Glossary

ACCOUNT: A descriptive heading under which are recorded financial transactions that are similar in terms of a given frame of reference, such as purpose, object, or source

ACCOUNTING SYSTEM: The total mechanism of records and procedures of recording, retrieving, and reporting information on the financial position and operations of a governmental unit or any classifying of its funds, balanced account groups and organizational components.

ACCRUAL BASIS: The basis of accounting under which revenues are recorded when earned or when levies are made, and expenditures are recorded as soon as they result in liabilities, regardless of when the revenue is actually received or the payment is actually made.

ASSETS: Those things of value (resources) held by the school district which have monetary value.

AUDIT:   The examination of records and documents and the securing of other evidence for one or more of the following purposes: (a) determining the propriety of proposed or completed transactions, (b) ascertaining whether all transactions have been recorded, (c) determining whether transactions are accurately recorded in the accounts and in the statements drawn from the accounts.

BALANCE SHEET: A formal statement of assets, liabilities, and fund balance as of a specific date.

BUDGET: A plan of financial operation embodying an estimate of proposed expenditures for a given period or purpose and the proposed means of financing them. The budget usually consists of three parts. The first part contains a message from the budget-making authority together with a summary of the proposed expenditures and the means of financing them. The second part consists of schedules supporting the summary. The schedules show in detail the proposed expenditures and means of financing them together with information as to past years' actual revenues and expenditures and other data used in making the estimates. The third part is composed of drafts of the appropriation, revenue, and borrowing measures necessary to put the budget into effect.

CASH: Currency, checks, postal and express money orders, and bankers' drafts on hand or on deposit with an official or agent designated as custodian of cash, and bank deposits. Any restriction or limitations as to its availability should be indicated.

CASH BASIS: The basis of accounting under which revenues are recorded only when actually received, and only cash disbursements are recorded as expenditures.

CHART OF ACCOUNTS: A list of all accounts generally used in an individual accounting system. In addition to account title, the chart includes an account number which has been assigned to each account. Accounts in the chart are arranged with accounts of a similar nature; for example, assets and liabilities.

CURRENT ASSETS. Cash or anything that can be readily converted into cash.

CURRENT EXPENSE: Any expenditure except for capital outlay and debt service. Current expense includes total charges incurred, whether paid or unpaid.

CURRENT LIABILITY: Debts which are payable within a relatively short period of time, usually no longer than a year.

DEFERRED CHARGES: Expenditures which are not chargeable to the fiscal period in which made but are carried on the asset side of the balance sheet pending amortization or other disposition. Deferred charges differ from prepaid expenses in that they usually extend over a long period of time and may or may not be regularly recurring costs of operation.

DIRECT COSTS: Those elements of cost which can be easily, obviously, and conveniently identified with specific activities or programs, as distinguished from those costs incurred for several different activities or programs and whose elements are not readily identifiable with specific activities.

DISBURSEMENTS: Payments in cash.

ESTIMATED REVENUE: If the accounts are kept on an accrual basis, this term designates the amount of revenue estimated to accrue during a given period, regardless of whether or not it is all to be collected during the period. If the accounts are kept on a cash basis, the term designates the amount of revenues estimated to be collected during a given period. (11)

EXPENDITURES: Charges incurred, whether paid or unpaid, which are presumed to benefit the current fiscal year.

FEDERAL REVENUE: Revenue provided by the Federal Government. Expenditures made with this revenue should be identifiable as federally supported expenditures

FINANCIAL ACCOUNTING: The recording and reporting of activities and events affecting the money of an administrative unit and its program. Specifically, it is concerned (1) with determining what accounting records are to be maintained, how they will be maintained, and the procedures, methods, and forms to be used; (2) with recording, classifying, and summarizing activities or events; (3) with analyzing and interpreting recorded data; and (4) with preparing reports and statements which reflect conditions as of a given date, the results of operations for a specific period, and the evaluation of status and results of operation in terms of established objectives.

FISCAL PERIOD: Any period at the end of which an LEA determines its financial condition and the results of its operations and closes its books.   It is usually a year, though not necessarily a calendar year. The most common fiscal period for school systems is July 1 through June 30.

FIXED ASSETS: Land, buildings, machinery, furniture, and other equipment which the LEA intends to hold or continue in use over a long period of time. 'Fixed' denotes probability or intent to continue use or possession and does not necessarily indicate immobility of an asset.

FIXED ASSETS GROUP OF ACCOUNTS: This self- balancing group of accounts is used to account for fixed assets owned by the LEA. Fixed assets purchased under Lease- Purchase agreements are entered in this group after the last payment is made.

FUNCTION: A function is the activity or action which is performed to accomplish an objective. The activities of a local school system are classified into six broad areas or functions: Instruction, Supporting Services, Community Services, Non- Programmed Charges, Debt Service, and Provisions for Contingencies.

FUND: An independent fiscal and accounting entity with its own assets, liabilities, and fund balances. Generally, funds are established to account for financing of specific activities of an agency's operations. The funds of a local school systems are: Educational, Operations and Maintenance, Bond and Interest, Transportation, Municipal Retirement/Social Security, Work Cash, Rent, and Fire Prevention and Safety.

FUND BALANCE: The excess of the assets of a fund over its liabilities and reserves, except for funds subject to budgetary accounting where, prior to the end of a fiscal period, it represents the excess of the fund's assets and estimated revenues for the period over its liabilities, reserves, and appropriations for the period.

GENERAL LONG-TERM DEBT GROUP OF ACCOUNTS: This self-balancing group of accounts is used to account for general long-term debt of a governmental unit.

H:  reserved

INTERMEDIATE SOURCES OF REVENUE: An intermediate administrative unit or a political subdivision between LEAs and the State that collects revenue and distributes it to LEAs in amounts different from those which are collected within such systems.

INTERNAL CONTROL: A plan of organization under which employees' duties are so arranged and records and procedures so designed as to make it possible to exercise effective accounting control over assets, liabilities, revenues, and expenditures. For example, under such a system, the employees work is subdivided so that no one employee performs a complete cycle of operations. For instance, an employee handling cash would not post the accounts receivable records. Again, under such a system, ft procedures to be followed are definitely laid down, and such procedures call for proper authorizations by designated officials for 231 actions to be taken.

INVESTMENTS: Securities and real estate held for the production of income in ft form of interest, dividends, or rentals, or lease payments. The account does not include fixed assets used in LEA operations.

JOURNAL: The accounting record in which the details of financial transactions are first recorded.

K:  reserved

LEDGER: Contains all the accounts of a particular fund or all those detail accounts which support a particular General Ledger account.

LEVY: (Verb) To impose taxes or special assessments. (Noun) The total of taxes or special assessments imposed by a governmental unit.

LIABILITIES: Debt or other legal obligations arising out of transactions in the past which are payable but not necessarily due. Encumbrances are not liabilities; they become liabilities when the services or materials for which the encumbrance was established have been rendered or received.

LOCAL EDUCATION AGENCY (LEA): An educational agency at the local level which exists primarily to operate schools or to contract for educational services. Normally, taxes may be levied by such publicly operated agencies for school purposes. These agencies may or may not be coterminous with county, city, or town boundaries. This term is used synonymously with the terms 'school district,' 'school system,' and 'local basic administrative unit."

MANAGEMENT LETTER: The management letter identifies issues not required to be disclosed in the Annual Financial Report but represent the auditor's concerns and suggestions noted during the audit.

MEMORANDUM ACCOUNTING: An informal record of an LEA transaction that cannot be recorded under the regular financial accounts but for which a record is desired.

NET EXPENDITURE: The actual outlay of money by the LEA for some service or object after the deduction of any discounts, rebates, reimbursements, or revenue produced by the service or activity.

NET INCOME: The balance remaining to the LEA after deducting from the gross revenue for a given period all operating expense and income deductions during the same period.

OBJECT: The commodity or service obtained from a specific expenditure. There are eight object categories for the local school system: Sala6es, Employee Benefits, Purchased Services, Supplies and Materials, Capital Outlay, Other Objects, Transfers, and Tuition.

OBJECT CLASSIFICATION: A category of goods or services purchased.

PAYMENTS IN LIEU OF TAXES: Payments made out of general revenues by a governmental unit to the LEA in lieu of taxes it would have had to pay, had its property or other tax base been subject to taxation by the local LEA on the same basis as other privately owned property or other tax bases. It would include payment made for privately owned property which is not subject to taxation on the same basis as other privately owned property due to action by the governmental unit owning or responsible for the property.

PETTY CASH: A sum of money set aside for the purpose of paying small obligations for which the issuance of a formal voucher and check would be too expensive and time- consuming. Also, a sum of money, either in the form of currency or a special bank deposit, set aside for the purpose of making change or immediate payments of comparatively small amount.

PROGRAM: A plan of aofivifies and procedures designed to accomplish a predetermined objective or set of allied objectives.

PROPRIETARY ACCOUNTS: Those accounts which show actual financial conditions and operations such as actual assets, liabilities, reserves, surplus, revenues, and expenditures, as distinguished from budgetary accounts.

RECEIPTS: cash received.

RECEIVING AND DISBURSING: Accepting and paying out funds. It includes the current audit of receipts and the preaudit of requisitions or purchase orders before ft order is placed to determine whether the amounts are within the budgetary allowances and whether such disbursements are lawful expenditures of the school or LEA.

REIMBURSEMENT: The return of an overpayment or overoollecbon in cash.

RESTRICTED GRANTS-N-AID: Revenues received as grants by the LEA which must be used for a categorical or specific purpose. If such money is not completely used by the LEA, it usually must be returned to the government unit. Separate accounts may be maintained for general source grants-in-aid which are not related to specific revenue sources of the governments] unit and for those assigned to specific source of revenue, as appropriate.

REVENUES: Additions to assets which do not increase any liability, do not represent the recovery of an expenditure, do not represent the cancellation of certain liabilities without a corresponding increase in other liabilities or a decrease in assets, and do not represent contributions of fund capital in Food Service and Pupil Activity funds.

STATE AID FOR EDUCATION: Any grant made by a State government for ft support of education.

TRANSFER FROM OTHER FUNDS: Money received unconditionally from another fund without expectation of repayment. Such monies are other financing sources of the receiving fund, but not the LEA as a whole.

TRIAL BALANCE: A list of the balances of the accounts in a ledger kept by double entry with the debit and credit balances shown in separate columns. If the totals of the debit and credit columns are equal or their net balance agrees with a controlling account, the ledger from which the figures are taken is said to be "in balance."

UNRESTRICTED GRANTS-N-AID: Revenues received as grants by the LEA which can be used for any legal purpose desired by the LEA without restrictions.

VOUCHER: A document which authorizes the payment of money and usually indicates the accounts to be charged.

WARRANT: An order drawn by the school board to the LEA treasurer ordering him/her to pay a specified amount to a payee named on the warrant. Once signed by the treasurer, the warrant becomes a check payable by a bank named on the warrant by the treasurer. (1 1 B M)