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Joint Meeting With The School Board & Audit Committee

Joint Meeting With The School Board & Audit Committee. October 31, 2007 Wednesday, 5:00 – 6:00 p.m. Audit Department Organization Chart. Staffing. 9 Professional, 1 Administrative, 1 Vacancy Collectively 9 Advanced Degrees 9 Professional Certificates – CPA, CIA, CISA, and CMA

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Joint Meeting With The School Board & Audit Committee

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  1. Joint Meeting With TheSchool Board & Audit Committee October 31, 2007 Wednesday, 5:00 – 6:00 p.m.

  2. Audit DepartmentOrganization Chart

  3. Staffing • 9 Professional, 1 Administrative, 1 Vacancy • Collectively • 9 Advanced Degrees • 9 Professional Certificates – CPA, CIA, CISA, and CMA • Over 150 Years of Auditing & Accounting Experience

  4. Audit Activities During 2006-2007 • Internal Funds Audits • Performance Audits • Special Requests • Charter School Audits

  5. Results of 2006 AuditsMiddle and Elementary Schools • Comparing to 2004 findings • Areas with noticeable improvements • Areas that need improvement • Areas that need special attention

  6. Internal Funds Audit2006 Findings Compared to 2004 FindingsMiddle and Elementary Schools Areas with Noticeable Improvement: • Accounting record keeping ( by 13) • Timekeeping for payroll ( by 15) • Timecards not signed by employees ( by 16) • Program deficit / high staffing ( by 14) • Access to drop safe ( by 14)

  7. Internal Funds AuditAnalysis of 2006 Findings Areas With Improvements: • Registration form ( by 11) • Lease prequalification ( by 10) • Adjustment to records ( by 12)

  8. Internal Funds AuditAnalysis of 2006 Findings Areas That Need Improvement: • SACC students released without sign-out ( by 20) • SACC students released to unauthorized person ( by 32) • Timecard not signed by supervisor ( by 21) • Inadequate support for disbursement ( by 47) • Lease agreement not adequately maintained ( by 28) • Lease – inadequate proof of insurance ( by 19) • Lease – fees collected after use of facilities ( by 27) • Lease – undercharged rentals ( by12)

  9. Internal Funds AuditAnalysis of 2006 Findings Areas That Need Special Attention: # • Inadequate support for disbursement 68 • Students released to unauthorized person 48 • Inadequate proof of insurance for facilities leasing 47 • Fundraisers not adequately documented 40 • Students released without parent sign-out 38 • Lease agreement not adequately maintained 38 • Timecard not signed by supervisor 30 309 (51% of total)

  10. New Areas of FocusSince 2004 Receipts • Verify prepared deposits in schools’ drop safe & surprise check of monies collected • More in-depth review & verification of monies collection records & revenues sources • Request financial records from banks, reconcile schools’ monies collection with deposit records Disbursements • Ascertain the appropriateness of expenditures for selected accounts

  11. New Areas of FocusSince 2004 • SACC Program • Examine SACC student records & student release/dismissal procedures • Reconcile SACC revenues with student registration & attendance records • Test SACC payroll Community School Program • Reconcile Community School revenues with student registration and attendance records • Test Community School payroll

  12. New Areas of FocusSince 2004 Leasing of School Facilities • More in-depth review of leasing operations & determine: • Adequacy of documentation • Adequacy of insurance coverage • Leasing revenues

  13. Principals’ Priority In Significant Findings

  14. Implementation ofNew Rules & Procedures To Improve Controls and Accountability • Sponsors retain the yellow copy of the MCR in order to match the deposit records on Official Receipts prepared by bookkeeper • Remitters record monies put in the drop safe on the new “Drop Safe Log” • Incoming mails be received and opened by staff other than the bookkeeper. MCR for monies received in the mail be prepared by mail opener and submitted to bookkeeper for deposit

  15. Special Requests/InvestigationsDuring 2006-2007 • 12 Special Requests/Investigations • Involved • 5 High Schools • 2 Middle Schools • 5 Elementary Schools • Most of them were related to financial matters • Results were referred to School Police / Employee Relations for further investigation

  16. Special Requests/InvestigationsDuring 2006-2007 Results (as of October 24, 2007) Some involve multiple employees • 2 Ongoing Investigation • 3 Reprimands • 5 Employees Resigned • 3 With Papers Referred to State Attorney • 1 Unfounded • 1 Results in Development & Implementation of New Procedures

  17. Possible Impacts for Audits • Value added to our existing management controls and accountabilities • Value added to the integrity of our system • Strengthening the control system

  18. Possible Impacts for Audits Ultimate results: • Protect our students • Protect school administrators • Safeguard assets and ensure compliance with laws, School Board Policies & guidelines • Better controls resulting in increase in revenues • Better control in operating expenses • Provide deterrent for potential abuse of the system • Promote public confidence in the school system through public transparency, professional independence, & objective reporting

  19. Internal Funds Revenues Analysis Constant $ adjusted for inflation; 1996 base year. Source: Annual Internal Funds Audit Reports and Manatee Accounting System.

  20. Internal Funds Revenues Analysis Constant $ adjusted for inflation; 1996 base year. Source: Annual Internal Funds Audit Reports, Manatee Accounting System, & Budget Executive Summary Reports.

  21. Internal Funds Revenues Analysis Source: Annual Internal Funds Audit Reports and Manatee Accounting System.

  22. Internal Funds Revenues Analysis Source: Annual Internal Funds Audit Reports and Manatee Accounting System.

  23. SACC & Summer CampRevenues Analysis Constant $ adjusted for fee increases and student enrollment; 2004 base year. Source: Manatee Accounting System and SACC Fee Schedules.

  24. SACC & Summer CampRevenues Analysis Source: TERMS System.

  25. SACC & Summer CampRevenues Analysis Source: Manatee Accounting System and SACC Fee Schedules.

  26. SACC & Summer CampRevenues Analysis Constant $ adjusted for fee increases and student enrollment; 2004 base year. Source: Manatee Accounting System and SACC Fee Schedule.

  27. Leasing Revenues Analysis Constant $ adjusted for fee increases; 2004 base year. Source: Manatee Accounting System and Leasing Rate Schedules.

  28. Leasing Revenues Analysis Constant $ adjusted for fee increases; 2004 base year. Source: Manatee Accounting System and Leasing Rate Schedules.

  29. Leasing Revenues Analysis Source: Manatee Accounting System.

  30. Leasing Revenues Analysis Constant $ adjusted for fee increases; 2004 base year. Source: Manatee Accounting System and Leasing Rate Schedules.

  31. Other Involvements • Provide input for the Department of Accounting Services, After School Programming, and Adult & Community Education in developing and implementing new guidelines to strengthen controls for Internal Funds • Present audit results to principal groups at their regular meetings so that administrators can keep updated re: most common control weaknesses and new audit approaches to help administrators prevent and detect improprieties at their schools

  32. Performance Audits • Audit of Implementation of Corrective Actions in Response to Auditor General’s 2004 Audit of Student FTE (August 2006) and • Audit of Corrective Actions in Response to Auditor’s General’s 2004 Audit of Student Transportation FTE (August 2006)

  33. Performance Audits Audits of Corrective Actions for FTE Audits • The Auditor General’s 2004 Student FTE Audit of the School District was released in 2005, and revealed certain weaknesses in documentation of our programs. That audit resulted in total negative adjustments of $2,020,203 in FEFP funding. We lost $2,020,203 in that year. • Based on a sample of 48 schools, instances of noncompliance found were related to six departments: • Exceptional Student Education • School Choice and Choice Programs • Compensation and Human Resource Planning • Multicultural Education • Transportation

  34. Performance Audits Audits of Corrective Actions for FTE Audits • These findings were in the areas of • Student Records for ESE • Off-campus On-the-job Training (OJT) documentation, and • Teacher Certification with regards to ESOL strategies compliance • Audit Exceptions were found involving reporting errors, missing records, or records that were not properly and accurately prepared. • The next FTE Audit will be performed for the records of 2006-07 School Year by The Auditor General during 2007-08. • Our own follow-up audit identified similar areas we have to address, based on a sample of 11 schools.

  35. Performance Audits Audits of Corrective Actions for FTE Audits • District’s Corrective actions must be fully implemented in all schools effective 2006-07 School Year. • District staff were developing and implementing guidelines and procedures that all schools should to follow in order to address all issues. Eventually, the District’s goal is to eliminate the negative Funding adjustment imposed by the State.

  36. Performance Audits • Audit of Boca Raton Middle School Internal Accounts (September 15, 2006) School staff became aware in June 2006, that Internal Accounts records were missing. All records and files for disbursements and receipts from July 1, 2005, through February 28, 2006, could not be located. As stated by the previous bookkeeper, who handled the books during that time, the records had been boxed and moved to a specific storage area. However, repeated searches of the specific area by school staff did not locate the records.

  37. Performance Audits • Audit of Seminole Ridge High School Deposit Records (November 17, 2006) • Audit uncovered $31,000+ stolen by the school bookkeeper. Findings were referred to School Police for further investigation. • Police later filed charges against the bookkeeper. • The bookkeeper was arrested later. • With assistance provided by Accounting Services Department, corrective actions were developed and implemented immediately. Remedial actions included: • Sponsors of fundraisers for future verification will maintain a copy of the Monies Collection Reports • Auditors will perform unannounced verification of monies in a drop-safe • Use of log book for all deposits in the drop-safe

  38. Performance Audits • Audit of Communications Department of Alexander W. Dreyfoos School of the Arts (November 17, 2006) • Several issues were brought up by the school principal, including the balance of the Year Book Account, donation form the School of Arts Foundation, forging of signature on Check Requisition, and receipt of a laptop as gift from parents. • The Year Book Account related issue was resolved. Causes of the problems were due to inclusion of unrelated expenditures in the Year Book Account. • Regarding donation from the School of Arts Foundation, the audit revealed that the proceeds were not spent inappropriately.

  39. Performance Audits • Audit of Boynton Beach Community High School (January 19, 2007) • $101,884 overpayments in payroll – There were widespread inconsistencies and unaccountable overpayments to staff. • Questionable pay widespread – The Community School secretary input hours into the payroll system for staff without proof of hours worked and supervisor approval for time and hours.

  40. Performance Audits • Audit of Boynton Beach Community High School (January 19, 2007) Irregularities widespread in leases school facility. The audit identified repeated irregularities and noncompliance by staff in handing leases. Of the 81 executed leases, • Lessees underpaid $12,726 for their 29 leases because non-profit rates were applied; utility charges were waived; leases were granted undocumented fee-waivers. • 59 leases did not provide proof of adequate liability insurance. • 42 were not signed by lessees. • Five did not have the approved Rental Prequalification. • 35 had not made the full payment before the use of facilities, as required by District guidelines.

  41. Performance Audits • Audit of Boynton Beach Community High School (January 19, 2007) • Disbursements Not Properly Documented • Change Fund Not Properly Secured • Access to School’s Drop Safe • Prenumbered Document Custodian

  42. Performance Audits • Audit of Contract Compliance, WHLS of Florida, Inc. for Fiscal Year 2006 (January 19, 2007) The audit concluded that: • WHLS did not achieve the objective that the percent of WHLS students making learning gains in reading and math will be significantly higher than the learning gains of students at other District alternative education sites. • WHLS did not achieve objective that 100% of WHLS students will earn a minimum of four credits in FY 2006. • The other 3 objectives were achieved: regarding students’ absences; dropout rate, and percent of seniors receiving employment.

  43. Performance Audits • Audit of Royal Palm Beach High School Cheerleading and ESE Field Trip Accounts (April 13, 2007) • The audit revealed that $12,795 in cheerleading program monies were unaccounted for; and $2,128 in ESE field trip monies was also unaccounted for. • The Cheerleading sponsor resigned from the District and discipline was issued to the ESE teacher.

  44. Performance Audits • Audit of Olympic Heights High School Drama Ticket Sales (July 12, 2007) The audit concluded that there was a shortfall of $2,464 in the Spring 2007 Show Fundraiser account; unsold tickets were not retained; there was no independent reconciliation of ticket sales; and no documentation for inventory of tickets.

  45. Performance Audits • Audit of E-Rate Revenue Collection (July 12, 2007) The audit revealed that: • The School District received a total of $5,342,554 in E-Rate funds for Fiscal Years 2005 and 2006. • $379,567 in cellular services E-Rate revenues were missed due to misunderstanding of requirements for funding. • District E-Rate procedures were not adequately documented in writing.

  46. Performance Audits • Audit of Palm Bach Central High School’s Facilities Leasing (July 12, 2007) During School Year 2006, the school administered 91 Lease Agreements and collected a total of $184,290 in leasing revenues. The audit revealed widespread of irregularities. Specifically, • Sixty leases (66%) did not have the required prequalification. • Thirty-two leases (35%) did not have proof of adequate liability insurance. • All 91 Lease Agreements were not properly executed. • None of the Lease Agreements were signed by Principal.

  47. Performance Audits • Audit of Palm Bach Central High School’s Facilities Leasing (July 12, 2007) • Five leases were neither signed by the lessees nor a school representative. • 48 leases were not signed by the lessees. • 81 leases were not signed by a witness as required by the lease document. • School lost $97,223 in revenues due to undercharged rentals. Leasing charges for 53 (58%) of the 91 leases were below the District approved rate schedule, resulting in a total loss of $82,464 in rental income during School Year 2006.

  48. Performance Audits • Audit of Palm Bach Central High School’s Facilities Leasing (July 12, 2007) • $14,759 in total rental charges were waived for seven leases without obtaining the prequalification approval from the Real Estate Services Department. • Rental charges not timely collected. • Monies not timely deposited. • Sales Tax not collected for Commercial Leases. • Incorrect allocation for utility charges.

  49. Performance Audits • Audit of Palm Bach Central High School’s Facilities Leasing (July 12, 2007) • Employee accepting payment from lessee. During August 2006, a lessee sent a $180 check to the school for payment of theater technician’s services. However, the check was made payable to the technician instead of the school. • No supervisor review and approval was obtained prior to inputting into the payroll system. • Audit conclusions were referred to Police and Personnel for further investigations.

  50. Performance Audits • Audit of Vending Machines (September 14, 2007) The audit concluded that: • Schools with full-service vending machines appeared to be 3% to 30% more profitable than those with self-service vending machines. • Schools with both services seemed to perform even better.

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