BUSINESS
AND OPERATIONS: ACCOUNTING AND AUDIT [LAW]
1. Fiscal Year
The charter holder shall adopt a fiscal year that
begins on July 1 or September 1 of each calendar year. [See
Business and Operations: Accounting and Audit [Recommended Policy]].
2. Financial Accounting
The charter holder shall comply fully
with:
A. Generally
accepted accounting principles (GAAP);
B. TEA’s
Financial Accountability System Resource Guide; and
C. Applicable
federal standards for financial management systems, including the following:
(1) Financial
reporting. Accurate, current, and
complete disclosure of financially assisted activities shall be made in
accordance with the financial reporting requirements of the grant or subgrant.
(2) Accounting
records. The school shall maintain
records that adequately identify the source and application of funds provided
for activities assisted with federal funds. These records must contain
information pertaining to grant or subgrant awards and authorizations,
obligations, unobligated balances, assets, liabilities, outlays or
expenditures, and income.
(3) Internal
control. The school shall maintain
effective control and accountability of all federal grant and subgrant cash,
real and personal property, and other assets obtained with federal funds. The school shall adequately safeguard all such
property and assure that it is used solely for authorized purposes.
(4) Source
documentation. Accounting records must
be supported by such source documentation as cancelled checks, paid bills,
payrolls, time and attendance records, contract and subgrant award documents,
etc.
(5) Budget
control. The school shall compare actual
expenditures or outlays of federal funds with budget amounts for each grant or
subgrant. Financial information must be
related to performance or productivity data, including the development of unit
cost information whenever appropriate or specifically required in the grant or
subgrant agreement.
(6) Applicable
federal cost principles, agency program regulations, and the terms of grant and
subgrant agreements will be followed in determining the reasonableness,
allowability, and allocability of costs.
(7) Cash management. Whenever advance payment procedures are used,
the school shall follow applicable federal procedures.
34 C.F.R. § 80.20; 19
3. Annual Audit by the School
A charter holder shall at its own expense have the
financial and programmatic operations of the charter school audited annually by
a certified public accountant licensed by the Texas State Board of Public
Accountancy and registered as a provider of public accounting services.
A. The
charter holder shall file a copy of the annual audit report, approved by the
board of the charter holder, with the Texas Education Agency (TEA) division
responsible for school financial audits not later than the 150th day after the
end of the fiscal year for which the audit was made.
B. The
audit must comply with Generally Accepted Auditing Standards and must include
an audit of the accuracy of the fiscal information provided by the charter
school through the Public Education Information Management System (PEIMS).
C. Financial
statements in the audit must comply with Government Auditing Standards and the
Office of Management and Budget Circular A-133 or its successor.
D. A
charter holder shall separately disclose, in its annual audit report, all
persons with a substantial interest in a management company.
E. Beginning
with the fiscal year in which
A. General
Authority
The commissioner may audit the records of
the charter holder, the charter school, or a management company that has
provided management services to a charter school or charter holder.
B. Scope
of Audit
Such an audit shall be limited to matters directly
related to the management or operation of a charter school, including the
allocation of costs shared between the charter school and any non-charter
business activity. The audit may examine
the financial or administrative records related to the charter school that are
in the possession of a management company or former management company,
including records related to the allocation of shared costs.
C. Charter
Holder Cooperation
A charter holder and its employees and agents shall
cooperate fully with an audit by the commissioner and shall take all actions
necessary to secure the cooperation of a management company. Failure to timely comply with a request for
access to records or other cooperation from the charter holder constitutes a
material charter violation.
D. Management
Company Cooperation
A management company and its employees and agents
shall fully cooperate with an audit by the commissioner. Failure to timely comply with a request for
access to records or other cooperation from the management company constitutes
a management company breach.
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5. Attendance Accounting
The charter holder shall comply with the TEA Student
Attendance Accounting Handbook and with state laws and rules regarding
attendance accounting.
A. TEA
Attendance Accounting Rule:
(1) All public schools in
(2) The
School Director and teachers shall be responsible to the school board and to
the state to maintain accurate, current attendance records;
(3) The
school shall maintain records and make reports concerning student attendance
and participation in special programs as required by the commissioner of
education;
(4) Effective
January 1, 2001, before the school may count a student in attendance when the
student was allowed to leave campus during any part of the school day, the school
shall adopt a policy addressing parental consent for a student to leave campus
and distribute the policy to staff and to all parents of students in the school;
(5) If
a school chooses to use a locally developed record or automated system, it must
contain the minimum information required by the commissioner of education;
(6) When
classroom instruction is organized on a departmentalized basis, a central
attendance accounting system must be used;
(7) Excused
days for travel for the purpose of observing religious holy days shall be
limited to not more than one (1) day for travel to, and one (1) day for travel
from, the site where the student will observe the holy days;
(8) The
student has a documented appointment with a health care professional during
regular school hours. The appointment
should be supported by a document such as a note from the health care
professional;
(9) In
accordance with the Texas Education Code § 25.087, students may be excused for
medical, dental, and psychological appointments; for special education
assessment procedures; and for special education related services;
(10) The
School Director is responsible for the safekeeping of all attendance records
and reports. The School Director may
determine whether the properly certified attendance records or reports for the
school year are to be filed in the central office or properly stored on school
campuses. Regardless of where such
records are filed or stored, they must be readily available for audit by the
Division of Audits of the Texas Education Agency;
(11) A
student must be enrolled for at least two (2) hours to be considered in
membership for half-day, and for at least four (4) hours to be considered in
membership for one (1) full day;
(12) Attendance
for all grades shall be determined by the absences recorded in the second or
fifth period of the day, unless permission has been obtained from the Texas
Education Agency for an alternate period to record absences;
(13) Students
enrolled on a half-day basis may earn only half-day of attendance each school
day. Attendance is determined for these
pupils by recording absences in a period during the half-day that they are
scheduled to be present;
(14) The
established period in which absences are recorded may not be changed during the
school year;
(15) Students
absent at the time the attendance roll is taken, during the daily period
selected, are counted absent for the entire day. Students present at the time the attendance
roll is taken, during the daily period selected, are counted present for the
entire day;
(16) A
student who is not actually in school at the time attendance is taken shall not
be counted in attendance for Foundation School Program funding purposes unless
the student is participating in an activity which meets the conditions set out
in this policy;
(17) A
student not actually on campus at the time attendance is taken may be
considered in attendance for Foundation School Program purposes under the
following conditions:
(a) The student
is participating in an activity which is approved by the school board and is
under the direction of a member of the professional staff of the school, or an
adjunct staff member who:
(i) Has a
minimum of a bachelor’s degree; and
(ii) Is
eligible for participation in the Teacher Retirement System of Texas;
(b) The
student is participating in a mentorship approved by school personnel to serve
as one or more of the advanced measures needed to complete the Distinguished
Achievement Program;
(c) The student
is a Medicaid-eligible child participating in the Early and Periodic Screening,
Diagnosis, and Treatment Program (EPSDT) implemented by the Texas Department of
Human Services with contractual cooperation of the Texas Department of Health.
Such students may be excused for up to one (1) day at any time without loss of
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B. Exceptions
(1) The
school is not required to comply with TEA rules regarding attendance of
court-related students.
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(2) The
school shall report its actual student attendance data to TEA at six-week
intervals, or as directed by TEA.
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C. Pre-Kindergarten
Program
The school shall include the following information in
the school’s PEIMS report:
(1) Demographic
information, as determined the commissioner, on students enrolled in
pre-kindergarten classes, including the number of students who meet the
eligibility requirement;
(2) The
numbers of half-day and full-day pre-kindergarten classes offered by the school;
and
(3) The
sources of funding for the pre-kindergarten classes.
6. Non-Charter
Activities
A charter holder shall keep separate and
distinct accounting, auditing, budgeting, reporting, and recordkeeping systems
for the management and operation of the charter school.
A. Any
business activities of a charter holder not directly related to the management
and operation of the program described in the charter shall be kept in separate
and distinct accounting, auditing, budgeting, reporting, and recordkeeping
systems from those recording the business activities of the school.
B. Any commingling of charter and
non-charter business in the accounting, auditing, budgeting, reporting, and
recordkeeping systems of the school shall be a material charter violation.
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7. Interested Transactions
A charter holder shall comply with conflict of
interest laws and rules. [See Governance: Board Member Conduct: Conflicts
of Interest[Law]]. In addition, the
following shall be discretely and clearly recorded in the accounting, auditing,
budgeting, reporting, and recordkeeping systems for the management and operation
of the school:
A. Financial
transactions between the school and the non-charter activities of the charter
holder;
B. Financial
transactions between the school and an officer or employee of the charter
holder or the school;
C. Financial
transactions between the school and a member of the governing body of the
charter holder or the school;
D. Financial
transactions between the school and a management company charged with managing
the finances of a school; and
E. Financial
transactions between the school and any other person or entity in a position of
influence over the charter holder or the school. A person or entity is in a position of
influence if:
(1) The charter
holder or the school is a subsidiary of, or shares governing body members, officers,
or employees with, another organization, and
(a) The
person or entity is a shareholder, partner, administrator, official, or
employee of the other organization; or
(b) The
person or entity by any other means participates in the business decisions of
the affiliate or parent organization; or
(2) A
relative of the person is in a position of influence over the charter holder or
the school under this section, within the third degree by consanguinity or
affinity, as determined by nepotism laws and rules.
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