Authorized Bank Accounts for Public Schools

The Latest Rules and Regulations That Impact Your Government Entity

Recently there have been a few schools in the news with headlines regarding unauthorized bank accounts.  Have you recently looked through the list of bank accounts your School District has?  If not, you may want to schedule a reminder each year to review your compliance with your bank accounts.

We would recommend that you schedule out each known bank account and evaluate those accounts.  You may ask yourself, is it a board approved account and do I have board minutes from the past that support that approval?  It is good practice to make a copy of those board approved minutes to maintain together with your schedule of bank accounts in case regulators ask about it.  Are your bank accounts allowed by Arizona State Statute?

The State only allows the following bank accounts for School Districts:
• M&O Fund revolving account? A.R.S. §15-1101
• Miscellaneous Receipts clearing account(s)? A.R.S. §15-341(A)(20)
• Food Service Fund clearing account? A.G. Opinion I60-35
• Food Service Fund revolving account? A.R.S. §15-1154
• Auxiliary Operations Fund account? A.R.S. §15-1126
• Auxiliary Operations Fund revolving accounts? A.R.S. §15-1126
• Student Activities Fund accounts? A.R.S. §15-1122
• Student Activities Fund revolving account? A.R.S. §15-1124
• Federal Savings Bond Withholdings account? A.R.S. §15-1221
• State Income Tax Withholdings account? A.R.S. §15-1222
• Employee Insurance Programs Withholdings account? A.R.S. §15-1223
• Grants and Gifts to Teachers account? A.R.S. §15-1224
• Federal Payroll Tax Withholdings account? USFR page VI-H-8
• Principals’ Supplies account(s)? A.R.S. §15-354
• Electronic Payments clearing account? A.R.S. §15-1221
• Payroll Direct Deposits clearing account? A.R.S. §15-1221

You may want to submit a formal inquiry to your banks of all accounts opened under your District’s Tax ID number.  You may notice above that accounts for school related clubs and other Districts are not allowed under your tax ID number, such as bank accounts for parent teacher organizations.  Don’t get caught with a bank account opened under your tax ID number that is not allowable by Arizona.  You may find in your inquiry that you have inactive bank accounts from the past.  It is also required that your District close those inactive accounts as soon as they become inactive.

These are just a few suggestions to remind yourself to do each year in order to protect yourself and your School District from any non-compliance.  Be on the lookout for my future blogs where I will discuss other cash related compliance issues and controls surrounding those items.  Also, Henry & Horne is always available for help.  If you are looking to procure for audit services or consulting to help maintain good compliance, remember Henry & Horne has certified public accountants with years of Public School District related experience that can help.  Consider us in your next RFP and experience a committed and friendly group of professionals ready to help.

Brian Hemmerle, CPA, CFE