Transcript Introductory School District Accounting

Colorado Association of
School Business Officials
Presented by Tony Whiteley, CPA
Curriculum Prepared by Karin Slater, SFO
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Introductions
◦ Name
◦ School District/Employer
◦ Position
◦ How long have you been involved with school
finance
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The School District Accounting Classes are
developed for School Accounting Personnel of
public and charter schools by ColoradoASBO in
cooperation with the Colorado Department of
Education, the Colorado League of Charter
Schools, and offers updates on issues affecting
the accounting/financial operations and
reporting requirements of public schools in
Colorado. These classes will help you develop a
“Tool Kit” to be used in your present or future
school district employment.
Class Overview: This class provides attendees with
a detail look at fund accounting in school districts.
Through a combination of lecture and classroom
participation, participants will learn the concepts of
the measurement focus, basis of accounting, and
revenue recognition as it pertains to school districts.
This course is appropriate for anyone interested in
advancing their knowledge of school district
accounting.
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Fund Accounting
CDE Chart of Accounts
Fund Types
Flow-thru coding concept
Measurement Focus and Basis of Accounting
Capital Assets/Depreciation
Financial Statements
TABOR Calculations
Other Considerations
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Http://www.cde.state.co.us/cdefinance
Financial Policies and Procedures
 FPP Handbook
 Meetings and Minutes
 Chart of Accounts
Section 1
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Each fund is tracked as a separate, selfbalancing set of accounts
Each fund will have a complete, balanced TB
Pooled Cash or Due to/Due From is often
used
Like running multiple, separate entities
Considerations for interfund transfers
◦ Object 52xx debit balance
 (source indicating destination)
◦ Object 52xx credit balance
 (destination indicating source)
Section 2
XX
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XXX
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XXXX
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XXXX
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XXX
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XXXX
Fund
Location
SRE
Program
Source
Source/Object/
Balance Sheet
Equity/Liability/Asset
(SOBS)
Job
Classification
Grant/Project
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xx-xxx-xx-xxxx-xxxx-xxx-xxxx
1. Fund - an independent fiscal and
accounting entity with a self-balancing set
of accounts for recording cash and other
financial resources. It contains all related
assets, liabilities and residual equities or
balances, or changes therein. Funds are
established to carry on specific activities or
attain certain objectives of the school
district according to special legislation,
regulations, or other restrictions.
2.
xx-xxx-xx-xxxx-xxxx-xxx-xxxx
Location - a dimension used as a way to
identify schools, attendance centers,
operational units, buildings, or sites as
budgetary units or cost center designators, as
a means of segregating costs.
3.
xx-xxx-xx-xxxx-xxxx-xxx-xxxx
Special Reporting Element (SRE) - describes
the activity for which a service or material
object is acquired, much like a function. This
element is optional, but may be used with the
program element to differentiate program
costs.
Exception: If District has been approved for
Title I Consolidated School-wide Reporting,
SRE 95 is required.
xx-xxx-xx-xxxx-xxxx-xxx-xxxx
4. Program - a dimension which describes
the activity for which a service or material
object is acquired. The programs of a
school district are classified into six broad
areas: Instruction (0010-2099), Support
Services (2xxx), Operation of NonInstructional Services (3xxx), Facilities
Acquisition and Construction Services
(4xxx), Other Uses (5xxx), and Reserves
(9xxx).
CDE: PROGRAM
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A program is a plan of activities and
procedures designed to accomplish a
predetermined objective or set of objectives.
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0010 through 2099 :INSTRUCTIONAL
PROGRAM
◦ activities dealing directly with the interactions
between staff and students
◦ Location:
 school classroom
 in another location such as a home or hospital,
 or in other locations such as those involving
cocurricular activities.
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SUPPORT SERVICE PROGRAM
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2100
2200
2300
2400
2500
2600
◦ 2700
◦ 2800
◦ 2900
Support Services - Students
Support Services - Instructional Staff
Support Services - General Administration
Support Services - School Administration
Support Services – Business
Operation and Maintenance of Plant
Services
Student Transportation Services
Support Services – Central
Other Support Services
o
3100
3200
3300
3400
4000
o
5000
o
o
o
o
Food Services Operations
Enterprise Operations
Community Services
Education for Adults
Facilities Acquisition and Construction
Services
Other Uses
Note: Continue to use Program Code 3100 for Food
Services Operations reported under Fund 21, effective
July 1, 2014.
xx-xxx-xx-xxxx-xxxx-xxx-xxxx
5.
Source/Object/Balance Sheet - a combination
dimension which is used to identify the type of
account: Balance Sheet, Revenue (Sources), or
Expenditure (Object). Object is the service or
commodity obtained.
xx-xxx-xx-xxxx-xxxx-xxx-xxxx
6.
Job Classification - a dimension which enables
school districts to break down expenditures for
salaries and employee benefits by the employee’s
job classification. If salary or benefit object code is
used, job classification code must be used.
7.
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xx-xxx-xx-xxxx-xxxx-xxx-xxxx
Designated Grant/Project - an award of
financial assistance in the form of cash or
a contribution or gift of other assets from
another government to an eligible grantee
to be used for a specified or designated
purpose, activity or facility.
To track grants, grant codes are used in the
asset, liability, expenditure/expense, and
revenue accounts
Grant codes generally follow the same
sequence as Source Codes
1000’s:
local grants
2000’s:
Intermediate sources
3000’s:
State grants
4000’s-9000’s Federal grants
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◦ See CDE listing of State and Federal Grant numbers
http://www.cde.state.co.us/cdefinance/sfCOA
Section 3
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Types of Funds
◦ Governmental
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General
Special revenue
Debt Service
Capital Projects
Permanent
◦ Proprietary
 Enterprise
 Internal Service
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Types of Funds (Cont’d)
◦ Fiduciary
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Pension
Investment
Private purpose
Agency
How many funds is a government required to
have?
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Used to account for and report all financial
resources not accounted for and reported in
another fund.
For instance:
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Bond Redemption Fund
Capital Reserve Fund
Special Building Fund
Insurance Reserve Fund
any other fund authorized by the State Board of
Education
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Used to track revenues and expenditures of
charter schools
Not required to include transactions in
financial database for normal day to day
operations
However, must be included for Data pipeline
reporting purposes.
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May use Other funds to track charter school,
if applicable, such as Pupil Activity Fund and
Governmental Designated-Purpose Grants
Fund.
Location codes 900 through 969, which are
reserved exclusively for charter schools, must
be used to identify specific charter schools
within the district.
See Appendix K, “Charter Schools,” in the
COA
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Allows you to separate your risk management
accounting, and maintain a self-balancing set
of records specific to risk management
insurance
Funds 10 and 18 are the only funds available
for risk-management purposes
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Allows a district to separate the Colorado
Preschool Program
Other moneys used to pay the costs of
providing preschool services may be
deposited into this fund.
Expenditures shall only be made to pay the
costs of providing preschool services directly
to children enrolled in the district’s preschool
program
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Such costs shall include
teacher and paraprofessional salaries and benefits,
supplies and materials,
home visits,
the entire cost of any preschool program contracted
services,
◦ the costs of their parents, any associated professional
development activities,
◦ costs that a district would not otherwise have incurred
but for the services provided in conjunction with the
five percent of such overhead costs.
◦ For more info visit http://www.cde.state.co.us/cpp
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Any moneys remaining in the fund at the
end of the year shall remain in the fund.
Allocations may be made to fund 11 for
charter schools.
◦ Must use the grant code of 3141 (CPP preschool)
◦ Unused amounts at year end, must use a
“reservation of fund balance” within the equity
section of Fund 11, including balance sheet code of
6724.
Used to account for and report the proceeds
of special revenue sources
that are restricted
or committed for specified purposes
other than debt service or capital projects.
A separate fund may be used for each
restricted source.
21
22
23
24
25
Food Services Special Revenue Fund
Recently moved from Fund 51 (Enterprise
Fund) 21 Effective July 1, 2014
Governmental Designated-Purpose Grants
Fund
Pupil Activity Special Revenue Fund
Full-Day Kindergarten Mill Levy Override
Fund
Transportation Fund
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Resources that are restricted, committed, or
assigned to expenditure for principal and
interest.
Debt service funds should be used to report
resources if legally mandated.
The use of Bond Redemption Funds for non
voter-approved debt is not permitted by
Colorado Revised Statutes.
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31 Bond Redemption Fund. Used to account for the
accumulation of resources for and the payment of
principal, interest, and related expenses on longterm general obligation debt or long-term voterapproved lease-purchase debt.
39 Non-Voter Approved Debt Service Fund. Must be
used to account for the accumulation of resources
and payment of principal, interest and related
expenses on any non-voter approved debt. DO NOT
use this code for voter approved debt.
Funds 32-38 roll to Fund 31, and should not be used
for non-voter approved debt.
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Resources are restricted, committed, or
assigned to expenditure for capital outlays
acquisition or construction of major capital
facilities and other capital assets (other than
those financed by proprietary funds and trust
funds).
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41 Building Fund. Used to account for all resources available
for acquiring capital sites, buildings, and equipment. Examples
of such resources include bond sale proceeds, grants, donations,
and interfund transfers.
42 Special Building and Technology Fund. Used to account for
all resources generated by taxes levied pursuant to Section 2245-103(1)(d), C.R.S., for the construction of schools (e.g., the
acquisition of land and construction of structures) or for the
acquisition of instructional computer technology. If a district
levies the tax, this fund is required.
43 Capital Reserve Capital Projects Fund. Used to account for
the purposes and limitations specified by Section 22-45103(1)(c), C.R.S., including the acquisition of sites, buildings,
equipment, and vehicles. Fund 43 CAN be used for a capital
reserve fund which is classified as a capital projects fund.
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Similar to private business enterprises
Intent is that the costs (expenses, including
depreciation) of providing goods or services
to the general public on a continuing basis be
financed or recovered primarily through use
charges.
Activities are required to be reported as
enterprise funds if any one of the following
criteria is met. Governments should apply
each of these criteria in the context of the
activity’s principal revenue sources:
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◦ The activity is financed with debt that is secured solely
by a pledge of the net revenues from fees and charges of
the activity.
◦ Debt that is secured by a pledge of net revenues from
fees and charges and the full faith and credit of a related
primary government or component unit is not payable
solely from fees and charges of the activity.
◦ Laws and regulations require that the activity’s costs or
providing services, including capital costs, be recovered
with fees and charges, rather than with taxes or similar
revenues.
◦ The pricing policies of the activity establish fees and
charges designed to recover its costs, including capital
costs (such as depreciation or debt service).
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51 Food Service Fund. Used to record financial
transactions related to food service operations.
If the district receives USDA school
breakfast/lunch money, this fund is required.
◦ Recent changes have moved this fund number to 21
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effective July 1, 2014
Note:
Enterprise fund codes 52 through 59
are available for district use.
If funding is being provided by the General
Fund, the source code used in the Enterprise
Fund should be an appropriate source codes
(1973 – 1978) for data pipeline purposes.
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Services provided by one department or
agency to other departments or agencies of
the government and its component units, or
to other governmental units, on a costreimbursement basis.
Internal service funds should only be used if
the reporting government is the predominant
participant in the activity.
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The recording of user fee revenue generated
by charging other funds causes a double
counting of revenues and expenditures
To prevent the overstatement of revenue and
expenditure amounts on CDE reports,
districts must code revenues to the
appropriate source codes (1973-1978).
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63 Risk-Related Activity Fund (Used if a
second fund in addition to fund 64 below is
needed)
64 Risk-Related Activity Fund.
Note:
Internal service fund codes 61
through 62 and 65 through 69 are available
for district use.
Trust:
 Used to account for assets held in a trustee
capacity or as an agent for individuals, private
organizations, and/or other governmental units.
 Normally subject to a trust agreement that
affects the degree of management involvement
and the length of time that the resources are
held.
Agency funds do not involve a formal trust
agreement and the government's role is purely
custodial.
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72 Private-Purpose Trust Fund
◦ This fund may be used for expendable or nonexpendable scholarship programs
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73 Agency Fund
◦ Agency funds are custodial in nature and do not
involve measurement of operations. Agency funds
generally serve as clearing accounts.
74 Pupil Activity Agency Fund
◦ These activities are self-supporting and do not
receive any direct or indirect district support
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79 Permanent Funds should be used to report
resources that are legally restricted to the extent
that only earnings, and not principal, may be
used for purposes that support the reporting
government’s programs
85 Foundations – Accounting for Foundations
90 District Debt Fund. Used with Balance Sheet
Codes 7511, 7512, 7513, 7514, 7515, and 7519
(contra account) to report District Debt. Not a
true fund, used for data pipeline collection
purposes.
Section 4
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CDE does not allow the entity that CDE
provides with the Federal funding (District or
BOCES) to subgrant the Federal funding to
another entity.
In the cases where the District involves
another entity (charter school or District), the
FPP committee established the flow-thru
coding concept; please see Object Codes
0591-0594 and Source Codes 4951-4954,
3951-3954, and 1951-1954.
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This flow-thru coding (not to be confused
with the Federal grant pass through funding
concept or sub-granting) was established to
allow the other entity to report the activities
they performed on behalf of the District or
BOCES. It is therefore up to the District or
BOCES to meet, with the charter school or
other district assistance, the compliance
requirements related to Federal funding
provided to the District or BOCES.
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The use of the flow-thru object and source
coding may also include the appropriate
grant code involved.
The sum of the flow-thru Object Codes
(0591-0594), should agree with the sum of
the flow-thru Source Codes (1951-1954,
3951-3954, and 4951-4954) at the state
level. These sums may agree at the district
level for use with charter schools.
Section 5
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Basis of accounting determines when the
government will recognize transactions in the
accounting records and when they will be
reported in the financial statements.
◦ Governmental funds use the modified accrual basis of
accounting.
◦ Proprietary funds use the accrual basis of accounting.
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Accrual basis of accounting recognizes
transactions when they occur, despite the
timing of the related cash flows.
◦ Using this basis of accounting, revenues are
recognized in the accounting period which they
become objectively measurable and the government
earns them.
◦ Expenses are recognized in the period incurred
assuming that they are measurable.
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Modified accrual basis of accounting modifies
the accrual basis of accounting to reflect the
spending of financial resources.
◦ Revenues are recognized when they are measurable
and available.
 Measurable means you have some objective way to
quantify the revenue.
 Available means collectible within the current period
or soon enough thereafter to be used to pay
liabilities of the current period.
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Measurement focus determines what a
government measures and reports in its
financial statements.
◦ Governments use the flow of current financial
resources measurement focus.
◦ Proprietary funds use the economic resources
measurement focus.
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Current financial resources measurement
focus shows the extent to which financial
resources obtained during a period are
sufficient to cover claims incurred during
that period against financial resources.
With this measurement focus, only current
assets and current liabilities generally are
included on the balance sheet.
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Economic resources measurement focus
With this measurement focus, all assets and
all liabilities associated with the operation of
these funds are included on their statements
of net position.
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The “available” criterion applies to
reimbursement grants. For expenditure driven
grants in governmental funds, revenues are
recognized at the time of the expenditure only
if the reimbursement will be received within the
government’s period of availability.
Ensure that you request your June 30th Grants
Accounts Receivable prior to the end of your
revenue recognition period (may be 60 days or
more) to meet the “available” criterion
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GASB 34 requires a separate presentation of
financial statements for each type of
measurement focus:
◦ Fund Statements remain modified accrual basis of
accounting, current financial resources
measurement focus
◦ Government-Wide Statements combine and present
all non-fiduciary funds on a full accrual, economic
resources measurement focus
Section 6
*
* Land Improvements that have a useful life are depreciable
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Things to consider in implementing
depreciation.
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Depreciable lives
Depreciation methods
Capitalization threshold
In what department of the government does the asset
belong?
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Generally, will use straight line depreciation
Value of the asset should include all costs to
make the asset ready for use
Divide Value by life of asset to determine
yearly depreciation
Determine is you are going to use a half-year
convention or by number of months asset is
in place
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Infrastructure, defined as:
◦ Long-lived capital assets that can be preserved for a
significantly greater period than most capital assets
◦ Normally stationary items
◦ Examples:
 Roads and bridges, dams
 Water and sewer systems
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Do any of you have infrastructure?
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Reporting alternatives
◦ Historical cost based depreciation
◦ Modified approach
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No depreciation is required if the government
demonstrates that it is maintaining qualifying
infrastructure assets approximately at or above
the condition level established.
Condition assessments must be performed at
least every three years.
Section 7
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The government-wide statements include:
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Statement of Net Position.
Statement of Activities (cost of services approach).
Economic resources measurement focus.
Accrual basis of accounting.
Governmental activities.
Business-type activities.
Discretely presented component units.
Do not include Fiduciary Funds at the government-wide
level.
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All assets (including capital assets)
Deferred Inflows
All liabilities (including long-term liabilities)
Deferred Outflows
Net position (rather than fund balances, retained
earnings; GASB 34 was called total net assets).
◦ Invested in capital assets, net of related debt
◦ Restricted
◦ Unrestricted
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Choice between classified format or order of
liquidity.
Statement of Net Position
Deferred outflow of resources: a consumption
of net position by the government that is
applicable to a future reporting period
•
Has a positive effect on net position,
similar to assets
 Outflow of resources: a consumption of net
position by the government that is applicable
to the reporting period
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Some transactions in which the resulting item
should be reported as a deferred outflow of
resources (currently classified as assets)
–Grant paid in advance of meeting timing
requirement
–Deferred amounts from the refunding of
debt (debits)
–Costs to acquire rights to future revenues
(intra-entity)
–Deferred loss from sale-leaseback
Some transactions in which the resulting item
should be reported as a deferred outflow of
resources (currently classified as assets)
-Debt issuance costs (other than insurance)
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Initial direct costs incurred by the lessor
for operating leases
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Acquisition costs for risk pools
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Loan origination costs
Deferred inflow of resources: an acquisition
of net position by the government that is
applicable to a future reporting period
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Has a negative effect on net position,
similar to liabilities
 Inflow of resources: an acquisition of net
position by the government that is applicable
to the reporting period
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Some transactions in which the resulting item
should be reported as a deferred inflow of
resources (currently classified as liabilities)
–Grants received in advance of meeting timing
requirement
–Taxes received in advance
–Deferred amounts from refunding of debt
(credits)
–Proceeds from sales of future revenues
–Deferred gain from sale-leaseback
Some transactions in which the resulting item
should be reported as a deferred inflow of
resources (currently classified as liabilities)
– “Regulatory” credits (gains or other
reductions)
–“Unavailable” revenue in governmental funds
–Loan origination fees (excluding points) –
lessor accounting
–Commitment fees (after exercise of
expiration)
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Use Balance Sheet Code 7801 for Grant
revenues that were received after the
district’s revenue recognition period.
Avoid this situation by requesting your funds!
Use Balance Sheet Code 7482, if received
grant revenue prior to its being earned.
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Long-term assets
◦ Receivables
◦ Capital Assets
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Long-term Liabilities
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Debt
Compensated Absences
Claims and Judgments
Pension Benefit Obligation
Other Post Employment Benefits (OPEB)
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Inventory (expense when used rather than
when purchased).
Previously had the option of using the
consumption method or the purchase method,
but now we can only use the consumption
method.
Interest payable on long-term debt.
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Net cost format (expenses minus program
revenue – net cost)
Expenses by functions/programs
Revenues by:
◦ Program (charges for services and program specific
operating and capital grants) or
◦ General (i.e. taxes and other non program revenue)
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Special, extraordinary items and transfers
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Expenses/expenditures are reported by
function
◦ Direct expenses – required
◦ Indirect expenses allocation permitted
 Separate column for indirect expenses if allocated
◦ Depreciation
◦ Interest
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Program revenues reduce the net cost of a
program.
◦ Charges for services
◦ Program specific grants and contributions
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Net cost is financed by general revenues. All
revenues are general revenues unless they are
required to be reported as program revenues.
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Recognition of revenues on accrual basis.
◦ Property taxes – no availability criterion, recorded on
full accrual basis of accounting.
◦ Recognition of expenses for long-term liabilities.
 Compensated absences
 Claims and judgments
 Pension benefit obligation
 OPEB
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Fund Presentations
◦ Major funds
◦ Non-major funds presented in a single
column by category
◦ Major fund concept does not apply to
fiduciary funds or internal service funds
However, to meet Colorado Revised Statutes,
supplemental schedules are required for
reporting budgetary comparisons for all funds
and schedules of changes for fiduciary (agency)
funds.
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General Fund is always a major fund
Individual fund is:
◦ At least 10 percent of assets including deferred
outflows, liabilities including deferred inflows,
revenue, expenditures/expenses, ( excluding
extraordinary items) of the relevant category or fund
type
At least 5 percent of total governmental and enterprise
funds combined
Other funds that are deemed to be important
for separate disclosure
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Required Statements:
◦ Balance Sheet
◦ Statement of Revenue, Expenditures, and Changes in
Fund Balances
◦ Characteristics of governmental fund statements:
 Current financial resources measurements focus
 Modified accrual
 Reconciliation required to government-wide
statements for both statements
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Remove the ‘doubling up” effect of internal
service fund activity at government-wide level
Generally, assets and liabilities are reported
with governmental activities – unless internal
service funds primarily support business-type
activities.
The doubling up effect is addressed in the data
pipeline file by the use of additional negative offset
entries (source 1979 and object code 0529).
Triggered by the use of source codes 1973-1978.
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Used to account for the financing of goods or
services provided by one department or
agency to other departments or agencies of
the government and its component units, or
to other governmental units, on a costreimbursement basis.
To prevent the overstatement of revenue and
expenditure amounts on CDE reports,
districts must code revenues to the
appropriate source codes (1973-1978).
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Economic resources measurement focus
Accrual basis of accounting
Enterprise defined
◦ Debt secured solely by pledge of net revenues from
fees or charges
◦ Laws or regulations require recovery of cost
◦ Pricing policy designed to recover cost
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Classified Statement of Net Position
Statement of Revenue, Expenses, and Changes
in Net Position
Statement of Cash Flows
Reconciliation required for financial position
and operating statements (if necessary)
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Statement of Net Position (previously Net
Assets)
◦ Classified – current vs. long term
◦ Restricted assets must be reported as such
◦ Net position
 Invested in capital assets, net of related debt
 Restricted
 Unrestricted
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Operating Statement
◦ Distinguish between operating and non-operating
◦ Capital contributions and transfers reported
separately
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Cash Flow
◦ Four categories of cash flows
 Operating
 Non-capital financing
 Capital and related financing
 Investing
Direct method is required for cash flows
Reminder:
 Food
Service, as of July 1, 2014 is
moving from Fund 51 Proprietary
Fund to Fund 21 Special Revenue
Fund
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Sample disclosure as of July 1, 2014:
Restatement of Net Position and Fund Balance
The District previously reported the activity of the Food Service Fund in a proprietary fund. Beginning in fiscal year
2014-2015, such activity has been more appropriately reported in a special revenue fund. Accordingly, the newly
established special revenue fund reports a restated beginning balance of $xxx,xxx, which is equal to the net current
assets and current liabilities previously reported in the proprietary fund. All remaining assets and liabilities, including net
position of $xxx,xxx, previously reported in the proprietary fund are not recognized at the fund level under modified
accrual, and have been reclassified as assets and liabilities of the governmental activities as of July 1, 2014.
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Discrete presentation in government-wide
statements
Major component unit reporting choices:
◦ Separate columns in the government-wide statements
◦ Separate statements after fund presentations
◦ Condensed information in the notes
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Note: Charter schools are still required to
provide a separate governmental audit to its
authorizer and to CDE.

Budgetary comparisons for general fund and
major special revenue funds
◦
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◦
Original and final budget
Actual on budgetary basis or GAAP basis
Reconciliation to GAAP basis statements
When applicable – infrastructure-modified approach
 Three most recent condition assessments
 Estimated amount to maintain and preserve versus
actual amount for the last five years
Note: Budgetary comparisons are required as
supplemental information for all funds per State
Statutes.
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
The MD & A is a section of a government's
annual report in which management discusses
numerous aspects of the company, both past
and present.
Among other things, the MD&A provides an
overview of the previous year of operations and
how the government fared in that time period.


Management will usually also touch on the
upcoming year, outlining future goals and
approaches to new projects.
Note: to be considered as a complete audit,
the MD&A must be included.

The MD&A is a very important section of an
annual report, especially for those analyzing
the fundamentals, which include management
goals and management style. Although this
section contains useful information, investors
should keep in mind that the section is
unaudited.

MD&A’s should:
• enable readers to view the government through
the eyes of management;
• complement as well as supplement financial
statements;
• be reliable, that is, complete, fair and balanced,
and providing material information — namely,
information that could influence a reasonable
investor in making a decision to invest or
continue to invest in the government;
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Have a forward-looking orientation;
focus on management’s strategy for generating
value for investors over time;
be written in plain language, with candor and
without exaggeration, and
embody the qualities of understandability,
relevance, comparability and consistency over
reporting periods.

MD & A is the only required component of the
financial statements that has comparative
information. These comparative summaries or
schedules include:
◦
◦
◦
◦
Net Positions
Changes in Net Positions
Capital Assets
Long-term debt
Section 8

The TABOR amendment was approved by
Colorado voters in 1992. TABOR places limits
on revenue, spending, and debt which may be
weakened only by the approval of the voters.

TABOR requires the establishment of
“emergency reserves… to use for declared
emergencies only”, amounting to “3% or more
of its fiscal year spending excluding bonded
debt service”. [TABOR (5)]

“Fiscal year spending means all district
expenditures and reserve increases except, as
to both, refunds made in the current or next
fiscal year or those from gifts, federal funds,
collections for another government, pension
contributions by employees and pension fund
earnings, reserve transfers or expenditures,
damage awards, or property sales”. [TABOR (2)
(e)]

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The term “reserve” in the definition of fiscal
year spending refers to fund balances, and
“reserve transfers or expenditures” means
moneys which are passed from one fund of
cash or assets held as a reserve to another
such fund or moneys which are disbursed from
such fund.
Therefore, districts use “revenues” for TABOR
determinations.
Section 9
Key element in Internal Control
Should not be able to perpetrate and to conceal
errors or fraud in their normal course of their
duties.
Fraud Triangle: 3 factors that contribute to
fraudulent activity by employees:
opportunity, financial pressure, and
rationalization.
Incompatible duties to be segregated
 Custody of assets.
 Authorization or approval of related
transactions affecting those assets.
 Recording or reporting of related
transactions.

If can’t segregate duties, consider what
compensating controls to use
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All accruals and deferrals should be recorded
i.e. booked (revenue recognition and
matching principal).
All balance sheets accounts should be
reconciled.
Have available all supporting worksheets and
reconciliations to “prove” the balances,
including bank reconciliations.

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Trial Balance should be “Balanced”.
Adopted and any revisions to Budgets
available.
Review prior year(s) journal entries made by
the auditors.
Colorado Statutes and Constitution
http://www.leg.state.co.us
Colorado Department of Education
http://www.cde.state.co.us/cdefinance

Contact: Bert Huszcza, Executive Director
at
[email protected]
Or go to
www.ColoradoASBO.org
Q&A