Walter Wallace

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Fundamentals of Finance and Accounting for
Non-Financial Employees

• Walter Wallace
• Chief Business Officer
• Granada Hills Charter High School
• California Charter Schools Conference
• March 5, 2008

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Topics for Today

• Basic Accounting
• Financial Reporting Funding
• Accounts Payable
• Accounts Receivable
• Payroll
• Categorical Programs

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Basic Accounting

• If you have not had a class in accounting,
  consider taking one!
• Single vs. Double Entry
• Single Entry informal one entry check book
• Double Entry formal two entries accounting
  system

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Basic AccountingTypes of Accounts

• Balance Sheet
• ASSETS
• LIABILITIES
• FUND BALANCE

• Income Statement
• REVENUES
• EXPENDITURES

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For Every Debit There Is a Credit

• OR
• Debits Credits

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Basic Accounting

• DEBIT

• CREDIT

• increases
• ASSETS
• EXPENDITURES
• --------------------------------
• decreases
• LIABILITIES
• REVENUE
• FUND BALANCE

• increases
• LIABILITIES
• REVENUE
• FUND BALANCE
• --------------------------------
• decreases
• ASSETS
• EXPENDITURES

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Basic Accounting

• RESOURCES
• California School Accounting Manual
• http//www.cde.ca.gov/fg/ac/sa
• Basic Accounting Tutorial
• http//www.dwmbeancounter.com/tutorial/Tutorial.ht
  ml

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Financial Reporting

• Generally required by state law and your charter
  document
• Adopted Budget July 1
• 1st Interim Report October 31 due early
  December
• 2nd Interim Report January 31 due early March
• Unaudited Actuals Report June 30 early August

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Financial Reporting

• Revenue
• Expenditures
• Fund Balance
• Components of Fund Balance
• Projected Balance Sheet

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Financial Reporting - Revenue

• Revenue Limit Sources (Object 8011 8099)
• Charter Block Grant 8015 State portion
• In lieu of Property Taxes 8096 new account
• Federal Revenue (Object 8100 8299)
• Consolidated Application Programs
• Federal meal reimbursement
• Other federal grants

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Financial Reporting - Revenue

• Other State Revenue (Object 8300 8599)
• Categorical Block Grant
• Supplemental Hours
• State meal reimbursement
• Lottery funding
• Special education
• Other specific state entitlements Art Music
  Block Grant, Counseling Block Grant, etc.

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Financial Reporting - Revenue

• Other Local Revenue (Object 8600 8799)
• Cafeteria Sales
• Interest earned
• Other local income

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Financial Reporting - Expenditures

• Certificated Salaries (Object 1000 1999)
• Classified Salaries (Object 2000 2999)
• Employee Benefits (Object 3000 3999)
• Books and Supplies (Object 4000 4999)
• Services, Other Operating (Object 5000 5999)
• Capital Outlay (Object 6000 6999)
• Direct Support, Indirect (Object 7300 7399)

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Financial Reporting Fund Balance

• Beginning balance Revenue Expenditures
• Certain amounts must be reserved and designated
  leaving the rest as Undesignated /
  Unappropriated
• Reserved Amounts
• Revolving Cash
• Stores
• Prepaid Expenditures
• Categorical / Restricted Balances

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Financial Reporting Fund Balance

• Designated Amounts
• Economic Uncertainties usually 5 expenditures
• Other amounts and purposes determined by
  Governing Board

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Business Office Responsibilities

• Accounts Payable
• Accounts Receivable
• Payroll
• Categorical Programs

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Business Office Accounts Payable

• Internal Control separation of responsibilities
• Ordering and receiving materials
• Approving payment and check writing
• Ordering and Paying for materials
• Reviewing account codes
• Monitoring budget lines
• Maintaining financial records
• Communicating with vendors and employees
• Credit Cards documentation and approval

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Business Office Accounts Receivable

• Internal Control separation of responsibilities
• Log of checks received
• Cash Receipts / Bank Deposits
• Billing Invoices advances, damages, rentals
• Year end accruals of items earned but not
  received by June 30
• Apportionment/Grant Letters and Schedules
• www.cde.ca.gov, Finance Grants, Funding

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Business Office Accounts Receivable

• There are three apportionment certifications
• February P1
• June (July) P2
• February (following year) Annual
• There can be several additional annual
  certifications, if there are changes in funding
  rate or ADA

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Business Office Accounts Receivable

• How do the certifications affect payments?
• Advance apportionment
• Determined in July based on previous months P-2
• Directs payments from July through January
• February (P-1) apportionment
• First determination of rates multiplied by Dec.
  15 (P-1) ADA
• From total calculated subtract July January
  payment
• Pay 2/6 of remainder in February, 1/6 in March,
  April, and May
• June (P-2) apportionment
• Second determination of rates multiplied by Apr.
  15 (P-2) ADA
• From total calculated subtract all previous
  payments
• Pay remainder in early July
• What is your schools history on P-1/P-2
  attendance?

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Business Office Accounts Receivable
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Business Office Accounts Receivable
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Business Office Payroll

• Most schools will outsource payroll operation
• If so, each payroll journal must be posted to the
  schools general ledger via journal entry
• Tax payments withheld and matching amounts
  deposited to IRS and EDD deposit schedule
• Who is doing your quarterly tax reports?
• What types of retirement options do you offer?

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Business Office Categorical Programs

• For charter schools, not many programs outside
  Categorical Block Grant
• Consolidated Application federal programs
• New state programs
• Art Music
• Physical Education
• Counselors
• Federal School Lunch Program

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Business Office Categorical Programs

• Grants
• Revenue is recognized as expenditures are made
  expenditures must equal revenue at year end
  expenditures cannot exceed award year end fund
  balance will always be zero
• If revenue exceeds expenditures at year end,
  balance goes to deferred revenue (liability)
  reverse in following year
• If revenue is less than expenditures at year end,
  record difference as receivable

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Business Office Categorical Programs

• Entitlements
• Based on an allocation formula revenue
  recognized when awarded
• At year end, any amount unspent goes to
  restricted fund balance
• At year end, record receivable for balance of
  entitlement not received
• If one-time award, expenditures will exceed
  revenue in the new year be sure to reduce
  categorical reserve in fund balance

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Business Office Categorical Programs

• CAT report in SACS software will help you
  determine deferrals and receivables at year end

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Materials Available Online

• Charter Conference Materials
• Complete 2nd Interim Financial Report
• Business Services Guide Accounting Section
• FCMAT Predictors
• PowerPoint Presentation
• CAT Report
• Presenter Contact Information
• wwallace_at_ghchs.com