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

Chapter 6: Account Classification Descriptions

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 school 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.

The basic account structure provides 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. The basic structure and codes discussed herein are sufficient to comply with federal reporting requirements and those established by Governmental Accounting Standards Board (GASB) Statement Concept 34 for fund reporting. Local and state needs and requirements may call for additional levels of account details to be added to this basic structure.

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 monies 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 being 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; and
  • 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, thereby provide for more comparable financial statements among districts.