Meeting held at the California Department of Education (CDE), Sacramento
Meeting Agenda
Announcements
-
California School Accounting Manual (CSAM) 2011 is available on the California Department of Education (CDE) Website
-
October SACS Forum minutes available on the CDE Website
Accounting Issues
-
2010–11 unaudited actuals data review – common coding/reporting issues noted by the CDE
-
New object code for reporting commodities – update
-
Use of receivables objects 9200 and 9290 – update
-
New and proposed GASB pronouncements: implications for LEA financial reporting – update
SACS Software Issues
-
SACS2012 software – continued discussion of proposed changes
Other Issues/Next Meeting
- Next Meeting
Meeting Minutes
Announcements
-
California School Accounting Manual (CSAM) 2011 is available on the CDE Website
The CSAM [http://www.cde.ca.gov/fg/ac/sa/] is available for viewing and download.
-
October SACS Forum minutes available on the CDE Website
The October 4 SACS Forum minutes [http://www.cde.ca.gov/fg/ac/ac/sacsforumrecap.asp] are now posted.
Accounting Issues
-
2010–11 unaudited actuals data review – common coding/reporting issues noted by CDE
The CDE distributed and reviewed a list of common coding and reporting issues noted during the 2010–11 unaudited actuals data review (Attachment A) [http://www.cde.ca.gov/fg/ac/ac/sacsminutes011012a.asp]. The CDE mentioned that again this year most of the time taken for review was focused on indirect cost rate calculations where the percentage change in the straight rate was significant as compared to the prior year or where it was above or below the threshold that triggered the related technical review exception (TRC).
Also noted was that some charter schools reporting using SACS are still having difficulty applying the correct coding to their financial activity, e.g., lumping salary and benefits into salary account lines, not coding salary and related benefits for one employee together in the same resource, goal and/or function combination.Following is additional guidance regarding a few specific issues noted in the list referenced above.
-
E-Rate
Several of the technical review exceptions generated for negative object code balances were a result of E-rate reimbursements.
The CDE is advising local educational agencies (LEAs) to account for E-rate reimbursements as a discount, not a grant or subsidy. LEAs should treat the E-rate discount the same as any other discount, even though the E-rate discount may be a significant amount. LEAs should record the expenditure or the purchase of equipment at net cost, not full value.
LEAs may use a contra-account to record the discount in order to keep the full amount of the expenditure intact for informational purposes. The use of contra-accounts is discussed in CSAM Procedure 560, Abatement of Expenditures. For example, the LEA accounts for its telephone service costs before discount using the normal expenditure object, and accounts for the discount in a contra-account:
Debit/Credit Object Code Account Amount Debit 5900 Communications 10,000 Credit 5901 E-rate discount 9,000
If the discounted cost of a piece of equipment does not meet the LEA’s defined capitalization threshold, the LEA will not capitalize the item, but should include it in the equipment inventory for internal control purposes and should document its replacement cost for insurance purposes.
Consistent with the guidance in Procedure 560, E-rate reimbursements received for expenditures incurred in a prior year should be accounted for as local revenue, Object 8699. Note that although E-Rate is a federal program, funding does not derive from the federal sources; rather, E-rate is a federally mandated local program where the funding stays within the service area of the communication provider.
- Special Education funding passed through to charter schools
In conjunction with the discussion of coding issues for Special Education pass-through funding, participants asked the CDE for guidance regarding how to record funding passed-through to charter schools by an authorizing LEA other than the special education local plan area (SELPA) administrative unit (AU). Note that this is an evolving issue so the CDE’s guidance could change in the future as internal research and discussions continue.
Background: The manner in which a SELPA apportions special education funding for a charter school depends on whether the charter school is a member of the SELPA “as its own LEA” or “as a school of the [authorizing] LEA.” If the charter school is a member of the SELPA as its own LEA, the charter school is responsible for providing special education services to its students and receives its special education funding from the SELPA on the same basis as any other LEA in the SELPA, in accordance with the local plan. If the charter school is a school of the LEA, the LEA is responsible for providing special education services to the charter school’s students and the LEA receives the funding from the SELPA.
Where the authorizing LEA is responsible for providing special education services to the charter school’s students, but contracts with the charter school to provide some or all of the services, this arrangement is indicative of a subagreement for services where the payment by the LEA to the charter school would be recorded as if the LEA had a contract with an independent vendor to provide Special Education services to the district. For example, the district might reimburse the charter school for providing supplemental services to nonseverely handicapped students. The district’s entry to record the payment would reflect the appropriate Special Education goal, Special Education instructional function and/or other support function, and Object 5100 (or Object 5800 for the first $25,000). The charter school would record the revenue as interagency services, Object 8677, and code the expenditures using a non-agency goal since the district would be coding the subagreement payment to the appropriate special education goal.
Where the charter school is responsible for providing special education services to its own students, but for some reason the funding is apportioned by the SELPA to the authorizing LEA and is passed through by the LEA to the charter school, the LEA most likely has only administrative involvement in the Special Education pass-through revenues. Therefore, the pass-through accounting model would be appropriate. The specific entries would depend on what type of funding is passed through, e.g., state Special Education apportionment, other state Special Education funding, or federal Special Education funding. Examples of these entries can be found in CSAM Procedure 755, Special Education.
It would not be appropriate for an LEA that is not the SELPA AU to use Fund 10 for the funding passed through to the charter school. Note that using the pass-through transaction in the LEA’s general fund may create a warning technical review exception (SE-PASS-THRU-REVENUE), which will just need to be explained.
-
New object code for reporting commodities – update
The CDE received little feedback regarding the proposal to establish a new object code for reporting food commodities as discussed at the October meeting. The CDE plans to go forward with setting up the new code and proposed Object 8225. At minimum it will be opened to Resource 5310 in Fund 01, Fund 13 and Fund 61. Additional information will continue to be provided at future meetings. The new object is proposed to become effective July 1, 2012.
-
Use of receivables objects 9200 and 9290 – update
The CDE is continuing to evaluate the need for the two object codes currently established to record receivables. As discussed at the October meeting, the CDE noted that the majority of LEAs are reporting receivables using Object 9200, Accounts Receivable, even though most receivables are due from federal, state, or local governmental agencies and should be recorded using Object 9290, Due From Grantor Governments.
The CDE noted that prior to SACS there was only one receivables object code. The establishment of the additional object code when SACS was implemented was to align with the federal school accounting manual, which provides separate codes for intergovernmental receivables versus other receivables.
- New and proposed GASB pronouncements: implications for LEA financial reporting – update
The CDE provided an update regarding on the new and proposed Governmental Accounting Standards Board (GASB) pronouncements that were initially discussed at the October meeting.
-
GASB Statement 61 – The Financial Reporting Entity
As discussed at the October meeting, this Statement modifies some of the requirements for determining a component unit of a primary government and how that component unit should be reported in the primary government’s financial statements. The CDE noted that this Statement would require charter schools that are determined to be reported as a blended component unit to be reported in a special revenue fund and not as part of the primary government’s general fund.
The CDE communicated that it will be issuing guidance to the extent practicable, and that the determination of whether a charter school is a legally separate entity that would even meet the definition of a component unit may require a legal opinion that may not be finalized before this Statement is required to be implemented. Therefore, LEAs should use the information that is most reasonable in their circumstances in order to determine whether a charter school is a component unit and if so how that component unit should be reported in the financial statements.
-
GASB Statement 63 – Reporting Deferred Inflows and Deferred Outflows
As discussed at the October meeting, this Statement prescribes how the new financial statement elements, deferred inflows of resource and deferred outflows of resources, should be reported in the financial statements. The CDE is in the process of determining the appropriate changes to the SACS financial reporting software forms and reports. There is a pending GASB Statement that will specify the types of transactions should be reported as deferred inflows or deferred outflows. Until this statement is issued the CDE can not know for certain which fund forms the changes will affect.
-
Proposed pension reporting standards
The GASB is still in deliberations, reviewing Exposure Draft comments and field test results.Also, the CDE noted that there is another pending GASB project regarding economic conditions reporting, for which a Preliminary Views document was recently published. The proposed standards would require financial projections to be included in a governmental entity’s general purpose financial statements. The project page
is available on the GASB Website.
-
SACS Software Issues
- SACS2012 software – continued discussion of proposed changes
Attachment B [http://www.cde.ca.gov/fg/ac/ac/sacsminutes011012b.asp] summarizes the proposed SACS2012 software changes that continued the discussion started at the October meeting.
There was additional discussion on some of the proposed changes, as noted below.
- Fund 09
The CDE continued the discussion from the October meeting regarding discontinuing Fund 09 for separately reporting charter schools only. There were questions at the October meeting about how the Fund 09 2011–12 ending fund balance would be reported as beginning fund balance in Fund 01 in 2012–13.
The CDE is advising that for 2011–12, charter schools close with ending balances in Fund 09. For 2012–13, beginning balances (Object 9791) will be reported that agree with the ending balances reported for 2011–12, and restatement entries (Object 9795, with corresponding offsets to the appropriate asset and/or liability accounts) made to reclassify beginning balances from Fund 09 to Fund 01 (or Fund 62 if appropriate).
The CDE is proposing a new fatal technical review check (TRC) to ensure that there is no balance reported in Fund 09, object codes 1000 – 8999 and 979Z (ending balance) for 2012–13, again only for separately reported charter schools. Some participants expressed concern with this proposal because accrual-clearing activities need to be allowed in 2012–13. There was a request to possibly allow this TRC to be warning for 2012–13 or to allow more object codes to be excluded from the TRC.The CDE would like to clarify that Fund 09 code combinations will remain open, as Fund 09 is still valid for charter school activity that is reported as part of a school district or COE. This will allow the local financial systems to accept transactions for accrual-clearing activities where these systems validate against the CDE valid code combination tables. However, the accrual-clearing activities should result in zero balances in all Fund 09 accounts by 2012–13 year-end. Note that it may be necessary to make manual adjusting entries to clear account balances, including those resulting from minor differences between amounts accrued in 2011–12 and the actual transaction posted in 2012–13.
-
Form CASH
In addition to the changes presented in the attached summary, there were a few additional change requests discussed:
-
Internal form check to compare the budget and total columns – informational warning exception. There was some discussion regarding which lines to compare, e.g., section totals versus individual lines. The consensus was that individual lines should be compared.
The CDE is in the process of incorporating this into Form CASH. -
Additional Form CASH for preparing a subsequent year’s analysis. Suggestion for a second tab added to the current Form CASH.
The CDE will evaluate this request and provide an update at a future meeting.
-
Option to print portrait or landscape orientation
NOTE: users have the option to change the print orientation by clicking on the “Properties” button in the print screen.
-
Other Issues/Next Meeting
- Next meeting
It was announced that the next meeting would be held on March 6, 2012 at the CDE. However, subsequent to the meeting that date was cancelled. The CDE will announce a new date once it is available.
