Accounting Procedures Handbook

10 REVENUE I. OVERVIEW Revenue increases the appropriate fund’s ownership equity in its assets. Usually revenues increase cash or other current assets which are convertible into cash without affecting the fund’s liabilities. To be considered revenue, the amount received must be expendable and it must not create a reserve to be used for a particular purpose. Revenues are additions to assets, which do not increase any liability, do not represent an expenditure reimbursement, and do not represent the cancellation of any liabilities without a corresponding increase in liabilities or a decrease in assets. The Board of Education receives revenue from many different sources. Revenue can be either unrestricted or restricted. Unrestricted revenues are those received without restriction other than the general restrictions imposed by the parent government. Restricted revenues are generally those for which expenditure authority is maintained by the grantor. Revenue is accounted for in accordance with the Financial Reporting Manual for Maryland Public Schools (FRMMPS). Since there are many sources of revenue it is necessary that a general ledger account be maintained for each source. The account “miscellaneous revenue” should only be used for small non-recurring income items. Estimated or budget revenue accounts are required for each source of revenue to assist management with the status of actual revenue realized compared with estimated revenue. Reporting requirements to comply with various rules and regulations established by the accounting profession, the Federal Government, and the State of Maryland make it extremely important for the WCBOE’s accounting systems and procedures to be designed in such a way so as to facilitate compliance and provide for a means to monitor such compliance. II. CONTROL OBJECTIVES • To report revenues (unrestricted and restricted) in accordance with generally accepted accounting principles. • To ensure all revenue is identified and accurately recorded in a timely manner to the appropriate fund. • To monitor and ensure compliance with all applicable rules and regulations established by the various professional and governing entities regarding revenue recognition. III. PROCEDURES Note: Unless otherwise stated, the Accounting Manager is responsible for the following procedures as related to revenues: General Controls Surrounding Revenue: • Management reviews the Board’s financial statements on a periodic basis and investigates significant variances from budgets and expected results. • The Board of Education approves rates and fees on an annual basis in accordance with applicable laws and regulations.