| Action Required |
September 13, 2001
TO THE ADMINISTRATOR ADDRESSED:
SUBJECT: Update 8 to the Financial Accountability System Resource Guide
This letter is to communicate that the Financial Accountability System Resource Guide (Resource Guide) published by the Texas Education Agency (TEA) was amended to implement revisions to financial accounting standards, in accordance with Senate Bill 702, House Bill 6 and other bills passed by the 77th Legislature, and to implement other necessary revisions to financial accounting standards. The primary purpose of the revisions were to implement changes to accounting, auditing and reporting standards related to costs charged to the Foundation School Program (FSP) State Compensatory Education (SCE) allotment and implement new financial accounting and management standards that apply to charter schools. The amendments to the Resource Guide and the Resource Guide supplements for charter schools are effective, in most instances, for the fiscal year that began September 1, 2001 (school year 2001-2002), with certain exceptions.
It is to be noted that a comprehensive revision was made to Module Nine of the Resource Guide, in accordance with Senate Bill 702, and to accomplish needed enhancements to the SCE auditing and reporting system required under Section 42.152, Texas Education Code. The revisions to these standards are applicable to all school districts and charter schools, and are described in Modules One and Nine of the Resource Guide, titled Financial Accounting and Reporting (FAR); and Compensatory Education Guidelines, Financial Accounting Treatments, and an Auditing and Reporting System. The involvement of the Office of the Comptroller of Public Accounts and the State Auditor's Office in the development of new accounting, auditing and reporting standards that apply to the SCE allotment is deeply appreciated.
It is to be noted that changes to SCE-related financial accounting standards affect the types of costs that are eligible to be charged to the SCE allotment, and cost accounting methodologies for allocating costs between regular education (Program Intent Code 11, Basic Educational Services) and SCE (Program Intent Code 24, Accelerated Education). It is also important to note that only supplemental costs of nondisciplinary alternative education programs are eligible to be charged to the SCE allotment (nondisciplinary alternative education programs are not entirely supplemental to the cost of regular education programs effective school year 2001-2002). Senate Bill 702 also enacted provisions that limit the amount of costs related to basic services provided under disciplinary alternative education programs that are eligible to be charged to the SCE allotment. A question and answer document about various SCE topics will be available by October 1, 2001 on the Internet site of the Division of Student Support Programs at the following link: http://www.tea.state.tx.us/student.support/.
Additionally, a significant change was implemented related to the SCE auditing and reporting system required under Section 42.152, Texas Education Code. All school districts and charter schools that received a SCE allotment will be required to file an agreed-upon procedures annual audit report with the TEA within 150 days after the end of fiscal year 2002 (the fiscal period ended June 30, 2002 or August 31, 2002 depending upon the fiscal year start date). This change was necessary to implement a statewide standard for a SCE auditing and reporting system, which is described in Sections 9.3.5 through 9.3.7 of Module Nine of the Resource Guide.
As mentioned above, the amendments to the Resource Guide and the supplements for charter schools are effective, in most instances, for the fiscal year that began September 1, 2001 (school year 2001-2002). It is also important to note there are two revisions that affected the annual audit report for the fiscal year ended August 31, 2001. The revisions to the annual audit report for fiscal year 2001 involve an additional note disclosure relating to group health insurance plans (the note disclosure does not apply to charter schools that did not offer group health insurance benefits to employees during fiscal year 2001 and do not plan to implement this benefit in the future), and revision of Exhibit C-2, Schedule of Expenditures for Computation of Indirect Cost, in accordance with federal regulations. Additionally, five new program intent codes will be effective September 1, 2002, as described in Module One of the Resource Guide. It is to be noted that changes were made to all of the modules of the Resource Guide, which are referenced in the What's New Module. The Resource Guide and the two supplements for charter schools are accessible from the TEA Internet site under the links shown below:
http://www.tea.state.tx.us/school.finance/audit/resguide8/index.html
http://www.tea.state.tx.us/school.finance/audit/chartersupplement0901.doc
http://www.tea.state.tx.us/school.finance/audit/chartercodes0701.doc
Notice was provided in the Texas Register regarding proposed changes to the Resource Guide. The notice in the Texas Register states that comments to the proposed changes to the Resource Guide may be filed with the TEA. Comments may be filed through October 5, 2001 with the Division of School Financial Audits. The comments will be reviewed and considered by staff in the Division of School Financial Audits for the purpose of making adjustments to the proposed changes to the Resource Guide, as necessary. If you have any questions, please feel free to contact the Division of School Financial Audits at (512) 463-9095.
Sincerely,
Tom Canby
Managing Director
School Financial Audits
For further information on this topic, contact the Division of School Financial Audits at (512) 463-9095.