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Lesson 3: Accounting: The Language of Budgeting
PA Accounting Manual
The Manual of Accounting and Financial Reporting for Pennsylvania Local Education Agencies (LEAs), also known as the MAFR or Accounting Manual, is the official document issued by the Pennsylvania Department of Education.
- Serves as the accounting manual for school districts
- Describes and defines all types of accounts and their use
- Provides requirements and guidance to school districts for school accounting and budgeting
Most states have a similar accounting manual. If you understand the PA system, you will have little trouble with another state's system.
The PA manual is a very useful document in two ways:
- It serves as a conceptual framework for thinking about district and school operations.
- It is a means of structuring, specifying, and explaining fiscal data.
- It controls the way fiscal information about the district and its schools is developed and presented, which includes the following information:
- Where the funds come from
- How they are spent
- What financial shape the district is in
- It also functions as a reference source for account definitions and codes.
- It is important to become familiar with the types of items in the manual and where to find them.
- Understand the accounting structure in the manual.
- Be able to find needed information in the manual.
- Don’t memorize the MAFR.
- It is important to become familiar with the types of items in the manual and where to find them.
Table of Contents
Chapters
- Chapter 1: Introduction
- Chapter 2: Types of Educational Agencies and Summary of Funding
- Chapter 3: Overview of Fund Accounting
- Chapter 4: Governmental Funds
- Chapter 5: Proprietary Funds
- Chapter 6: Fiduciary Funds
- Chapter 7: Investments, Inventory and Capital Assets
- Chapter 8: Debt
- Chapter 9: Financial Reporting for PA Local Educational Agencies (LEAs)
- Chapter 10: Advanced Accounting Issues
Chart of Accounts
The MAFR is supplemented by the Chart of Accounts for PA Local Educational Agencies (LEAs).
- System for organizing fiscal information
- Classification and coding scheme for accounts
- Listing of all types of accounts with a coding structure for their organization
- Each type of account has its own coding arrangement
- Mandated for all districts in the state
- Assures uniformity in classification and coding
- Permits comparison among districts
- Allows aggregation to state level for totals
- Arranged for management control and reporting
- The following sections are included in the Chart of Accounts:
- A
- Account Classification and Coding Structure
- B
- Fund Dimension
- C
- Assets and Other Debits
- D
- Liabilities, Reserves, Fund Balance and Deferred Outflows/Inflows
- E
- Expenditures and Other Financing Uses
- F
- Object Dimension
- G
- Funding Source Dimension
- H
- Instructional Organization Dimension
- I
- Revenue and Other Funding Sources
Summary
Time: 00:03:58 Summary Audio Transcript
PROFESSOR: One of the key documents in dealing with budgeting is the state accounting manual. The manual for Pennsylvania is called The Manual of Accounting and Finance Reporting for Pennsylvania Public School Systems. And we're going to abbreviate it as the MAFR to avoid saying that long name every time. It is the document that's issued by the Department of Education. It is mandated to be used by school districts. It is the official document that tells what the accounts are, what the codes are, and provides the organizational structure for doing your budgeting and doing your transaction recording.
You should think about and use this manual on two different levels. First, it's a conceptual piece. It gives you a way of thinking about and using the accounting structure that is present to understand what kind of expenditures and revenues you have, what kind of financial condition the district is, and to have that in your head almost as a visual picture that you can hang the detail on. The second use of this manual is as a reference source. It is a reference document.
In it it has a great deal of detailed information about the different kinds of accounts. And within each account, it has a breakdown of all the sub accounts within that. So all the different kinds of assets are there. Each of the different kinds of assets is often broken down into not only sub accounts but sub sub accounts and, in some cases, four different sub levels.
Each of those will have an accounting code which will be geared to the type of asset. And we will go over all of this in some detail a little bit later in the lesson. But it gives you a way of seeing codes and understanding how this all pulls together.
The manual is provided-- or at least a reference to that is provided-- to give you access to this because you will be using it throughout the course. The manual itself is divided into two main pieces. There are a series of chapters. There are chapters 1 through 19 which talk about different kinds of accounting aspects. Some of those are more important than others. There is a reading list of the more important chapters for you to look at in this lesson.
The second component is called the chart of accounts. This is the listing of all the accounts in their organized fashion with their account codes and their descriptions. If you are not clear or not sure about what precisely an account is-- say, an expenditure account-- you can go to the accounting manual, find expenditures, find the kind of expenditure it is, and then read the definition of that in the manual. So it provides that reference source for you.
Now, a word at this point is, do not memorize the manual. This is not a textbook. It is a reference book. So you should be able to know enough about the manual so that you know where to find things. Now frankly, as we go through this, you will inevitably find yourself not consciously memorizing, but by simply using some of the types of accounts enough times, you will know what they are.
You will know, for example, that if you're recording a teacher's salary, that's going to be a 121 object code. Now, that may not mean much to you now, but it will very soon. So you'll have the manual as one of your main documents to refer to and to understand.
You should think about and use this manual on two different levels. First, it's a conceptual piece. It gives you a way of thinking about and using the accounting structure that is present to understand what kind of expenditures and revenues you have, what kind of financial condition the district is, and to have that in your head almost as a visual picture that you can hang the detail on. The second use of this manual is as a reference source. It is a reference document.
In it it has a great deal of detailed information about the different kinds of accounts. And within each account, it has a breakdown of all the sub accounts within that. So all the different kinds of assets are there. Each of the different kinds of assets is often broken down into not only sub accounts but sub sub accounts and, in some cases, four different sub levels.
Each of those will have an accounting code which will be geared to the type of asset. And we will go over all of this in some detail a little bit later in the lesson. But it gives you a way of seeing codes and understanding how this all pulls together.
The manual is provided-- or at least a reference to that is provided-- to give you access to this because you will be using it throughout the course. The manual itself is divided into two main pieces. There are a series of chapters. There are chapters 1 through 19 which talk about different kinds of accounting aspects. Some of those are more important than others. There is a reading list of the more important chapters for you to look at in this lesson.
The second component is called the chart of accounts. This is the listing of all the accounts in their organized fashion with their account codes and their descriptions. If you are not clear or not sure about what precisely an account is-- say, an expenditure account-- you can go to the accounting manual, find expenditures, find the kind of expenditure it is, and then read the definition of that in the manual. So it provides that reference source for you.
Now, a word at this point is, do not memorize the manual. This is not a textbook. It is a reference book. So you should be able to know enough about the manual so that you know where to find things. Now frankly, as we go through this, you will inevitably find yourself not consciously memorizing, but by simply using some of the types of accounts enough times, you will know what they are.
You will know, for example, that if you're recording a teacher's salary, that's going to be a 121 object code. Now, that may not mean much to you now, but it will very soon. So you'll have the manual as one of your main documents to refer to and to understand.