Associated Student Body
2015
Accounting Manual, Fraud Prevention Guide and Desk Reference
Internal Controls
Fraud Prevention
Procedures
Policies
Governance
Organization
Laws
F o r C a l i F o r n i a K - 1 2 P u b l i C S C h o o l S a n d C o m m u n i t y C o l l e g e S
Fiscal Crisis & Management Assistance Team
1300 17th Street, Bakerseld, CA 93301
www.fcmat.org
Associated
Student
Body
Accounting Manual, Fraud Prevention Guide
and Desk Reference
2015
Fiscal Crisis & Management Assistance Team
ii
Publishing Information
e Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference was
published by the Fiscal Crisis and Management Assistance Team (FCMAT)
(mailing address: 1300 17th Street, Bakerseld, CA 93301).
© 2015 by FCMAT
All rights reserved
is manual may be reproduced with permission from FCMAT.
Ordering Information
Bound copies of this publication are available for $40.00 each, including tax and shipping charges.
Please send check or purchase order to the mailing address listed above, or pay via credit card using the link
on FCMAT’s website at www.fcmat.org.
A complete, printable version of this publication may be downloaded at no charge at www.fcmat.org.
iii
Contents
Contents
Foreword ...................................................................................................................................................ix
Chapter 1 – Introduction .......................................................................................................................1
Intent of the ASB Manual ................................................................................................................................... 1
ASB Issues ................................................................................................................................................................ 2
Chapter 2 – Roles and Responsibilities – Administration of an ASB .............................................5
The State of California .......................................................................................................................................... 5
The Governing Board ............................................................................................................................................. 5
The Superintendent (K-12) or President (Community Colleges) ................................................................ 5
The Business Ofce Staff ..................................................................................................................................... 6
The Principal/School Administrator .................................................................................................................... 6
The ASB Advisor ...................................................................................................................... ............................... 8
The ASB Bookkeeper ........................................................... ................................................................................. 9
The Student Council ........................................................... ................................................................................. 10
The Independent Auditors ................................................................................................................................. 11
The Food Service/Cafeteria Program ............................................................................................................... 11
Groups That Should Not Administer or Supervise Activities of Student Organizations .................. 12
Chapter 3 – Laws and Regulations ....................................................................................................13
Laws and Regulations Overview ....................................................................................................................... 13
Importance of Good Business Practices ........................................................................................................ 14
Governing Board Policy and Administration Regulations .......................................................................... 14
Recommended Legal Background Knowledge ............................................................................................ 15
Laws Governing K-12 Food Sales ...................................................................................................................... 19
Chapter 4 – Forming an ASB ................................................................................................................21
ASB Types: Organized vs. Unorganized ........................................................................................................ 21
Elementary/Unorganized ASB Schools ............................................................................................................ 21
Secondary/Organized ASB Schools .................................................................................................................. 21
Student Organization and Club Trust Accounts .......................................................................................... 24
Minutes of Meetings ...........................................................................................................................................25
Forms ...................................................................................................................... ..................................................29
Chapter 5 – General Business Practices and Internal Controls...................................................37
The Business Operating Cycle .......................................................................................................................... 37
Establishing the Bank Account ........................................................................................................................ 37
Internal Controls ..................................................................................................................................................38
Internal Controls Checklists ..............................................................................................................................40
Maintaining ASB Records ..................................................................................................................................50
Temporary Loans ..................................................................................................................................................50
iv
Insurance ................................................................................................................................................................. 51
Whistleblower Hotlines and Fraud Reporting Websites ............................................................................ 51
Information Summary, Document Checklist and Questions ....................................................................53
Forms ...................................................................................................................... ..................................................53
Chapter 6 – Budgets and Budget Management ...............................................................................57
What Budgets Represent ...................................................................................................................................57
Budget Development ............................................................................................................................................58
Budget Monitoring ........................................................... ....................................................................................60
Carryover of Unexpended Balances ............................................................................................................... 61
What Happens when a Class Graduates? .................................................................................................... 61
Forms ...................................................................................................................... ..................................................63
Chapter 7 – Accounting and Financial Management ......................................................................69
Accounting Systems .............................................................................................................................................69
Centralized versus Decentralized Accounting...............................................................................................70
Chart of Accounts ................................................................................................................................................ 71
Sound Business Practices for Accounting System Management ............................................................72
Financial Reporting and Closing the Books ...................................................................................................72
Types of Financial Reports ................................................................................................................................ 73
Closing the Books ................................................................................................................................................ 75
District Business Ofce Support ..................................................................................................................... 75
Annual Audit ...........................................................................................................................................................75
Bank Reconciliations ...........................................................................................................................................77
Good Business Practices for Bank Account Management and Reconciliation ...................................78
Forms ...................................................................................................................... ..................................................87
Chapter 8 – Fundraising Events ..........................................................................................................89
Approval of Fundraisers.......................................................................................................................................89
Revenue Projections for Individual Fundraiser Events .................................................................................89
Typically Allowed Fundraising Events and Revenues ................................................................................... 91
Fundraisers That May Not be Allowed ..........................................................................................................94
Procedures for Reporting Revenue Sources Other than Fundraisers .....................................................96
Nonstudent Group Fundraising .........................................................................................................................96
ASB Accounts are not Pass-Through Accounts ............................................................................................. 97
Fundraising Websites ...........................................................................................................................................97
Forms ...................................................................................................................... .................................................. 99
Chapter 9 – Class Fees, Deposits and Other
Charges – Grades K-12 ...................................................................................................................... 111
Allowable Fees ...................................................................................................................................................... 112
Prohibited Fees ..................................................................................................................................................... 116
v
Charter Schools ................................................................................................................................................... 119
Chapter 10 – Vending Machines ....................................................................................................... 121
Purpose of Vending Machines ........................................................................................................................121
Products Sold in Vending Machines .............................................................................................................. 121
Issues for Vending Machines ..........................................................................................................................122
Good Business Practices Related to Vending Machine Operations ..................................................... 123
Vending Machine Operations ...................................................................................................................... ... 124
Advantages and Disadvantages of Various Vending Machine Operations ........................................125
Procedures for Managing Vending Machine Stock ..................................................................................125
Procedures for Emptying Vending Machines .............................................................................................126
Forms ...................................................................................................................... ................................................ 129
Chapter 11 – The Student Store ..................................................................................................... 133
ASB Store Operations ...................................................................................................................... ................. 133
Sound Business Practices for Student Stores .............................................................................................134
Sales and Use Tax .............................................................................................................................................136
Forms ...................................................................................................................... ................................................ 137
Chapter 12 – Gifts and Donations ................................................................................................... 145
Donations of Cash to a District for a Specic School or Program ......................................................145
Cash Donations to an ASB Organization ....................................................................................................146
Donations of Material or Equipment to an ASB Organization .............................................................146
Donations of Scholarships to an ASB Organization ................................................................................147
Donations to ASBs from Booster Clubs, Foundations, Auxiliary Organizations and Other Parent-Teacher
Organizations .................................................................................................................................................... 147
Good Business Practices for ASB Donation Management ..................................................................... 147
Tax-Exempt Status ............................................................................................................................................. 147
Forms ...................................................................................................................... ................................................ 149
Chapter 13 – Cash Receipt Management and Procedures ....................................................... 155
Good Business Practices for Cash Procedures ...........................................................................................155
Audit Findings and Preventive Action ...........................................................................................................155
Cash Control Procedures for Fundraising Events ...................................................................................... 155
Cash Control Procedures for the ASB Bookkeeper ..................................................................................160
Internal Controls for Cash After Receipt .....................................................................................................161
Petty Cash and Change Accounts ..................................................................................................................163
Clearing Account .................................................................................................................................................164
Taxes.......................................................................................................................................................................164
Forms ...................................................................................................................... ................................................ 165
Chapter 14 – Allowable and Questionable Expenses .................................................................. 179
Examples of Allowable Purchases ..................................................................................................................179
vi
Examples of Prohibited Purchases ............................................................................................................... 180
Good Business Practices ........................................................... ......................................................................... 184
Chapter 15 – Contracts .................................................................................................................... 185
Contract Situations ............................................................................................................................................185
Potential Problem Situations ........................................................................................................................... 185
Role of the Business Ofce .............................................................................................................................186
Uncompensated Service Agreements ............................................................................................................ 186
Booster Clubs, Foundations, Auxiliary Organizations and other Parent-Teacher Organizations ..187
Good Business Practices ..................................................................................................................................187
Chapter 16 – Equipment Purchases and Management ............................................................... 189
Equipment Ownership Options .....................................................................................................................189
Risk Management and Insurance Options .................................................................................................189
Inventory Practices ............................................................................................................................................189
Forms ...................................................................................................................... ................................................191
Chapter 17 – Employees and Consultants ..................................................................................... 193
ASB Employees ....................................................................................................................................................193
Good Business Practices for ASB Employee Payroll Management ........................................................193
The ABC Test .......................................................................................................................................................195
Consultants ...........................................................................................................................................................195
Chapter 18 – Cash Disbursement Management and Procedures............................................. 197
Sales and Use Tax ..............................................................................................................................................197
Internal Controls ..................................................................................................................................................197
Associated Student Body Sales and Use Tax Applicability ..................................................................... 203
Forms ...................................................................................................................... ............................................... 207
Chapter 19 – Cash Controls and Fraud ......................................................................................... 213
Fundraising and Deposits .................................................................................................................................213
Checks, Reimbursements and Advances ......................................................................................................215
ASB Financial Reports ........................................................................................................................................ 217
Club Advisors’ Copies of Financial Documents ...........................................................................................218
Chapter 20 – Charter Schools and ASBs ....................................................................................... 221
Chapter 21 – Booster Clubs, Foundations, Auxiliary Organizations
and Other Parent-Teacher Associations ......................................................................................... 223
Auxiliary Organization versus Student Organization at Community Colleges .................................. 225
Regulations Governing Booster Auxiliary Organizations ......................................................................... 226
Booster Auxiliary Organizations as Nonprot Organizations with Their Own Tax Identication Number
229
Financial Guidelines ........................................................................................................................................... 230
Solicitations on School Premises .....................................................................................................................231
vii
School District Employees ............................................................................................................................... 232
Donations for Supplies, Equipment and Transportation ........................................................................ 232
Paying Stipends, Salaries and Consultants ................................................................................................. 233
Forms ...................................................................................................................... ............................................... 235
Chapter 22 – Where to Go for Help ............................................................................................. 239
Organizations and Online Resources .......................................................................................................... 239
State Agencies ................................................................................................................................................... 240
National Associations ...................................................................................................................................... 240
Chapter 23 – Glossary ...................................................................................................................... 241
Terminology ......................................................................................................................................................... 241
Acronyms ..............................................................................................................................................................251
Chapter 24 – Appendices .................................................................................................................. 255
Sample Associated Student Body (ASB) Constitutions and Bylaws ..................................................... 255
Sample Budgets ................................................................................................................................................... 277
Legal References ............................................................................................................................................... 289
California Education Codes Specic to K-12 Education.......................................................................... 289
California Education Codes Specic to Community Colleges ................................................................ 307
Public Contract Code ........................................................................................................................................ 313
California Administrative Code, Title 5, Education ...................................................................................321
Code of Federal Regulations, Title 7 ............................................................................................................ 325
California Penal Code ........................................................................................................................................331
Revenue and Taxation Code ............................................................................................................................341
Board of Equalization, Sales and Use Tax Regulations .......................................................................... 343
California Constitution, Article XVI, Public Finance ................................................................................. 365
Sample Internal Control Reference Checklist ............................................................................................ 367
California School Boards Association Samples .......................................................................................... 377
Sample Administrative Regulations ............................................................................................................. 397
Chapter 25 – FCMAT Online Frequently Asked Questions Archive and Help Desk ........... 409
viii
ix
Foreword
e Fiscal Crisis and Management Assistance Team (FCMAT) is proud to present the fourth revision of the
Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference. Initially published in
2002, the manual continues to be a widely used resource in education. In this revision, FCMAT has added
information in response to suggestions from users in the eld, ASB workshop attendees, and many questions
received and answered via FCMAT’s online help desk. New information is also included based on updated
laws and clarication related to food service and allowable fees.
Established in 1992 by the Legislature as an independent and external state-funded entity, FCMAT helps
California’s local educational agencies fulll their nancial and managerial responsibilities by providing scal
advice, management assistance, professional development, software and products, resources, and other related
school business services. FCMAT’s work ranges from the state policy level to the operational level at schools.
is manual is an example of FCMAT’s direct support, assistance and leadership to educational agencies
statewide, including K-12 schools, community colleges, county oces of education, and charter schools.
e Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference is designed for
school administrators, associated student body (ASB) and activity directors, scal services administrators,
oce managers and accountants, ASB bookkeepers, secretaries, teachers, students and others who are
responsible for student body activities. is manual responds to the increased demands on today’s school
leaders to augment funding for students and schools while maintaining scal accountability, transparency
and accuracy.
e goal of the manual is to answer questions in many areas concerning ASBs, including laws, accounting,
purchasing, student stores, vending machines, food sales, clubs, internal controls and overall roles and
responsibilities. It will be especially helpful to new employees and those who have recently been assigned
ASB responsibilities. Readers are guided systematically through the major steps to initiate and maintain an
eective student body program for elementary, middle, junior and senior high school students, as well as
community colleges.
is manual is a concise guide to successful student body business management in a complex environment.
It focuses on the wide range of decision-making authority of student councils, suggests useful tools and
procedures, provides practical advice, and indicates legal constraints in specic areas. Most important, the
Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference suggests the right
questions to ask and how to assess the answers.
FCMAT will continue to publish periodic revisions to this manual. Suggestions about how to improve this
document and make it more useful are always welcome.
FCMAT acknowledges the many people who have taken part in producing this manual and keeping
it updated so that it remains useful in the eld. eir time, dedication and shared expertise have been
invaluable.
Joel D. Montero, Chief Executive Ocer
Fiscal Crisis and Management Assistance Team
x
Chapter 1
–
Introduction 1
Chapter 1
Chapter 1 – Introduction
California law allows students in California’s public schools to raise money and make decisions about how
they will spend this money. Student organizations established to raise and spend money on behalf of students
are called Associated Student Body organizations, or ASBs. ASBs must be made up of current students and be
located at the school where the funds are maintained. e funds raised and spent by student organizations are
called associated student body funds or ASB funds. In the minds of public school ocials, parents and the
general public, ASB funds may be thought of as small proceeds from a few bake sales, magazine sales, dances
or car washes a year. However, in many cases ASB funds have become big business for student organizations
and fund much more than people realize. An ASB at a large high school or a community college may raise
millions of dollars a year.
ASB organizations and the management of ASB funds present students with opportunities not only to
raise and spend money, but also to learn the principles of operating a small business and acquire leadership
skills while making a contribution to their school and fellow students and improving their own educational
experience. As students and sta work together to plan projects and activities, students also learn project
planning.
It takes work and management by many individuals to ensure that an ASB is operated correctly. is
manual provides information on how to run a successful ASB organization in a user-friendly format to
guide district business oce support sta, principals/school administrators, ASB and activity directors, scal
administrators, oce managers and accountants, ASB bookkeepers, secretaries, students and others who are
responsible for student body activities.
Intent of the ASB Manual
Each of this manual’s 25 chapters covers one or more critical areas in the administration of ASB. e manual
is intended to be a comprehensive guide to student organization operations and was written for those involved
in ASB operations. It includes sample forms and procedures that may be copied directly from the manual
or modied for an entity’s own use. e manual can be used by K-12 school districts, charter schools and
community colleges because all of these public entities can have ASBs in their schools. Although the manual
may seem oriented to K-12 districts, all guidance related to internal controls and best business practices can
also be used by charter schools and community colleges.
Because current laws do not cover everything that occurs in ASB operations, the guidance in this manual
goes beyond the law and ocial regulations to include information based on good business practices, sound
internal controls, and the practices of successful ASB operations in many districts throughout California.
Educational entities with successful ASB operations have the following:
• Comprehensive board policies and administrative regulations regarding ASB operations and funds
that provide guidance beyond what is in the law, including district procedures, best practices and
internal controls.
• A comprehensive and user-friendly ASB manual that provides guidance for all individuals involved
in day-to-day ASB activities.
• A signicant level of oversight and support from the district’s business oce.
• Annual training for all sta members and students who work with ASB operations.
• Standardized processes and procedures at all sites.
2 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
is manual can be used by educational entities to achieve successful ASB operations because:
• e manual covers the policies, procedures and internal controls that should exist when handling
ASB funds and operations, and includes sample forms and procedures.
• e manual can be used as the basis for a district’s comprehensive board policy and administrative
regulations, or the governing board can adopt a policy that requires the sta to adhere to the
guidance in the manual.
• e manual is suciently comprehensive to provide guidance for both district oce and school
sta if the district has not produced its own manual for ASB operations.
• e manual includes information on eective oversight and support from the district’s business
oce sta.
• e manual can be used as the basis for annual training either by a district’s business oce sta or
by a trainer from outside the district.
• e manual includes sample forms in most chapters to help districts as they develop their own
standard forms and procedures for communication and audit purposes.
is FCMAT Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference may
also be adopted to supplement a district’s board policy or procedures regarding student organizations and
booster auxiliary organizations. Sample board policy language for this is as follows:
e Governing Board adopts on an ongoing basis the most recent Fiscal
Crisis and Management Assistance Team (FCMAT) Associated Student Body
Accounting Manual, Fraud Prevention Guide and Desk Reference as the
District’s ASB Manual as part of district ASB board
policy. In the event of any conict between the most recent FCMAT Associated
Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
and the District ASB processes or procedures, the policies
and procedures established in the District will prevail.
is type of language gives a district clarity and the exibility to follow its own policies and procedures when
they dier from those in the FCMAT Associated Student Body Accounting Manual, Fraud Prevention Guide
and Desk Reference.
ASB Issues
Many issues can occur with ASB funds and operations if not managed appropriately. First, in sharp contrast
to other funds that the district usually receives in the form of checks or wire transfers, most ASB funds
are received in cash. It is always easier for fraud, abuse or human error to occur when dealing with cash, so
internal controls are extremely important. However, internal controls over ASB funds are often overlooked or
found to be inadequate.
Other issues arise as a result of decentralized student fundraising and operations by many individuals and
groups throughout the district, without adequate communication, guidance and standardization. In addition,
sta and students involved in ASB are often asked to use proper accounting procedures and internal controls
even though they are not accountants and have probably received little or no guidance or training regarding
the importance of correct procedures and controls and what could occur if they are not followed. Appropriate
communication, standardization, training and oversight are critical to ensure that the correct processes and
procedures are followed.
Chapter 1
–
Introduction 3
Local communities, parents and other members of the public often pay close attention to ASB issues and are
typically sensitive when they occur. e media are also often quick to report on ASB issues because the funds
are raised by students and for students.
e district is ultimately responsible for how ASB funds are handled and spent. us, board policy,
procedures and internal controls must start with the district, and proper oversight and follow-up must take
place to ensure that issues do not occur.
4 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
Chapter 2
–
Roles and Responsibilities—Administration of an ASB 5
Chapter 2
Chapter 2 – Roles and Responsibilities – Administration of an ASB
Many individuals and entities are involved in administering and supervising the activities of student
organizations.
The State of California
e State of California is responsible for establishing the laws and regulations that govern the activities of
local educational agencies (LEAs), including student organizations. e Legislature writes the laws, and state
agencies enact regulations based on those laws.
e California Department of Education (CDE) develops policies regarding any legislation or regulations
enacted as a result of the law; these are codied in Title 5 of the California Code of Regulations for K-12
school districts. For community colleges, the California Community Colleges Chancellor’s Oce (CCCCO)
functions as the oversight agency.
No one state agency monitors the operations of ASB organizations. Rather, the state relies on districts’
governing boards to ensure that ASB activities are carried out within the law, based on a district’s internal
policies and procedures. is is reviewed during a district’s annual independent audit performed by an
external certied public accountant (CPA) rm.
The Governing Board
e governing board of the school district, charter school or community college is ultimately responsible for
everything that happens in the district, including the activities of student organizations. Under Education
Code section 48930 for K-12, and section 76060 for community colleges, the governing board has the
authority to approve the formation of a student body organization within the district. is means that
governing boards are not required to allow student body organizations to exist. Many districts have chosen
to stop student fundraising and organizations as a last resort because of continual and severe noncompliance
issues, including fraud.
In assuming the authority the Education Code gives them, governing boards establishes parameters for
district operations through board policies and regulations. ese policies and regulations must specify how
the student body organization will be established, how the organization’s activities will be supervised, and
how the organization’s nances will be operated and managed. e district’s administration is responsible
for establishing and monitoring the procedures to carry out the policies and regulations adopted by the
governing board.
Students are raising funds for their own benet and are able to make decisions about the funds (with
co-approval from an administrator); however, when there is a conict, governing board policies and
regulations override ASB decisions because ultimately the funds are under the governing board’s authority.
A comprehensive board policy is the cornerstone of sound practices in student organizations. is is most
eectively achieved by establishing a comprehensive district ASB manual for all student organizations to
follow, and referencing it in board policy that requires all sta to follow the manual’s guidance. Sample board
policies are provided in the appendices of this manual (Chapter 23).
The Superintendent (K-12) or President (Community Colleges)
e superintendent or president of a district is responsible for ensuring that board policies are implemented
and that sta follow those policies. In addition, the superintendent or president is responsible for establishing
the procedures by which sta remain in compliance with board policy. is is normally done by establishing
administrative regulations.
6 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
e superintendent or president should communicate and make certain that:
• ey act as the supervisor of the student body organization’s activities.
• All district sta are familiar with and understand the importance of following all policies
established by the governing board, including those regarding ASB.
• All district sta understand the importance of problems noted in the annual audit.
• Immediate action is taken to investigate any allegations of impropriety regarding ASB funds.
Appropriate action is taken if the allegations are conrmed.
The Business Ofce Staff
District business oce sta are responsible for general oversight of student body activities. In this capacity,
the business oce sta should:
• Serve as a resource and answer questions from the school sta.
• Develop and update the district’s ASB manual based on input from the school sta, student
organizations and district auditors. Questions asked throughout the year and the ndings noted by
the auditors should also be taken into consideration when updating the manual.
• Provide training at least annually on the district’s ASB manual or procedures. is includes
providing new sta members and student council members with copies of the district’s ASB
manual and training during the year.
• Make periodic visits to schools to review the procedures in operation and answer questions. It is a
good practice to visit each school at least once a year and more often if the school appears to have
problems or continues to have audit ndings year after year.
• Obtain and review nancial reports from the schools at least quarterly.
• Review the reconciled bank statements for all ASB accounts at school schools regularly, preferably
monthly.
• Work with the schools’ sta to respond to problems and audit ndings noted by the auditors in the
annual audit and develop corrective actions to resolve the issues.
• Follow up on all issues related to administration of student organizations.
• Develop accounting procedures for recording and controlling the student body organization’s
nancial transactions.
• Periodically review procedures to make sure they conform to prescribed accounting procedures;
take into consideration any input from school sta, student organizations and district auditors
when updating policies and procedures.
The Principal/School Administrator
e principal/school administrator is the most important person when it comes to managing a school.
Regardless of the school level or size of the school, the principal/school administrator is directly responsible
for student body organization nancial activities and must make sure that they conform to established laws,
policies and procedures that aect the student body, including those specic to the district.
Although the principal/school administrator has ultimate responsibility for all activities at the school,
including ASB, many ASB management functions may be delegated to other sta members depending on the
grade level and size of the school, unless board policy or law does not allow such delegation. At elementary
schools, this designee is often a teacher or secretary. In secondary schools, the designee is usually an assistant
Chapter 2
–
Roles and Responsibilities—Administration of an ASB 7
principal or ASB advisor. e principal/school administrator must maintain nal approval authority for ASB
projects and activities because of the school’s educational and legal obligations to its students.
Unorganized ASBs
Under the supervision of the superintendent, the principal/school administrator is responsible for the
activities at the school (see Chapter 4 for full denitions of unorganized and organized ASBs). In elementary,
adult education, continuation, special education, regional occupational programs (ROPs) and K-8 schools
(unorganized ASB) the students do not govern themselves, so the principal/school administrator is primarily
responsible for all ASB activities, including the following:
• Communicating the student organization policies and procedures to the sta and students, and
enforcing the policies and procedures.
• Assigning and supervising a school sta member (often the school secretary or the attendance clerk)
to perform school nancial tasks related to ASB and maintain adequate records of ASB activities,
including the deposit of funds.
• Receiving and reviewing the monthly bank reconciliation prepared for the ASB bank account and
any other nancial information and statements for the ASB funds, including budgets and nancial
reports.
• Deciding how many fundraising events will be held each year and, before approving them,
ensuring that they are appropriate for the students and the community.
• Scheduling and receiving proper approval for fundraising events.
• Making decisions about how the funds raised will be spent, and approving the use of the funds
before they are spent.
• Delegating responsibility for operating the fundraising event to a responsible adult.
• Monitoring the results of the fundraising activities.
• Ensuring that all ASB funds are raised and spent in accordance with applicable laws and the
district’s policies and procedures.
• Working with the district’s business oce to provide training, implement good business practices,
ensure internal controls, and resolve audit ndings.
• Working with the student organization to develop methods for securing cash collected after hours
and on non-school days.
• Ensuring that proper cash control procedures are established and followed at all times.
• Reporting any suspected fraud or abuse to the district’s business oce.
e principal/school administrator may delegate some or all of these activities to a school employee such as
a vice principal, teacher, or classied school support sta member. Because cash is involved, the principal/
school administrator should ensure proper internal controls by requiring that a second school employee be
involved in the following:
• Decisions about the use of ASB funds.
• Handling all cash.
• Signing checks to spend the student funds.
Organized ASBs
For middle, junior and high schools (organized ASB), the responsibilities of the principal/school adminis-
trator are dierent because the students are much more active in governing the ASB activities, with oversight
8 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
from the principal/school administrator and other school employees. e principal/school administrator is
responsible for the following major duties, many of which are delegated to an ASB advisor:
• Communicating the student organization policies and procedures to the sta and students, and
enforcing the policies and procedures.
• Ensuring that a student council is established, that it approves all new clubs, and that every club
and the student council has a certicated advisor.
• Providing supervision to the ASB advisors.
• Reviewing and approving constitutions for each club on campus.
• Making certain that minutes are kept of all ASB and club meetings.
• Supervising the ASB bookkeeper or similar position. is position will perform school nancial
tasks related to ASB, maintain adequate records of ASB activities, deposit funds into the bank, pay
invoices, reconcile monthly bank statements, and prepare monthly nancial statements.
• Receiving and reviewing the monthly bank reconciliation prepared for the ASB bank account and
any other nancial information and statements for the ASB funds, including budgets and nancial
reports.
• Ensuring that all ASB funds are raised and spent in accordance with applicable laws and the
district’s policies and procedures, and approving the use of the funds before they are spent (the
assigned ASB advisor and the student representative of the club spending the funds must also
approve use of the funds).
• Deciding how many fundraising events will be held each year and, before approving them,
ensuring that they are appropriate for the students and the community.
• Scheduling and receiving proper approval for fundraising events.
• Working with the district’s business oce to provide training, implement of good business
practices, ensure internal controls and resolve audit ndings.
• Working with each student organization to develop methods for securing cash collected after hours
and on non-school days.
• Ensuring that proper cash control procedures are established and followed at all times.
• Reporting any suspected fraud or abuse to the district’s business oce.
e principal/school administrator may delegate some or all of these activities to a school employee such as a
vice principal or teacher.
The ASB Advisor
In secondary schools and community colleges, each student club will have an
advisor; this is in addition to the advisor who is responsible for the general
student council (also called the leadership class in many high schools). Every
ASB advisor, whether for a specic student club or the general student council,
must be a certicated employee of the district and must be aware of all laws,
policies and procedures that aect the student body, including those specic
to the district, to ensure they are followed. e advisor will act as a liaison to
the faculty, administration, student body and community in matters relating
to ASB, and keep the principal/school administrator and sta apprised of the
organization’s activities.
Fraud Alert
When the ASB advisor
relinquishes their
responsibilities and has
the ASB bookkeeper
perform the ASB
advisor functions,
separation of duties
diminishes and the
opportunity for fraud
increases.
Chapter 2
–
Roles and Responsibilities—Administration of an ASB 9
For organized ASBs, an advisor’s responsibilities will include:
• Providing guidance and direction, and being knowledge about how ASBs operate so legal
responsibilities are understood.
• Overseeing the election/selection of ocers and committee chairs, as well as ensuring that they
understand and carry out their duties.
• Approving expenditures along with the student representative and the board designee.
• Ensuring that the clubs are meeting and keeping minutes.
• Reviewing with the students all budgets, nancial reports and transactions.
• Working with the students when preparing the annual budget and revenue projection estimates.
• Ensuring that only valid expenditures are made and authorized from the dierent clubs’ funds.
• Ensuring that every organized club has a constitution in place and follows it.
• Providing supervision to ensure student safety and compliance during ASB activities.
• Ensuring that student organizations secure in a school safe any cash collected after hours and on
non-school days.
• Ensuring that proper cash control procedures are established and followed at all times.
• Reporting any suspected fraud or abuse to the district’s business oce.
As the principal/school administrator’s designee, the ASB advisor frequently is directly responsible for all of
the functions listed above and ensures that all required procedures are followed. e ASB advisor(s) works
directly with students in clubs and the student council on a day-to-day basis, supervising the activities of
the student council and the clubs and serving as a link from the student council and the clubs to the ASB
bookkeeper and the principal/school administrator.
When any ASB organization or club holds fundraising events, the ASB advisor is responsible for ensuring
that adequate planning and internal controls are established and that all of the funds are properly accounted
for and given to the ASB bookkeeper with all the necessary paperwork at the end of the event. Because of the
age of the students, the ASB advisor in an unorganized student body organization will do many more of the
tasks, while the advisor in an organized ASB or at a community college will mainly oversee students doing
the tasks. Regardless of the age of the students in the organization, it is important that they be involved as
much as possible in the various responsibilities so that student body activities serve not only as fundraisers but
also as learning opportunities.
Additional duties of the ASB advisor include the following:
• Helping students prepare the annual budget and revenue projection estimates for fundraisers.
• Ensuring that adequate internal controls are in place.
• Approving expenditures (in organized ASBs, student representative(s) and a board designee will
also need to approve).
• Ensuring that all laws, policies and procedures are followed.
The ASB Bookkeeper
At each school, a sta member is responsible for maintaining the accounting records for the ASB funds and
safeguarding the funds at the school until they are received at the bank. In elementary schools, the school
secretary or an attendance clerk may serve as an ASB bookkeeper. Middle, junior and high schools, and
community colleges, will usually have a sta person whose only responsibility is to maintain the accounting
records for student organizations.
10 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
Regardless of which employee is assigned to be ASB bookkeeper, or the exact title that employee might hold,
the employee responsible for ASB bookkeeping (referred to as ASB bookkeeper in this manual) is responsible
for ensuring that:
• When receipted funds are properly counted, conrmed, documented and then turned over to the
ASB bookkeeper, all ASB funds are safeguarded while at the school until deposited in the ASB
bank account in a timely manner (within a few days of receipt).
• Adequate nancial records are prepared and maintained for all ASB nancial transactions in
accordance with established policies and procedures.
• Expenditures are approved in advance of any spending and paid only after receiving appropriate
documentation of expenditures, which should include but not be limited to preapproved purchase
orders, invoices, packing slips, and student council minutes.
• e bank reconciliation is completed each month.
• Materials are provided to ASB advisors for fundraisers, and stock is kept on hand (change box,
receipt books, tickets, etc.).
• Purchase orders, payments, and invoices are processed.
• Laws and the district’s policies and procedures related to ASB funds are followed.
• Business policies, procedures and internal controls related to ASB, such as those for accounting,
purchasing, budget, and payroll, are known and followed.
• Any suspected fraud or abuse is reported to the principal/school administrator or the district’s
business oce.
e ASB bookkeeper position is often perceived as a simple bookkeeping position but it is more than that.
e ASB bookkeeper also acts as a controller and is the gatekeeper for student funds. e ASB bookkeeper
must be strong-willed enough to refuse and disallow deposits, reimbursements or other transactions when
policies and procedures are not followed.
Both the ASB advisor and bookkeeper must work together and support each other in keeping their duties
separate and when policies and procedures are not followed.
The Student Council
In middle, junior high and high schools, as well as community colleges, a student council (often called a
general student council or leadership class) must oversee all of the student clubs in the school. e student
council represents the students and has primary authority over student funds, with guidance from, and
adherence to, district policy.
A successful student council will understand and respect the value of faculty and student participation;
everyone needs to participate and work together for success to occur.
e main responsibilities of the student council include the following:
• Developing and adopting the annual budget for the student council/leadership class.
• Authorizing the budgets for all student clubs.
• Authorizing fundraising events for all student clubs, with additional authorization from the
principal/school administrator if required in that district. In some districts, the student council
is not given this authority; rather, it is notied of what the principal/school administrator has
approved.
Chapter 2
–
Roles and Responsibilities—Administration of an ASB 11
• Approving expenditures, in addition to approval from a board designee and the ASB advisor. In
some districts the student council will approve expenditures from all student funds before the
spending occurs; in others the general student council approves after the fact; and in others it does
not approve any expenditures (for student clubs) but is informed of them. e student council must
approve its own expenditures before spending occurs.
• Reviewing nancial reports and bank reconciliations from all student clubs.
• Approving new clubs (in addition to approval from the principal/school administrator).
• Approving who will be student council auxiliary members for other functions, such as head of
lighting and head of sound.
• Approving the student council’s policies and procedures and determining how student council
members will perform their duties, as well as the consequences for nonperformance of duties.
e student council in an unorganized ASB is not usually as active and does not normally adopt the annual
budget, authorize fundraising events, approve expenditures, review nancial reports or approve new clubs.
e principal/school administrator or designee normally has full responsibility for these functions, even
though the students may give input.
The Independent Auditors
e district’s independent auditors, who perform the annual nancial audit of the school entity, also have
responsibility to audit ASB funds and student activities as part of the annual audit. e auditors scrutinize
the ASB funds and, if they identify a problem or signicant weakness in how ASB funds were managed
during the school year, they will report the weakness to the district’s chief business ocial. Any material
ndings will be included in the nal annual independent nancial report as an audit nding. Each nding
will be accompanied by the auditor’s recommendation for how to correct the weakness. e district must
provide a written response to the audit nding and the auditor’s recommendation, and develop an action plan
to ensure that the nding does not occur again.
Audit ndings should be taken seriously and the action plan followed so that the nding is not repeated
in subsequent years. If a nding occurs at one school but not another, it is important that all individuals
involved with ASB at all schools know what the ndings were so that their own operations can be reviewed
and adjusted if necessary. is helps prevent the audit nding from being repeated in future years at any
school. Audit ndings should be used as a tool to strengthen operations throughout the district with
follow-up to ensure that issues do not recur.
e auditors can also be used as a resource throughout the year when questions, internal control concerns
or unique issues arise. Because the auditors are familiar with the district’s operations and with student body
operations in other districts, they can provide valuable advice and insight.
If there is a suspicion that fraud may be occurring, the district can contract with the auditors or other
agencies to investigate the possible fraud and provide a written report.
The Food Service/Cafeteria Program
e relationship of the ASB to a district’s food service/cafeteria program is often thought of as competitive,
but in reality the two programs should work together because both benet the same students. Food
regulations are numerous and often confusing to student groups. Because the food service/cafeteria program
must follow most of the same regulations, its sta should be considered experts and partners who can help
ensure that any food or beverage sold by students meets nutritional requirements and complies with local,
state and federal laws.
Because student groups must follow specic rules, including those regarding noncompetitive sales and
whether items can be prepared on site at the K-12 level, the food service/cafeteria program sta can help
12 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
ensure that all sales are in compliance and that students are being served safely and correctly. ese
regulations were not developed by the food service/cafeteria program but are the result of legislation. If
the laws are not followed, the district can be penalized with reduced funding to the food service/cafeteria
program, which aects all of the district’s students.
Groups That Should Not Administer or Supervise Activities of Student
Organizations
Booster Clubs, Foundations, Auxiliary Organizations and other Parent-Teacher Associations
e relationship between booster clubs, foundations, parent-teacher associations, auxiliary organizations
and student organizations is often confusing. Student organizations are legally considered part of the
school district and/or community college, but booster clubs, foundations, auxiliary organizations and other
parent organizations are not. ese nonstudent organizations are established to support the school district
or community college and its students, and they may raise funds and donate these funds to the district or
purchase items with their funds for donation or assistance to the district; however, they are separate legal
entities. Funds raised by booster clubs, foundations, auxiliary organizations or parent-teacher groups should
not be deposited into or commingled with the funds or bank accounts of the student organization or the
district; rather, they should be deposited into the organization’s own bank account. ese organizations
can donate funds to the ASB, but once they have done so, the ASB decides how to use the funds, following
district policy, procedures and applicable laws. It is critical that student groups and parent groups keep their
activities and funds separate even though they are supporting the same students.
More information on this subject is contained in Chapter 21.
Chapter 3
–
Laws and Regulations 13
Chapter 3
Chapter 3 – Laws and Regulations
is chapter provides a brief overview of the sections of the California Education Code, Title 5 of the
California Administrative Code, California Constitution, Internal Revenue Code and the Penal Code that
aect ASB operations at all levels (K through community college). Full citations of the relevant code sections
cited are included in the appendices of this manual.
In addition to state laws and regulations that must be followed, there should be local school district board
policies, administrative regulations and procedures that have the eect of law in that specic school district
relative to how ASBs are managed and operated. To run a successful ASB, it is important that all of the
people involved with the ASB be familiar with the laws and the local district rules that govern ASBs.
State and federal laws and local district policies, procedures and administrative regulations are subject
to continual review and change. is manual includes the full text of all major California state laws
and regulations that directly aect ASB operations as of December 31, 2014. is list is included in the
appendices. e reader may also wish to check the Internet for changes to state law. Many websites, including
http://leginfo.legislature.ca.gov/faces/codes.xhtml, www.calregs.com and www.oal.ca.gov, have references or
lists of California laws and regulations.
Laws and Regulations Overview
Education Code
e California Education Code is one of 29 sets of code in the state and is the primary body of law for
kindergarten through community college governance. ASB management is referenced in many of the code’s
sections. Laws in the Education Code must go through a formal process before being chaptered or signed into
law by the governor. ese laws are also known as statutes.
California Code of Regulations – Title 5
A regulation is a rule adopted by a state regulatory agency to implement, interpret, or make specic the law
enforced or administered by it, or to govern its procedure. e California Code of Regulations (CCR), also
known as the California Administrative Code, has the force of law.
Regulations in the CCR are adopted by a state regulatory agency, approved by the California Oce of
Administrative Law, led with the secretary of state and then signed by the governor. e CCR is separated
into 28 sections called titles. e education section is known as Title 5.
Penal Code
e Penal Code is the primary body of law for issues related to crimes and criminal activity. e portions of
the Penal Code relating to games of chance, such as lottery and bingo, are important to ASB operations.
Revenue and Taxation Code
e state Revenue and Taxation Code (RTC) identies what constitutes a sale and what is subject to state
sales tax. Based on this code, ASBs must pay sales tax on what they buy and sell, with few exceptions.
Publication 18 of the California State Board of Equalization (BOE) provides guidance on the taxability of
sales by nonprot organizations, including ASBs. Publication 18 can be found on the BOE website at http://
www.boe.ca.gov/pdf/pub18.pdf.
Internal Revenue Code
Although ASB operations are not guided by the Internal Revenue Code (IRC), if teachers or other adults
are conducting fundraising independent of the ASB or an approved booster/auxiliary organization to make
14 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
donations to the ASB or to increase class budgets, that income is considered taxable. e United States Tax
Law can be found online at http://www.fourmilab.ch/ustax/.
California Constitution
In the absence of a statute granting public local educational agencies (LEAs) the legal authority to make a
special expenditure (i.e., for food, clothing, awards, etc.), the legality of any expenditure is determined by
the “gift of public funds” provision in the California Constitution, Article 16, section 6. is constitutional
provision prohibits making any gift of public money to any individual (including public employees),
corporation, or other government agency. It states, “ . . . the Legislature shall have no . . . power to make
any gift, or authorize the making of any gift, of any public money or thing of value to any individual . . .
whatever . . .”
Expenditures of school funds must be for a direct and primary public purpose to avoid being a gift. An
approved public purpose must be within the scope of a school district’s jurisdiction and purpose, which does
not extend to purposes such as aid to the indigent or the promotion of social welfare, though these may be
lawful public purposes for other agencies.
On the other hand, it is also well established that expenditures of public funds that involve a benet to
private persons (including public employees) are not gifts within the meaning of the California Constitution
if those funds are expended for a public purpose. is means that public funds may be expended only if
a direct and substantial public purpose is served by the expenditure and private individuals are beneted
only incidentally to the promotion of the public purpose. To justify the expenditure of public funds, an
LEA’s governing board must determine that the expenditure will benet the education of students within its
schools. Expenditures that most directly and tangibly benet students’ education are more likely justied.
Expenditures driven by personal motives are not justied even if they have been a longstanding local custom
or are based on benevolent feelings.
If the LEA’s governing board has determined that a particular type of expenditure serves a public purpose,
courts will almost always defer to that nding. us, if the district has a board policy stating that specic
items are allowable (e.g. scholarships or donations), there is more certainty that the expenditure might be
considered allowable. Unless such a policy exists, examples of items that would be usually considered a gift of
public funds include owers, candy, advertisements for private award ceremonies, and donations to charity.
Importance of Good Business Practices
e laws and regulations that govern ASB activities and funds are not suciently comprehensive to provide
guidance for all areas in which questions arise. us, while this manual conforms to the laws and regulations,
it also provides guidance in areas where formal legal guidance is inadequate or nonexistent. is supple-
mentary guidance is based on sound business practices, internal controls and eective procedures used by
successful LEAs throughout California. Because the additional guidance is not based on laws or regulations,
local school administrations may change these recommended practices to better suit the operating
environment of each individual LEA.
Governing Board Policy and Administration Regulations
Because only a limited number of laws and regulations in the Education Code, Penal Code, California
Constitution and California Code of Regulations identify parameters for ASB operations, a signicant
amount of local exibility is needed. e governing board has nal authority over everything that occurs
in the district, including ASB operations. is includes authority to decide whether ASB organizations will
exist in the district, and if so, how all ASB operations and activities will be supervised, and ensuring that
clear guidelines and processes are developed to enable ASB organizations to operate eciently and eectively
for the benet of students. e recommended procedure for providing these guidelines and processes is
Chapter 3
–
Laws and Regulations 15
for the governing board to develop and adopt clear and understandable board policies and administrative
regulations, as well as an ASB manual, for district sta, students and other stakeholders to follow.
Because most ASB operations relate directly to business management functions, the district’s chief business
ocial should take a lead role in ensuring that the district has appropriate board policies and administrative
regulations regarding the operation and management of the organization’s nances. In addition, all
individuals involved with the ASB should receive training at least every two years on ASB laws, policies,
regulations, internal controls and good business practices. e district’s business oce should take the lead
in ensuring that this training is provided. ASBs must be made aware that district policy applies to them, and
people involved in ASB must understand that district board policies and regulations are an additional set of
laws that ASB organizations must follow. All district board policies that apply to general district operations
apply to ASB as well, unless there is a policy stating otherwise.
Local school leaders should be encouraged to suggest innovative ASB practices, ASB fundraisers, and ASB
management operations that will promote the general welfare, morale, and educational experiences of
students. Successful ASB management is a collaborative eort between and among students, student leaders,
teachers, activity directors, advisors, school site leaders, school sta, and the district’s central oce.
Recommended Legal Background Knowledge
LEAs must ensure that ASBs are in compliance with the areas of ASB operations specically addressed in
the law. For this reason, it is important that principals/school administrators, ASB advisors, and district
administrators understand the provisions of the law, which are listed in their entirety in the appendices of this
manual.
ese laws and regulations cover three major areas related to ASB operations:
• General Guidance
• Fundraising Activities
• Food Sales in Schools
e following summary gives a brief overview of the sections of the California Education Code applicable to
grades K-12:
General Guidance Provisions of Law – K 12
Education Code § 48930 Grants the governing board the authority to allow groups of students
to organize a student body organization. Also discusses the purpose and
privileges of student body activities.
Education Code § 48933 Gives guidance on where the ASB organization may deposit or invest its
funds.
Requires that ASB funds be spent with the preapproval of three people:
an employee or ofcial of the school district designated by the governing
board, the ASB advisor (must be a certicated employee), and a student
representative of the ASB organization.
Education Code § 48934 Allows ASB funds to be used to nance activities for noninstructional
periods or to augment or enrich the district’s programs for K–6
students.
Education Code § 48936 Provides guidance on uses of student funds, such as loans to other ASB
organizations in the district or loans for permanent improvements to
school district property.
16 Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference
Education Code § 48937 Requires the governing board to provide for the supervision and auditing
of the ASB funds.
Allows the governing board to use the school district staff for ongoing
audits of ASB funds.
Education Code § 48938 Authorizes the governing board to appoint an employee to act as trustee
for unorganized ASB funds in elementary and continuation schools,
special education or regional occupational programs, or in adult classes.
Education Code § 35564 Applies only when a school district is reorganized, i.e., when two school
districts are legally combined or boundaries are changed. The section
provides guidance on how the ASB funds are split.
Fundraising Activities Provisions of Law – K-12
Education Code § 48931 Grants the governing board the authority to authorize the sale of food
by student organizations.
Education Code § 48932 Grants the governing board the authority to authorize student organiza-
tions to conduct activities, including fundraising during and after school
hours.
Education Code § 51520 Prohibits teachers or others from soliciting students during the school
day or one hour before or after school unless the solicitation has been
approved by the governing board and is for a charitable organization or
an organization under the control of the district.
Education Code § 51521 Prohibits individuals from making solicitations on behalf of the school
district or an ASB organization without the approval of the governing
board.
Chapter 3
–
Laws and Regulations 17
e following summary gives a brief overview of the sections of the California Education Code that apply to
community colleges:
General Guidance Provisions of Law – Community Colleges
Education Code § 76060 Grants the governing board the authority to allow groups of students
of a community college to organize a student body organization. Also
discusses the purpose and privileges of student body activities.
More than one student body organization may be authorized by the
governing board if it is found that the day students and the evening
students each need their own student body association, or if geographic
circumstances make having one association impractical or inconvenient.
The community college may assume the responsibilities for the ASB
activities if the student body association is dissolved. If this occurs,
an employee who was employed to perform such ASB activities shall
become a member of the classied service of the district in accordance
with Section 88020.
Education Code § 76060.5 If a student body association is established, an election can be held to
establish a student representation fee of $2 per semester. The election
shall be open to all regularly enrolled students of the community college.
An afrmative vote by the majority of the voting students is sufcient
to establish the fee, except in special circumstances. The fee may be
terminated by a majority vote of the students voting in an election
held for this purpose, open to all regularly enrolled students of the
community college