The Department of Education for the state of California operates a variety of programs that are useful in funding schools in the state and other organizations that engage in activities that support education. The highest percentage of funds that schools use to fund their activities come from the government. According to a report by the Public Policy Institute of California, The fiscal year 2018-2019 has seen the state of California fund schools from money obtained from three sources (PPIC, 2018) . The sources included property taxes, the state of California, and other local sources.
This paper discusses the various sources of funds for schools and the respective handlers of those funds. Further analysis is done to review the accounting practices of a school right from the point a school receives funds to the point those funds are budgeted and allocated for use. The paper looks at the various principles of accounting that the activities must conform with including the state regulations that must be followed in the process of making budgets and allocating funds. Additionally, the paper discusses the various ways that schools and institutions may involve in to safeguard funds of the school. Further to that, an analysis is done on the various measures that can be taken to ensure accuracies in data entry during accounting and budgeting. Finally, the paper discusses the oversight measure that a school or the government may put in place to ensure that the school accounting systems adhere to the regulations of the state.
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Sources of Funding and their accountability
As mentioned earlier, the state provides the larger share in the funding of public schools. Nevertheless, there are such programs that do not directly come from the resources of the state. The Laws in California allows schools to control both the general fund allocation and the funds allocated from property taxes. Apparently, taxes on property contribute to about 25 percent of funding to California schools. It is worth noting that the fund allocation to California schools is done through a certain formula that gives priority to students with a high level of economic disadvantages. The formula sets a base amount and adds 20 percent for each needy student in the district (Hoff, 2016).
Financial functions such as accounting, budgeting, and auditing are important activities which are also useful in providing financial information of the institution. Budgeting refers to the process where plans are made for the expenditure of the funds and estimations made with regards to expected revenue for a period of one year. Accounting refers to the arrangement of a financial system that defines the money expenditures receipts and anything that involves money within the schools. There are existing state regulations and guidelines that define the way money is spent in the schools as well as the specific accounting models to be used in presenting the same (Hoff, 2016)..
It is important to note that the school superintendent or head is the one who is legally responsible for spending funds allocated to their respective schools as well as the processes of accounting and budgeting in their respective schools. Therefore, the school head should be well informed about the accounting and budgeting principles, the state regulations regarding budgeting and accounting for schools, the policy of the school regarding the same and how to connect both the school policy and requirements to the state regulations regarding accounting and budgeting. The head of the school involves several accounting practices (Allison, Honegger, Johnson, & Hoffman, 2009) .
Accounting Practices include Receiving Funds
There are a number of people who have always thought that accounting is only interested in transactions of expenditures and revenues. Accounting for nonprofit making organizations such as schools happens to be among the most confusing practices because these are the institutions which receive m0re grants than they receive revenues. Fund accounting is the branch of accounting that specializes in accounting for non-profit making organizations as well as government agencies whose main expenditures are funded by grants. Fund accounting defines the fund allocation as done to the schools by the state and the subsequent management of those funds including expenditure (Hoff, 2016).
The International Standards of Accounting through IAS 20 defines how accountants are supposed to account for sums of money received as grants as well as other forms of monetary assistance. Apparently, funds received from governments are supposed to be regarded as loss or profit in the school’s income statement. The Generally Accepted Accounting Principles (GAAP) defines grants as monetary awards as well as direct assistance that organizations receive. Funds from the state to the schools fall under grants and should be treated the same way grants are treated in the accounting books. The GAAP recommends that an organization should keep records for all received funds to ensure that every money spent can be accounted for and the balance noted. It is therefore clear that receiving funds for schools is part of accounting practices and is recorded in the books (Allison, Honegger, Johnson, & Hoffman, 2009) .
Allocation of Funds should comply with accounting principles
Allocation of funds in schools is done during budgeting where plans are laid for the estimated expenditures and various amounts allocated for the expenditures. The allocation of funds should be done in compliance with the principles of accounting which guides every accounting process. Further to that, the principles are good for ensuring the accounting appears as sound and reasonable. One of these principles of fund allocation is the achievement of a balanced operating budget. This principle asks that the number of revenues should either be equal or should supersede the number of funds allocated to expenditures. In simpler terms, this principle provides that the fund allocation should be done in such a way that the available funds are enough to cater for the expenses (Perry, 2005) .
Other accounting principles that touch on fund allocation are the inclusion of budget reserves. Accounting standards recommend that while allocating funds for expenditure, a school should set money aside to fund its operational activities. Equipment replacement is yet another principle that guides the allocation of funds for schools in California and all over America. This principle calls for plans to replace worn out equipment that is owned by the school. Budgeting or allocation of funds should also conform to the principle of program sustainability which calls for the allocation of funds in such a way that the funds are enough to sustain a project to its completion and that the project would not fail after its launch (Allison, Honegger, Johnson, & Hoffman, 2009) .
Accounting and Budgeting Procedures ensuring the safety of funds
Safety of funds and assets of the school is one very important role of school heads and is done through laying down a good control system. These are done through the employment of specific procedures of accounting that are useful in protecting the funds and assets of the company. One such practice is the use of authorization in transactions. Authorization involves the setting of certain basis by which authority must be made available to complete certain actions. Authority can be set on withdrawal of funds, recording specific entries into the books. The use of authorization requires that authorization is received from particular individuals before the execution of activities involving money. Documentation is another essential accounting procedure that is good in ensuring safety and security of funds. In this context, documentation refers to the set basis for documenting transactions which are the completion of a certain cycle. Reconciliation is yet another important accounting practice to secure funds. This is the regular cross-checking of the cashbook against the balances in the bank to confirm that the activities conform to the results ( Anessi-Pessina, Barbera, Sicilia, & Steccolini, 2016) .
Maintaining Accurate Records of Transactions
Accounting and budgeting are two significant sources of reference in the institution and any other organization. It is, therefore, necessary to keep accurate data of the transactions which means that the records as they appear. There are specific activities that the school head must do or oversee to keep such accurate data. Firstly, the accounting team must ensure that transactions are recorded instantly as they occur. Alternatively, the school can use a management information system which records information automatically. Another important activity in ensuring accuracy of data is the constant review of transaction regularly to help detect errors and inaccuracies. The school should keep additional records as a backup which will help offer alternative sources in case of errors and inaccuracies detected (Sorenson & Goldsmith, 2017).
Oversight and Audit
The school and the entire state education system should lay down a surveillance and audit system which are to enable the activities of running a check through the accounting and fund allocation system and confirm if the activities conform with the laid down regulations of the government. The oversight system would effectively work only with specific features that support oversight. First, the state must have a team of auditors who conduct a yearly audit to check that the school keeps the rightful books of accounts, conforming to the principles of accounting as well as the state regulations that are laid. The school accounting team must also have an auditor who conducts regular audits to ensure that the budgeting system of the school conforms to the state regulations.
Conclusion
In summary, the state through its Department of Education works on a number of programs that are set to fund schools in California and promote the delivery of education as a service. However, the funds provided by the state should be used properly and someone has to be responsible for it. Therefore, adoption of a sound accounting system is very important role that the heads of schools or superintendents must put in place to ensure a good accounting and budgeting. Accounting and budgeting principles must be followed to ensure that allocation and expenditure of money is done in accordance with the principles of accounting. It is necessary to establish an audit unit that will create an oversight, and watchdog system that keeps the system in check to ensure that the laid down measures, principles and state regulations are indeed adhered. Schools need to secure funding to undertake their objectives but proper utilization of funds will depend on the establishment other systems of accounting, budgeting, and auditing.
References
Allison, G. S., Honegger, S. D., Johnson, F., & Hoffman, L. (2009). Financial Accounting for Local and State School Systems: 2009 Edition. Washington DC: U.S Department of Education.
Anessi-Pessina, E., Barbera, C., Sicilia, M., & Steccolini, I. (2016). Public sector budgeting: a European review of accounting and general management journals. Accounting, Auditing & Accountability Journal , 29 (3), 491-519.
Hoff, D. J. (2006). Call for ‘weighted’ student funding gets bipartisan stamp of approval . Education Week, 4(1): 1, 30
Perry, M. (2005, January). Understanding Disctrict Schools Budgets: A guide for local Leader. Retrieved from Edsource: https://edsource.org/wp-content/publications/UnderstandingSchoolDistrictBudgets.pdf
PPIC. (2018, July 1). FACTS- Financing Carlifonia's Public Schools . Retrieved from Public Policy Institute of Carlifonia: https://www.ppic.org/publication/financing-californias-public-schools/
Sorenson, R. D., & Goldsmith, L. M. (2017). The principal's guide to school budgeting . Corwin Press.
