosters/Parent Organizations-cont.

• Budgets for each ASB club
• Completion of Revenue Potential forms
• Inventory control for vending machines, stores, and concession

stands

• Proper cash handling and physical chain of custody for all cash

receipts

• No commingling of receipts from separate events
• Immediate delivery of all event proceeds to the ASB bookkeeper
• Using pre-numbered tickets, receipt books, or tally sheets
• Cash boxes to keep the received money safe

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Examples of Internal Controls in ASB/Boosters/Parent Organizations-cont.

• Safe storage is a MUST
• The safest place for money to be is in the bank
• Second safest place is a SAFE
• FUNDS SHOULD NEVER BE TAKEN HOME, PUT IN A

DESK DRAWER, OR EVEN IN A LOCKED FILE CABINET

• If you cannot deposit the money in the bank that day -

PUT THE MONEY IN THE SAFE WITH A WITNESS PRESENT!!

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Are ASB Purchase Orders Really Necessary?

• YES! Must be issued for purchases to reflect proper approval
• ASB not obligated to pay for an expenditure ordered or directly

purchased by a teacher, student or other person who has not first received a purchase order with the appropriate approval signatures

• You cannot go shopping on your own and expect to be

reimbursed

• Purchase orders must be pre-numbered and have multiple

copies

• A check request is NOT pre-approval

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Booster/Parent Organization Sound Business Practices

 Booster/parent organizations should adhere to sound business practices and maintain an adequate system of controls just as ASBs should, such as with the following: Financial statements and treasury

• The treasurer or designated officer should prepare monthly financial

statements that are presented to the organization along with a copy of the most current bank statement and reconciliation. Financial state- ments may include cash receipts, cash disbursements, checking account beginning and ending balances, balance sheets, income statements and other relevant items.

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Booster/Parent Organization Sound Business Practices – cont.

Financial statements and treasury - continued

• A budget should be developed at the beginning of the year to project

expected revenues and expenses, and should be revised as needed.

• An auditor who is independent of the treasurer should be appointed and

should report directly to the booster/parent organization board. The auditor should review all of the financial records, journals, check registers, receipts, invoices, bank statements, and other financial information at least annually.

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Booster/Parent Organization Sound Business Practices – cont.

Cash receipts and bank reconciliation

• Pre-numbered receipt books and supporting backup documentation.
• Preparation of duplicate deposit, cash count and fund-raising forms.
• Bank deposits should be made intact and in a timely manner.
• Someone other than the individual(s) responsible for depositing funds

and writing checks should perform bank reconciliations monthly.

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Booster/Parent Organization Sound Business Practices – cont.

Cash disbursements

• Checks should require a minimum of two signatures.
• Preparation of duplicate forms such as purchase orders.
• All expenditures should be approved by the booster/parent board and

the approval noted in the board meeting minutes.

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Whom Do Internal Controls Protect?

• Employees
• Volunteers
• Students
• Your organization’s assets

93

ASB Journal Entries and Transfers

• Control is required
• Purpose must be documented with a detailed reason
• Needs supporting documentation
• Should be prepared only with prior written approval
• ASB advisor
• Principal
• Club meeting minutes
• Any journal entry that isn’t properly documented or

approved is a fraud indicator

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ASB Minutes Requirements

• The student council and each club must prepare and

maintain a record of each meeting and action taken in them

• Details of proceedings
• Actions taken
• Demonstrate that policies and procedures are followed

by ASB

• Need to be concisely and clearly written
• If ASB is unorganized, and if meetings are not held, then

minutes are not mandatory. But if meetings are held, and decisions are being made at the meetings, then minutes are mandatory

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ASB Minutes Requirements, cont.

• Any information introduced to those attending the

meeting should be attached to the original copy and kept on file, such as list of purchase orders, list of checks, financial information, and letters

• The club secretary, or whoever took the minutes,

should sign the minutes when they are completed

• Review and approve at next meeting
• Maintain a binder of all of the approved minutes for the

school year

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ASB Bank Accounts

• District guidelines must be followed
• Best practice = Only district’s accounting office

should open bank accounts

• District accounting office must be notified when any

bank account needs to be opened or closed

• ASB bank accounts are for the exclusive use of the

ASB organization

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ASB Bank Accounts, cont.

• ASB bank accounts should always be in the name
• f the ASB organization rather than in the name of

any individual

• Only ASB funds are deposited into ASB accounts
• There must be at least two signatories on each

bank account, and these signatories should not include students

• Should also not include the bookkeeper

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Auditors

• Good resource:
• Annual Audit Report
• Report of Internal Controls is within the audit

requirements

• Report their findings and recommendations to correct

procedures

• Protect the district by offering a third-party line of defense

for why policies and procedures are necessary

• Auditors report directly to the governing board

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What Do Successful ASB Operations Include?

• Comprehensive board policies and administrative

regulations regarding ASB operations and funds

• A comprehensive and user-friendly ASB manual that

provides guidance for all individuals involved in day- to-day ASB activities

• A significant level of oversight and support from the

district’s accounting office

• Standard processes and procedures at all sites

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What is Adequate ASB Oversight by the District Business Office?

• Serve as a resource and answer questions
• Provide training at least annually regarding the district’s

ASB manual and procedures

• Ensure that ASB training includes providing new staff

members and student council members with training throughout the year, and with copies of the ASB manual

• Visit school sites periodically to review the procedures in

use and answer questions

101

What is Adequate ASB Oversight by the District Business Office?, cont.

• Obtain and review financial reports from the school sites at

least quarterly

• Review the reconciled bank statements for all ASB accounts

at school sites monthly

• Work with the school sites’ staff to respond to problems noted

by the auditors in the annual audit and develop corrective actions to resolve the problems

• Follow up on all issues regarding the administration of

student organizations

• 102

What is Adequate ASB Oversight by the District Business Office?, cont.

• Develop accounting procedures for recording and

controlling the student body organizations’ financial transactions

• Periodically review procedures to ensure that they

conform to prescribed accounting procedures. Use input from site staff, student organizations and district auditors, and take this information into consideration when updating policies and procedures

103

Boosters/Parent Organizations & District Employees

 School employees are not employees of the booster/parent

• rganization, and the booster/parent organization should be aware of

the following:

• While serving as district employees, they have no authority to

work for the booster/parent organization during their district work

• schedule. A district employee acting in his or her official capacity

and during work hours may interact with booster/parent

• rganization officials when this is a required part of his or her

duties as a district employee.

• If a district employee would like to be employed by the

booster/parent organization, the employee must obtain prior approval from the district’s personnel department.

104

Boosters/Parent Organizations & District Employees – cont.

• Some districts that permit a district employee to also be employed

by a booster/parent organization may require that the employee be paid through the district, with the district being reimbursed in turn by the booster/parent organization. The district may also require that any employee chosen to work for a booster/parent organization be hired and cleared for work through the district’s personnel office.

• A district employee who acts in their personal capacity and on their
• wn personal time is free to establish a booster/parent organization
• r to participate in it. The employee must ensure that participation in

the booster/parent organization does not present a conflict of interest with their duties as a school employee. The employee should also make it clear that their participation is in their personal capacity and not in their capacity as a district employee.

105

Boosters/Parent Organizations & District Employees – cont.

• A booster/parent organization may not pay any employee of

the school district an additional stipend or salary without prior approval from the district’s business and/or personnel office.

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When You Have Questions

• Work with your district office. No one knows the rules and

policies of your district better

• Ask your auditors. They have an annual responsibility to

review your district, including ASB

• Review FCMAT’s ASB Accounting Manual, Fraud

Prevention Guide and Desk Reference

• Use FCMAT’s online help desk at www.fcmat.org. If your

question hasn’t been answered before and is not contained in the archives, you can submit your question and receive a confidential answer

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Any Questions???

108

Thank You For Attending

109