Many of the below questions and answers are pertinent only to Arizona school districts; please contact your auditor or consultant for further clarification if needed.

School Level Reporting

Q:  What is school level reporting?

A: School-Level Reporting is required by A.R.S. §15-904(F).  All districts, including those that operate only 1 school, are required to complete this school-level reporting file.


Q: What type of annual reporting is required for school level reporting?

A: Revenues and expenditures can be related to a school, district-wide operations, or services provided to private schools or placement of students in private schools. Additionally, for CTEDs, revenues and expenditures can be reported as related to satellite programs at member districts.  The School Level Report will report these revenues and expenses and the proportionate share of the District-wide revenues and expenses. 


Audit Services Fees for coding and Annual Financial Report (AFR) reporting

Q:  For our AFR, what portion of our audit fees should be charged to audit services associated with financial & compliance audits (object  code 6350) and what portion should be charged to audits related to Federal programs (object code 6330)?

A:    If a separate amount is indicated on the District’s contract for the audit of Federal programs, this amount should be used on the AFR.

If it is not indicated separately, the District will have to estimate the percentage to charge to the Federal programs for audit services. There are a couple methods for making this estimation.  One way is to determine the percentage of federal expenditures to total expenditures and allocating that percentage of the audit fees to the federal program costs account code. 

Alternatively, you can look at the expenditures of just those programs that were audited as major federal programs for the year to the total funds expended by the District and allocate the percentage of that calculation to the federal program costs account code.  To determine which federal programs were audited for the year, you can look at the Summary of Auditors’ Results page within your single audit report. 


Accessing older Arizona Attorney General Opinions

Q:  How can I obtain Attorney General’s Opinions that are older than the ones listed on the Attorney General’s web site?

A:  All Attorney General’s Opinions are maintained by the Solicitor General’s Office of the Attorney General’s Office. The old Opinions not listed on the web site can be found at or by calling (602) 542-3333.  


Using District Monies for Student Awards

Q:  Is there official guidance available regarding districts giving awards to individual students for meeting certain goals?

A:  Districts should refer to Arizona Attorney General Opinion No. I87-123 and No. I90-072 which address this issue.  The conclusion of these opinions is that the use of M&O funds or auxiliary operations funds to reward students who achieve perfect attendance is not permissible.  Generally speaking, no awards can be provided for an activity (i.e., attendance) that is required by law.  Rewards as special recognition of academic achievement (ex. honor roll) is acceptable provided the consideration paid for the award does not violate the constitutional prohibition against improper gifts of public funds.  AG Opinion I91-003 also elaborates on this further.


Intergovernmental Agreements (IGA’s)

Q:  The USFR Chart of Accounts lists fund 955 as the fund that accounts for revenues and expenditures associated with an Intergovernmental Agreement (IGA) when a district is the fiscal agent. Where should revenues and expenditures associated with an IGA be recorded when a district is NOT the fiscal agent?

A:  Revenues and expenditures associated with an IGA when a district is not the fiscal agent should be recorded in a Special Projects Fund, depending on the funding source. The following funds should be used:

050 – accounts for city, town or county-funded projects
300-399 – accounts for other federally funded projects
465-499 – accounts for other state-funded projects

The accurate recording of these funds becomes particularly important since the expenditures of fund 955 are excluded from both operational and nonoperational spending in the Auditor General’s “Classroom Dollar” calculation.


Instructional Improvement Programs

Q: ARS 15-979 E2 says Instructional Improvement Funds may be used for “instructional improvement programs including programs to develop minimum reading skills for students by the end of third grade”. Does this limit instructional programs to just reading programs?

A: No, the reading program reference in the statute is only given as an example. 


Capital Expense

Q: Should a purchased protection plan be included as part of the fixed asset value? What object code should be used for that?

A: Under GASB Statement #34 Capital Assets should be reported at historical cost and should include the cost of freight, site preparation, architect and engineering fees, etc. Generally if the protection plan is part of the initial purchase it would be included in these costs. However, if it is purchased after the original purchase, then it would be expensed instead. A warranty purchase after the initial purchase should be coded as an operational cost in object code 6430.


Q: Are smaller technology items such as laptops and iPads considered to be capital items or a supply?

A: Generally laptops, tablets and smaller technology items are considered to be capital items as they have an expected life of more than one year. Per USFR guidelines, these should be coded to object code 6737 and/or 6738 if their acquisition cost is less than $5,000 and to object code 6739 is the cost is $5,000 or more.


Bank Accounts

Q:  Is collateral required for school districts’ deposits in bank accounts? (i.e. deposits not with the County Treasurer)

A:  ARS 15-1025 currently refers to the general depository law of ARS 15-323(G) which requires collateralization of 102%. 

Arizona statute requires a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the public deposits less any applicable deposit insurance.


Student Awards

Q: Can a district make awards to students who achieve perfect attendance?

A:  No. According to Attorney General’s opinion I90-072, a school district governing board lacks the authority to make awards to individual students achieving perfect attendance because the laws do not authorize awards for compliance with mandatory school attendance laws. However, the AG’s opinion goes on to say that a governing board is not so limited in promoting academic achievement. Governing boards may make nominal awards as a special recognition of academic achievement, provided the amount is limited to its value as a token acknowledgement of the pupil’s accomplishment.  


Educational Foundation

Q:  Can a district provide bookkeeping services for a district’s educational foundation?

A:  No, a district cannot provide services to outside organizations free of charge, without violation of the Arizona gift of public monies clause.  



Q:  When developing depreciation policies, can a government have different useful lives for its buildings?

A:  Yes. One should use all available historical information to develop its useful life policies to provide for more accurate external financial reporting and to assist management with developing maintenance plans. An example would be to utilize different useful lives for brick and mortar buildings as opposed to wood frame construction buildings.  


Excess Monies in the Unemployment Insurance Fund

Q:  What can be done if a school district has accumulated excess monies in the unemployment insurance fund (Fund 575) over the past several years, to the point where some of the money in the fund will never be needed to pay annual claims?

A:  According to the ARS 15-1104 and USFR III-59, when the Governing Board determines that monies accumulated are in excess of insurance needs, the excess can be transferred to M&O or Unrestricted Capital Outlay to reduce district taxes for the budget year. 


Surplus Property

Q:  Can a school district donate all surplus property to a nonprofit organization?

A:  No. A.R.S.15-342(18) only allows for the donation of surplus or outdated learning materials, educational equipment and furnishings to nonprofit community organizations where the governing board determines that the anticipated cost of selling the learning materials, educational equipment or furnishings equals or exceeds the estimated market value of the materials.  


Q: Can a school district sell outdated learning materials (i.e,, items such as textbooks, instructional aids, ipads, cromebooks) to current students?

A: According to A.R.S. § 15-342(35), a school district may offer to sell outdated learning materials, educational equipment or furnishings at a posted price commensurate with the value of the items to pupils who are currently enrolled in that school district before those materials are offered for public sale.


Day Care Licensing Fees

 Q: What function and object code should we use for day care licensing fees?

A: If operating as a childcare center under community services operations should be 900.100.3300.6300.XXX


Calculating Transportation – Eligible Students and Route Miles

Q: How are route miles calculated?

A: To determine the miles, school districts must report the actual daily route mileage, other route miles and summer school miles for the first 100 days. In addition, the school district must include estimated mileage for days 101 through 180, or 200 if the school district is operating on an approved 200 day calendar. A good rule of thumb for the estimated mileage is 80% of the actual mileage for the first 100 days for school districts operating on a 180 day calendar and 100% for school districts operating on an approved 200 day calendar.  This includes daily route mileage, other route miles and extended school year miles.


Q: How are eligible students calculated?

A: In addition to the three mileage categories described above, school districts must also report the number of eligible students transported during the school year. Eligible students may only be counted one time by any one school district. No student may be counted as an eligible student by more than one school district.  Eligible students include students in the district boundaries, students who are transported on a school bus, students transported by parents when contracted by the District.

To determine the number of eligible students, a school district shall:

  1. Identify at least 25 consecutive or nonconsecutive scheduled school days in the first 100 days in session. Each school district must document and maintain the selected days for audit purposes.
  2. Determine the number of eligible students transported each day for the days determined in paragraph 1 of this section using the following formula:
  3. Count the eligible students actually transported on routes from a regular pickup point to school before the start of the school day and the total eligible students transported on a route from school to a regular drop-off point after the completion of the scheduled instruction for the school day.
  4. Divide the result of (a) by 2.
  5. To determine the eligible students transported for the 100 day transportation report, sum the daily result of (2) for the identified days, then divide by the number of identified days. For the remaining 80 days on a 180 day calendar or 100 days on an approved 200 day calendar, use the eligible students reported for the first 100 days.


Ratifying Vouchers

Q: Is the District permitted to approve a resolution to ratify vouchers at a later board meeting date?

A: The Governing Board is responsible for authorizing all payroll and accounts payable expenditures.  This is done by approving the vouchers.  The Governing Board has the ability to delegate the approval of voucher to the administration and then ratify the voucher at the next regularly scheduled Board meeting.  ARS 15-321G states:

“An order on a county school superintendent for a salary or other expense shall be signed by the governing board. An order for salary or other expense may be signed between board meetings if a resolution to that effect has been passed prior to the signing at a regular or special meeting of the governing board and the order is ratified by the board at the next regular or special meeting of the governing board.”


Q: How frequently must this resolution be approved?

A: This should be approved annually.


Outsourced employees using District credit cards

Q: Can outsourced employees (like a food service management company, outsourced transportation, etc.) use District credit cards?

A: USFR specifically references employees in the general policies and procedures.  There does not appear to be any authority to allow a non-employee to utilize a district credit card.

The content of this page is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.