005.28.19 Ark. Code R. § 006 - DESE Rules Governing the Regulatory Basis of Accounting
Arkansas Division of Elementary and Secondary Education Rules Governing the Regulatory Basis of Accounting
Effective: December 30, 2019
1.00
Authority
1.01 The Arkansas State Board of Education's
authority for promulgating these Rules is pursuant to Ark. Code Ann.
§§ 6-11-105, 6-20-401, 10-4-413, and Act 867 of 2019.
1.02 These rules shall be known as the
Arkansas Division of Elementary and Secondary Education Rules Governing the
Regulatory Basis of Accounting.
2.00
Purpose
2.01 The purpose of these Rules is to
establish a consistent basis of accounting for schools.
3.00
Definitions - For purposes of
these Rules, the following terms mean:
3.01 "Accrue" - To record revenues when
earned and to record expenditures as soon as they result in liabilities,
regardless of when the revenue is actually received or the payment is actually
made.
3.02 "Assets" - Probable
future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events. Examples include: cash, investments,
receivables, prepaid items, inventory, land, building, and equipment.
3.03 "Deferred Revenue" - Revenue received
prior to the fiscal year in which it is earned. Deferred revenue is recorded as
a liability when received and as revenue in the fiscal year it is
earned.
3.04 "Expenditures" -
Charges incurred, whether paid or unpaid, which are presumed to benefit the
current fiscal year.
3.05
"Liabilities" - Debt or other legal obligations arising out of transactions in
the past that are payable but not necessarily due.
3.06 "Regulatory Basis of Accounting" - A
basis of accounting that the reporting entity (school) uses to comply with the
requirements or financial reporting provisions of a governmental regulatory
agency (Arkansas Division of Elementary and Secondary Education) to whose
jurisdiction the entity is subject.
3.07 "Revenues" - Additions to assets that do
not increase a liability, do not represent the recovery of an expenditure, do
not represent the cancelation of certain liabilities without a corresponding
increase in other liabilities or decrease in assets, and do not represent
contributions of fund capital in Food Service and Pupil Activity
Funds.
3.08 "School" - any public
school district, public charter school, educational cooperative, or any
publicly supported entity having supervision over public educational
entities.
3.09 "Uniform Rate of Tax
(URT)" - Ad Valorem property tax of twenty-five (25) mills levied on the
assessed value of all taxable real, personal, and utility property in the state
to be used solely for maintenance and operations for the schools per Article
14, Section 3 of the Constitution of the State of Arkansas of
1874.
4.00
Financial Reporting-Regulatory Basis of Accounting
4.01 The financial statements shall be
presented on a fund basis format. There shall be no entity-wide
statements.
4.02 The financial
statements shall consist of: Balance Sheet - Regulatory Basis; Statement of
Revenues, Expenditures and Changes in Fund Balances - Governmental Funds -
Regulatory Basis; Statement of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual - General and Special Revenue Funds - Regulatory
Basis.
4.03 There shall be included
a Schedule of Capital Assets, including land, buildings, and equipment, as
supplemental information. The Capital Assets shall be reported net of
accumulated depreciation.
4.04
Major governmental funds shall be defined as general and special revenue. Such
funds shall be presented separately in the financial statements. All other
governmental funds shall be presented in the aggregate. Fiduciary fund types
shall be presented in a separate column in the Balance Sheet - Regulatory
Basis.
4.05 Revenues, except for
property taxes (see below), shall be reported in the financial statements in
the accounting period in which they become susceptible to accrual; that is when
they become both measurable and available to finance expenditures of the fiscal
period. Expenditures shall be reported in the financial statements when the
related liability is incurred. Such expenditures shall not include accruals for
interest payable, compensated absences, prepaid expenses, or inventories.
Reported liabilities shall not include the current portion of long-term debt or
deferred revenues. Property taxes shall be recorded in accordance with Ark.
Code Ann. § 6-20-401 through the 2020-2021 fiscal year.
4.06 Revenues shall be reported by major
sources, and expenditures shall be reported by major function.
4.07 Other transactions that are not reported
as revenues or expenditures shall be reported as other financing sources and
uses. Transactions related to the recording of installment contracts, capital
leases, and significant insurance recoveries shall be reported as other
financing sources. Losses resulting from the impairment of capital assets shall
not be reported in the financial statements.
4.08 The carrying value of sinking funds,
required by the provisions of a Qualified Zone Academy Bond (QZAB), shall be
reported at cost. Risk disclosures of the related investments, as addressed in
Governmental Accounting Standards Board Statement No. 40, shall not be included
in the Notes to Financial Statements.
4.09 The Notes to Financial Statements (NTFS)
shall include those disclosures appropriate to the regulatory basis of
accounting. The NTFS shall also include the following, if applicable: material
summarized reporting information pertaining to component units, related
organizations, and other affiliated organizations (as defined by the
Governmental Accounting Standards Board), as well as changes in private-purpose
trust funds and required disclosures related to long-term debt.
4.10 There shall be no Management's
Discussion and Analysis.
4.11 The
Schedule of Expenditures of Federal Awards shall be reported on the same basis
of accounting as the financial statements.
4.12 Those payments made by the Division of
Elementary and Secondary Education on behalf of schools, but not directly to
schools, shall not be recorded as revenue and expenditures by the schools.
(Example: Health Insurance contributions paid by the Division in accordance
with Ark. Code Ann. §
6-17-1117.)
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
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