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Financial Accounting for Local and State School Systems: 2009 Edition
NCES 2009-325
June 2009

Chapter 8: Activity Fund Guidelines

Historically, little attention has been given to accounting for activity funds in school districts. The nature of activity funds, however, makes them especially vulnerable to error, misuse, and fraud. In addition, activity funds often total to large sums of money, especially when capturing the amounts that flow through an educational organization in the form of school board funds, student-generated funds, receipts and disbursements related to athletics, and the myriad cocurricular and extracurricular events sponsored by school districts today. This chapter recommends policies and procedures6 for improving controls over these funds and promotes capturing all student activity-related monies in the district's financial records. Please note, however, that the guidelines presented are minimum controls that local school districts may expand on. In addition, since these guidelines are not generally mandated in any jurisdiction, the controls imposed in a particular state may be greater or lesser than those that are suggested here.7

This chapter provides a total systems view that

  • defines and distinguishes the types of activity funds and their proper classification;
  • delineates controls for establishing and maintaining activity funds; and
  • provides initial guidance on accounting for and reporting of activity funds, including requirements emanating from GASB Statement 34.

Recommended policies and procedures based on current best practices for operating activity funds are also provided.


6 For an example of a well-constructed student activity funds operating manual, go to INTERNAL ACCOUNTS MANUAL for LEON COUNTY SCHOOLS. The sections in this chapter relating to general policies and controls are indebted to and follow closely from the Kansas State Department of Education's guidelines.
7 Individual states may already have directive legislation and/or advisory guidelines for the treatment of activity funds. Consequently, see each state's statutory requirements for accounting for activity fund monies. More generally, useful references related to activity fund accounting are Everett, Lows, and Johnson (1996); Governmental Accounting Standards Board (2000); Association of School Business Officials International (2000).

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