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GORENZ DISTRICT NEWSLINE A newsletter of audit significance from Gorenz and Associates, Ltd., Peoria, IL November 2006 What Is In Your Chart of Accounts? When it comes to coding an expenditure, the Illinois Program Accounting Manual gives you well over five hundred and thirty choices. There are over six hundred revenue accounts to choose from. The balance sheet is made up of over one hundred and seventy accounts. And this is just the standard, “simplified” Chart of Accounts. The bare bones; fund, function, object numbers. However complicated, convoluted, or detailed your district’s Chart of Accounts has become, it must be crunched down to this simplified form in order to be reported to ISBE for both budget and annual reporting purposes. When is the last time you reviewed your District’s Chart of Accounts? How many account number choices are currently available to complicate and confuse everyone? Are each of your account numbers fifteen digits long? Do you keep piling new accounts on to where the chart itself is three hundred pages long? Most software programs won’t limit you. Set up as many as you want. It may even be a selling point for their product. We encourage you to step back to square one. Rethink what you are accomplishing with your financial reports. You should start with the users of your financial reports – your Board, the administration, ISBE, granting agencies, and the public. What information do they need or want to know? How much detail is too much? Consider the following example. The Program Accounting Manual has one account for athletic admissions (A/C 1711). Does your Chart of Accounts track all admissions separately by sport, by school, by gender? Who uses the information? Do you need all the detail? What about expenses? Are you tracking repairs by each building or is there just one repair account under purchased services? Certain federal and state grants require expenditure reports which are more easily processed by tracking expenditures separately. This can usually be accomplished by assigning a source of funds code for each grant and coding expenditures accordingly. Have you set up a source of funds code for Tort and Lease levy expenditures? There is no “one size fits all” answer for a Chart of Accounts. Our observation is that districts typically have gone overboard with their chart. Or they have not reviewed the chart to simplify it; getting rid of old, unused accounts. At times, less detail is better than volumes of complicated numbers. You may even spend less time – bookkeeping. New Oath of Office for Board Members Effective when the governor signed it into law (June 20, 2006), HB4310 (now P.A. 94-0881) requires new school board members to take a specific oath of office. It also specifically spells out school board member responsibilities – “the school board shall direct, through policy, the superintendent in his or her charge of the administration of the school district concerning the budget, building plans, location of sites, selection, retention, and dismissal of employees, and the selection of textbooks, instructional material, and course of study.” The original bill would also have required mandatory training approved by the ISBE for board members. The School Management Alliance successfully defeated this portion of the legislation.
SB 1853, Financial Difficulty Determination, now law as Public Act 94-0234 has more specifically defined this term and given the ISBE more options in “assisting” Financially Troubled Districts. The new definition includes districts that have needed to issue teacher orders to meet payroll, issued short-term debt against two or more revenue sources, and districts that have refused to provide financial information to the ISBE. This is also the law that now requires districts to adopt and file with the ISBE an annual balanced budget. Districts that adopt a budget that is not “balanced” will be required to adopt and file a deficit reduction plan to balance the budget within three years. The deficit reduction plan is required to be filed with the ISBE and must be submitted at the same time as the annual budget. For this purpose a balanced budget is defined as one in which deficit spending does not exceed 1/3 of ending operating fund balances (Ed, O&M, Trans, and WC). From a budgeting stand point this is the same as one in which expenditures do not exceed revenue by more than 25% of the beginning funds available in the operating fund balances. Deficits in one operating fund will be allowed with an explanation and documentation that surpluses exist in other operating funds. IRS Announces increased 403B contribution limits for 2007 The maximum 403B contribution will increase from the current $15,000 to $15,500 in 2007. The “catch up” amount for any one over 50 years of age will remain at $5,000. Is your 403B plan being properly managed? You ARE responsible. The IRS has published a “403(b) Plan Checklist” to assist you with plan management. You can obtain this checklist on the internet at http://www.irs.gov/pub/irs-pdf/p4546.pdf . We strongly encourage everyone to review this checklist and your responsibilities as a 403(b) employer. Cyber Voting Available after January 1, 2007 SB585, an amendment to the Open Meetings Act, was signed by the governor on July 31, 2006 and will be effective January 1, 2007. This law addresses the use of electronic communications during board meetings. You now may have a board member present and voting via telephone, video or audio conference, or other electronic means of contemporaneous interactive communication for the purpose of discussing public business. Previously, a board member could participate, but not vote. Now a member present by electronic means may vote as long a quorum is physically present at the meeting. This has also been extended to executive session discussions, again as long as a quorum is physically present. 2007 Federal Mileage Rate The IRS announced in IR 2006-168 that the optional mileage allowance for owned or leased autos is 48.5¢ for business travel after 2006 under accountable plans. That's 4¢ more than the 44.5¢ allowance for 2006 business travel. This increase is due to higher prices for vehicles and fuel. Reminder: Mileage reimbursements under a non-accountable plan (i.e. a flat reimbursement of $200 per month) need to be added to the employee’s W-2 at the end of each calendar year as taxable wages. This publication is distributed for general information. It is not intended to address specific matters or render legal opinion. |
