The Audit Program - Fund 50 (Enterprise Fund)

Date Issued 5/02 SECTION II – SPECIFIC COMPLIANCE FUND 50 – PROPRIETARY FUNDS PROPRIETARY FUNDS Proprietary funds are used to account for district activities that are similar to business operations in the private sector. They are not used to account for the normal operations of a district regardless as to whether the operations include services provided to outside parties that are offset by revenues such as tuition or adult education fees. There are two categories of proprietary funds -- enterprise funds and internal service funds. The use of these fund types should be consistent with GAAP (GASB Codification 1300.104). Additional guidelines for districts using the internal service fund to account for shared services are outlined N.J.A.C. 6A:23-2.13. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations. The most common examples of enterprise funds in New Jersey school districts are those established to account for the food services program of the district and latchkey programs. All the expenses of these operations are accounted for in the funds with any board contribution shown as a transfer to cover deficit in the general fund and as an operating transfer in the enterprise fund. Auditor’s Note – The Transfer to Cover Deficit included in the general fund must reconcile to the Operating Transfer – Board Contribution reflected in the enterprise fund. The ...