Fiduciary Funds

Fiduciary Funds - Date Issued 6/05 SECTION II- SPECIFIC...

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Date Issued 6/05 SECTION II- SPECIFIC COMPLIANCE PROPRIETARY FUNDS FUND 70 – INTERNAL SERVICE FUNDS II-70. 1 Internal Service Funds Districts should use internal service funds to account for the financing of goods or services provided by one department or office to other departments or offices of the district board of education, or to other district boards of education and governmental units, on a cost-reimbursement basis. Internal service funds are cost accounting and distribution entities, and are intended to "break even" annually and/or over a period of years. The use of an internal service fund does not provide additional revenue or expenses to the district but acts as a means to document the sharing of the costs. Use of this fund replaces the prior common practice of "refunding" expenditure accounts for shared services. Some activities that may be accounted for in an internal service fund are central purchasing and warehousing, central motor pools, central printing and duplicating or central data processing departments. Joint transportation agreements where the lead district uses its own employees and buses are accounted for in an internal service fund. Joint transportation agreements where the lead district contracts with a vendor are accounted for in the general fund. Arrangements for sharing the costs of administrative and other non-instructional personnel and related costs under joint agreements where the employees remain under the employment of one lead district would also be accounted for in an internal service fund in the records of the lead district. Each of the "sharing" districts, including the employing lead district, should reflect their agreed-upon portion of the costs in the general fund. For the employing district, that cost would be budgeted as a salary expenditure. The "sharing" districts would account for the payments made to the lead district as a contracted service under the appropriate function. If the shared employees have employment contracts with each of the districts involved, each district's share of the employees' salary and related costs would be budgeted and expended against the appropriate salary and other accounts and there would be no need for any of the districts involved to establish an internal service fund. The district board of education providing the shared service shall allocate the costs on a user charge basis to all participating entities on an annual basis at a minimum. User charges should be reported by entities or funds being serviced by the internal service fund in the applicable line item account for the goods or services received. Sales and purchases of goods and services for a price approximating their external exchange value should be reported as revenues ("Services Provided to Other Funds"). The total user charges should approximate the total costs of the internal service fund. Local school district auditors should refer to Chapter 14 of the GAAP Technical Systems Manual
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This note was uploaded on 04/12/2011 for the course ACCT 2500 taught by Professor Johnmalone during the Fall '08 term at Cuyahoga CC.

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Fiduciary Funds - Date Issued 6/05 SECTION II- SPECIFIC...

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