Accrued Modified Fund Basis - The “basis of accounting” refers to the point in time when revenues, expenditures or expenses (as appropriate), and the related assets and liabilities are recognized in the accounts and reported in the financial statements.

Modified accrual accounting falls between the cash basis and the full accrual basis and is the most common accrual basis used by school districts. In modified accrual accounting, most items of revenue and expenditures may be handled on a “cash” basis for daily processing and converted to an accrual basis by periodic adjustments. The determination of how frequently the adjustments will be made is a value judgment that depends on the significance of the items, the purposes for the accounting, the need to reflect the operations of the enterprise, and the associated cost and complexity of the system. Since the resulting reports are produced at the end of an accounting period, some adjustments can best be made as they happen (daily) and others only at the end of the accounting period.