N.J. Admin. Code § 6A:23A-16.2

Current through Register Vol. 57, No. 1, January 6, 2025

Section 6A:23A-16.2 - Principles and directives for accounting and reporting

(a) Each district board of education and charter school and renaissance school project board of trustees shall use accounting and reporting directives as prepared, published, and distributed by the Commissioner, in addition to any books, materials, or bulletins, for the guidance of school officials in establishing and maintaining the double-entry bookkeeping and accounting system mandated in this subchapter.

(b) Each district board of education and charter school and renaissance school project board of trustees shall develop a system of accounting and reporting objectives that makes it possible to:

1. Present fairly and with full disclosure all funds and activities of the district board of education or charter school or renaissance school project board of trustees in conformity with GAAP; and

2. Determine and demonstrate compliance with finance-related legal and contractual provisions.

(c) Each district board of education and charter school and renaissance school project board of trustees shall develop an accounting system that is organized and operated on a fund basis and shall:

1. Report governmental, proprietary, and fiduciary funds in the fund financial statements to the extent that they have activities that meet the criteria for using those funds;

2. Establish and maintain funds required by law and sound financial administration. Only the minimum number of funds consistent with legal and operating requirements should be established;

3. Use the modified accrual or accrual basis of accounting as appropriate in measuring financial position and operating results in accordance with GAAP and regulatory provisions; and

4. Recognize transfers in the accounting period in which the interfund receivable and payable arise.

(d) Each district board of education and charter school and renaissance school project board of trustees shall adopt an annual budget and shall include the adopted annual budget in the minutes of the board.

1. A district board of education or charter school or renaissance school project board of trustees shall develop a detailed budget statement, which includes the classification of expenditures by program and function and is prepared on a fund basis in accordance with N.J.S.A. 18A:22-8 and on a form prescribed by the Commissioner.

2. A district board of education or charter school or renaissance school project board of trustees shall prepare a detailed budget for each special project, each capital project as separately identified in a referendum, and each Federal or State grant, in proposal and maintain the detailed budget, along with all authorized revisions, on file in the central business office.

3. Each district board of education and charter school and renaissance school project board of trustees shall take appropriate action, as necessary, to maintain a balanced budget.

(e) Each district board of education and charter school and renaissance school project board of trustees shall ensure that the accounting system provides the basis for appropriate budgetary control.

(f) Each district board of education and charter school and renaissance school project board of trustees shall use common terminology and classification consistently throughout the budget, accounts, and financial reports of each fund, and shall adopt a prepared chart of accounts that conforms with the following:

1. Each district board of education and charter school and renaissance school project board of trustees shall use, for financial reporting to the Department, the 2024-2025 Uniform Minimum Chart of Accounts for New Jersey Public Schools published and distributed by the Commissioner consistent with the Financial Accounting for Local and State School Systems, 2014 Edition, developed by NCES; K Street NW, Washington DC 20006, incorporated herein by reference, as amended and supplemented, in accordance with N.J.S.A. 18A:4-14.

2. A district board of education or charter school or renaissance school project board of trustees that formally adopts a resolution to expand upon the minimum requirements for the budget system at (f)1 above shall:

i. Be subject to the budgetary and over expenditure controls pursuant to N.J.A.C. 6A:23A-16.10(a)3;

ii. Compile budget data in the expanded and minimum format each month and at the end of the fiscal year; and

iii. Use, for such expanded systems, the Financial Accounting for Local and State School Systems, developed by NCES, as published and distributed by the Commissioner.

3. A district board of education and charter school and renaissance school project board of trustees shall approve and adopt any modifications to the chart of accounts, and shall ensure the modifications conform with the standards at (f)1 and 2 above.

(g) Each district board of education and charter school and renaissance school project board of trustees shall establish an adequate internal control structure and procedures for financial reporting.

(h) Each district board of education and charter school and renaissance school project board of trustees shall prepare monthly financial statements and reports of financial condition, operating results, and other pertinent information, in accordance with directions issued by the Commissioner, to facilitate management control of financial operations, legislative oversight, and, where necessary or desired, for external reporting purposes.

(i) Each district board of education and charter school and renaissance school project board of trustees shall prepare and publish an ACFR in compliance with the standards set forth by the Government Accounting and Financial Reporting Standards Original Pronouncements, incorporated herein by reference, as amended and supplemented, as prepared, published, and distributed by GASB and GAAP, covering all activities of the district board of education or charter school or renaissance school project board of trustees. The district board of education and charter school and renaissance school project board of trustees shall ensure that the ACFR includes, but is not limited to: an introductory section; basic financial statements; required supplementary information; schedules, narrative explanations, and a statistical section. Each district board of education and charter school and renaissance school project board of trustees shall use the uniform program as published and distributed by the Commissioner for preparing the ACFR.

1. A district board of education or charter school or renaissance school project board of trustees shall cause an audit of the annual financial statements to be made pursuant to N.J.S.A. 18A:23-1 et seq., and shall engage, to conduct the annual audit, only a licensed public school accountant who has an external peer/quality report performed in accordance with Government Auditing Standards (Yellow Book) by the Comptroller General of the United States (U.S. Government Printing Office, Stop SSOP, Washington, DC 20402-0001). The district board of education or charter school or renaissance school project board of trustees shall ensure that the external peer/quality report is completed within the time established by Government Auditing Standards issued by the Comptroller General of the United States unless the accountant or firm can show good cause as to why there is a delay.

2. A district board of education or charter school or renaissance school project board of trustees shall require the submission of the most recent external peer/quality report and letter of comment to the district board of education or charter school or renaissance school project board of trustees for review and evaluation prior to each appointment of a licensed public school accountant to conduct the annual audit.

i. A district board of education or charter school or renaissance school project board of trustees shall acknowledge the receipt, review, and evaluation of the external peer/quality report in the public session and minutes in which the district board of education or charter school or renaissance school project board of trustees authorizes the engagement of the accountant or firm to perform the audit.

ii. A district board of education or charter school or renaissance school project board of trustees shall require the submission of an updated external peer/quality report of the engaged licensed public school accountant, within 30 days after the issuance date of the external peer/quality report if such report is issued prior to the date of the audit opinion for the most recent fiscal year.

iii. In accordance with NJOMB Circular Letter 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid, including any amendments or revisions thereto, a district board of education or charter school or renaissance school project board of trustees shall ensure that the public school accountant provides a copy of the most recent external peer/quality report to the Department, within 30 days after the initial engagement of a licensed public school accountant or firm and within 30 days after the issuance of a subsequent peer/quality report.

3. A district board of education or charter school or renaissance school project board of trustees shall engage a public school accountant during the audit engagement period for non-auditing, management, or other consulting services only if the services comply with the independence standards as established in Government Auditing Standards (Yellow Book) by the Comptroller General of the United States.

4. The Commissioner may prohibit, for good cause, a district board of education or charter school or renaissance school project board of trustees from engaging a particular licensed public school accountant, or may direct the use of a process for the appointment of a licensed public school accountant. For the purpose of this provision, good cause shall include documented violations of N.J.S.A. 18A:23-1 et seq., reported deficiencies or violations identified through the American Institute of Certified Public Accountants (AICPAs) Peer Review Process as applied by the New Jersey Society of Certified Public Accountants (NJSCPA), disciplinary action by the State Board of Accountancy or AICPA, or after an investigation by the Department and hearing before the Commissioner or Commissioner's designee.

5. Documented violations of N.J.S.A. 18A:23-1 et seq. will be reported to the State Board of Accountancy with a recommendation by the Commissioner to cancel the license of the licensed public school accountant. A district board of education or charter school or renaissance school project board of trustees shall be prohibited from employing any accountant subject to this provision until the State Board of Accountancy makes a determination on the cancellation of the license.

(j) Pursuant to N.J.S.A. 18A:4-14, each district board of education shall maintain restricted fund balance categories stipulated by constitution, external resource providers, or through an enabling law in accordance with GAAP accounting standards and published by GASB for encumbrances, or legal restrictions imposed or permitted by the State or another government. A district board of education may request approval to establish a legal reserve other than those authorized herein by submitting a written request to the Division of Finance and Business Services in accordance with the annual audit program.

N.J. Admin. Code § 6A:23A-16.2

Amended by 49 N.J.R. 1079(a), effective 5/1/2017

Amended by 56 N.J.R. 2166(a), effective 11/4/2024