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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
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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.
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Example 1-Theft of Receipts
What went wrong?:
1) No segregation of duties.
1) No oversight by management
Example 1-Theft of Receipts
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
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Example 1-Theft of Receipts
Recommendation #1 - Example Deposit Form
Example 1-Theft of Receipts
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
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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.
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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.
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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.
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Example 2-Theft of Ticket Receipts
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.
Example 2-Theft of Ticket Receipts
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.
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Example 2-Theft of Ticket Receipts
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.
Example 2-Theft of Ticket Receipts
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.
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District Recommendations
● 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
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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
Example 3 - Inappropriate Spending
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.
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Example 3 - Inappropriate Spending
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
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District Recommendations
● 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
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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.
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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: ______________
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: $______________________
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
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: ______________
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: $______________________
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: 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
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 ����
���������������������
Total $ in Ending Box $ _______________
Minus Starting Box $ _______________
Proceeds $________________
Game �orker �ignature _____________________________________
Game �anage� �ignature _____________________________________ Fund �ustodian �ignature _____________________________________��������������
Last unsold Ticket _____________ 1ST Unsold Ticket _____________ �������������������������������� Sub Total: _____________
-1
Total Sold: ______________
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: $______________________
�� ��
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
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.