Question: In our ASB account there is a Color Guard Account which is $14,000.00 in debt. The district was written up for this in an audit two years ago and then this year the account was not noticed by the auditors. I am having a meeting with the band director tomorrow and I need Ed Code to back up my position that I need that deficit cleaned up. Now obviously, this is a difficult situation, after all this years color guard did not create this debt. I know my ASB surplus is eventually responsible. Suggestions?
Response: Education Code 48937 establishes the guidelines for the supervision and audit of student funds. As a result, your district should have policies and procedures that govern both the business and accounting practices of the ASB. With that said, there is not a code section that would apply specifically to deficits carried forward in the ASB budget. However, prudent business practice would dictate that deficit balances are cleared when the books are closed at the end of each fiscal year. To not clear operational deficits leaves the district vulnerable to continuing audit exceptions in subsequent reports. The fact that the district auditors may have missed this accounting problem last year, does not excuse the district from continued scrutiny and the audit requirement to address prior year findings.
Another question that should be pursed is the status of the Color Guard with respect to the ASB. If they have money in the ASB account, they need to be organized as a formal club complete with officers and bylaws. If the Color Guard is not organized as a club, their funds should not be deposited with ASB. Within the ASB Constitution you should also find information related to business practices of the organization. Our suggestion to schools, regarding their ASB budgets, is that they be balanced each month. Balancing monthly provides a real time view of the actual income and expenses and helps to avoid the prospect of deficit balances. In any event, best practices and accounting protocol both dictate that negative balances be cleared at the end of the fiscal year.
8/25/03
