The Massachusetts Department of Elementary and Secondary Education (DESE) Office of Charter Schools recently announced that, effective in fiscal year 2018, the Charter School Audit Guide will require auditors to determine if the school operates in accordance with its credit card policy. AAFCPAs recommends, accordingly, that at this time each charter school client review its current credit card policy for clarity, ensure it provides for adequate controls, and that the school is operating in accordance with the policy.
AAFCPAs provides the following best practice recommendations regarding charter school credit card policies:
- Approval by Trustees – The school’s Board of Trustees should formally approve the issuance of school credit cards, as outlined in the DESE Charter School Recommended Fiscal Policies and Procedures.
- Prohibition of Personal Expenditures – School-issued credit cards are only to be used for school-related purchases, and any personal use is strictly prohibited.
- Employee Sign Off – Each employee who is issued a credit card should sign off on the credit card policy before the card is issued.
- Receipts – Every purchase should have a receipt or other backup attached and the receipt should state the business purpose of the purchase. Purchases where a receipt was not available or lost should be submitted with a missing receipt form that documents the purchase and its business purpose. This form should be signed by the employee and their supervisor. Use of this form should be rare.
- Approval by Supervisor – All employees’ monthly credit card bills should be approved by the School Leader or another supervisor. The School Leader/CEO’s credit card bill and supporting receipts should be reviewed by a member of the Finance Committee or Board on a random, periodic basis.
- Reconciliation Process – The Business Office should reconcile monthly credit card bills to receipts in a timely manner and follow up on any missing receipts.
Credit cards should be used only when necessary and when another form of payment is impracticable. In addition, schools should only issue credit cards to employees who truly need them and should try to keep the number of active credit cards as low as possible. Management should also monitor the line of credit for each card to determine if the amount is appropriate.
AAFCPAs recommends that each Massachusetts Charter School review its credit card policy to ensure that the controls are adequate and that the policy is clear. Each school should also ensure that all credit card holders have signed off on the policy.
AAFCPAs is available to assist schools in determining clarity of their credit card policies or discuss any questions. Please contact your AAFCPAs Partner, or John Buckley, CPA, at 774.512.4039 or firstname.lastname@example.org.