E-rate reimbursements coming to the district via a credit from a vendor:
Q: What should be done if e-rate reimbursements are coming to the district via a credit from a vendor?
A: The district should discuss the situation with the vendor and indicate that State guidelines do not allow credits from vendors, rather refunds should be issued. (See USFR Memorandum No. 161)
Handling check issued by vendor for an e-rate reimbursement:
Q: When a vendor issues a check to the District for an e-rate reimbursement how should this be handled?
A: According to USFR Memorandum No. 161, an E-Rate Fund (Fund 374) should be established.
The reimbursement check should be recorded in the E-Rate Fund. If the related expenditures have been recorded in a different fund (probably the M&O Fund or a capital fund), then these expenditures should be reversed from the other fund, and recorded in the E-Rate Fund. As the USFR memorandum indicates, the district should try to record the expenditures in the E-Rate Fund initially, even if the reimbursement has not yet come from the vendor. This is especially important if the expenditures are incurred in one year, and not reimbursed until the following year.
Stewardship and Capital Assets purchased with E-Rate Funds:
Q: We purchased stewardship and/or capital assets with E-Rate funds. What dollar value should we assign to these items?
A: Stewardship items and capital assets should be recorded at the cost of acquiring these items. Normally, this is simply the cost paid to the vendor. However, if an E-Rate vendor only invoices the District the percentage of the cost they are responsible for paying, rather than the full cost of the item, the amount paid by the District could differ from the value of the item being paid for.
This could cause capital asset and stewardship additions to be understated and could result in an audit finding. Additionally, an item could be misclassified as a stewardship item by mistake if the discounted value is not accounted for which would have caused the value of that item to exceed the stewardship threshold.
The District should manually adjust the cost of the discounted items to reflect the actual cost of the items on the capital asset and stewardship listings.This will create a reconciling item on the District’s capital outlay reconciliation for the year, similar to the impact of having a capital asset donated to the District.
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