Student activity fund controls: cash handling for school events

The NCES handbook for school accounting points out that a large share of activity fund receipts is collected as currency, not checks, so controls that safeguard that money deserve extra attention (NCES). The Washington State Auditor's Office makes a similar point about fundraisers: many small transactions add up, and each one is a chance for error or loss (Washington State Auditor).

This applies whether your student activity funds are reported as custodial or governmental under GASB 84. Controls protect the money and the people handling it either way.

NCES recommends the board set lines of authority over all money the district handles, with at least these roles (NCES):

Illinois puts several of these in rule. The board appoints an activity fund treasurer, groups deposit money with the treasurer and get a signed receipt, and the treasurer pays out only by check (23 Ill. Adm. Code 100.80).

NCES names three duties that should be done by different people: signing checks, keeping the fund's accounting records and reconciling bank statements (NCES). GFOA adds that the person who receives revenue shouldn't also record it (GFOA).

When one person does most of the work

Many schools have one bookkeeper. The Washington State Auditor's guide to segregation of duties suggests compensating controls when duties can't be split, with extra care around voids and refunds, which are a common way to hide a missing payment (Washington State Auditor). Practical examples:

• Someone outside the activity fund reviews the bank statement and reconciliation each month.
• A second person approves every void and refund, and someone reviews a report of them.
• A supervisor compares deposits to tickets sold or receipts issued for each event.
• Unannounced cash counts by someone other than the person who holds the cash.

NCES recommends these disbursement controls for activity funds (NCES):

• No payment or obligation unless the fund or account has an equal or greater amount of assets.
• A purchase order and voucher system with written authorization for every payment.
• Pre-numbered checks with two original signatures and no signature stamps, ideally the principal and someone other than the bookkeeper.
• No using activity fund receipts to cash checks for individuals, make loans, pay employees directly or extend credit.

NCES also says student activity money should benefit the students who take part in the activity it was raised for. Write down how leftover balances are handled when a class graduates or a club becomes inactive. In Illinois, when an activity is discontinued or has had no activity for a year, the board transfers the money to another activity fund, to district funds or to the group's members pro rata (23 Ill. Adm. Code 100.80).

NCES recommends reconciling activity fund bank statements as soon as they arrive, and a monthly report for each school's activity funds with these columns (NCES):

• Beginning cash balance (matching last month's ending balance)
• Cash receipts
• Cash disbursements
• Ending cash balance
• Unpaid purchase orders
• Unencumbered cash

The bookkeeper also prepares a monthly report for each student group showing its receipts and disbursements, and the sponsor compares it with their own records (NCES). Monthly reports should go to the administration and the board (NCES). For the reconciliation itself, see our guide to reconciling school payments by account code.

GFOA encourages governments to accept electronic payments where it's feasible and cost-effective, because it reduces overall risk, and recommends receipt systems that connect to the accounting system (GFOA). For school events, that means fewer cash boxes to count, carry and lock up.

Here's how Omella handles it:

• Families pay online by card or with free ACH bank transfer, before the event or at the door.
• Staff check guests in by scanning QR code tickets in a web browser.
• For in-person sales, the Omella card reader works with the Omella mobile app.
• Card reader and online payments land in the same report by account code, so the business office sees one record.
• Staff get the access their role needs, while the district keeps oversight.

Omella is free for schools and makes money from optional tips. See pricing, event check-in and the card reader.