Arkansas Administrative Code
Agency 005 - DEPARTMENT OF EDUCATION
Division 01 - Division of Fiscal and Administrative Services
Rule 005.01.11-007 - ADE 264: Rules Governing the Arkansas Financial Accounting and Reporting System and Annual Training Requirements

1.01 These rules are promulgated pursuant to Ark. Code Ann. §§ 6-11-105, 6-11-128, 6-17-410, 6-20-1805, 6-20-2004, 6-20-2104, 6-20-2202, 6-20-2203 and 6-20-2207.

2.01 These rules shall be applied to all school districts, open enrollment charter schools, and education service cooperatives for the purposes of accounting and reporting revenues and expenditures and for providing required training.

3.01 Annual Financial Budget (AFB) - the annual budget of expenditures and receipts required in Ark. Const. Art. 14, § 3, and Ark. Code Ann. §§ 6-11-128, 6-13-620 and 6-20-2202.

3.02 Annual Financial Report (AFR) - the annual report of financial information for the prior fiscal year as required by Ark. Code Ann. § 6-20-2202.

3.03 Approved Budget (AFB) - a budget (AFB) that has received the required written notification from the Department that the budget presented was not identified as deficient as of February 15 of the current year.

3.04 APSCN - Arkansas Public School Computer Network

3.05 Arkansas Financial Accounting Handbook - the uniform chart of accounts and related codes which are established by the Department and incorporated into these rules as the "Arkansas Handbook, and used for accounting and financial reporting of all public schools, school districts, open enrollment charter schools, and education service cooperatives.

3.06 Athletic Expenditures - all direct and indirect expenses related to interschool athletic programs, prorated if necessary.

3.07 Budget (AFB) Review - the process of determining if the AFB submitted to the Department meets the mandated expenditure requirements in effect for the appropriate year and that budgeted revenue, expenditures and fund balances are reasonable and in compliance with law.

3.08 Court-Ordered Desegregation Funding - state funds received by a LEA under a federal court order or a settlement agreement in desegregation litigation.

3.09 Deficient - a finding by the Department auditors that budget or financial accountability reports do not meet the mandated expenditure requirements in effect for the appropriate year; that budget or financial accountability reports contain one or more material misstatements of financial information; or that budgeted revenue, expenditures and fund balances are not in compliance with law or Department rules.

3.10 Department - the Arkansas Department of Education.

3.11 Full-time Equivalent (FTE) - The amount of time an employee works during a school year (July 1 through June 30 of following calendar year) as a percentage of the amount of time a full-time employee in the same position would work during a school year.

3.12 Interschool Athletic Program - any athletic program which is organized primarily for the purpose of competing with other schools, public or private; or any athletic program which is subject to regulation by the Arkansas Activities Association.

3.13 Interschool Scholastic Activities - any interschool activity program that is outside the regular curriculum, excluding interschool athletic programs as defined by Ark. Code Ann. § 6-20-2002(3), which is organized primarily for the purpose of competing with other schools, public or private; or any program or activity, excluding interschool athletic programs as defined by Ark. Code Ann. § 6-20-2002(3), which is subject to regulation by the Arkansas Activities Association.

3.14 Interschool Scholastic Activity Expenditures - all direct and indirect expenses related to interschool scholastic activities, prorated if necessary.

3.15 Local Educational Agency (LEA) - all Arkansas public school districts, open-enrollment public charter schools and education service cooperatives.

3.16 Material Findings - a financial condition that jeopardizes the fiscal integrity of the school district.

3.17 SBE - the Arkansas State Board of Education.

3.18 Special Needs Categories - the state funding categories of Alternative Learning Environments, English Language Learners, National School Lunch Act funding, and Professional Development.

3.19 State Funds - all money derived from state revenues, specifically including but not limited to, distributions from the Department of Education Public School Fund Account and uniform rate of tax ad valorem property taxes distributed to a public school or school district.

3.20 Tier I & II Employees - those employees described as Tier I or Tier II employees in § 7 of this rule.

3.21 Tier I & Tier II Training - that training described as Tier I or Tier II training in § 7 of this rule.

3.22 Valid Comparisons - comparisons deemed to be relevant to the subject material in substance and scope.

4.01 The AFR shall be electronically submitted to the Department by LEAs in the format required by the Department.

4.02 APSCN shall have the programs necessary to collect the AFR data available to the LEAs at least fifteen (15) calendar days before the date required to submit the AFR.

4.03 The AFR shall be filed electronically with the Department by August 31 of each year. If August 31 is on a weekend or state holiday, the AFR electronic submission shall be on the first work day for state employees following the weekend or state holiday.

4.04 No changes shall be made to the LEA's financial data after it has been submitted to the Department as a part of the AFR, unless the AFR is resubmitted by the deadline specified in 4.03.2 of this rule.

4.05 Each LEA shall perform a final close of its fiscal year immediately following its submission of the AFR. If a resubmission is necessary and within the timeframe allowed by 4.03.2 of this rule, APSCN shall be contacted in order to re-open the fiscal year.

4.06 The data to be reported in the AFR includes, but is not limited to:

5.01 The AFB shall be electronically submitted to the Department by LEAs in the format required by the Department.

5.02 The AFB shall be filed electronically with the Department by September | 30 of each year. If- September 30 is on a weekend or state holiday, the AFB electronic submission shall be on the first work day for state employees following the weekend or state holiday.

5.03 The AFB shall be approved by the board of directors of each LEA at a legally held meeting and shall be signed by the president of the board of directors and the ex officio financial secretary of each LEA.

6.01 Information regarding FTEs and Average Salaries shall be electronically submitted to the Department by LEAs in the format required by the Department.

6.02 Information regarding FTEs and Average Salaries shall be filed electronically with the Department by July 31 of each year. If July 31 is on a weekend or state holiday, the electronic submission shall be on the first work day for state employees following the weekend or state holiday.

7.01 The Department shall establish and implement a uniform chart of accounts and related codes known as the Arkansas Financial Accounting Handbook (Arkansas Handbook) which shall be the uniform chart of accounts and codes utilized in reporting revenues and expenditures.

7.02 The Arkansas Handbook shall be the chart of accounts and codes utilized by LEAs in making the record of actual revenues and expenditures and the annual budget of revenues and expenditures required by these rules.

8.01 By February 15 of each year, the Financial Accountability Unit of the Department shall review the LEAs' most currently submitted AFR, AFB, FTEs and Average Salaries to determine if the financial records are deficient. Any error related to the coding and reporting of financial information that causes a material misstatement of financial information will be cause for determining a deficiency. A material misstatement occurs whenever the submitted data has more than a ten percent (10%) variance from the correct data or when corrective action is not taken after the Department has sent written notification to an LEA regarding specific errors discovered in the financial records.

8.02 The Department review will include, but is not limited to:

8.03 The Department shall notify in writing, via certified mail, the superintendent or director of the LEA whose financial records are found to be deficient.

8.04 The LEA will have thirty (30) days to respond to the Department's notification. The response may include, but is not limited to:

8.05 The response shall not be considered a right of appeal.

8.06 If the review determines the financial records of any LEA are deficient as defined in Section 8.01 or otherwise not properly maintained or submitted by the LEA or are not administered in accordance with state or federal laws, SBE rules, or the Arkansas Handbook, then state-funded grants and/or aid that the district would be eligible to receive shall be withheld until the financial issues have been resolved.

8.07 The SBE may require the superintendent or director and board members explain and/or appear before the SBE to explain why the district is not complying with state laws or rules.

8.08 Upon written notice of approval by the Financial Accountability Unit, the Department shall file copies of the approved budget with the LEA and the county treasurer.

8.09 It is the duty of the State to monitor LEA financial records, Arkansas Comprehensive School Improvement Plan, or any other pertinent records, to ensure the following:

8.10 The Department shall have the authority to review, analyze and inspect the financial records of any LEA in order to verify that an LEA is correctly and accurately reporting revenues and expenditures in accordance with the Arkansas Handbook.

8.11 The Department shall submit a report titled "Annual Statistical Report (ASR) to the Governor, the Senate Interim Committee on Education, and the House Interim Committee on Education by February 15 of each year concerning LEA revenue, expenditures, legal balances (total and unrestricted), FTEs, average salaries and any other financial information required by law.

9.01 The Department shall publish by July 1 of each year, via Commissioner's Memo, a list of all required financial accountability reports, that are not a part of a cycle report submitted through APSCN, with due dates.

9.02 The Department shall submit a written notice via certified mail on or before February 15 of each year to those school districts, open enrollment charter schools and education service cooperatives whose budget or financial reports are identified as deficient. Likewise, the Department will issue a Commissioner's Memo on or before February 15 of each year indicating which school districts, open enrollment charter schools or education service cooperatives budgets are identified as approved.

9.03 Each county clerk is required to provide to the Department an annual Abstract of Assessment by March 15 of each year.

9.04 By January 31, 2012, and by January 31 of each year thereafter, each county treasurer shall provide an annual summary report of all proceeds generated from ad valorem tax and distributed by the county to a school district for the period beginning January 1 and ending on December 31 of the preceding calendar year to the:

9.05 By September 1 of each year, any school district that received court-ordered desegregation funding for the prior school year shall report to the Department the following:

9.06 Unless the Department approves otherwise, any data to be reported under sections 9.05.1, 9.05.3, and 9.05.4 shall be submitted to the Department in electronic format as a Microsoft Excel file utilizing a template to be furnished by the Department no later than August 1.

9.07 The Department may withhold state aid from any LEA that fails to file its budget or any other required report with the Department by the deadline established on the list of all required financial accountability reports, provided that the Department has met the deadline for providing information pertinent to meeting the deadlines.

10.01 The Department shall establish two (2) tiers of required training.

10.02 The two (2) persons per LEA required to attend shall each obtain twelve (12) hours of Initial Training and instruction necessary to demonstrate basic proficiency as determined by the Department, including but not limited to:

10.03 After obtaining the Initial Training, the two (2) persons required to attend shall obtain four (4) hours of Tier I annual training and instruction in order to maintain basic proficiency in the topics described in Section 10.02 of these rules.

10.04 Tier II training shall include, but is not limited to, employees who make decisions about selecting codes or who have a limited number of codes that they can use.

11.01 Any school district that does not comply with and meet the requirements of these rules, shall, after receiving notice as required by law, be identified by the Department as being in fiscal distress.

11.02 Any education service cooperative that does not comply with and meet the requirements of these rules shall be sanctioned by the SBE.

11.03 Any licensed classroom teacher or administrator of a school, school district, open enrollment charter school or education service cooperative that provides false expenditure information may have his or her license placed on probation, suspended or revoked pursuant to procedures utilized in accord with Ark. Code Ann. § 6-17-410.

11.04 Persons failing to obtain required training by December 31 of the calendar year and who fails to cure any training deficiency by March 1 of the following year without filing a request for extension of time and after receiving proper notice shall be unable to continue in his or her position of employment effective on the date of receipt of notification from the superintendent of the school district, open enrollment charter school or education service cooperative.

11.05 If a person fails to obtain all required training by December 31, this failure shall constitute one (1) citation against the school district, the open enrollment charter school or an admonishment to the education service cooperative.