Financial Management Practices for School and Municipal Government Officials
Vermont citizens put their trust in elected public officials and employees to be effective and responsible custodians of their tax dollars. Public officials validate this trust by employing strong financial controls and ensuring that the books of accounts accurately reflect the financial activities of the fiscal year.
Vermont law requires that school districts, towns and cities account for the monies entrusted to them and that these records be audited (see 24 V.S.A. §§ 1681-1686 and 16 V.S.A. § 323).
The Auditor's Office receives many calls each year that pertain to financial management practices at the municipal and school district levels. Questions come from both citizens and elected officials and cover a variety of topics, from proper fund accounting to understanding budgets and audit reports to division of responsibilities. Vermont law relating to schools and municipalities can be confusing, and clear lines of authority can sometimes be hard to identify. Added to that, the governance of municipalities and schools has grown increasingly complex, and with that has come expectations for greater accountability and transparency.
We have found that ordinary citizens and elected municipal and school officials alike can benefit from an annual review of their accounting practices and internal controls to improve financial management practices. Documenting those practices and making them available publicly improves communication and encourages elected officials to identify areas of improvement.
In 2012, the Legislature enacted an annual requirement for town treasurers to complete and submit to the selectboard, a copy of the internal financial controls document provide by this office (see link to checklist below, Updated 8/24/15). Likewise, each school superintendent is responsible for completing and providing a copy of a similar internal financial controls checklist to all member district boards for their review (see link to checklist below). These checklists provide a summary of key issues that pertain to adequate accounting, management, and reporting of tax, fee, and grant dollars in local government.
There are numerous free publications available through the Vermont League of Cities and Towns. Their toll-free number is 800-649-7915, or visit the Vermont League of Cities and Towns Website.
Vermont State Auditor's Internal Controls Checklists
According to 32 V.S.A. § 163(11), our office is required to "Make available to all counties, municipalities, and supervisory unions as defined in 16 V.S.A. § 11(23) and supervisory districts as defined in 16 V.S.A. § 11(24) a document designed to determine the internal financial controls in place to assure proper use of all public funds. The Auditor shall consult with the Vermont School Boards Association, the Vermont Association of School Business Officials, and the Vermont League of Cities and Towns in the development of the document. The Auditor shall strive to limit the document to one letter-size page. The Auditor shall also make available to public officials charged with completing the document instructions to assist in its completion." These documents can be found at the appropriate links below.
- Title 24: Municipal Government
- Selectboard; general powers and duties
- (a) Internal Financial Controls Checklist for Municipalities Updated 8/24/15
- Per 24 V.S.A. § 1571(d), The town treasurer shall annually, on or before June 30, complete and provide to the selectboard a copy of the document made available by the Auditor of Accounts pursuant to 32 V.S.A. § 163(11) regarding internal financial controls. (Amended 1981, No. 239 (Adj. Sess.), § 5; 2011, No. 155 (Adj. Sess.), § 27.)
- Title 16: Education
- (b) Internal Financial Controls Checklist for Schools
- Per 16 V.S.A. § 242a(a), The superintendent or his or her designee shall annually, on or before December 31, complete and provide to the supervisory union board and to all member district boards a copy of the document regarding internal financial controls made available by the Auditor of Accounts pursuant to 32 V.S.A. § 163(11)
- Per 16 V.S.A. § 242a(b), The supervisory union board shall review the document provided by the superintendent within two months of receiving it. (Added 2011, No. 155 (Adj. Sess.), § 29.)
- (b) Internal Financial Controls Checklist for Schools
County Sheriff's Financial Management and Auditing
- 24 VSA §290b requires that the Auditor of Accounts adopt, and the Sheriff's comply with, a uniform system of accounts, controls, and procedures for the sheriff's departments.
- In July 2021, the SAO issued the latest version of the Uniform Accounting Manual to fulfill this requirement.
- Request a copy of the manual by email, call (802-828-2281), or send a request by mail.
- This statute also requires that the Sheriff retain a public accountant biennially to conduct an audit of the financial systems, controls, and procedures within the department and forward this report to the Auditor of Accounts and assistant judges. Read the Sheriff Audit Reports.
- The Auditor also produces reports detailing the funding sources for each County Sheriff's Department. Read the Sheriffs' Funding Sources Reports.
- Financial Management Checklist - Generic, One-Page - 2012
- Generic Checklist for Internal Controls (short) - 2012
- Municipal Checklist for Internal Controls (long) - 2011
- VLCT Town Auditors' Workshop - (Helpful Information for Town Auditors) - November 16, 2010
- Internal Controls Checklist
- Internal Controls for Municipalities
- Improving Government Effectiveness
- 21 Best Practices
- Segregation of Duties
- Do You Need an Audit Committee, Finance Committee or Joint Municipal Education Committee?
- Using Data Mining Techniques to Identify "Potential Improper Payments"