What does "fund accounting" refer to in school finance?

Fund accounting in school finance specifically refers to a system that utilizes individual funds to track revenues and expenditures. This method is essential in public sector accounting, including education, as it allows schools to demonstrate accountability and compliance with various financial regulations. Each fund can be designated for specific purposes, such as operating expenses, capital projects, or grants. By maintaining separate accounts for each fund, the school can ensure that resources are used as intended, adhere to legal requirements, and provide transparency to stakeholders. This distinct tracking is crucial for effective budget management and aids in financial reporting, making it easier to assess how well different programs are funded and expended.