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Accounting Procedures for Title IV Programs

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.)

Last Modified: 06/30/1995