1. (a)

   1. (1) APSCN shall be the official financial record of all LEAs.

   2. (2) All LEAs shall, at a minimum, use the following financial management systems applications of APSCN as described in Arkansas Code § 6-11-128(a)(2):

      1. (A) Fund accounting, including all activity funds;
      2. (B) Budget preparation;
      3. (C) Human resources;
      4. (D) Fixed assets;
      5. (E) Attendance;
      6. (F) Discipline;
      7. (G) Mark reporting;
      8. (H) Medical; and
      9. (I) Scheduling.

2. (b) The ex officio financial secretary of each LEA shall keep a record of the following information in a format required by the Division of Elementary and Secondary Education:

   1. (1) The daily expenditures and receipts of the LEA;

   2. (2) Information on fund balances maintained by the LEA, including but not limited to:

      1. (A) Sources of the funds maintained as fund balances, to the extent practicable; and
      2. (B) Reasons for maintaining, instead of spending, the fund balances; and
   3. (3) The amount of funds transferred between various funds during the past year.

3. (c) The LEA shall identify the funds transferred between and the amount of funds transferred, including but not limited to:

   1. (1) The amount of fund balances dedicated for the construction, maintenance, or repair of academic or athletic facilities; and

   2. (2) Any information necessary for the division to verify whether funds allocated for educational purposes, including but not limited to student academic needs and the maintenance and operation of public school district facilities, are:

      1. (A) Used for their intended purposes; or
      2. (B) Retained by the school district in its fund balances.

4. (d) FTEs and average salaries — Annual financial report (AFR) and annual financial budget (AFB).

   1. (1) Information regarding FTEs and average salaries and the AFR and AFB shall be electronically submitted to the division by LEAs in the format required by the division.
   2. (2) The official date of filing with the division shall be the date and time received by APSCN.

   3. (3) The board of directors of each LEA shall:

      1. (A)
5. (i) Electronically file the AFR in the required format with the division by August 31 of each year.

6. (a) (a) The data to be reported in the AFR:

   1. (1) (1) Is outlined in Arkansas Code § 6-20-2202(d)(1)(A); and
   2. (2) (2) Includes but is not limited to daily expenditures and receipts of the LEA.

7. (b)

   1. (1) (b)(1) If material errors are discovered in the AFR by either the LEA or the division, a corrected AFR must be resubmitted by September 10.
   2. (2) (2) Otherwise, no changes shall be made to the LEA’s financial data after it has been submitted to the division as part of the AFR.

8. (c)

   1. (1) (c)(1) Each LEA shall perform a final close of its fiscal year immediately following submission of the AFR.

   2. (2) (2) Closing activities would include:

      1. (A) (A) Any entry adjusting applicable to the previous year;
      2. (B) (B) Balancing the bank statements;
      3. (C) (C) All reconciliations; and
      4. (D) (D) Journal entries required.

   3. (3) (3) If a final close has been performed before errors are discovered, APSCN should be contacted to reopen the fiscal year; and

      1. (B)

9. (i) Approve, by board of directors resolution signed by the ex officio financial secretary and the president of the board of directors, and electronically file the AFB in the required format with the division by September 30 of each year.

   1. (ii) If the approved AFB and board of directors resolution are not filed by September 30:
10. (a) (a) All warrants or checks issued after September 30 are invalid; and

11. (b) (b) The superintendent and the superintendent's surety shall be liable.

    1. (iii)
12. (a) (a) State funds may be withheld if the AFB and AFR have not been received by the division.

13. (b) (b) State aid may only be withheld if the division met all deadlines for providing pertinent information to:

    1. (1) (1) School districts;
    2. (2) (2) Open-enrollment charter schools; or

    3. (3) (3) Education service cooperatives.

       1. (c) (c) The division may only withhold funds until the reporting requirements of Arkansas Code § 6-20-2202 et seq. and this part are met.

    4. (4)

       1. (A)

          1. (i) Annually by February 15, the financial accountability office of the division shall review the LEAs’ most currently submitted AFR, AFB, FTEs, and average salaries for deficiencies in the financial records.
          2. (ii) Any errors related to the coding and reporting of financial information that cause a material misstatement of financial information will be cause for determining a deficiency.
          3. (iii) A material misstatement occurs whenever:
14. (a) (a) The submitted data has more than a ten percent (10%) variance from the correct data; or

15. (b) (b) When corrective action is not taken after the division has sent written notification to the LEA regarding specific errors discovered in the financial records.

    1. (B) The division review will include, but not be limited to, the items listed in Arkansas Code § 6-20-2203(c).

       1. (C)

          1. (i) If deficiencies are found in any of the financial records, the division shall notify in writing via certified mail the superintendent or director of the LEA of the specific deficiencies found.
          2. (ii)
16. (a) (a) The LEA will have thirty (30) days to respond to the notification of deficiency.

17. (b) (b) The response must include:

    1. (1) (1) A proposed corrective action plan;
    2. (2) (2) A training schedule to educate all pertinent personnel, if necessary;
    3. (3) (3) A procedure to prevent a repeat of the deficiency; and

    4. (4) (4) Any other information necessary to explain and correct the deficiency.

       1. (D) The response shall not be considered a right of appeal.
18. (e) If the review determines the financial records are not properly maintained, submitted, or administered by the LEA in accordance with state or federal laws, State Board of Education and division rules, or the Arkansas Financial Accounting Handbook, then eligible state funds shall be withheld until the financial issues have been resolved.
19. (f) The state board may require the superintendent or director and board members to provide a written explanation, appear before the state board, or both to explain why the district is not complying with state laws or rules.

20. (g) It is the duty of the division to monitor:

    1. (1) LEA financial records; and
    2. (2) Other pertinent records.

21. (h) The division 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 Financial Accounting Handbook.

    1. (i) Recording audit adjustments will be the only adjustments made to previous year data after the September 30 deadline.
22. (j) APSCN will document the LEAs that are allowed to make audit adjustments to the previous year data.

Codification Notes: "APSCN" means the Arkansas Public School Computer Network. "LEA" means local educational agency. "FTE" means full-time equivalent.