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Financial Accounting for Local and State School Systems: 2014 Edition
NCES 2015347
April 2015

Chapter 8: Activity Fund Guidelines — Summary

There are two classifications of activity funds: district and student. It is recommended that district activity funds be classified as special revenue funds and student activity funds as agency (fiduciary) funds.

As governments increasingly respond to the demands for fiscal and operational accountability, best practice dictates the creation of strong controls over activity funds, including assurances that all transactions are recorded and reported in district financial records. Additionally, at a minimum, proper lines of authority combined with strong control practices–such as segregation of duties, multiple checks and balances, requirements for annual audits, and regular financial reporting–are the elements needed to protect against error and abuse.