Skip Navigation
Financial Accounting for Local and State School Systems, 2003 Edition

Account Classification Description
Quick Code Finder by Number/Category
Code Descriptions in Alphabetical Order

Table of Contents
Uses of Information
Governmental  Accounting
Financial Accounting
Cost Accounting and Reporting for Educational Programs
Activity Fund Guidelines
Summary of Account Code Changes and other Appendices
PDF File (1044 KB)

Frank Johnson
(202) 502-7362

Chapter 1: Introduction

This 2003 revision of the National Center for Education Statistics (NCES) handbook, Financial Accounting for State and Local School Systems, reflects the many changes that have taken place since its initial publication in 1980 and modest update in 1990. It is anticipated that this handbook will receive periodic updates to ensure that contemporary issues are regularly incorporated into the accounting guidance for schools. The online version of this handbook will be updated as revisions are approved.

This handbook represents a national set of standards and guidance for school system accounting through January 2003, incorporating guidance from Governmental Accounting Standards Board (GASB) statements through 39. Its purpose is to help ensure that education fiscal data are reported comprehensively and uniformly. To be accountable for public funds and to assist educational decisionmakers, all school financial reports need to contain the same types of financial statements for the same categories and types of funds and account groups. This revised and restructured guidance focuses on

  • defining account classifications that provide meaningful financial management information for its users;
  • complying with generally accepted accounting principles (GAAP), established by the GASB;
  • recognizing the changes that have taken place in technology, safety, and security; and
  • supporting federal reporting requirements.
This revision was prepared with guidance from a national panel of experts representing national accounting firms, accounting board officials, and practitioners. A working Task Force of the National Forum on Education Statistics (NFES) included national, state, and local education accounting practitioners. The members of the review panel and the Task Force are listed on the opening pages of this handbook.

The statutes and regulations regarding school accounting differ from state to state. Those differences may require states, school districts, and schools to adapt the guidance that appears in this handbook. However, consistent practices and terminology are critical to accountability for government funds. The accounting methods must be capable of producing financial reports that conform with GAAP and with the legal requirements of each state, if the two differ.

Major Changes and Chapter Highlights

The updates to this handbook incorporate many changes in content and structure. The remainder of the introduction highlights the chapters and the major changes in each chapter.

Chapter 2: Uses of Information

This discussion of the role of the fiscal data system in education management and policymaking includes the advantages of alignment with a comprehensive information system and an overview of the users of education information.

Chapter 3: Budgeting

Formerly, this topic was covered briefly in the "Uses of Account Classification System" chapter. This new chapter expands the discussions of budgeting methods and budget preparation, including capital budgeting. It addresses budgetary approaches and responsibilities, financial forecasting, and special budgeting practices such as multiyear construction projects.

Chapter 4: Governmental Accounting

Formerly, this topic was also covered briefly in the "Uses of Account Classification System" chapter. This new chapter expands the topic of accounting systems and requirements for governmental accounting to provide information on internal control practices as well as new information on fund-level reporting and governmentwide reporting required by GASB Statement 34.

Chapter 5: Financial Reporting

This new chapter in this handbook outlines the major financial statement elements and reporting requirements for governments. It significantly expands the guidance provided in the former "Account Classifications" chapter and describes each major balance sheet element. Where detailed guidance is provided by a particular GASB requirement, this chapter offers additional guidance. Financial statements for governments are highlighted, particularly in regard to changes owing to GASB Statement 34.

Chapter 6: Account Classification Descriptions

This new chapter consolidates the former "Account Classifications" and "Account Classification Description" chapters into a single account code chapter. Several changes and additions have been made, including revising obsolete language and expanding the codes for technology, safety, and security. A detailed list of account code changes is presented in appendix A.

Chapter 7: Cost Accounting and Reporting for Educational Programs

Equity and accountability issues have expanded the need for cost information at school and program levels. This chapter presents cost accounting methods and examples of the use of existing data systems to provide this information.

Chapter 8: Activity Fund Guidelines

This new chapter addresses the complex issues surrounding student activity funds. It defines and distinguishes activity funds and provides proper classification. The chapter gives initial guidance for improving controls and for accounting for and reporting these funds. The requirements of the most recent GASB standards are also addressed.

[back to top]