This chapter establishes the hierarchy
of the account code structure. This structure gives an entity the
ability to accurately and effectively report on its financial activities.
The hierarchy for both revenues and expenditures gives districts
the necessary code structure to segregate and group accounts with
the greatest amount of flexibility and, therefore, the ability to
produce the most useful financial statements.
This chapter provides the basic account structure
necessary for uniform financial reporting by state education agencies
and public schools, including charter schools. Additionally, private
schools may use this chart of accounts to report financial information
that is comparable to that of the public education sector. Local
and state needs and requirements may call for additional levels
of account details and reporting requirements to be added to this
basic structure. The basic structure and codes discussed herein
are sufficient to comply with federal reporting requirements and
those established by GASB Statement 34 for fund reporting.
The account code structure associated with revenues
is relatively straightforward because each revenue is identified
by source, ranging from general to specific. Expenditures, however,
use a series of levels in a hierarchy to identify the following:
- The fund from which funds are being expended
- The program that is spending the funds
- The function for which the funds are being
spent
- The object on which the funds are spent
- The project for which funds are being spent
(used mainly for reporting, e.g., grants)
- The level of instruction associated with the
expenditure
- The operational unit on which the funds are
being spent
- The subject matter on which the funds are being
spent
- The job class associated with the expenditure
Although the code structure for the accounting
of expenditures may initially appear complex, it has been established
to develop sound guidelines for school district account codes and,
therefore, to provide for more comparable financial statements among
districts.
A "Permanent Fund" (code
5) was added in the draft 2003 handbook to account for resources
that are legally restricted to the extent that only earnings, and
not principal, may be used by the school district. Codes for Enterprise
Funds and Internal Service Funds were moved up to make room for
the new Permanent Fund code. The Trust and Agency Fund in the 1990
handbook was broken out into two funds in the 2003 handbook; Trust
Funds (code 8) and Agency Funds (code
9). The General Fixed Assests (in the 1990 handbook) was deleted.
The new fund classifications are presented below.
| Code Description
|
|
Governmental
Fund Types |
| 1. |
General Fund. This fund is the chief operating fund
of the school district. It is used to account for all financial
resources of the school district except for those required to
be accounted for in another fund. A district may have only one
general fund. |
| 2. |
Special Revenue Funds. This fund is used to account
for the proceeds of specific revenue sources (other than trusts
or major capital projects) that are legally restricted to expenditure
for specified purposes. Some examples of special revenue funds
are |
| |
- restricted state or federal grants-in-aid
and
- restricted tax levies.
|
| |
A separate fund may be used for each identified restricted
source, or one fund may be used, supplemented by the classification
Project/Reporting code. |
| 3. |
Capital Projects Funds. This fund is used to account
for financial resources to be used to acquire or construct major
capital facilities (other than those of Proprietary funds and
trust funds). The most common source of capital projects funding
is the sale of bonds or other capital financing instruments.
A separate fund may be used for each capital project or one
fund may be used, supplemented by the classification Project/Reporting
code. |
| 4. |
Debt Service Funds. This fund is used to account for
the accumulation of resources for, and the payment of, general
long-term debt principal and interest. |
| 5. |
Permanent Funds. This fund is used to account for resources
that are legally restricted to the extent that only earnings,
and not principal, may be used for purposes that support the
school district's programs. |
| Proprietary Fund Types |
| 6. |
Enterprise Funds. This fund may be used to account
for any activity for which a fee is charged to external users
for goods or services. Enterprise funds are required to be used
to account for any activity whose principal revenue sources
meet any of the following criteria: |
| |
- Debt backed solely by revenues from fees
and charges (thus, not debt that is backed by the full faith
and credit of the school district)
- Legal requirement to recover costs through
fees and charges
- Policy decision of the governing board
of management to recover the costs of providing services
through fees or charges
- Some examples of enterprise funds are
activities such as the food service program, the bookstore
operation, the athletic stadium, or the community swimming
pool.
|
| 7. |
Internal Service Funds. This fund may be used to account
for any activity within the school district that provides goods
or services to other funds, departments, component units, or
other governments on a cost-reimbursement basis. The use of
an internal service fund is appropriate only for activities
in which the school district is the predominant participant
in the activity. Otherwise, the activity should be reported
as an enterprise fund. Examples of internal service funds are
such activities as central warehousing and purchasing, central
data processing, and central printing and duplicating. |
| Fiduciary Fund Types |
| 8. |
Trust Funds. These funds are used to account for assets
held by a school district in a trustee capacity for others (e.g.,
members and beneficiaries of pension plans, external investment
pools, or private purpose trust arrangements) and therefore
cannot be used to support the school district's own programs.
Trust funds are generally accounted for on the economic resources
measurement focus and the accrual basis of accounting (except
for the recognition of certain liabilities of defined benefit
pension plans and certain post-employment healthcare plans;
refer to GASB 26 and 27 for guidance on the recognition of these
liabilities). Trust funds include pension trust funds, investment
trust funds, and private-purpose trust funds (as described below). |
| |
Pension Trust Funds. This fund is used to account for
resources that are required to be held in trust for members
and beneficiaries of defined benefit pension plans, defined
contribution plans, other post-employment benefit plans, or
other benefit plans. Typically, these funds are used to account
for local pension and other employee benefit funds that are
provided by a school district in lieu of or in addition to any
state retirement system. |
| |
Investment Trust Funds. This fund is used to account
for the external portion (i.e., the portion that does not belong
to the school district) of investment pools operated by the
school district. |
| |
Private-Purpose Trust Funds. This fund is used to account
for other trust arrangements under which the principal and income
benefit individuals, private organizations, or other governments.
|
| 9. |
Agency Funds. This account is used for funds that are
held in a custodial capacity by a school district for individuals,
private organizations, or other governments. Agency funds may
include those used to account for student activities or taxes
collected for another government. |
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