Section PI 35.13 - Fiscal and internal control practices(1) FINANCIAL ACCOUNTING SYSTEM. A school participating in the choice program shall use a double entry financial accounting system organized in a manner that enables preparation of the audit under ss. PI 35.09 and 35.10 and contains any other information necessary to fiscally manage the school. The accounting system shall identify all sources of funding a school uses in the school's operation. The accounting system shall identify all of the following if the school receives revenue from the specified source: (a) Revenue from pupils participating in the choice program.(b) Revenue from parents or other privately paid tuition pupils.(c) Revenue from the school district in which the school is located for instruction of pupils enrolled in the school.(d) Revenue from the school district in which the school is located for transportation of the school's pupils.(e) Revenue from federal, state, and local governments.(2) SCHOOL BUDGET. A school shall complete all of the following:(a) Annually by June 30, a budget for the following school year that contains all of the following: 1. Anticipated enrollments for all pupils enrolled in the school.2. Anticipated enrollments for choice program pupils.3. Estimated total revenues and costs.4. Estimated amounts required under s. PI 35.10(3) (a).5. A schedule of anticipated beginning and ending net assets.6. Identification of the contingent funding sources the school will use should actual enrollments be less than expected.7. Anticipated beginning and ending reserve balance.(b) If a school's actual third Friday in September enrollment for all pupils or for choice program pupils varies by 20 percent or 20 pupils, whichever is less, from the anticipated enrollments the school used in the budget required under par. (a), the school shall, annually by November 1, complete a revised budget containing all of the following:1. The information required in par. (a) that reflects revenues resulting from the school's actual third Friday in September enrollment.2. Any other required budget changes related to the change in revenues resulting from the school's actual third Friday in September enrollment.(3) EXPENSE PAYMENT. A school shall pay in full all of the following as required by the written agreement or, if there is no written agreement, within 90 days of the receipt of the invoice or payment request:(a) Amounts owed to vendors.(b) Reimbursements to employees and other persons for expenses incurred on behalf of the school. A school may only reimburse an employee or other person if the employee or other person submits receipts supporting the reimbursement to the school and the request for reimbursement is made within the time period specified in the school's written policy for reimbursement. The school shall retain a record of all reimbursements, including supporting receipts.(4) EMPLOYEE COMPENSATION. A school shall do all of the following:(a) Have a signed, written agreement for each employee stating the employee's compensation. The agreement shall be signed by the employee and a representative of the school before the school makes the first payment to the employee for the school year.(b) Provide each employee with a document that states the dates that the school will pay the employee. The school shall provide a copy of this document to the employee before the school makes the first payment required by the document.(c) Provide a written document to the employee specifying any changes to a document under par. (a) or (b) before any change is effective. The written notification does not need to be signed. If the change is to the compensation for the employee, the written notification shall include all of the following:1. The dollar amount of the compensation change or how the compensation change will be calculated.2. If the compensation change is a one time amount that will be paid to the employee, the written notification shall specify when the one time compensation payment will be paid.3. If the compensation change is an ongoing change, the written notification shall specify the date the ongoing compensation change is effective.(d) Make payments to employees based on the documents in pars. (a) to (c).(5) FINANCIAL INTERNAL CONTROL SYSTEM. A school shall have an adequate system of financial internal controls which requires a school to do all the following:(a) Deposit all receipts and pay all disbursements from a depository account maintained solely for the school's purposes unless the operating organization's financial accounting system separately identifies the school's transactions and account balances. The depository account the school or its operating organization uses for school purposes shall be located in the state of Wisconsin.(b) Maintain documentation as to the nature and source of all cash receipts.(c) Use pre-numbered checks for all non-electronic school disbursements except those from a petty cash fund.(d) Maintain invoices and payment requests supporting disbursements.(e) Ensure that no checks or other withdrawals are denied due to insufficient funds.(f) Authorize electronic fund transfers by the school in accordance with a policy established by the school.(g) Reconcile the school's bank accounts on a monthly basis.(h) Establish a policy indicating what expenses will be included in eligible education expenses and the methods that will be used to allocate any expenses or government assistance revenues that are related to eligible education expenses and other activities.(6) GOVERNMENT AGENCY FILINGS AND PAYMENTS. A school shall be current with all of the following:(a) Filing, payments, and withholdings payment requirements of the U.S. internal revenue service.(b) Filing, payments, and withholdings payment requirements of the Wisconsin department of revenue.(c) Filing and payment requirements of the Wisconsin department of workforce development.(d) Filing and payment requirements of the Wisconsin department of financial institutions.(e) Filing requirements of the Wisconsin department of safety and professional services.(f) Auditing requirements of federal, state, and local government entities. The school shall submit to the department a copy of audit reports issued or revisions of such reports within 30 days of submission to the requiring government agency.(7) LIABILITY INSURANCE. A school shall have insurance coverage provided by an insurance company licensed to do business in the state of Wisconsin or by a non-profit, tax exempt mutual protective organization covering risks of schools of, and controlled by, a religious denomination. All coverage shall be on an occurrence form or a claims made basis. A school's minimum insurance coverage shall be as follows: (a) Worker's compensation insurance as specified in ch. 102, Stats.(b) Commercial general liability insurance in the following amounts unless the coverage amounts are based on a written recommendation of a risk or insurance consultant.1. For each occurrence, minimum coverage in the amount of $1,000,000.2. Personal injury coverage of not less than $1,000,000.(c) Umbrella excess liability insurance with an aggregate limit minimum coverage of $5,000,000, unless the coverage amount is based on a written recommendation of a risk or insurance consultant.(d) Auto liability insurance with a combined single limit minimum coverage of $1,000,000 for each accident unless the coverage amount is based on a written recommendation of a risk or insurance consultant.(e) Errors and omissions insurance for school management with an aggregate limit minimum coverage of $1,000,000 unless the coverage amount is based on a written recommendation of a risk or insurance consultant.(f) Sexual misconduct liability insurance with an aggregate limit minimum coverage of $1,000,000 unless the coverage amount is based on a written recommendation of a risk or insurance consultant.(8) SCHOOL BUS. If a school operates or contracts for the operation of school buses with an organization other than a Wisconsin school district, the school or the contracted operator shall have school bus insurance as required under s. 121.53, Stats., and complete the inspections required under s. Trans 300.87. The school may not contract for the school bus operation with an organization other than a Wisconsin school district unless the operator has provided the school with a certificate of insurance meeting the requirements of s. 121.53, Stats., and has completed the inspection report required under s. Trans 300.87.(9) ALTERNATIVE VEHICLE PUPIL TRANSPORTATION. Any motor vehicle, other than school buses, used by a school to provide pupil transportation shall comply with the conditions specified in s. 121.555, Stats.(10m) Background checks. (a) In this subsection, "license" means a valid license issued by the department under ch. PI 34.(b) Schools shall conduct criminal background investigations of all employees by completing one of the following: 1. Conduct a criminal background check prior to employing any individual at the school and every 5 years after the date of the previous background check.2. Complete all of the following procedures for an individual with a license: a. Obtain and retain a copy of the license.b. Annually determine that the individual has a license in advance of the employee working for the school term.(c) The requirements under par. (b) shall be completed for all individuals defined as employees under s. 108.02(12), Stats., who are directly or indirectly related to educational programming. For the purposes of this paragraph, an individual shall be determined to be directly or indirectly related to educational programming if any of the following apply:1. Any compensation for the individual is included as an eligible education expense in a financial audit submitted under s. 115.7915, 118.60, or 119.23, Stats.2. The individual interacts with pupils.3. The individual performs financial, administrative, or academic duties for the school.(d) A school may not employ any of the following individuals: 1. Individuals who have engaged in immoral conduct as defined under s. 115.31(1) (c), Stats.2. Individuals who are not eligible for a teaching license under s. 118.19(4), Stats.(11) FIDELITY BOND. A school shall have a fidelity bond indemnifying the school against loss resulting from dishonesty, malfeasance, or neglect by owners, officers, and employees.(12) EMPLOYEE EDUCATION. A school shall ensure all teachers, administrators, and teacher aides meet the requirements of s. 119.23(2) (a) 6. and (7) (b) 3, Stats., and s. PI 35.16, unless a teacher or administrator is exempt under s. 119.23(2) (c), Stats.(13) MANAGEMENT LETTER REVIEW. An auditor shall review the management letter required under s. 119.23(7) (am) 2m a., Stats., and determine whether a school has properly remediated any concerns raised by the auditor in the letter. If the auditor determines a concern has not been properly remediated by the school, the auditor shall include the following in the report: (a) The concern that has not been properly remediated.(b) The action the school has taken to remediate the concern.(c) The potential impact of not resolving the concern.(d) Recommendations for resolving the concern.(14) FISCAL AND INTERNAL CONTROL PRACTICES REPORT. A school shall engage an auditor to submit a report to the department by December 15 attesting to the school's compliance or non-compliance with the fiscal and internal control practices required in this section. The report shall meet all of the following requirements: (a) The report shall be prepared in accordance with professional standards and identify the procedures agreed upon by the auditor and the department that were used in determining compliance or non-compliance. In making such a determination, the auditor shall not rely on oral or written representations of the school's management or staff.(b) If the auditor determines that the school has not complied with the fiscal and internal control practices in subs. (1) to (12), the report shall include a letter from the school describing the reasons for noncompliance and the corrective action the school is taking.Wis. Admin. Code Department of Public Instruction PI 35.13
Adopted by, CR 16-004: cr. Register July 2016 No. 727, eff. 8-1-16; correction in (1) (intro.) made under s. 35.17, Stats., Register July 2016 No. 727, eff. 8/1/2016Amended by, CR 19-120: am. (2) (intro.), cr. (2) (a) 7., am. (2) (b) (intro.), (4) (a), renum. (4) (c) to (4) (c) (intro.) and am., cr. (4) (c) 1. to 3., r. (10), cr. (10m), am. (14) (b) Register May 2020 No. 773, eff. 6/1/2020The fiscal and internal control practices report may be obtained at no charge from the Wisconsin department of public instruction's webpage at http://dpi.wi.gov/sms/choice-programs.