The summer months have quickly passed and another school year has started. This means your district's extraclassroom clubs are resuming their activities. New central treasurers, student officers and faculty advisors may have already been appointed. Those student officers and faculty advisors resuming their positions may need to refresh their memories as to what the district's procedures were as they jump back into the swing of things.

If some of you just shuddered, it could be that you have seen recurring audit findings in this area. Auditors are famous for pointing out the fact that clubs may not be following the district's policies and procedures. However, perhaps now is the time to make some of those pesky auditor findings go away, or at least limit them to some degree.

To help you with this, Dermody, Burke & Brown offers the following for your consideration:

The New York State Education Department has provided the governing rules and principles in a Finance Pamphlet entitled "The Safeguarding, Accounting and Auditing of Extraclassroom Activity Funds." The pamphlet describes how students appointed as club officers participate in activities which resemble running a business, such as establishing a club budget, maintaining a ledger of cash deposits and payments to reconcile with the Central Treasurer's records (not unlike a checkbook), the filing of sales tax revenues, and the planning of fundraising and other events. Participation in these activities can enable students to learn life skills in areas such as the management of their time and money, as well as communication skills. The district's environment can provide the grounds for students to learn under the guidance and supervision of district staff.

The guide is there to follow, but it is easier said than done! In our experience, those districts that have been most successful in addressing the extraclassroom area have the following in place:

• A procedures manual with consistent procedures to follow and forms to use;
• Board/Administrative accountability; and
• An annual training program in regard to the Board's policies and the district's procedures.

The Procedures Manual

This manual provides a step by step process for each transaction type that a Faculty Advisor/Student Treasurer could run into, from purchasing to fund raising. It also provides the forms that are expected to be used, and what is expected to be handed into the Extraclassroom Central Treasurer.

Board/Administration Accountability

Clear expectations must be communicated by the board of education and by administrative personnel that this area is a priority, and following the district's procedures is not an option. Without the accountability, we find that Faculty Advisors and Student Officers do not consistently carry out the district's procedures. This would be a learning opportunity that could potentially be lost. If a club is being run like a business, the students will see the importance of proper checks and balances.

An Annual Training Program

Now is a great time for your district to provide a training to all those involved with extraclassroom clubs. Doing so at the beginning of the year permits a clear, consistent message of the Board and Administration's expectations and the appropriate procedures that need to be followed.

Questions to Ask

We offer the following questions for Board members, their Finance Committee, or Audit Committee to consider in regard to the district's extraclassroom clubs:

• Does the board appoint the extraclassroom central treasurer and faculty advisors annually?
• Does the board receive reports at least quarterly from the extraclassroom central treasurer?
• Does the district have the appropriate policies and procedures/administrative regulations in place that truly communicate how the board/management expects the extraclassroom clubs to operate?
• Does the district conduct an annual training program for its extraclassroom central treasurers, faculty advisors and student officers?
• Does the district have an extraclassroom policy and procedures manual that includes forms and procedures for extraclassroom club personnel to follow?
• Are the district's extraclassroom clubs collecting sales tax and reporting it on sales tax returns? Many extraclassroom fund related sales are not exempt from Sales Tax.
• Are student running the clubs, or is it the Faculty Advisor? The State Education Pamphlet is very clear that it is the students that should be running the clubs and being guided by the Faculty Advisors.
• Have there been audit findings in regard to adequate supporting documentation retained for cash receipts and disbursements, fundraising activities, and inventory or proper approvals? Again, training those involved can help students and district personnel understand how and why they need to document their Club's activities and the importance of proper review procedures.
• Is the acceptance of gifts and donations in the extraclassroom funds consistent with the Board of Education's policy? Some districts implement a policy where no gifts or donations over a given dollar amount may be accepted until the Board is notified and approves of them. How is that being monitored?

The clubs have formed and are beginning their activities. Is your district ready?

We are hopeful that this has proven useful to you and your district. If you have any questions about anything in this report, please do not hesitate to email us at Dermody, Burke & Brown, CPAs, LLC.

Brian DuMond, Partner brd@dbbllc.com
Johanna Dorrance, Manager jmd@dbbllc.com

The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.