ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL Independent Accountant s Report on Applying Agreed-Upon Procedures For the Period from July 1, 2014 to June

Transcription

1 ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL Independent Accountant s Report on Applying Agreed-Upon Procedures For the Period from July 1, 2014 to June 30, 2015

2 ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL For the Period from July 1, 2014 to June 30, 2015 Contents Independent Accountant s Report on Applying Agreed-Upon Procedures 1 Recommendations for Improvement 7 Statements of Financial Position 8 Statements of Activities 11 Statement of Activities, Actual vs. Budget 18 Bank Account Information 25 Management Representation Letter 26 Letter to the Bishop 28

3 INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURES St. Bernard of Clairvaux Catholic School 1404 Old Gate Lane Dallas, TX We have performed the procedures enumerated below, which were agreed to by St. Bernard of Clairvaux Catholic School (the School ), at the request of the Catholic Diocese of Dallas, as of June 30, The School s management is responsible for the School s accounting records. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the School and of the Catholic Diocese of Dallas. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings accompany this letter. We were not engaged to, and did not; conduct an audit, the objective of which would be the expression of an opinion on the accounting records. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the School and the Catholic Diocese of Dallas and is not intended to be and should not be used by anyone other than those specified parties. September 9,

4 DIOCESE OF DALLAS AGREED-UPON PROCEDURES ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL 1) Obtain a copy of the entity s year-end Right Networks (RN) standardized financial report #8 Statement of Financial Position vs. Prior Year, report #9: Statement of Activities vs. Prior Year - Natural and report #11: Statement of Activities vs. Budget Natural. The above financial reports are part of these procedures and must be in the prescribed RightNetworks format and included in the final review report. a. For Report #11 tie the budget balances to the approved budget by reference to minutes of the Finance Committee (and School of Advisory Board if applicable). If there is no budget or approval, so note in reviewer s report. b. Note and review any significant (e.g. 20%) variances in budget to actual comparison, and document reason(s) for such variance in the final review report. c. For Report #8 determine that the reported net assets balances in the prior year column agree with the report used in the prior year s review. The results of the above procedures are as follows: a. No exceptions noted as a result of applying this procedure. b. The following variances in excess of 20% were noted between actual results and budgeted amounts for the fiscal year ended 2015: Description Favorable (Unfavorable) Variance % Reason(s) for Variance Fees 34, % Registration and technology fees ended up being higher than anticipated. Fundraisers & Investment Income (68,234) -30.0% Budget for fundraisers and investment income ended up being overly optimistic. Gifts, Bequests, & Property Sales 13, % There ended up being more gifts and bequests than initially anticipated. Contributions & Assessments (1,769) -60.5% Additional assessments unplanned for arose for athletics, the retirement of the superintendant, Supplies, Repairs & Maintenance Interest & Financing Charges Change in Temporarily Restricted Net Assets and a contribution to the CRS Rice Bowl. 83, % Over budgeted for supplies, repairs and maintenance. More money than previously thought was taken (5,497) % by credit card, leading to increased credit card fees. (4,703) 100.0% The change in this amount is a result of interest and the change in the endowment fund. c. GPP noted that the reported balance of net assets for the prior year in the current year s Statement of Financial Position had a variance of $1,024 from the reported balance for net assets in the prior year s Statement of Financial Position. 2) Obtain (or update) the list of all accounts at all financial institutions using the attached format (Bank/Investment Account Information) - The list must include any trusts and all Parish Based Organizations accounts. - The list must include account number, name, authorized signers and purpose. - Identify any accounts on the list that are not included in the entity s RightNetworks report #8 Statement of Financial Position vs. Prior Year. - The list must be signed by the Pastor (and the Principal if applicable) and included in the final review report. See the attached bank account listing. 2

5 DIOCESE OF DALLAS AGREED-UPON PROCEDURES ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL 3) Review the June 30 th account reconciliation for all of the above accounts and: a. Determine that reconciliation to the general ledger was performed in a timely (30 days) manner. b. Determine that the reconciliation was reviewed by other than the preparer (i.e. supervisory personnel) and such review is documented. c. Note in final review report any accounts that are not reconciled using QuickBooks. GPP noted a net variance of $105 between the amounts on the bank reconciliations per QuickBooks and the amounts reported on the RightNetworks report. GPP also noted that four of the six bank reconciliations did not include a signature noting that the reconciliation was reviewed by someone other than the preparer. No other exceptions were found as a result of applying this procedure. 4) Select 10-15% of employees (a minimum of 5, or all employees if there are less than 5), including some new hires, and determine that: a) Each is actively at work. b) Salary has been appropriately approved. In this respect, a priest s salary should agree with the Diocesan schedule and the related W-2 form (if any discrepancies are noted, the Diocesan CFO should be contacted at mweis@cathdal.org). c) All compensation has been included for tax reporting purposes. d) Each has been enrolled in the diocesan group insurance plan if qualified (working 30 hours or more per week) and that the cost of elective coverages has been withheld from pay. e) I-9 documentation has been properly completed and is maintained in a file separate from other personnel records. f) Obtain a list of all employees paid during the fiscal year that indicates which are eligible and not eligible for 403B employer mandatory and employer match contributions. This list should include gross pay for each employee for the fiscal year and the reason(s) why paid employees marked as ineligible are in that status. - Determine that the employee is properly enrolled in the 403B Plan and received the correct matching and mandatory employer contributions for the fiscal year. (General 403(B) plan rules: (1) an employee can defer at any time. (2) To be eligible for employer contributions, an employee must have worked at least one year and worked more than 1,000 hours in a 12 month period). - Review the status of employees listed as ineligible for reasonableness. No exceptions were found as a result of applying this procedure. 5) Determine that employees are not also being given a 1099 tax form. No exceptions were found as a result of applying this procedure. 6) Inquire if the entity is providing any benefits to employees outside of Diocesan benefit plans. If any are identified, notify the Diocesan CFO immediately (mweis@cathdal.org). No exceptions were found as a result of applying this procedure. 7) Determine by inquiry and confirmation on a sample basis that payments to non-employees (e.g. independent contractors) are properly reported for federal tax purposes (i.e. tax form 1099) and the corresponding return (tax form 1096) filed with the IRS. No exceptions were found as a result of applying this procedure. 8) Determine by inquiry and observation in other work steps that no payroll taxes are being paid direct to the IRS by the entity. (Payroll taxes are paid and returns filed by PayChoice for all periods after December 31, 2008.) No exceptions were found as a result of applying this procedure. 3

6 DIOCESE OF DALLAS AGREED-UPON PROCEDURES ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL 9) Inquire if the entity has any unresolved payroll tax issues/correspondence with the IRS. If so, notify immediately and include a description in the final review report. No exceptions were found as a result of applying this procedure. 10) For Parish only, a) Review Mass collection procedures and compare to those specified in the Diocese Accounting Standards Handbook. b) Tie in 3 non-consecutive weeks count sheets to related deposit and posting to general ledger. c) Ascertain procedures have been documented for collecting, documenting and recording fees and other revenues, and review such procedures. Test on a sample basis that such funds are timely deposited and properly recorded. d) Ascertain, and test on a sample basis, that donor restricted gifts or contributions are properly accounted for and in accordance with the standard chart of accounts (in accounts #7xxx and #8xxx.). Ascertain that donor restrictions are complied with. This step is not applicable. 11) For Schools only, a) Review reconciliation of actual enrollment to actual tuition and registration fees, collections, deposits and tuition revenue for the current year actual and for next year s budget. b) Obtain a reconciliation of the parish subsidy amount for the current year between the School s financial report, the Parish s financial report and the parish assessment reports (see step 14) for the fiscal year. c) Ascertain procedures have been documented for collecting, documenting and recording fees and other revenues, and review such procedures. Test on a sample basis that such funds are timely deposited and properly recorded. d) Ascertain, and test on a sample basis, that donor restricted gifts or contributions are properly accounted for and in accordance with the standard chart of accounts (in accounts #7xxx and #8xxx.). Ascertain that donor restrictions are complied with. GPP noted a $2,537 difference between the actual enrollment tuition and fees reconciliation and the current year actual amounts reported on the statement of activities. GPP noted a $4,583 variance between the school subsidy deduction per the Statement of Activities for the parish and the amounts reported by the school. This variance is a timing difference between when the church paid the money and when the school recorded the revenue. No other exceptions were found as a result of applying this procedure. 12) Review lesser of 30 or 10% of non-payroll disbursements - i.e., 30 disbursements for the Parish and 30 disbursement for the School, to include disbursements by parish based organizations and determine: a) That invoice, receipt or contract is properly approved and attached. b) That employee/pastor/priest expense reimbursement is adequately and properly supported. c) That purchase is reasonable in the circumstances. d) Inquire if any payee that is an individual is in fact an employee but is paid outside of the payroll process. Of the 30 disbursements selected, GPP noted three items that lacked the required approval. No other exceptions were found as a result of applying this procedure. 13) Review a representative sample of disbursements paid to pastor, other priests, principal and staff for proper approvals and documentation. GPP noted one item for which receipts were provided for the reimbursement but the reimbursement lacked proper approval. 4

7 DIOCESE OF DALLAS AGREED-UPON PROCEDURES ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL No other exceptions were found as a result of applying this procedure. 14) For parishes, review the aggregate of the four quarterly assessment reports during the fiscal year and: a) Tie into general ledger and review for compliance with Diocesan policy (contact the Diocesan CFO if the written policy is not available), b) Determine that deductions for debt service represent actual payments, or that those payments have been properly offset against excluded proceeds from approved debt service campaigns, c) Determine that school subsidy deduction represents actual disbursements to or on behalf of the school by reconciling the annual amount deducted, to the parish and school general ledgers (QuickBooks). See also step 11b above. This step is not applicable. 15) Determine that national and special collections are being remitted timely and in the proper amounts, by reviewing the amounts collected and remitted to the Diocese for 2 special collections. The CPA s report should list the 2 special collections reviewed, dates of collection and remittance and amounts for each. This step is not applicable. 16) Determine and report what financial reports are presented to appropriate governing groups (parish council, parish finance committee, school advisory council, board of directors, etc.) The board is presented with a monthly and year-to-date P&L with comparison of budget to actual when the finance committee meets. 17) Determine that the parish and/or school published its prior fiscal year s financial reports in accordance with established Diocesan policy (refer to the Accounting Practices Handbook section labeled Policy on Audits, Financial Review and Financial Reporting Requirements). - Include in the final review report all pertinent details such as what reports were published, date of publication, length of publication, publication medium (e.g. bulletin, website, mailings) etc. The school published the Statement of Financial Position and the Statement of Activities on October 1, The length of the publication was ten pages and was included on the school s website. 18) The Pastoral Center provides a monthly statement of unpaid Diocesan invoices to each entity. The Pastoral Center also provides monthly statements, if applicable, for each entity s Funds on Deposit (savings) account at the Diocese and a statement of any loans from the Diocese. Obtain the Pastoral Center fiscal year end statement(s) of unpaid invoices, note payable activity & balance and Funds on Deposit activity & balance and reconcile them to the general ledger(s). No exceptions were found as a result of applying this procedure. 19) (a) Meet with the entity s pastor/principal/administrator, business manager and Finance Committee and review the results of the annual financial review. This should include a review of the year-end report and the final review report noted in step 21. (b) Obtain a copy of the completed Letter from Finance Committee (required letter/report to the Bishop on Parish Pastoral Council and Parish Finance Committee members and activities) and include it with the final review report. The parish is to submit the original of this letter to the Diocesan Director of Parish & School Financial Reporting (Fred Villela). See the attached letter the Bishop. 5

8 DIOCESE OF DALLAS AGREED-UPON PROCEDURES ST. BERNARD OF CLAIRVAUX CATHOLIC SCHOOL 20) Obtain a representation letter (see attached draft) from the pastor/principal/administrator and the business manager/bookkeeper and include a copy of the letter in the final review report. See the attached management representation letter. 21) Write a final report on the results of the review and all exceptions noted, and include recommendations for improvements in internal controls. The report should be addressed to the pastor/principal/director and delivered to them. See the attached recommendations for improvement letter. 6

9 RECOMMENDATIONS FOR IMPROVEMENT September 9, 2015 St. Bernard of Clairvaux Catholic School 1404 Old Gate Lane Dallas, TX While performing the agreed-upon procedures required by the Catholic Diocese of Dallas (the Diocese ) of St. Bernard of Clairvaux Catholic School (the School ), we noted opportunities to improve the School s internal control and accounting procedures. It should be noted and understood that we did not conduct a formal review of the School s systems of internal controls or accounting procedures so management should not place any reliance on our agreed-upon procedures as it relates to the adequacy and effectiveness of the School s internal controls and accounting procedures. The aforementioned agreed-upon procedures were also not designed to detect fraud, errors or other irregularities. In performing step 3, we noted that the balances per the QuickBooks s reconciliations and the balances per the RightNetworks reports did not reconcile. We recommend verifying that the amounts being reported on the RightNetworks report tie to the QuickBooks reconciliations by comparing the balances of each while performing the reconciliation process. In performing step 3b, we noted that four of the six bank reconciliations did not include a signature indicating that the bank reconciliation was reviewed by someone other than the preparer. We recommend that the school put in place a procedure that requires someone other than the preparer to review and sign the reconciliation. In performing step 12a and 13, we noted that out of 30 non-payroll disbursements and five reimbursements selected, three disbursements and one reimbursement lacked the proper approval. We recommend that the school properly authorize all disbursements with a signature of approval and supporting documentation accompanying the approval. We would like to thank you and your team for the kind cooperation and assistance provided to us. Very truly yours, 7

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