Let’s Get Fiscal: Excellence in Bond Accounting

When I was hired by Mark Van Pelt, a little over three years ago, I never would have imagined that my responsibilities would include categorizing, tracking and reconciling budgets totaling more than $268 million dollars. After all, I have a literature degree and I rarely, if ever, balance my own checkbook. But as of my first day with this firm, I began an intense practical education in school bonds and bond program accounting as part of our work on behalf of the San Rafael City School District.

Here’s the easiest way to describe how school bonds work: school districts use bond funds to pay for school repairs, upgrades and new construction. Bond measures are voted in and funded through property taxes paid by the voters, and are expended only for very specific and defined purposes. Every penny spent through bonds are reviewed, evaluated and re-evaluated not only by the voters but also by the School District Board of Education, parents, teachers, oversight committees, and anybody else interested in studying complex fiscal structures.

Needless to say, it was important that I quickly learn the nuts and bolts of bond accounting – as well as the many subtleties – as a way of protecting our clients’ interests.

Early on in my tenure at VPCS, the firm invested in accounting software that assists in systematically registering every project and tracking each financial transaction involved in a large program. The application helps with everything from paying an invoice to setting up a purchase order, staying on top of retentions, managing change orders, tracking contract contingencies, and more.

As I got up to speed on the San Rafael City School District bond program and more deeply involved in managing its accounting, the software helped simplify the process and … I’ll admit it … make it fun! Not only are we able to track every project budget to the penny, but we’re also able to answer and accommodate every question, every request for information and any inquiry regarding proper usage of bond funds. With this, our team here at San Rafael City Schools has built a very clean and systematic approach to bond accounting.

With regard to our approach, the Van Pelt team stands by three fundamentals:  consistency, transparency, and accountability.

• We insist on consistency when establishing and modifying contracts and when paying all invoices. Once Board-approved, all contracts are entered into the software application and every subsequent invoice follows an identical chain of approval involving four signatures in proper sequence: the bond accountant, the bond operations manager, the construction manager, and the senior director. We follow this process 100% of the time.
• We have maintained an “open door policy” with regard to all accounting transactions. We prepare and supply regular budget and expenditure reports to the members of the Board of Education, the Citizens’ Bond Oversight Committee and the surrounding community. Our goal is to maintain 100% transparency in all that we do.
• Through our signature process, we’ve established a line of accountability ensuring that all four signatories review every transaction for accuracy and bond funds are spent as approved by the voters.

We have found that maintaining a sound process, along with continued collaboration with the district accounting team, allows us to pay invoices accurately and on time. This has proven to strengthen our current and potential future relationships with consultants and contractors.

Throughout the San Rafael City Schools’ bond programs, it has been a source of great pride for the Van Pelt team to maintain a record of “zero findings” on each of the annual fiscal and performance audits. These audits are performed by public accountants hired by the school district as required by bond language. To administer audits, two or three auditors set up shop in a nearby office and arbitrarily request bond-related documents that might pertain to invoicing, contracts or some kind of adherence to a state mandate. We’ve been fortunate to work with some very helpful auditing teams and have enjoyed the challenge.

Our bond programs here in San Rafael are slated to be complete sometime within the next three years. I look forward to continuing my education into the intricacies of bond accounting and taking what I learn to the next project. But I’m not going to lie: I might not ever get into the habit of balancing my checkbook!

By Patti Llamas