PublicationDate: 7/1/95 ChapterNumber: 5 ChapterTitle: Accounting Procedures for Title IV Programs SectionNumber: 1 SectionTitle: Institutional Financial Management Systems PageNumbers: 141-142 ((Executive Summary)) Accounting is one of the more important responsibilities assumed by institutions participating in Title IV programs. This chapter deals primarily with recommended accounting procedures for institutions. The aim is to help schools identify any areas of difficulty and potential weaknesses in their fiscal management systems. At the same time, schools can identify those areas that are being managed properly and ensure that proper accounting and bookkeeping procedures are performed. This chapter is a general guide; it is not intended to replace accounting standards established by the American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), Governmental Accounting Standards Board (GASB), or the concept of generally accepted accounting principles (GAAP). ((Key Terms)) account number account payable account receivable asset account capital account capital reduction account chart of accounts checks and balances clear audit trail credit debit expense account fund accounting general ledger income account internal control system journal entry ledger account liability account program balance reconciliation restricted funds revenue account separation of functions trial balance 5.1 Institutional Financial Management Systems ((Minimum requirements)) An institution's financial management system must provide effective control over and accountability for all funds received from the Department of Education Payment Management System (ED/PMS). At a minimum, the institution's system must provide: - accurate, current, and complete disclosure of the financial status of each program or project sponsored by the U. S. Department of Education (ED); - records that adequately identify the source and application of funds for sponsored activities and contain information on institutional awards, authorizations, obligations, unobligated balances, assets, income, liabilities, revenues, expenditures, and cash disbursements; - effective control over and accountability for all funds, property, and other assets, including adequate safeguarding of all such assets and ensuring that they are used solely for authorized purposes; - comparison of actual expenditure amounts with amounts budgeted for each Title IV program; - procedures, whenever funds are advanced through ED/PMS, to minimize the time between the transfer of funds from the U.S. Treasury and cash disbursement by the institution, for making disbursements to students as soon as administratively feasible, but no later than three business days following the dates the institution receives the funds; - procedures in accordance with the applicable terms of the Title IV program for determining reasonableness, allowability, and allocability of costs; - accounting records that are supported by audit trail documentation; and - examinations in the form of external or internal audits, which must be made in accordance with generally accepted auditing standards. (See section 6.6 for more information on audits.) |