DAR File No. 37922

Education, Administration

Rule R277-425

Budgeting, Accounting, and Auditing for Utah Local Education Agencies (LEAs)

Notice of Proposed Rule

(Amendment)

DAR File No.: 37922
Filed: 08/14/2013 10:22:48 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is amended to provide specific uniform budgeting, accounting, and auditing procedures for LEAs to meet new financial reporting requirements which specifically require a "chart of accounts".

Summary of the rule or change:

The changes provide new and amended definitions, new language for LEA audit requirements, and new language for LEA financial accounting.

State statutory or constitutional authorization for this rule:

• Subsection 53A-1-402(1)(e)(iv)
• Subsection 53A-1-401(3)

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget. Existing staff within existing budgets will manage new financial reporting requirements.

local governments:

There is no anticipated cost or savings to local government. It is anticipated that LEAs will manage new reporting requirements with existing staff and within existing budgets.

small businesses:

There is no anticipated cost or savings to small businesses. This rule and the amendments to the rule apply to public education and do not affect businesses.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated cost or savings to persons other than small businesses, businesses, or local government entities. The changes to the rule apply to LEAs and their reporting requirements and do not affect individuals.

Compliance costs for affected persons:

There are no compliance costs for affected persons. LEAs will report financial information consistent with this rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

I have reviewed this rule and I see no fiscal impact on businesses.

Martell Menlove, State Superintendent

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Education
Administration
250 E 500 S
SALT LAKE CITY, UT 84111-3272

Direct questions regarding this rule to:

• Carol Lear at the above address, by phone at 801-538-7835, by FAX at 801-538-7768, or by Internet E-mail at carol.lear@schools.utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/01/2013

This rule may become effective on:

10/08/2013

Authorized by:

Carol Lear, Director, School Law and Legislation

R277. Education, Administration.

R277-425. Budgeting, Accounting, and Auditing for Utah Local Education Agencies (LEAs).

R277-425-1. Definitions.

A. "Accrual accounting" means a basis of accounting that measures the performance of an entity by recognizing economic events regardless of when cash transactions occur. Economic events are recognized by matching revenues to expenses at the time in which the transaction occurs rather than when payment is made.

[A]B. "Board" means the Utah State Board of Education.

C. "FASB" means the Financial Accounting Standards Board that has legal authority to establish financial accounting and reporting standards (GAAP) for publicly held companies and nonprofit organizations.

[C]D. "GAAP" means Generally Accepted Accounting Principles, as defined in the Codification of Governmental Accounting and Financial Reporting Standards, as published by the Governmental Accounting Standards Board.

[D]E. "GAAS" means auditing standards established by the American Institute of Certified Public Accountants, generally referred to as Generally Accepted Auditing Standards.

F. "GASB" means the Governmental Accounting Standards Board that is the source of generally accepted accounting principles (GAAP) used by state and local governments in the United States.

[E]G. "LEA" means local education agency which includes school districts and charter schools.

[B]H. "Modified accrual[ basis of] accounting" means a [method under which expenditures other than accrued interest on general long-term debt are recorded at the time liabilities are incurred and revenues are recorded when they become measurable and available to finance expenditures of the current period]basis of accounting, commonly used by government agencies, that recognizes revenues when they become available and measureable and, recognizes expenditures when liabilities are incurred.

I. "Non-operating LEA" means an LEA that has not received minimum school program funds or federal funds and is not providing educational services during a fiscal year, such as an LEA in a start-up year(s).

J. "Operating LEA" means an LEA that has received state minimum school program funds or federal funds and is providing educational services during a fiscal year.

[F]K. "USOE" means the Utah State Office of Education.

 

R277-425-2. Authority and Purpose.

A. This rule is authorized by Utah Constitution Article X, Section 3 which vests general control and supervision over public education in the Board, Section 53A-1-402(1)(e)(iv) which allows the Board to adopt rules regarding financial, statistical, and student accounting requirements, Section 53A-1-404 which allows the Board to approve auditing standards for school boards, Section 53A-1-405 which requires the Board to verify accounting procedures of school boards for the purpose of determining the allocation of Uniform School Funds, and Section 53A-1-401(3) which allows the Board to adopt rules in accordance with its responsibilities.

B. The purpose of this rule is to specify uniform budgeting, accounting, and auditing procedures for LEAs consistent with Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS).

 

R277-425-3. LEA Audit Requirements.

A. An operating LEA shall cause an audit to be made of its accounts by a competent, independent certified public accountant. Utah Code Section 51-2a-201-1 requires audits for an entity whose revenues or expenditures of all funds is $500,000 or more. Section 51-2a-201-2 require an entity whose revenues or expenditures of all funds less than $500,000 cause a financial report to be made in a manner prescribed by the state auditor. The state auditor provides for external parties to require audits of their entities.

B. A non-operating LEA shall cause a financial report to be made consistent with Utah Code section 51-2a-201.

 

R277-425-[3]4. Reporting Standards.

A. Each LEA's financial reporting shall be in accordance with GAAP which include GAAS.

[B. Each LEA's financial reporting shall be provided in the modified accrual basis of accounting in accordance with GAAP.

]B. LEA's financial reporting shall be provided in a manner consistent with the basis of accounting as determined by the entity's GAAP, consistent with either GASB or FASB. If FASB standards are followed, the LEA shall provide reconciliation between the accrual basis of accounting and modified accrual basis of accounting.

C. LEAs shall provide data and information consistent with School Finance budgeting, accounting and auditing standards for Utah LEAs provided online by the Utah State Office of Education, October, [2011]2013 and reviewed annually. The USOE School Finance website contains applicable Utah statutes, applicable Board rules, and uniform rules for:

(1) budgeting;

(2) financial accounting which includes a chart of accounts for LEAs required under Section 53A-1-301(3)(d)(v);

(3) student membership and attendance accounting;

(4) indirect costs and proration;

(5) financial audits;

(6) statistical audits; and

(7) compliance and performance audits.

D. Section 53A-19-103 allows LEAs to have an undistributed reserve not to exceed five percent of the LEA general fund budgeted expenditures. The purpose of the reserve is to meet unexpected and unspecified contingencies.

 

KEY: education finance

Date of Enactment or Last Substantive Amendment: [February 7, 2012]2013

Notice of Continuation: August 2, 2013

Authorizing, and Implemented or Interpreted Law: Art X Sec 3; 53A-1-402(1)(e); 53A-1-404; 53A-1-405; 53A-1-401(3)