CITY OF BOGALUSA SCHOOL BOARD. For the Year Ended June 30, 2004

Transcription

1 RECEIVED UDITR" 05FEB-3 PM 1: 01* FINANCIAL STATEMENTS AND SINGLE AUDIT REPRTS Fr the Year Ended June 30, 2004 Under prvisins f state law, this reprt is a public dcument. Acpy f the reprt has been submitted t the entity and ther apprpriate public fficials. The reprt is available fr public inspectin at the Batn Ruge ffice f the Legislative Auditr and, where apprpriate, at the ffice f the parish clerk f curt. Release Date

2 TABLE F CNTENTS FINANCIAL SECTIN Independent Auditr's Reprt 1 Required Supplementary Infrmatin - Part I Management's Discussin and Analysis 3 Basic Financial Statements: Gvernment-wide Financial Statements: Statement f Net Assets 11 Statement f Activities 12 Fund Financial Statements: Gvernmental Funds: Balance Sheet 13 Recnciliatin f the Gvernmental Funds Balance Sheet t the Statement f Net Assets 14 Statement f Revenues, Expenditures, and Changes in Fund Balances 15 Recnciliatin f the Statement f Revenues, Expenditures, and Changes in Fund Balances f Gvernmental Funds t the Statement f Activities 17 Fiduciary Funds - Statement f Fiduciary Net Assets 18 Ntes t the Financial Statements 19 Required Supplementary Infrmatin - Part II Schedules f Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: General Fund and Majr Special Revenue Fund Descriptins 40 General Fund 41

3 TABLE F CNTENTS (CNTINUED) Required Supplementary Infrmatin - Part II (Cntinued) Schedules f Revenues, Expenditures, and Changes in Fund Balances - Budget And Actual (Cntinued): Fd Services 43 Leeway Maintenance 44 Supplemental Infrmatin Schedules Nnmajr Gvernmental Funds: Nnmajr Fund Descriptins 45 Cmbining Balance Sheet 47 Cmbining Statement f Revenues, Expenditures and Changes in Fund Balances 48 Nnmajr Special Revenue Funds - Schedule f Revenues, Expenditures, and Changes in Fund Balances - Final Budget and Actual: Title I 49 Title H 50 Title HI 51 Title V 52 Summer Fd 53 REAP 54 TANF 55 HIPPY 56 IDEA B Special Educatin 57 Preschl Special Educatin 58 Extended Schl Year Prgram Special Educatin 59 Fiduciary Fund Type - Agency Fund Fiduciary Type Fund Descriptin 60 Cmbining Statement f Changes in Assets and Liabilities 61 Schedule f Cmpensatin Paid t Bard Members 62

4 TABLE F CNTENTS (CNTINUED) Independent Auditr's Reprt and Infrmatin Required by the Single Audit Act and Gvernment Auditing Standards Independent Auditr's Reprt n Internal Cntrl ver Financial Reprting and n Cmpliance and ther Matters Based n an Audit f Financial Statements Perfrmed in Accrdance with Gvernment Auditing Standards 63 Independent Auditr's Reprt n Cmpliance with Requirements Applicable t Each Majr Prgram and n Internal Cntrl ver Cmpliance in Accrdance with MB Circular A Schedule f Expenditures f Federal Awards 68 Ntes t the Schedule f Expenditures f Federal Awards 71 Schedule f Findings and Questined Csts 72 Summary Schedule f Prir Year Findings and Questined Csts 87 Crrective Actin Plan 88 STATE REPRTING SECTIN Schedules Required by State Law (R.S. 24:514 Perfrmance and Statistical Data) Independent Accuntant's Reprt n Applying Agreed-Upn Prcedures 97 Schedule 1 General Fund Instructinal and Supprt Expenditures and Certain Lcal Revenue Surces Educatin Levels f Public Schl Staff Number and Type f Public Schls Experience f Public Principals and Full-time Classrm Teachers Public Schl Staff Data Class Size Characteristics Luisiana Educatinal Assessment Prgram (LEAP) fr the 21 st Century The Graduatin Exit Exam fr the 21 st Century The IWA Tests 108

5 FINANCIAL SECTIN

6 REBWE & CMPANY CERTIFIED PUBLIC ACCUNTANTS CNSULTANTS A PRFESSINAL CRPRATIN 3501 N. Causeway Blvd. Suite 810 P.. Bx 6952 Metairie, LA Phne (504) Fax (504) rebwe@rebwe. cm Hnrable Bard Members City f Bgalusa Schl Bard 1705 Sullivan Drive Bgalusa, LA Members f the Bard: INDEPENDENT AUDITR'S REPRT We have audited the accmpanying financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f the City f Bgalusa Schl Bard (the "Schl Bard") as f and fr the year ended June 30, 2004, which cllectively cmprise the Schl Bard's basic financial statements as listed in the table f cntents. These financial statements are the respnsibility f the Schl Bard's management. ur respnsibility is t express an pinin n these financial statements based n ur audit. We cnducted ur audit in accrdance with auditing standards generally accepted in the United States f America and the standards applicable t financial audits cntained in Gvernment Auditing Standards, issued by the Cmptrller General f the United States. Thse standards require that we plan and perfrm the audit t btain reasnable assurance abut whether the financial statements are free f material misstatement. An audit includes examining, n a test basis, evidence supprting the amunts and disclsures in the financial statements. An audit als includes assessing the accunting principles used and the significant estimates made by management, as well as evaluating the verall financial statement presentatin. We believe that ur audit prvides a reasnable basis fr ur pinins. In ur pinin, the financial statements referred t abve present fairly, in all material respects, the respective financial psitin f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f the Schl Bard as f June 30, 2004, and the respective changes in financial psitin fr the year then ended in cnfrmity with accunting principles generally accepted in the United States f America. The accmpanying financial statements have been prepared assuming that the Schl Bard will cntinue as a ging cncern. As discussed in Nte 20 t the financial statements, the Schl Bard has experienced significant decreases in fund balances ver the last several years and cash flw shrtages caused by expenditures exceeding revenues raising substantial dubt abut its ability t cntinue as a ging cncern. Management's plans regarding this uncertainty are

7 described in Nte 20. The financial statements d nt include any adjustments that might result frm the utcme f this uncertainty. In accrdance with Gvernment Auditing Standards, we have als issued ur reprt dated January 14, 2005, n ur cnsideratin f the Schl Bard's internal cntrl ver financial reprting and n ur tests f its cmpliance with certain prvisins f laws, regulatins, cntracts, and grant agreements and ther matters. The purpse f that reprt is t describe the scpe f ur testing f internal cntrl ver financial reprting and cmpliance and the results f that testing, and nt t prvide an pinin n the internal cntrl ver financial reprting r n cmpliance. That reprt is an integral part f an audit perfrmed in accrdance with Gvernment Auditing Standards and shuld be cnsidered in assessing the results f ur audit. The Management's Discussin and Analysis and the budgetary cmparisn infrmatin n pages 3 thrugh 10 and 40 thrugh 44, respectively, are nt a required part f the basic financial statements but are supplementary infrmatin required by accunting principles generally accepted in the United States f America. We have applied certain limited prcedures, which cnsisted principally f inquiries f management regarding the methds f measurement and presentatin f the supplementary infrmatin. Hwever, we did nt audit the infrmatin and express n pinin n it. ur audit was cnducted fr the purpse f frming pinins n the financial statements that cllectively cmprise the Schl Bard's basic financial statements. The cmbining and individual nnmajr fund financial statements are presented fr purpses f additinal analysis and are nt a required part f the basic financial statements. This additinal infrmatin is the respnsibility f the Schl Bard's management. The accmpanying Schedule f Expenditures f Federal Awards is presented fr purpses f additinal analysis as required by U.S. ffice f Management and Budget Circular A-133, Audits f States, Lcal Gvernments, and Nn-Prfit rganizatins, and is als nt a required part f the basic financial statements f the Schl Bard. The cmbining and individual nnmajr fund financial statements and the Schedule f Expenditures f Federal Awards have been subjected t the auditing prcedures applied in the audit f the basic financial statements and, in ur pinin, are fairly stated in all material respects in relatin t the basic financial statements taken as a whle. & January 14, 2005

8 REQUIRED SUPPLEMENTARY INFRMATIN - PARTI

9 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS June 30, 2004 The Management's Discussin and Analysis (MD&A) f the Bgalusa City Schl Bard (Schl Bard) financial perfrmance prvides an verall review and an bjective, easily readable analysis f the Schl Bard's financial activities fr the fiscal year ended June 30, The intent f the MD&A is t lk at the Schl Bard's verall financial perfrmance and t assist readers in assessing the financial psitin as a result f the year's peratins. Therefre, readers shuld read the MD&A in cnjunctin with the Schl Bard's Basic Financial Statements and the Ntes t the Financial Statements. The MD&A is an element f the Required Supplementary Infrmatin specified in the Gvernmental Accunting Standards Bard's (GASB) Statement N Basic Financial Statements - and Management's Discussin and Analysis - fr State and Lcal Gvernments issued in June FINANCIAL HIGHLIGHTS Key financial highlights fr the years ending June 30, 2004 and 2003 include the fllwing: Net assets amunted t $2,125,059 and $4,064,053 fr the years ended June 30, 2003 and 2004, respectively. The net assets were cmpsed f the fllwing elements: Net Assets Invested in capital assets, net f related debt $ 4,318,787 $ 1,458,755 Unrestricted: ( ,304 $ S Net Assets increased frm July 1, 2003 t June 30, 2004 by $1,938,994. Althugh there are many factrs that make up this increase; the largest factrs are the increase in ad valrem taxes and a new capital prjects grant, which was primarily expended as capitalizable assets. The amunt "Invested in capital assets, net f related debt", represents the Bard's net bk value f its fixed assets. It is the accumulatin f years f investments in capital prjects. The Unrestricted prtin f net assets reflects a deficit f $254,734 representing several years f excess expenditures ver revenues.

10 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 As f June 30, 2004 and 2003, ttal assets amunted t $7,151,363 and $5,029,699, respectively, attributed t the fllwing elements: Cash and cash equivalents ther receivables Due frm ther gvernments Inventry Capital assets (net f accumulated depreciatin) TTAL ASSETS $ 1,115, ,460 1,542,090 53, $ $ 1,892,120 23,770 1,617,065 37, $ Due frm ther gvernments represents federal and state grant mnies due at year end. Capital assets represent the investment in capital prjects ver the histry f the bard. As f June 30, 2004 and 2003, ttal liabilities amunted t $3,087,310 and $2,904,610, respectively, due t the fllwing items: Accunts, salaries, and ther payables Liabilities due in mre than ne year Due in ver a year TTAL LIABILITIES $ 2,240, , S $ 2,492, ,817 S Accunts, salaries, and ther payables represent nrmal year end payables and the accrued summer payrll. Liabilities due in mre than ne year represent cmpensated absences. As f June 30, 2004 and 2003, ttal revenues amunted t $27,405,663 and $23,296,826, respectively, due t the fllwing items: Minimum Fundatin Prgram Sales Taxes perating Grants Ad Valrem Taxes ther Revenue Capital Grant $13,159,662 $ 12,620,209 2,054,345 2,050,354 6,758,318 5,323,401 3,345,905 2,674, , , TTAL REVENUES $ S

11 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 The largest single revenue surce cntinues t be the Minimum Fundatin Prgram (MFP) distributin frm the state, amunting t $13,159,662. This MFP frmula establishes a standard f lcal supprt fr each schl system based n the state average lcal supprt relative t the system's capacity t raise lcal funds. The Schl Lunch Prgram and Title I cntinue t be the largest federally funded prgrams with $1,241,366 and $1,132,285 in grant revenue, respectively. As f June 30, 2004 and 2003, ttal expenses amunted t $28,009,987 and $24,819,312, respectively, due t the fllwing items: Instructin related expenses $ 14,275,618 $ 13,682,287 Supprt Services TTAL EXPENSES S $ Expenditure increases are the result f the rise in health insurance csts. Health insurance cntinues t rise annually each year at rates significantly higher than inflatin. Cmputer hardware and sftware upgrades als cntributed t the increase. ther increases are due t nrmal step increases, preparatin csts assciated with a planned elementary schl cmplex and rf repairs t the Junir High and Senir High schl and administrative expenses. USING THE BASIC FINANCIAL STATEMENTS The Schl Bard's Basic Financial Statements cnsist f a series f financial statements and the assciated ntes t thse statements. These statements are rganized s the reader can understand the peratins f the Schl Bard as a financial whle, i.e., an entire perating entity, its funds, and its fiduciary respnsibilities. The "Basic Financial Statements" Sectin, cnsisting f the Statement f Net Assets, and the Statement f Activities prvide highly cnslidated financial infrmatin, and render a gvernment-wide perspective f the Schl Bard's financial cnditin. The Fund Financial Statements prvide the next level f detail and lk at the Schl Bard's mst significant funds and a ttal f all ther nnmajr funds. Reprting the Schl District as a Whle Statement f Net Assets and the Statement f Activities (Gvernment-wide) The Statement f Net Assets and the Statement f Activities present an aggregate view f the Schl Bard's finances and a lnger-term view f thse finances. These statements seek t answer the questin, "Hw did the Schl Bard d financially during the fiscal year?" These statements include all assets and liabilities using the accrual basis f accunting

12 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 used by mst private-sectr enterprises. The accrual basis takes int accunt all f the Bard's current year revenues and expenses regardless f when paid r received. These tw statements reprt the Schl Bard's net assets and changes in thse assets. By shwing the change in net assets fr the year, the reader may ascertain whether the Schl Bard's financial cnditin has imprved r deterirated. The causes f the change may be the result f many factrs, bth financial and nn-financial in nature. Nn-financial factrs which may have an impact n the Schl Bard's financial cnditin include the Schl Bard's prperty and sales tax base, student enrllment, facility cnditins, required educatinal prgrams fr which little r n funding is prvided, r ther external factrs. Reprting the Schl District's Mst Significant Funds Fund Financial Statements The analysis f the Schl Bard's majr funds prvide mre in-depth reprting f the Schl Bard's financial psitin and the results f peratins. Fund basis financial infrmatin is presented in the "Fund Financial Statements" Sectin. The Schl Bard uses many funds t accunt fr the numerus funding surces prvided annually. Hwever, the Fund Financial Statements lk at the Schl Bard's mst significant funds with all nn-majr funds presented in ttal in ne clumn. These statements reprt gvernmental activities n a mre current basis rather than a lng-term basis, indicating surces and uses f funding and resurces available fr spending in future perids. Fund Financial Statements prvide mre in-depth data n the Schl Bard's mst significant funds, such as its General Fund. This fund is cnsidered a "majr fund" under GASB Statement N. 34. Gvernmental Funds - Mst f the Schl District's activities are reprted in gvernmental funds, which fcus n hw mney flws in and ut f thse funds, the balances that are left at year-end and the amunt available fr spending in future perids. These funds are reprted using the mdified accrual basis f accunting, which measures cash and all ther financial assets that can readily be cnverted t cash. The relatinship between gvernmental activities reprted in the Gvernment-wide Financial Statements and the gvernmental funds reprted in the Fund Financial Statements are recnciled in the financial statements. Statement f Fiduciary Net Assets - This statement presents financial infrmatin relative t assets held by the Schl Bard n behalf f students and thers in a psitin f trust.

13 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 Gvernmental Activities As reprted in the Statement f Activities, the cst f the Schl Bard's gvernmental activities fr the year ended June 30, 2004 was $25,173,057. The Statement f Activities shws the cst f prgram services and the charges and grants ffsetting sme f thse services. Grants f $6,758,318 subsidized certain prgrams, and charges fr services fr schl lunches was the nly cntributr f charges fr services ttaling $170,117. The remaining amunt was financed by the taxpayers in the parish thrugh ad valrem and sales and use taxes ttaling $5,400,250 and $225,541 in State Revenue Sharing. The Minimum Fundatin Prgram (MFP) frm the State f Luisiana funded $13,159,662 and ther general revenues cntributed the remainder. In Table I belw, the cst f the Schl Bard's largest categries f expenses are presented as well as each prgram's net cst (ttal cst less revenues generated by the activities). This "net cst" presentatin allws the parish taxpayers t determine the remaining cst f the varius categries, and als allws them the pprtunity t assess the cst f each functin in cmparisn t the benefits they believe are prvided by the functin. The net cst als reflects the amunt needed t finance these functins frm general surces such as taxes and MFP. Ttal and Net Cst f Gvernmental Activities Ttal Cst Net Cst f Services f Services Gvernmental activities: Instructin: Regular prgrams Special prgrams Vcatinal prgrams Adult Prgrams All ther prgrams Supprt services: Student services Instructinal staff supprt General administratin Schl administratin Business services Plant services Student transprtatin services Central services Fd services Cmmunity service prgrams $ 7,494,612 4,980, ,922 33,160 1,106,117 1,094,640 1,242, ,745 1,413, ,158 2,997,054 1,032,853 79,827 1,764, $ (7,481,992) (403,720) (660,922) (33,160) (1,106,117) (1,094,640) (641,526) (410,000) (1,413,974) (682,158) (1,412,029) (978,718) (79,827) (278,129) Ttal Gvernmental Activities S S( t

14 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 THE SCHL BARD'S FUNDS The Schl Bard uses funds t cntrl and permit measurement in the shrt term f the revenues and expenditures f a particular activity r purpse (e.g., dedicated taxes and grant prgrams). The Fund Financial Statements allw the Schl Bard t demnstrate its stewardship ver and accuntability fr resurces prvided by taxpayers and ther entities. These statements als allw the reader t btain mre insight int the financial management f the Schl Bard and assess further the Schl Bard's verall financial stability. As the Schl Bard cmpleted the fiscal year ended June 30, 2004, its cmbined fund balance was $592,148 as cmpared t a cmbined fund balance f $1,196,472 as f June 30, The General Fund's fund balance decreased by $363,174 mainly as a result f emplyee raises and preparatin cst fr a prpsed new schl cmplex. General Fund Budgetary Highlights The Schl Bard's budget is prepared accrding t Luisiana law. During the curse f the year, the Schl Bard revises its budget t take int cnsideratin significant changes in revenues r expenditures. Luisiana Revised Statute 39:1311 requires a budget amendment if either expected revenues are less r anticipated expenditures are in excess f budgetary gals by five percent (5%) r mre. The riginal budget fr the Schl Bard was adpted n June 9, A statement shwing the Schl Bard's riginal and final budget cmpared with actual perating results is prvided in this financial reprt. The Schl Bard's year-end actual results were better than had been budgeted, as cnservative budgetary practices are custmary. Revenues are frecast cnservatively and expenditures are budgeted in anticipatin f all pssible csts and prjects. The General Fund's actual revenues exceeded prjected revenues by $647,958. Ttal expenditures were mre than prjected by $484,194. A cmparisn f actual results as f June 30, 2004 and the final budget fr the General Fund are as fllws: riginal Budget Cmparisn June 30,2004 Final Budget Actual Difference Ttal Revenues $ 20,882,031 $ 21,496,341 $ 614,310 Ttal Expenditures (21.454,550 ( ) ( ) Net Change in Fund Balance S ( $ ( S (

15 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 CAPITAL ASSET AND DEBT ADMINISTRATIN Capital Assets At June 30, 2004, the Schl Bard has apprximately $14 millin invested in a brad range f capital assets, including land, buildings, furniture, vehicles, cmputers, and ther equipment. Capital Assets at June 30, Land $ 290,626 Buildings and imprvements 11,436,957 Furniture and equipment 2,036,296 Cnstructin in prgress 450,324 Ttals S During the current year, additins f $3,408,114 f fixed assets were capitalized while $271,228 were deleted. ther lng-term bligatins include accrued sick leave and annual leave at June 30, 2004 f bth current and lng-term bligatins was $846,882. ECNMIC FACTRS AND NEXT YEAR'S BUDGET The financial well being f the Schl Bard is tied in large measure t the state funding frmula and the tax base. A majr cncern f the Schl Bard is funding prvided by the Minimum Fundatin Prgram. The Schl Bard will have t rely n the general fund t maintain current levels f peratin. GING CNCERN As reprted in the accmpanying fund financials, expenditures and ther uses exceeded revenues and ther surces fr the year ended June 30, 2004 in the amunt f $604,324. Fr the year ended June 30, 2003, expenditures and ther uses exceeded revenues and ther surces in the amunt f $806,215. The fund balance at June 30, 2004 was $64,140 in the General Fund. A decline in student enrllment and an increase in salaries and ther csts have cntributed t these lsses. In respnse t deficits, management has implemented significant cst reductins and is develping a plan t reduce expenses. Nnessential capital expenditures, and certain ther expenditures have been eliminated r pstpned. Shrt-term brrwings have als been used as further explained in Nte 18. Management is hpeful that its plan will eliminate r significantly reduce any deficits fr the year ended June 30, 2005 and future years.

16 BGALUSA CITY SCHL BARD BGALUSA, LUISIANA MANAGEMENT'S DISCUSSIN AND ANALYSIS (CNTINUED) June 30, 2004 Because it is uncertain whether the Schl Bard will be successful in accmplishing its plan, there is uncertainty abut the Schl Bard's ability t cntinue as a ging cncern. The financial statements d nt include any adjustments that might be necessary shuld the Schl Bard be unable t cntinue as a ging cncern. CNTACTING THE SCHL BARD'S FINANCIAL MANAGEMENT While this financial reprt is designed t prvide full and cmplete disclsure f the financial cnditin and peratins f the Schl Bard, citizens grups, taxpayers, parents, students, ther parish fficials, investrs r creditrs may need further details. T btain such details, please cntact Bgalusa City Schl District, Pst ffice Bx 310, Bgalusa, LA 70429, r by calling (985) during regular ffice hurs, Mnday thrugh Friday, 8:00 a.m. t 4:00 p.m., Central Standard Time, r at hdneelvfihtmail.cm. 10

17 BASIC FINANCIAL STATEMENTS

18 STATEMENT F NET ASSETS June 30, 2004 ASSETS Cash and cash equivalents Receivables Inventry Capital assets (net f accumulated depreciatin) Ttal Assets $ 1,115,385 1,663,550 53,641 4,318,787 7,151,363 LIABILITIES Accunts, salaries, and ther payables Nncurrent liabilities: Due within ne year Due in mre than ne year Ttal Liabilities NET ASSETS Invested in capital assets, net f related debt Unrestricted TTAL NET ASSETS 2,240, , ,749 3,087,310 4,318,787 (254,734) $ 4,064,053 The ntes t the financial statements are an integral part f this statement. 11

19 STATEMENT F ACTIVITIES Fr the Year Ended June 30, 2004 PRGRAM REVENUES NET (EXPENSE) PERATING CAPITAL REVENUE AND CHARGES FR GRANTS AND GRANTS AND CHANGES IN NET EXPENSES SERVICES CNTRIBUTINS CNTRIBUTINS ASSETS FUNCTINS/PRGRAMS Gvernmental activities: Instructin: Regular prgrams Special prgrams Vcatinal prgrams All ther prgrams Adult prgrams Supprt services: Student services Instructinal staff supprt General administratin Schl administratin Business services Plant services Student transprtatin services Central services Fd services Cmmunity service prgrams $ 7,494,612 $ 12,620 $ 4,980, ,922 1,106,117 33,160 1,094,640 1,242, ,745 1,413, ,158 2,997,054 1,032,853 36,581 79,827 1,764, , ,778 - $ 4,577, ,842 75, ,665 17,554-1,365, ,628 - S (7,481,992) (403,720) (660,922) (1,106,117) (33,160) (1,094,640) (641,526) (410,000) (1,413,174) (682,158) 1,570,360 (1,412,029) (978,718) (79,827) (278,129) 1,850 Ttal Gvernmental Activities $ 25,173,057 $ 170,117 $ 6,758,318 S 1,570,360 (16,674,262) General revenues: Prperty taxes Sales and use taxes. State revenue sharing Grants and cntributins nt restricted t specific purpses: Minimum Fundatin Prgram Unrestricted investment earnings Miscellaneus 3,345,905 2,054, ,541 13,159,662 1, ,399 Ttal general revenues and special items 18,906,868 Change in net assets Net assets - July 1,2003 Prir Perid Adjustment (See Ftnte 17) Net assets - July 1, 2003 (as restated) Nei assets - June 30, ,232,606 2,125,059 ( ) 1,831,447 4,064,053 The ntes t the financial statements are an integral part f this statement. 12

20 ^^ 3 fi W w 3 1 "E r" m 6 fr ( in i in N i^m in " u-t m" CN" m" ^^ ^ *$ in ^^ > in <5 ^D ^ ^r r- cs ^ -^t tn in r- TT \» «, -2 C i- S «U t- *rt x 5 c X C 3 C J fll [T^ cs cs m > in N in ^^ r~- ^ m m ^~ CN ^J- N 00 rs r- *-«00 W~l <st ^ (N i i i i N \ ts" r- <u u cd cd? U -tj s C i-j 'E3 w -«' cs ^r -, " in" In ' M _ ^D ^ in' m i i t-. r- r- r- N ^ in" m u H -r- tl-i u 00 "e -a g U LL, «. «~ \ N <* r-^ in ^^ «^ -_ rn fi in m r- ^ ' i-^ ^-H \ ^* r^* ^5 m t < CN \ (N fs ' ^-T " &0 m r-' fi m 6*1 * i CN, CN" ts" V) r^- r-- CN i-» N ' TT m' m" in r- -3- t» m «< r-' ^n ^T5 m "I r-' f<i in w»-h **i N' in ts" M -*-i -t-> ^!5 <*H ip. S 1 C H g 1 3 a- u u X W en. U I e e^ H W 00 < TTAL ^,UVD FUND BALANCES E/l.IABILITIE! ies, and ther payables & viabilities: Accunts, sal c/> c I-H -4-t D 3 Q ;S 1 13 'und balances Reserved fr; ID e G * Qi Inventry Unreserved, 1 en -a Cu. u 3 T3 [X u 3 " en rt ca CQ - u- *- H [ABILITIES AND GLANCES ^ CQ TTAL FUND 13

21 RECNCILIATIN F THE GVERNMENTAL FUNDS BALANCE SHEET T THE STATEMENT F NET ASSETS June 30, 2004 Ttal Fund Balances at June 30, Gvernmental Funds $ 592,148 Cst f capital assets at June 30, 2004 $ 14,214,203 Less - accumulated depreciatin as f June 30, 2004: Buildings and imprvements (9,091,793) Furniture and equipment (803,623) 4,318,787 Eliminatin f interfund assets and liabilities: Due frm ther funds 1,542,090 Due t ther funds (1,542,090) Lng-term liabilities at June 30, 2004: Cmpensated absences (846,882) Net Assets at June 30, 2004 $ 4,064,053 The ntes t the financial statements are an integral part f this statement. 14

22 GVERNMENTAL FUNDS STATEMENT F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Fr the Year Ended June 30, 2004 General Fd Services Leeway Maintenance ther Gvernmental Funds Ttal Gvernmental Funds REVENUES Lcal surces: Taxes: Ad valrem Sales and use Interest earnings Charges fr services ther Ttal Lcal Surces $ 2,831,817 2,054,345 1,016 49, ,152 5,056,531 $ - $ 514,088, - 120, , ,088 $ $ 3,345,905 2,054,345 1, , ,399 5,691,782 State surces: Minimum Fundatin Prgram Revenue Sharing ther Ttal State Surces 13,121, ,798 1,774,518 15,097,325 38,653 23, ,653 23, , ,511 13,159, ,541 1,881,029 15,266,232 Federal Surces 1,342,485 1,241,366 3,863,798 6,447,649 TTAL REVENUES 21,496,341 1,400, ,831 3,970,720 27,405,663 EXPENDITURES Current: Instructin: Regular prgrams Special prgrams Vcatinal prgrams AH ther prgrams Adult prgrams Supprt services: Student services Instructinal staff supprt General administratin Schl administratin Business services Plant services Student transprtatin services Central services Fd services Cmmunity service prgrams Cnstructin and land imprvement Ttal expenditures 8,594,425 3,556, ,410 1,116,377 33,160 1,097, , ,680 1,392, ,995 2,515,912 1,010,325 81, ,423 21,936, _ , ,568, ,568, ,160 1,399, _ 600,842 75, ,665 17, , ,628 1,570,360 3,955,797 8,594,425 4,955, ,410 1,116,377 33,160 1,097,312 1,239, ,425 1,392, ,995 3,079,737 1,027,879 81,644 1,739, ,628 1,659,783 28,009,987 (Cntinued) 15

23 GVERNMENTAL FUNDS STATEMENT F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CNTINUED) Fr the Year Ended June 30, 2004 General ther Ttal Fd Leeway Gvernmental Gvernmental Services Maintenance Funds Funds EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES (439,870) (168,048) (11,329) 14,923 (604,324) THER FINANCING SURCES (USES) Transfers in Transfers ut Ttal ther Financing Surces(Uses) NET CHANGES IN FUND BALANCES FUND BALANCES - Beginning Prir Perid Adjustment (See Ftnte 17) FUND BALANCES - Beginning - Restated 76,696 76,696 (363,174) 308, , ,314 76,696 (76,696) (76,696) (76,696) (168,048) (11,329) (61,773) (604,324) 695,179 12,206 61,773 1,078, , ,179 12,206 61,773 1,196,472 FUND BALANCES - Ending $ 64,140 1> 527,131 $ 877 $ - $ 592,148 The ntes t the financial statements are an integral part f this statement. 16

24 RECNCILIATIN F THE STATEMENT F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES F GVERNMENTAL FUNDS T THE STATEMENT F ACTIVITIES Fr the Year Ended June 30,2004 Amunts reprted fr gvernmental activities in the statement f activities are different because: Net change in fund balances - ttal gvernmental funds $ (604,324) Capital utlays are reprted in gvernmental funds as expenditures. Hwever, in the statement f activities, the cst f thse assets is allcated ver their estimated useful lives and reprted as depreciatin expense. This is the amunt by which capital utlays exceeded depreciatin in the current year: Depreciatin expense $ (323,191) Cmpleted Cnstructin in Prgress capitalized (224,891) Capital utlays capitalized 3,408,114 2,860,032 In the statement f activities, certain perating expense-cmpensated absences are measured by the amunts earned during the year. In the gvernmental funds, hwever, expenditures fr these items are measured by the amunt f financial resurces used (amunts actually paid). Cmpensated absences earned exceeded the amunts used by $23,102. (23,102) Change in net assets f gvernmental activities $ 2,232,606 The ntes t the financial statements are an integral part f this statement. 17

25 STATEMENT F FIDUCIARY ASSETS AND LIABILITIES- SCHL ACTIVITY AGENCY FUNDS FIDUCIARY FUNDS June 30, 2004 ASSETS Cash and cash equivalents $ 158,756 TTAL ASSETS $ 158,756 LIABILITIES Capital lease payable $ 4,381 Depsits due thers 154,375 TTAL LIABILITIES $ 158,756 The ntes t the financial statements are an integral part f this statement. 18

26 NTES T THE BASIC FINANCIAL STATEMENTS June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES The City f Bgatusa Schl Bard (the "Schl Bard") is an independent special district created fr the purpse f prviding elementary and secndary educatin t the citizens f Bgalusa, Luisiana. The Schl Bard is gverned by an elected bard cmprised f seven members. The fllwing is a summary f the Schl Bard's significant accunting plicies which cnfrm t generally accepted accunting principles as applicable t gvernmental units: Reprting Entity - In cnfrmity with the Gvernmental Accunting Standards Bard's definitin f a reprting entity, the basic financial statements f the Schl Bard include the accunts f all Schl Bard peratins. The Schl Bard is cnsidered a stand-alne reprting entity based n the fllwing criteria: a. Respnsibility fr surpluses/deficits. The Schl Bard is slely respnsible fr its surpluses/deficits. N ther gvernmental unit is respnsible fr its deficits r has a claim t its surpluses. b. Budget Apprval. The Schl Bard is slely respnsible fr reviewing, apprving and revising its budget. c. Respnsibility fr Debt. The Schl Bard is authrized t issue bnds. The Schl Bard is slely respnsible fr payments t the bndhlders. N ther gvernmental unit is required by statute t make any payments t bndhlders nr have any payments t bndhlders ever been made by any gvernmental unit, except the Schl Bard. d. Designatin f Management. The Schl Bard cntrls the hiring f management and emplyees. e. Special Financial Relatinship. The Schl Bard has n special financial relatinships with any ther gvernmental unit. f. Statutry Authrity. The Schl Bard's statutry authrity was created by the State f Luisiana as an independent gvernmental unit. nly an amendment t state statutes can change r ablish the Schl Bard's authrity. Additinally, the Schl Bard is a legally separate gvernmental rganizatin that has a separately elected gverning bdy and des nt meet the definitin f a cmpnent unit. The Schl Bard perates 10 schls within the City with a ttal enrllment f apprximately 2700 pupils. In cnjunctin with the regular educatin prgrams, sme f these schls ffer special educatin and/r adult educatin prgrams. In additin, the Schl Bard prvides transprtatin and schl fd services fr the students. 19

27 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) The accmpanying financial statements f the Schl Bard have been prepared in cnfrmity with generally accepted accunting principles (GAAP) as applied t gvernmental units. The Gvernmental Accunting Standards Bard (GASB) is the accepted standard setting bdy fr establishing gvernmental accunting and financial reprting principles. Fr financial reprting purpses, the Schl Bard includes all funds and activities fr which the Schl Bard exercises financial accuntability. The Schl Bard members, wh are elected by the public, have decisin-making authrity, the pwer t designate management, the ability t significantly influence peratins and primary accuntability fr fiscal matters. Certain units f lcal gvernment, ver which the Schl Bard exercises n financial accuntability, such as ther independently elected parish fficials and municipalities within the parish, are excluded frm the financial statements. These units f gvernment are cnsidered separate reprting entities and issue financial statements separate frm that f the Schl Bard. The Schl Bard is nt a cmpnent unit f any ther entity and des nt have any cmpnent units which require inclusin in the basic financial statements. Basis f Presentatin - Fund Accunting - The accunts f the Schl Bard are rganized n the basis f funds, each f which is cnsidered a separate accunting entity. The peratins f each fund are accunted fr with a separate set f self-balancing accunts that cmprise its assets, liabilities, reserves, fund balance, revenues and expenditures. The varius funds are summarized by type in the financial statements. The fllwing fund types are used by the Schl Bard: Gvernmental Funds Gvernmental funds accunt fr all r mst f the Schl Bard's general activities. These funds fcus n the surces, uses, and balances f current financial resurces. Expendable assets are assigned t the varius gvernmental funds accrding t the purpses fr which they may be used. Current liabilities are assigned t the fund frm which they will be paid. The difference between a gvernmental fund's assets and liabilities is reprted as fund balance. In general, fund balance represents the accumulated expendable resurces which may be used t finance future perid prgrams r peratins f the Schl Bard. The fllwing are the Schl Bard's primary gvernmental funds: General Fund - t accunt fr all financial resurces and expenditures except thse required t be accunted fr in anther fund. 20

28 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) Special Revenue Funds - t accunt fr the prceeds f specific revenue surces (ther than fr majr capital prjects) that are legally restricted t expenditures fr specified purpses. Capital Prject Fund - t accunt fr the acquisitin and cnstructin f majr capital facilities ther than thse financed by prprietary and trust funds. Fiduciary Fund Types The Fiduciary Fund is used t accunt fr assets held by the Schl Bard in a trustee r agency capacity. The Schl Bard maintains ne fiduciary fund type, an agency fund. An agency fund is custdial in nature and des nt present results f peratins r have a measurement fcus. Agency Funds - t accunt fr assets held by the Schl Bard as an agent fr thers. The accunting and financial reprting treatment applied t a fund is determined by its measurement fcus. All gvernmental fund types are accunted fr using a current financial resurces measurement fcus. With this measurement fcus, nly current assets and current liabilities generally are included n the balance sheet. perating statements f these funds present increases (i.e., revenues and ther financing surces) and decreases (i.e., expenditures and ther financing uses) in net current assets. Measurement Fcus/Basis f Accunting Gvernment-wide Financial Statements (GWFS) The Statement f Net Assets and the Statement f Activities display infrmatin abut the reprting gvernment as a whle. These statements include all the financial activities f the Schl Bard, except fr the fiduciary fund. Fiduciary funds are reprted nly in the Statement f Fiduciary Assets and Liabilities - Agency Funds. The GWFS were prepared using the ecnmic resurces measurement fcus and the accrual basis f accunting. Revenues, expenses, gains, lsses, assets and liabilities resulting frm exchange r exchangelike transactins are recgnized when the exchange ccurs (regardless f when cash is received r disbursed). Revenues, expenses, gains, lsses, assets and liabilities resulting frm nnexchange transactins are recgnized in accrdance with the requirements f GASB Statement N. 33, Accunting and Financial Reprting fr Nnexchange Transactins. 21

29 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) Prgram Revenues Prgram revenues included in the Statement f activities derive directly frm parties utside the Schl Bard's taxpayers r citizenry, as a whle; prgram revenues reduce the cst f the functin t be financed frm the Schl Bard's general revenues. Allcatin f Indirect Expenses The Schl Bard reprts all direct expenses by functin in the Statement f Activities. Direct expenses are thse that are clearly identifiable with a functin. Indirect expenses f ther functins are nt allcated t thse functins but are reprted separately in the Statement f Activities, Depreciatin expense, which can be specifically identified by functin, is included in the direct expenses f each functin. Interest n general lng-term debt is cnsidered an indirect expense and is reprted separately n the Statement f Activities. Fund Financial Statements (FFS") Gvernmental funds are accunted fr using a current financial resurces measurement fcus. With this measurement fcus, nly current assets and current liabilities are generally included n the balance sheet. The statement f revenues, expenditures, and changes in fund balances reprts n the surces (i.e., revenues and ther financing surces) and uses (i.e., expenditures and ther financing uses) f current financial resurces. This apprach differs frm the manner in which the gvernmental activities f the gvernment-wide financial statements are prepared. Gvernmental fund financial statements therefre include recnciliatin with brief explanatins t better identify the relatinship between the gvernment-wide statements and the statements fr gvernmental funds. Fund financial statements reprt detailed infrmatin abut the Schl Bard. The fcus f gvernmental fund financial statements is n majr funds rather than reprting funds by type. Each majr fund is presented in a separate clumn. Gvernmental funds and the agency fund use the mdified accrual basis f accunting. Under the mdified accrual basis f accunting, revenues are recgnized when susceptible t accrual (i.e., when they becme bth measurable and available). Measurable means the amunt f the transactin can be determined and available means cllectible within the current perid r sn enugh thereafter t pay liabilities f the current perid. The Schl Bard cnsiders all revenues available if they are cllected within 60 days after the fiscal year end. Expenditures are recrded when the related fund liability is incurred, except fr 22

30 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) year end. Expenditures are recrded when the related fund liability is incurred, except fr interest and principal payments n general lng-term debt which is recgnized when due, and certain cmpensated absences and claims and judgments which are recgnized when the bligatins are expected t be liquidated with expendable available financial resurces. The gvernmental funds use the fllwing practices in recrding revenues and expenditures: Revenues Federal and state entitlements (which include state equalizatin and state revenue sharing) are recrded as unrestricted grants-in-aid when available and measurable. Expendituredriven federal and state grants are recrded as restricted grants-in-aid when the reimbursable expenditures have been incurred. Revenues frm lcal surces cnsist primarily f sales, use and prperty taxes. Year-end accrual f sales and use tax revenue is based upn June and prir mnths' sales and use taxes cllected during July and August f the fllwing year. Prperty tax revenues and revenues received frm the State f Luisiana (the "State") are recgnized as revenue primarily when received except at year end when they are accrued fr a perid nt exceeding 60 days. Miscellaneus revenues are recrded as revenue when received in cash because they are generally nt measurable until actually received. Generally, investment earnings are recrded as earned since they are measurable and available. Grant funds are cnsidered t be earned t the extent f expenditures made under the prvisins f the grant. Expenditures Expenditures are recgnized in the accunting perid in which the related fund liability is incurred, if measurable, except fr the fllwing: (1) csts f accumulated unpaid vacatin, sick leave and ther emplyee benefit amunts are reprted in the perid due and payable rather than the perid earned by emplyees; (2) general lng-term bligatins principal and interest payments are recgnized when due. Cmmitments under cnstructin cntracts are recgnized as expenditures when earned by the cntractr. Cmpensated absences are recgnized as expenditures when leave is actually taken r when emplyees (r heirs) are paid fr accrued leave upn retirement r death. The cst f earned leave privileges nt requiring current resurces is nt recrded in the FFS but is recrded in the GWFS as lngterm liabilities. 23

31 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) Budget and Budgetary Accunting - Under Luisiana Revised Statues 39:1304, the Schl Bard adpts an annual budget f expected revenues and prbable expenditures fr the General Fund and Special Revenue Funds. The budgetary prcess includes public ntice f the prpsed budget, public inspectin f the prpsed budget, and public hearings n the budget. The budget is adpted and submitted t the State Department f Educatin n later than September 15th each year. nce a budget is apprved by the State Department f Educatin, it can be amended at the functin level at the discretin f management unless it becmes evident that receipts r disbursements will vary substantially frm thse budgeted. Then, the Schl Bard shall prepare and adpt an amended budget. During the year, several discretinary amendments were necessary. Generally, such discretinary amendments were f an insignificant nature. Budgetary cntrl is exercised at the revenue and expenditure functin level. Budgeted amunts reflected in the accmpanying basic financial statements were adpted by the Schl Bard in September 2003 and include amendments made thrugh June Encumbrances - Encumbrance accunting, under which purchase rders, cntracts, and ther cmmitments are recrded, is nt emplyed by the Schl Bard, and encumbrances utstanding at year-end are nt reprted. Cash and Cash Equivalents - Cash and cash equivalents include all shrt-term, highly liquid investments (including certificates f depsit) with riginal maturity f three mnths r less when purchased. Investments - Investments are stated at market value, which is based n published prices. Inventries - The Fd Service Fund inventries cnsist f purchased fd and supplies and cmmdities received as dnatins thrugh the federal schl lunch prgram. Such inventries are priced at cst (except fr cmmdities received as dnatins which are priced using the USDA price list fr cmmdities) n a first-in, first-ut basis. The cmmdities are recrded as revenues when received. Hwever, all inventries cnsumed are recrded as cmmdities expenditure (cnsumptin methd). Capital Assets - Capital assets that are purchased are recrded at cst r estimated histrical cst. Actual histrical cst data was nt available fr certain assets acquired prir t June 30, In thse cases where it was nt feasible t determine the actual cst, the assets were valued at estimated histrical cst. Capital assets which are dnated are recrded at their fair market value n the date received. 24

32 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) Capital assets are recrded in the GWFS, but are nt reprted in the FFS. Since surplus assets are sld fr an immaterial amunt when declared as n lnger needed fr public schl purpses by the Schl Bard, n salvage value is taken int cnsideratin fr depreciatin purpses. All capital assets with an riginal cst f $5,000 r greater, ther than land, are depreciated using the straight-line methd ver the fllwing useful lives: Descriptin Buildings and Imprvements Furniture and equipment Estimated Lives years 5 years Cmpensated Absences A. Vacatin and Sick Leave - All full-time emplyees f the Schl Bard are permitted t accrue vacatin days (annual leave) and sick pay (sick leave). Annual leave can be accumulated up t a maximum f 15 days at the end f each fiscal year. Sick leave may accrue up t an unlimited number f days. Upn terminatin f emplyment, the emplyee is paid fr all accrued sick leave up t a maximum f 25 days. In the gvernmental funds, nly that prtin which will be liquidated within ne year with expendable available financial resurces is accrued at year-end. The term "expendable available financial resurces" as used in this cntext means unreserved, undesignated fund balance. The remainder f the accrued liability which is applicable t gvernmental fund types is reprted in the GWFS as lng-term liabilities. nly that prtin f accumulated sick leave which is vested is accrued. B. Sabbatical Leave - Any emplyee with a teaching certificate is entitled, subject t apprval, t ne semester f sabbatical leave after three r mre years f cntinuus service r tw semesters f sabbatical leave after six r mre years f cntinuus service. Sabbatical leaves may be granted fr rest and recuperatin r prfessinal and cultural imprvement and must be apprved by the Schl Bard. Unused sabbatical leave may be carried frward t perids subsequent t that in which it is earned. Sabbatical leave des nt vest. Sabbatical leave benefits are recrded as expenditures in the perid paid. 25

33 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RGANIZATIN AND SUMMARY F SIGNIFICANT ACCUNTING PLICIES (CNTINUED) The cst f current leave privileges is recgnized as a current-year expenditure in the gvernmental funds when leave is actually taken r when an emplyee (heir) is paid fr accrued leave upn retirement r death. The cmpensated absence liability is reprted n the GWFS. Fr the FFS, the current prtin f unpaid cmpensated absences is the amunt that is nrmally expected t be paid using expendable available financial resurces. These amunts are recrded in the accunt "cmpensated absences payable" in the fund frm which the emplyees wh have accumulated leave are paid. The nn-current prtin f the liability is nt reprted. Restricted Net Assets Fr GWFS Statement f Net Assets, net assets are reprted as restricted when cnstraints placed n net assets used are either: Externally impsed by creditrs (such as debt cvenants), grantrs, cntributrs, r laws r regulatins f ther gvernments; and Impsed by law thrugh cnstitutinal prvisins r enabling legislatin. Use f Estimates Management uses estimates and assumptins in preparing financial statements. Thse estimates and assumptins affect the reprted amunts f assets and liabilities, the disclsure f cntingent assets and liabilities, and the reprted revenues and expenses. Actual results culd vary frm the estimates that were used. 2. CASH AND INVESTMENTS Depsits - Under state law, the Schl Bard may depsit funds in demand depsits, interest bearing demand depsits, mney market accunts r time depsits with state banks rganized under state law and natinal banks having their principal ffices in Luisiana. In accrdance with Luisiana Statutes, the Schl Bard maintains depsits at thse depsitry banks authrized by the Schl Bard. All such depsitries are members f the Federal Reserve System. Luisiana Statutes require that all Schl Bard depsits be prtected by insurance r cllateral. The market value f cllateral pledged must equal 100% f the depsits nt cvered by insurance. 26

34 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, CASH AND INVESTMENTS (CNTINUED) As f June 30, 2004, the carrying amunt f ttal depsits was $1,115,385 fr the System and $158,756 fr the agency fund. The bank balances fr these depsits ttaled $1,905,537 at June 30, 2004, and were insured r cllateralized with securities held by the pledging financial institutin r its agent, but nt in the Schl Bard's name. These depsits in excess f the insured amunts are cnsidered Categry 3 in accrdance with GASB Statement N. 3. Investments Cash balances f the Schl Bard's funds are pled and invested t the extent pssible in authrized investments. Interest earned n invested cash is distributed t the varius funds n the basis f the actual invested cash balances f the participating funds during the year. The Schl Bard invests idle funds as authrized by Luisiana Statutes in direct United States Treasury bligatins, the principal and interest f which are fully guaranteed by the gvernment f the United States. The investments are in the name f the Schl Bard and are held in the trust department f a custdial bank. At June 30, 2004, the Schl Bard held n investments. 3. RECEIVABLES The receivables at June 30, 2004, are as fllws: Class f Receivable Sales and use taxes Grants: Federal State ther Ttal Special General Revenue Fund Funds $ 303,388 $ 585, , ,408 15, , Ttal S 303,388 1,006, , $

35 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS Individual balances due frm/t ther funds at June 30, 2004 are as fllws: Receivable Fund General Fund Fd Service Special Revenue Fund Payable Fund Leeway Maintenance IdeaB Title I Title II Title V HIPPY REAP General Amunt $ 534, , ,993 85, ,235 8, ,069 Summer Fd Special Revenue Fund Fd Service 10,374 REAP IDEA B Special Educatin Special Revenue Fund General Preschl ESYP Ttal 7,215 17, $ The General Fund brrwed funds frm the Fd Service Special Revenue Fund during the year ended June 30, The ttal amunt wed t Fd Service by General Fund is $333,069. The Luisiana Fd and Nutritin Prgram Guidelines require that schl fd service funds that are brrwed by the General Fund must be repaid within the same fiscal year and a market interest rate f at least 1% must be paid. All ther balances represent shrt-term receivables and payables incurred in the nrmal curse f the Schl Bard's peratins. 28

36 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CNTINUED): Interfund transfers fr the year ended June 30, 2004 are as fllws: Transfers ut t General Fund: Title I Title II Title III Title V IDEA B Special Educatin Preschl Special Educatin Ttal Transfer t General Fund $32,201 9, , General Fund received indirect cst allcatins frm federal award prgrams fr the funds indicated fr the year ended June 30, CAPITAL ASSETS A summary f changes in capital assets fllws: Land Buildings and imprvements Furniture and equipment Cnstructin in prgress Balance June 30, 2003 $ 290,626 : 9,703, , ,891 Additins $ - a 1,733,879 1,223, ,324 E Deletins (46,337) ( ) Balance June 30, 2004 $ 290,626 11,436,957 2,036, ,324 Ttal $ S ! ( ) $ Less accumulated depreciatin: Building and imprvements Furniture and equipment $ 8,874, $ 216,803!& 106,388 (46,337) $ 9,091, Ttal 9.618, ,191 (46.337) Capital assets, net S S $ ( ) S

37 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, CAPITAL ASSETS (CNTINUED) Depreciatin expense f $323,191 fr the year ended June 30, 2004, was charged t the fllwing gvernmental functins: Instructin: Regular Educatin Special Educatin Vcatinal Educatin ther Educatinal Prgrams Supprt Services: Student Services: Instructinal Staff Supprt General Administratin Schl Administratin Business Services Plant Services Student Transprtatin Central Services Schl Fd Services Cmmunity Service Ttal 53,948 1,498 2,635 9, ,288 2, ,461 15,650 $ 323, SALES AND USE TAX Fr the year ended June 30, 2004, a ne cent lcal sales and use tax was levied and cllected within Washingtn Parish by the Washingtn Parish Sheriffs ffice f which 55% was received by the Schl Bard. All f the sales tax prceeds are used t pay payrll related expenditures f the Schl Bard. 7. SALARIES AND THER PAYABLES Payables at June 30, 2004 are as fllws: General Fund Special Revenue Funds Ttal Accunts payable Salaries and withhldings Emplyer's prtin f retirement payable $ 986,758 1,089, $ 55,651 $ 1,042,409 1,089, ,638 Ttal S S S

38 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, CHANGES IN LNG-TERM DEBT The fllwing is a summary f lng-term debt transactins fr the year ended June 30, 2004: Balance July 1, 2003 Prir Perid Adjustment Additins Retirements Balance June 30, 2004 Due Within ne Year $ $ $ $( ) $ $398,133 Cmpensated absences were understated fr the year ended June 30, 2003 by $411,963. The restated cmpensated absence liability fr June 30, 2003 was $823,780. This amunt was included as a prir perid adjustment in the GWFS. 9. RESERVATIN F FUND BALANCES At June 30, 2004, the Fd Services Fund had a reservatin f fund balance fr inventry in the amunt f $53,641. This reservatin indicates that the balance des nt cnstitute available expendable resurces even thugh inventry is a cmpnent f net current assets. 10. PRPERTY TAXES The Schl Bard levies taxes n real and business persnal prperty lcated within Ward 4 f Washingtn Parish. Prperty taxes are levied by the Schl Bard n prperty values assessed by the Washingtn Parish Tax Assessr and apprved by the State f Luisiana Tax Cmmissin. The Washingtn Parish Sheriffs ffice bills and cllects prperty taxes fr the Schl Bard. Prperty Tax Calendar Assessment date Ttal taxes are due Penalties and interest are added Lien date Tax sale - delinquent prperty January 1 Abut Nvember 15 December 31 January 1 Abut June 1 31

39 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, PRPERTY TAXES (CNTINUED) The fllwing is a summary f levied ad valrem taxes fr the year ended June 30, 2004: 11. RETIREMENT SYSTEMS Levied Expiratin Millage Date Bgalusa Schl Bard taxes: Cnstitutinal 6.43 Indef. peratins Cnstructin, peratin, and maintenance peratins Special Leeway Maintenance peratins Substantially all emplyees f the Schl Bard are required by State law t belng t retirement plans administered by the Teachers' Retirement System ("TRS") r the Luisiana Schl Emplyees' Retirement System ("LSERS"), bth f which are administered n a statewide basis. Each plan issues a separate financial reprt that includes financial statements and required supplementary infrmatin. Thse reprts may be btained by writing r calling the plan. Teachers' Retirement System f Luisiana Luisiana Schl Emplyees' Retirement System Pst ffice Bx Pst ffice Bx Batn Ruge, Luisiana Batn Ruge, Luisiana (225) (225) Disclsures relating t these plans fllw: A. TEACHERS' RETIREMENT SYSTEM 1. Plan Descriptin - All teachers, administratrs, and schl lunch emplyees f the Schl Bard are cvered by defined benefit cntributry pensin plans administered and cntrlled by a separate Bard f Trustees. The Bard f Trustees administers plans which are cst-sharing multiple-emplyer public emplyee retirement systems. All teachers, administratrs, and schl lunch emplyees are eligible t participate in the TRS plans. Teachers and administratrs belng t the Teachers* Regular Plan, and schl lunch emplyees belng t the Teachers' Plan A plan. Benefits are established by State statute. 32

40 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RETIREMENT SYSTEMS (CNTINUED) TRS prvides retirement benefits as well as death and disability benefits. Death and disability benefits vest after 5 years f credited service. Nrmal retirement is at age 60 with 10 years f service r 20 years f service regardless f age fr the Teachers' Regular plan members. Fr the Teachers' Plan A plan members, nrmal retirement is at any age with 30 r mre years f creditable service, at age 55 with at least 25 years f creditable service, and at age 60 with at least 10 years f creditable service. Retirement benefits are based upn the fllwing frmula percentages. Years f Service Minimum Age Teachers' Regular Teachers' Plan A % per year 1.0% r 3.0% per year 20 Any age 2.0% per year 1.0% r 3.0% per year % per year 1.0% r 3.0% per year 30 Any age 2.5% per year 1.0% r 3.0% per year % per year 1.0% r 3.0% per year The percentage frmula is applied t the average f the highest three successive annual salaries. The benefit is payable fr life with eight available annuity payment plans. The plans als prvide varius death and disability benefits, whereby the disabled emplyee r surviving spuse is entitled t receive amunts determined in accrdance with the plan. Cntributins Required and Made - Cvered emplyees and the Schl Bard are required by State statute t cntribute fixed percentages f emplyees' grss earnings t the pensin plans. Cntributin rates fr the plans are as fllws: Emplyee Emplyer Emplyer Cntributin Teachers'Regular 8.00% 13,8% $1,898,592 Teachers'Plan A 9.10% 13.8% $ 11,556 The Schl Bard's cntributins t TRS fr the years ended June 30, 2004, 2003 and 2002 were $1,910,148, $1,633,440, and $1,527,137, respectively, equal t the required cntributins fr each year. B. SCHL EMPLYEES' RETIREMENT SYSTEM 1. Plan Descriptin - Emplyees wh are nt teachers, administratrs, r schl lunch emplyees are cvered by defined benefit cntributin pensin plans administered and cntrlled n a statewide basis by a separate Bard f Trustees. The Bard f Trustees administers this plan which is a cst-sharing multiple-emplyer public emplyees retirement system. 33

41 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, RETIREMENT SYSTEMS (CNTINUED) All emplyees, ther than teachers, administratrs, and fd services emplyees, are eligible t participate in the LSERS. Benefits are established by State statute. LSERS prvides retirement benefits as well as death and disability benefits. Death and disability benefits vest after 5 years f credited service. Nrmal retirement is at any age with 30 r mre years f creditable service, at age 55 with at least 25 years f creditable service, and at age 60 with at least 10 years f creditable service. The maximum retirement and disability benefit is an amunt equal t 2 1/2% f the average cmpensatin fr the three highest cnsecutive years f credited service, multiplied by the number f years f service, plus a supplementary allwance f $2.00 per mnth fr each mnth f service. The plan als prvides varius death benefits, whereby the disabled emplyee r surviving spuse is entitled t receive amunts determined in accrdance with the plan. 2. Cntributins Required and Made - Cvered emplyees and the Schl Bard are required by State statute t cntribute fixed percentages f emplyees' grss earnings t the pensin plans. Cntributin rates fr the plan are 7.50% fr participating emplyees and 8.50% fr the Schl Bard. Hwever, the Schl Bard emplyer cntributin was funded by the State f Luisiana thrugh annual apprpriatins fr the years ended June 30, 2003 and PST-EMPLYMENT HEALTH CARE AND LIFE INSURANCE BENEFITS In accrdance with State statutes, the Schl Bard prvides certain cntinuing health care and life insurance benefits fr its retired emplyees. Substantially all f the Schl Bard's emplyees becme eligible fr these benefits if they reach nrmal retirement age while wrking fr the Schl Bard. Currently, retirees are eligible t participate in these benefits. These benefits fr retirees are prvided thrugh the State Emplyees Grup Benefits Prgram whse mnthly premiums are paid jintly by the retirees and by the Schl Bard. During fiscal year 2004, the Schl Bard cntributed 52% f the ttal premiums fr health care insurance prvided t the retirees. The Schl Bard recgnizes the cst f prviding these benefits (the Schl Bard's prtin f premiums) as an expenditure n a pay-as-yu-g basis when the mnthly premiums are due. The Schl Bard's net cst f prviding all health care benefits t the apprximately 341 active and retired participating emplyees amunted t $2,381,214 fr Fr 2003, the Schl Bard's cst f premiums paid fr retirees ttaled $1,017,

42 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, EXPENDITURES - ACTUAL AND BUDGET Under state law, the Superintendent is required t cmplete and submit a budget fr its General and Special Revenue Funds t the Schl Bard n later than fifteen days prir t the beginning f the fiscal year t which the budget applies. The ttal prpsed expenditures may nt exceed the ttal f estimated funds available at the fund level. Public participatin in the budgetary prcess prir t adptin f the budget is required if the ttal prpsed expenditures are $250,000 r mre. The budgets presented in the accmpanying basic financial statements are the riginal and amended budgets (if applicable) which were adpted by the Schl Bard. Actual revenues under budgeted revenues with a 5% r greater variance are as fllws fr the year ended June 30, 2004: Budget Actual Variance Fd Service Fund $1,600,000 $1,400,771 $(199,229) Summer Fd 223, ,842 (98,223) Preschl Special Educatin 53,921 26,654 (27,267) ESYP Special Educatin 19,826 17,270 (2,556) Title I 1,536,945 1,132,285 (404,660) Title II 388, ,757 (74,536) Title III 1, (722) Title V 25,755 20,600 (5,155) REAP 123,442 97,661 (25,781) Luisiana Revised Statute 39:1310 exempts special revenue funds which are expenditure driven frm the requirements t adpt amended budgets if prjected revenues r expenditures deviate mre than five percent frm the adpted budget. All f these funds wuld be cnsidered expenditure driven. Hwever, the Schl Bard shuld be ntified in writing when these variances ccur. Actual expenditures ver budgeted expenditures with a 5% r greater variance are as fllws fr the year ended June 30, 2004: Budget Actual Variance Leeway Maintenance Fund $436,969 $549,160 $112,211 The Schl System did nt amend the budget when actual beginning fund balance did nt meet estimated beginning fund balance by 5% r mre and fund balance was used t fund current expenditures fr the fllwing funds: 35

43 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, EXPENDITURES - ACTUAL AND BUDGET (CNTINUED) Budget Actual Variance General Fund Leeway Maintenance Fund Fd Service Fund Summer Fd Fund IDEA B Fund 572, , $ 308,970 12, ,179 45,666 16,107 $ (263,550) 12, ,604 45,666 16,107 Actual expenditures ver apprpriatins by 5% r greater at the functinal level are as fllws: Expenditures Actual Unfavrable Variance General Fund: Vcatinal prgrams ther instructinal Adult educatin Instructinal staff supprt Business services Plant services Student transprtatin service Central services $405, ,398 7, , ,263 1,306, ,676 67,726 $ 661,410 1,116,377 33, , ,995 2,515,912 1,010,325 81,644 $ (256,092) (285,979) (25,330) (175,224) (262,732) (1,209,348) (136,649) (13,918) IDEA B Special Educatin Fund: Instructinal staff supprt General administratin Student transprtatin services Extended Schl Year Prgram: Student transprtatin services Title II Fund: General administratin Leeway Maintenance Fund: Plant services HIPPY Fund: General administratin Student transprtatin services Cmmunity service peratins - - 1, , , ,036 6,468 1, , (77,039) (266) (11,036) (6,468) (177) (112,211) (276) (50) (345) 36

44 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, LITIGATIN At June 30, 2004, the Schl Bard was a defendant in several lawsuits arising principally frm the nrmal curse f peratins. The ultimate reslutin f these lawsuits wuld nt materially affect the financial statements in the pinin f the legal advisr f the Schl Bard. 15. RISK MANAGEMENT The Schl Bard is expsed t varius risks f lss related t trts; theft f, damage t and destructin f assets; errrs and missins; and natural disasters fr which the Schl Bard carries cmmercial insurance. 17. PRIR PERID ADJUSTMENT In the June 30, 2003 gvernment-wide financial statements, cmpensated absences payable were errneusly reprted as $ 411,817. The crrect balance fr cmpensated absences as f June 30, 2003 was $ 823,780. This errr had n effect n the Statement f Activities as f June 30, 2003 as the crrect amunt in change in cmpensated absences was reprted as an expense. Hwever, beginning net assets and ending net assets n the statement were understated by the errr f $ 411,963. In additin, as reprted n the Statement f Net Assets as f June 30, 2003, cmpensated absences payable were understated by $ 411,963. This prir perid adjustment is presented as an adjustment t the beginning net assets balance in the Statement f Activities. This prir perid adjustment wuld nt affect the fund financial statements as cmpensated absences payable are nt recrded n thse statements. In the June 30, 2003 fund financial statements and the gvernment-wide financial statements, payrll payables were verstated by $253,404 and receivables were understated by $135,053. The effect f this errr was t verstate liabilities and expenditures by $253,404 and t understate revenues and assets by $135,053. The net effect f this errr n ending fund balance at June 30, 2003 was $118,344. Prir Perid Adjustment Summary fr Gvernment-wide Financials: Understatement f Cmpensated Absences $(411,963) Understatement f Revenues (135,053) verstatement f Expenditures Ttal $

45 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, SUBSEQUENT EVENT Shrt-term Budgetary Lan n ctber 11, 2004 the Bgalusa Schl Bard adpted a reslutin t issue a Revenue Anticipatin Nte in the amunt f $ 1,000,000 fr the purpse f paying current peratins in anticipatin f revenues accruing t the general fund f the issuer fr the current fiscal year ending June 30, 2005, under the authrity cnferred by the prvisins f La. R.S. 17:89, and ther cnstitutinal and statutry authrity. The nte is a "qualified tax-exempt bligatin" within the meaning f Sectin 265(b) (3) f the Internal Revenue Cde f The nte was issued ctber 22, 2004 with an interest per anum equal t the Prime Rate (as determined daily by the Prime Rate set frth in the Wall Street Jurnal) nt t exceed 6% at any time. Interest shall be cmputed n the basis f a 360-day year cnsisting f twelve 30-day mnths. The principal f the Nte, upn maturity r prepayment, tgether with interest theren, is payable t Parish Natinal Bank. Energy Perfrmance Cntract The Schl Bard implemented an energy perfrmance cntact with Jhnsn Cntrls, Inc. in September The prgram addresses energy efficiency imprvements in the Bgalusa High Schl and Bgalusa Jr. High Schl. The cst f the prgram is $476,954 which includes the Jhnsn Cntrl, Inc. cntract at $456,954 plus $20,000 allwance fr asbests abatement, and $9, capitalized interest csts assciated with delaying payments until the energy measures are cmplete. 19. CAPITAL AND PERATING LEASES The Schl Bard entered int varius lease agreements fr the rental f temprary buildings n a mnth t mnth basis. These leases are accunted fr as perating leases with varying mnthly payments. Ttal lease expense fr the year ended June 30, 2004 was $16,099. The Bgalusa High Schl leases a cpy machine. This lease is cnsidered a capital lease fr accunting purpses. The cpier was recrded as a capital assets in the amunt f $10,950 and depreciated. The capital lease payable is recrded in the fiduciary fund - agency fund. The High Schl pays the lease thrugh a schl activity accunt. The lease began n March 30, 2001 and expires n March 31, Sixty payments are t be made equal t $226 each fr a ttal lease amunt f $13,534 cnsisting f interest and principal f $2,584 and $10,950, respectively. The balance f the lease at June 30, 2004 was $4,

46 NTES T THE BASIC FINANCIAL STATEMENTS (CNTINUED) June 30, CAPITAL AND PERATING LEASES The future minimum lease bligatin and the net present value f these minimum lease payments as f June 30, 2004, was as fllws: Year Ending June $ 2, ,030 Ttal minimum lease payments 4,737 Less: amunt representing interest (356) 20. GING CNCERN As reprted in the accmpanying fund financials, expenditures and ther uses exceeded revenues and ther surces fr the year ended June 30, 2004 in the amunt f $604,324. Fr the year ended June 30, 2003, expenditures and ther uses exceeded revenues and ther surces in the amunt f $806,215. The fund balance at June 30, 2004 was $64,140 in the General Fund. A decline in student enrllment and an increase in salaries and ther csts have cntributed t these lsses. In respnse t deficits, management has implemented significant cst reductins and is develping a plan t reduce expenses. Nnessential capital expenditures, and certain ther expenditures have been eliminated r pstpned. Shrt-term brrwings have als been used as further explained in Nte 18. Management is hpeful that its plan will eliminate r significantly reduce any deficits fr the year ended June 30, 2005 and future years. Because it is uncertain whether the Schl Bard will be successful in accmplishing its plan, there is uncertainty abut the Schl Bard's ability t cntinue as a ging cncern. The financial statements d nt include any adjustments that might be necessary shuld the Schl Bard be unable t cntinue as a ging cncern. 39

47 REQUIRED SUPPLEMENTARY INFRMATIN - PART II

48 BUDGETARY CMPARISN SCHEDULES GENERAL FUND AND MAJR SPECIAL REVENUE FUNDS WITH LEGALLY ADPTED BUDGETS GENERAL FUND T accunt fr resurces traditinally assciated with the Schl Bard which are nt required legally r by sund financial management t be accunted fr in anther fund. SPECIAL REVENUE FUNDS Special Revenue Funds accunt fr the prceeds f specific revenue surces (ther than expendable trusts r fr majr capital prjects) that are legally restricted t expenditures fr specific purpses. Fd Services - A prgram that prvides nurishing meals t students in all grades. This prgram is supplemented by bth federal and state funds that are based n reimbursement and participatin. Leeway Maintenance Fund - Accunts fr the receipt and disbursement f a 7.76 mill ad valrem tax. The prceeds are dedicated as a special tax leeway fr maintenance. 40

49 GENERAL FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Budgeted Amunts riginal Final Actual Amunts Variance With Final Budget - Psitive/ (Negative) REVENUES Lcal surces: Taxes: Ad valrem Sales and use Interest earnings Charges fr services ther Ttal lcal surces State surces: Minimum Fundatin Prgram Revenue sharing Prfessinal imprvement prgram ther state supprt Ttal state surces Federal surces Ttal revenues S 2,933,111! E 2,933,111 : E 2,831,817 2,030, ,500 5,042,317 2,030, ,500 5,042,317 2,054,345 1,016 49, ,152 5,056,531 12,282, , ,770 2,064,816 14,663,368 1,173,812 20,879,497 12,282, , ,770 2,064,816 14,663,368 1,176,346 20,882,031 13,121, , ,637 1,667,881 15,097,325 1,342,485 21,496,341 $ (101,294) 23,639 1,016 49,201 41,652 14, ,515 (4,490) (3,133) (396,935) 433, , ,310 EXPENDITURES Current: Instructin: Regular prgrams Special prgrams Vcatinal prgrams ther instructinal Special prgram Adult educatin Supprt services: Student services Instructinal staff supprt General administratin Schl administratin Business services Plant services Student transprtatin services Central services Cnstructin and land imprvement Ttal expenditures 8,532,221 3,311, , , ,869 7,830 1,087, , ,863 1,443, ,263 1,306, ,676 67,726 1,775,108 21,452,017 8,532,221 3,314, , , ,869 7,830 1,087, , ,863 1,443, ,263 1,306, ,676 67,726 1,775,108 21,454,551 8,594,425 3,556, ,410 1,116,377-33,160 1,097, , ,680 1,392, ,995 2,515,912 1,010,325 81,644 89,423 21,936,211 (62,204) (241,800) (256,092) (285,979) 179,869 (25,330) (9,868) (175,224) 281,183 50,747 (262,732) (1,209,348) (136,649) (13,918) 1,685,685 (481,660) DEFICIENCY F REVENUES UNDER EXPENDITURES (572,520) (572,520) (439,870) 132,650 (Cntinued) 41

50 GENERAL FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (CNTINUED) Fr the Year Ended June 30, 2004 Variance With Final Budget - Budgeted Amunts Psitive/ riginal Final Actual Amunts (Negative) THER FINANCING SURCES (USES) perating transfers in ,696 76,696 perating transfers ut Ttal ther financing surces (uses) ,696 76,696 NET CHANGE IN FUND BALANCES (572,520) ( ) ( ) 209,346 FUND BALANCE - Beginning 572, ,970 (263,550) Prir Perid Adjustment , FUND BALANCE - Beginning - Restated 572, , , ,520 FUND BALANCE - Ending $ - $ - $ $ 64,140 42

51 FD SERVICES FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Budgeted Amunts riginal Final Actual Amunts Variance With Final Budget - Psitive (Negative) REVENUES Fd Services Interest n cash and investments ther lcal surces State equalizatin Grants Ttal revenues $ 145,000, $ 145,000 1, ,989 1,228,011 1,600,000 1, ,989 1,228,011 1,600,000 $ 120, ,653 1,241,366 1,400,771 $ (24,495) (1,000) 247 (187,336) 13,355 (199,229) EXPENDITURES Fd services Ttal expenditures 2,168,575 2,168,575 2,168,575 2,168,575 1,568,819 1,568, , ,756 EXCESS (DEFICIENCY) F REVENUES VER EXPENDITURES (568,575) ( ) (168,048) 400,527 FUND BALANCE - Beginning FUND BALANCE - Ending 568, , ,179 $ 527, , ,131 43

52 i LEEWAY MAINTENANCE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Budgeted Amunts riginal Final Actual Amunts Variance With Final Budget - Psitive (Negative) REVENUES Lcal surces: Ad valrem taxes State surces: Revenue sharing Ttal revenues $ 412,608 5; 412,608 $ 514,088! B 101,480 24, ,877 24,269 23, , ,831 (526) 100,954 EXPENDITURES Current; Supprt services: Plant Ttal expenditures 436, , , , , ,160 (112,211) (112,211) EXCESS (DEFICIENCY) F REVENUES VER EXPENDITURES (72) (72) (11,329) (11,257) FUND BALANCE - Beginning FUND BALANCE - Ending $ - a ,206 J - $ ,134 $

53 SUPPLEMENTAL INFRMATIN SCHEDULES

54 NNMAJR FUNDS DESCRIPTINS SPECIAL REVENUE FUNDS Special Revenue Funds accunt fr the prceeds f specific revenue surces (ther than expendable trusts r fr majr capital prjects) that are legally restricted t expenditures fr specific purpses. Title I f the Educatin Cnslidatin and Imprvement Act (ECIA) - A prgram designed t meet the educatinal needs f students at risk f failure in schl and f drpping ut. Title II f the Educatin fr Ecnmic Security Act (EESA) - Authrizes federal funding t imprve the quality f instructin and t imprve in-service training f teachers and ther apprpriate schl persnnel in the field f mathematics and science. Title III - A prgram by which federal funding is used fr the develpment and implementatin f cmprehensive refrm plans t imprve the teachings and learnings f all children and t supprt the develpment and implementatin f systematic technlgy plans. Title V - A prgram by which federal funding is used fr the refrm f elementary and secndary educatin. Summer Fd Prgram - The Summer Fd Prgram is a prgram that prvides nurishing meals t students in summer schl sessins. REAP - A prgram designed t imprve the quality f teaching and learning in rural schl districts. Temprary Assistance fr Needy Families (TANF) - A prgram by which federal funding is used t imprve the learning envirnment fr children frm lw-incme husehlds. Hme Instructin Prgram fr Preschl Yungsters (HIPPY) - HIPPY is a tw-year prgram in which parents participate with their 3 r 4 year ld child in pre-schl activities at hme t stress the imprtance f a parent's rle in a child's transitin frm preschl t kindergarten. Idea B Special Educatin Fund - Individuals with Disabilities Educatin Act (IDEA), Public Laws (PL) , is a federally financed prgram f free public educatin in the least restrictive envirnment fr children with exceptinalities. Preschl Special Educatin Fund - Federal prgrams fr children at the preschl level which prvide a free, apprpriate, publicly supprted educatin t every exceptinal child in a least restricted envirnment Extended Schl Year Prgram Special Educatin Fund - Federal prgrams which prvide a free, apprpriate, publicly supprted educatin t every exceptinal child in a least restricted envirnment during the summer.. 45

55 NNMAJR FUNDS DESCRIPTINS (CNTINUED) CAPITAL PRJECT FUND Capital prject funds are used t accunt fr the acquisitin and cnstructin f majr capital facilities ther than thse financed by prprietary funds and trust funds. Rfing Grant Prject - This fund is used t accunt fr a federal grant received t replace the rfs n the High Schl and Junir High Schl. 46

56 S (N m P t«_. 00 ^1" M «i I--" 1^ U% «fc* w> ^ (N P *» t* (N (N * C *«t^ (M f-j * a\ (N (S * S 5 H v,5- ' ' 3 5 r-" 3t~r-" 5 r-" -3 S. i ~" S s r-t f»i V4 r^ M «1*1 ^ SM X r^ f^ s 1 IE < 1 & I S SH-l -' w VI W1 (N r-1 n ts. vi' bt S in * Temprary Assistance T Needy Families 6rt M ' ' ^~ S V*l " (N D > r-1 in * ^ tt -t» " ts ia ^r r-- fi " ^~ r~ t Tf f~ " M M *^p ri 3 ri M «2 rt fc^ M 6«ITi r^ M l^ >-c i~ r^ m 00, *n 00 m l*- 00 IA f} ^p (N <n ts " rj PI ^ 1 CTi (N V (S j a U Q M M Uy w> s 3-3 & ^ S- S i- ** u e B ^ S E s 8 w 3 -s 5 ^ H «1a S S ii f p d ; I i3< t ther funds tal Liabilities S (2 G 47

57 - 1! 1 1» 00 r* Z IS S-S 00, II J* a _ a g b "** -2 ** K. y S S 5-S 8.1 jj wl a. «g S T5 in S U) -q a- U NNMAJR GVERNMENTAL FUNDS c" H 5 NG STATEMENT F REVENUES, EXPEN AND CHANGES IN FUND BALANCES Fr the Year Ended June 30, 2004 g i u Special Revenue 03 "a -2 --a ^ R ^- Hme Instructi Temprary fr Assistance Prescb Summer T Needy Yungsli Title V Fd REAP Families (HIPPY iii s S t- H in u Bsur P - ff rge > s 1 a - s i!= «11 S ^, ENCY) F I EXPENDI is li si ** -. «a se X 0 M W ING USES eneral Fund u u is z s^ CC 2 p* *~" u tn.? u L. S 3 < 3! FUND BA Z u U H U Z as - BEGIN u z z aa Q 3 [*. u S-ENDIN a U ea D b. 48

58 TITLE I NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues S 1,536,945 $ 1,132,285 $ (404,660) 1,536,945 1,132,285 (404,660) EXPENDITURES Current: Instructin: Special prgram Supprt services: Instructinal staff supprt General administratin Plant services Cmmunity service peratins Ttal expenditures 716, ,946 68,218 60, ,161 1,536, , ,003 69,725 14, ,783 1,100, , ,943 (1,507) 46,826 11, ,861 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES 32,201 32,201 THER FINANCING USES Transfers ut - General Fund (32,201) (32,201) Ttal ther Financing Surces (32,201) (32,201) NET CHANGE IN FUND BALANCES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 49

59 TITLE II NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues $ 388,293 $ 313, , ,757 (74,536) (74,536) EXPENDITURES Current: Instructinal: Special Supprt services: Instructinal staff supprt General administratin Plant services Ttal expenditures 188, ,691 1,323 10, , , ,880 1, ,443 5,611 67,811 (177) 10,605 83,850 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES - 9,314 (9,314) THER FINANCING USES Transfers ut - General Fund (9,314) (9,314) Ttal ther Financing Surces (9,314) (9,314) NET CHANGE IN FUND BALANCES - FUND BALANCE - BEGINNING FUND BALANCE - ENDING 50

60 TITLE III NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues 1,611 $ 1, $ 889 (722) (722) EXPENDITURES Current: Instructinal: Special Supprt services: Plant services Ttal expenditures 1, , EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES THER FINANCING USES Transfers ut - General Fund (23) (23) Ttal ther Financing Surces (23) (23) NET CHANGE IN FUND BALANCES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 51

61 TITLE V NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues 25,755 $ 20,600 S 25,755 20,600 (5,155) (5,155) EXPENDITURES Current: Instructin: Special prgram Supprt services: General administratin peratins & maintenance Ttal expenditures 23,800 1, ,755 18,882 1,151-20,033 4, ,722 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES THER FINANCING USES Transfers ut - General Fund (567) (567) Ttal ther Financing Surces (567) (567) NET CHANGE IN FUND BALANCES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 52

62 SUMMER FD NNMAJR SPECIAL REVENUES FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 riginal and Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Lcal surces - charges fr services Federal surces Ttal revenues $ - $ 223, , $ 124, , (98,634) (98,223) EXPENDITURES Current: Supprt services: Fd services Plant services Ttal expenditures 191,688 31, , , ,508 21,180 31,377 52,557 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES (45,666) (45,666) FUND BALANCE - BEGINNING 45,666 45,666 FUND BALANCE - ENDING 53

63 REAP NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues EXPENDITURES Current: Instructin: Special prgram Supprt services: Instructinal staff supprt General administratin Ttal expenditures EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES 123,442 $ 97,661 $ 123,442 97,661 77,416 66,378 45, ,442 30, ,661 (25,781) (25,781) 11,038 14, ,781 FUND BALANCE - BEGINNING FUND BALANCE - ENDING 54

64 TANF NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative REVENUES Federal surces Ttal revenues EXPENDITURES Current: Instructin: Special prgram Supprt services: Instructinal staff supprt Ttal expenditures 2,026 $ 2,026 $ 2,026 2, ,907 1,907 2,026 2,026 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 55

65 HIPPY NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30,2004 Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES State surces - ther Federal surces Ttal revenues 89,727 $ 89,727 89, ,704 (486) 463 (23) EXPENDITURES Current: Instructin: Special prgram Supprt services: Instructinal staff supprt General administratin Schl administratin Plant services Student transprtatin services Cmmunity service peratins Ttal expenditures 35,371 52, ,727 35,614 52, ,704 (243) 337 (276) (50) (345) 23 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 56

66 IDEA B SPECIAL EDUCATIN NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 riginal and Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues 575, , ,672 $ 574,672 (768) (768) EXPENDITURES Current: Instructin: Special prgrams Supprt services: Instructinal staff supprt General administratin Student transprtatin services Plant services Ttal expenditures 502,076 73, , ,466 77, , ,807 33,610 (77,039) (266) (11,036) 73,364 18,633 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES 17,865 17,865 THER FINANCING USES Transfers ut - General Fund (33,972) (33,972) Ttal ther Financing Surces (33,972) (33,972) NET CHANGE IN FUND BALANCES (16,107) (16,107) FUND BALANCE - BEGINNING 16,107 16,107 FUND BALANCE - ENDING 57

67 PRESCHL SPECIAL EDUCATIN NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30, 2004 riginal and Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES Federal surces Ttal revenues $ 53,921 $ 26,654 53,921 26,654 (27,267) (27,267) EXPENDITURES Current: Instructin: Special prgrams Supprt services: Plant services Ttal expenditures 48,360 5,561 53,921 26,035 26,035 22,325 5,561 27,886 EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES THER FINANCING USES Transfers ut - General Fund (619) (619) Ttal ther Financing Surces (619) (619) NET CHANGE IN FUND BALANCES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 58

68 EXTENDED SCHL YEAR PRGRAM SPECIAL EDUCATIN NNMAJR SPECIAL REVENUE FUND SCHEDULE F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - FINAL BUDGET AND ACTUAL Fr the Year Ended June 30,2004 riginal and Final Budgeted Amunts Actual Amunts Variance with Final Budget - Psitive (Negative) REVENUES State surces-ther Ttal revenues 19,826 19,826 $ ,270 $ (2,556) (2,556) EXPENDITURES Current: Instructin: Special prgrams Supprt services: Student transprtatin services Plant services Ttal expenditures EXCESS (DEFICIENCY) F REVENUES VER (UNDER) EXPENDITURES 10,406 9,420 19,826 10,802 (396) 6,468 (6,468) 9,420 17,270 2,556 NET CHANGE IN FUND BALANCES FUND BALANCE - BEGINNING FUND BALANCE - ENDING 59

69 NNMAJR FUNDS DESCRIPTINS (CNTINUED) FIDUCIARY FUNDS- AGENCY FUNDS Agency funds are established t accunt fr all mnies held by the Schl System in an agency capacity. Disbursements are made nly in accrdance with the purpse fr which assets are received. Schl Activity Funds - The Schl Activity Agency Fund accunts are used t accunt fr mnies generated by the schls and rganizatins within the schls. While these accunts are under the supervisin f the Schl Bard, they belng t the individual schls r their student bdies and are nt available fr use by the Schl Bard. 60

70 CQ ^ * cs ' N cs c r c^ \ i- m c " r- r c i-«00 ^ N r- r- c "* " t-* c c in in i i N in in c c N r- in" ^f" c" ^t N cs cs ' N r^-nccti-rnnt~-'n N esr^-in<ncnn cs^ i-^, cs ^, N, ~-, <n^ cs^ cs,, " cs" ^f" c c <* r- C C N C N ~ N c «n ^ cs" N C N m Q C C3 2 y T3 < cs in N cs" iy^ CS cs cs" N CS I 1 N in" cs 1 r-- r- «i " N 'csin- tcsv^ i r- in TfcNCSN' ' cs cs, cs CS cs, cs N r^ c^ c^ N^ <n c" Tfr" " c" N" " N" c -^ c c r^ c N c m C in 00 p CQ C W 3 i > C cs N \ C cs C C in r-* in C r 1 N C N i < r-t C N N <n in C CS ^f r-4 ^H 1 r^,_, N CS m00^ N" r-t r-" Tf in N N C V -H N r-" in" i-t T-T ^_ 00 cs in" in 4/5 ^-g 5 1 u < galusa High - galusa High - CQ CQ Athletics i ffi C _3 u -Sk galusa High-i galusa Jr. Hij yrd Avenue El lumbia Streel lumbia Streel lumbia Streel 00 CQ CQ CQ >i E? ementary : Elementa : Elementa ; Student C.ementary.ementary lementary CQ U U CQ!a r % U U H PL, w u3a u $ 60 C Q Q Z 'enhamtwn El 'enhamtwn El brthside s smentary e Element, S 5 < *- c* b 'C C ( 0 & T-H 3 PL, 00 *r? f 1 c b w 2 uperir Avenu errace Elemen errace Elemen c H j^ H 'cd H 61

71 SCHEDULE F CMPENSATIN PAID T BARD MEMBERS Fr the Year Ended June 30, 2004 Michael Applewhite $ 9,600 Eleanr Duke 9,600 Paul Kates 9,600 Dneen McCullugh 9,600 Reverend Raymnd E. Mims 9,600 Ray Reeves 9,600 Hward Stewart 9,600 S

72 INDEPENDENT AUDITR'S REPRT AND INFRMATIN REQUIRED BY THE SINGLE AUDIT ACT AND GVERNMENTAL AUDITING STANDARDS

73 REBWE & CMPANY CERTIFIED PUBLIC ACCUNTANTS CNSULTANTS A PRFESSINAL CRPRATIN 3501 N. Causeway Blvd. Suite 810 P.. Bx 6952 Metairte, LA Phne (504) Fax (504) rebwe@rebwe.cm INDEPENDENT AUDITR'S REPRT N INTERNAL CNTRL VER FINANCIAL REPRTING AND N CMPLIANCE AND THER MATTERS BASED N AN AUDIT F FINANCIAL STATEMENTS PERFRMED IN ACCRDANCE WITH G VERNMENT A UDITING STANDARDS Members f the City f Bgalusa Schl Bard Bgalusa, Luisiana We have audited the financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f the City f Bgalusa Schl Bard (the "Schl Bard"), as f and fr the year ended June 30, 2004, which cllectively cmprise the Schl Bard's basic financial statements and have issued ur reprt theren dated January 14, We cnducted ur audit in accrdance with auditing standards generally accepted in the United States f America and the standards applicable t financial audits cntained in Gvernment Auditing Standards, issued by the Cmptrller General f the United States. Internal Cntrl ver Financial Reprting In planning and perfrming ur audit, we cnsidered the Schl Bard's internal cntrl ver financial reprting in rder t determine ur auditing prcedures fr the purpse f expressing ur pinins n the financial statements and nt t prvide an pinin n the internal cntrl ver financial reprting. Hwever, we nted certain matters invlving the internal cntrl ver financial reprting and its peratin that we cnsider t be reprtable cnditins. Reprtable cnditins invlve matters cming t ur attentin relating t significant deficiencies in the design r peratin f the internal cntrl ver financial reprting that, in ur judgment, culd adversely affect the Schl Bard's ability t recrd, prcess, summarize, and reprt financial data cnsistent with the assertins f management in the financial statements. Reprtable cnditins are described in the accmpanying Schedule f Findings and Questined Csts as Findings thrugh

74 A material weakness is a reprtable cnditin in which the design r peratin f ne r mre f the internal cntrl cmpnents des nt reduce t a relatively lw level the risk that misstatements caused by errr r fraud in amunts that wuld be material in relatin t the financial statements being audited may ccur and nt be detected within a timely perid by emplyees in the nrmal curse f perfrming their assigned functins. ur cnsideratin f the internal cntrl ver financial reprting wuld nt necessarily disclse all matters in the internal cntrl that might be reprtable cnditins and, accrdingly, wuld nt necessarily disclse all reprtable cnditins that are als cnsidered t be material weaknesses. Hwever, f the reprtable cnditins described abve, we cnsider Findings thrugh t be material weaknesses. We als nted ther matters invlving the internal cntrl ver financial reprting, which we have reprted t management f the Schl Bard in a separate letter dated January 14,2005. Cmpliance and ther Matters As part f btaining reasnable assurance abut whether the Schl Bard's financial statements are free f material misstatement, we perfrmed tests f its cmpliance with certain prvisins f laws, regulatins, cntracts and grant agreements, nncmpliance with which culd have a direct and material effect n the determinatin f financial statement amunts. Hwever, prviding an pinin n cmpliance with thse prvisins was nt an bjective f ur audit, and accrdingly, we d nt express such an pinin. The results f ur tests disclsed instances f nncmpliance and ther matters that are required t be reprted under Gvernment Auditing Standards and which are described in the accmpanying Schedule f Findings and Questined Csts as Findings 04-8 thrugh We als nted certain additinal matters that we reprted t management f the Schl Bard in a separate letter dated January 14, This reprt is intended slely fr the infrmatin and use f the Bard, the Schl Bard's management, the Legislative Auditr f the State f Luisiana, and federal awarding agencies and pass-thrugh entities, and is nt intended t be and shuld nt be used by anyne ther than these specified parties. Under Luisiana Revised Statute 24:513, this reprt is distributed by the Legislative Auditr as a public dcument. & January 14,

75 REBWE & CMPANY CERTIFIED PUBLIC ACCUNTANTS CNSULTANTS A PRFESSINAL CRPRATIN 3501 N. Causeway Blvd. Suite 810 P.. Bx 6952 Metairie, LA Phne (504) Fax (504) rebwe@rebwe.cm INDEPENDENT AUDITR'S REPRT N CMPLIANCE WITH REQUIREMENTS APPLICABLE T EACH MAJR PRGRAM AND N INTERNAL CNTRL VER CMPLIANCE IN ACCRDANCE WITH MB CIRCULAR A-133 Members f the City f Bgalusa Schl Bard Bgalusa, Luisiana Cmpliance We have audited the cmpliance f the City f Bgalusa Schl Bard (the "Schl Bard") with the types f cmpliance requirements described in the U.S. ffice f Management and Budget (MB) Circular A-133 Cmpliance Supplement that are applicable t each f its majr federal prgrams fr the year ended June 30, The Schl Bard's majr federal prgrams are identified in the summary f auditr's results sectin f the accmpanying Schedule f Findings and Questined Csts. Cmpliance with the requirements f laws, regulatins, cntracts and grants applicable t each f its majr federal prgrams is the respnsibility f the Schl Bard's management. ur respnsibility is t express an pinin n the Schl Bard's cmpliance based n ur audit. We cnducted ur audit f cmpliance in accrdance with auditing standards generally accepted in the United States f America; the standards applicable t financial audits cntained in Gvernment Auditing Standards, issued by the Cmptrller General f the Untied States; and MB Circular A-133, Audits f States, Lcal Gvernments, and Nn-Prfit rganizatins, Thse standards and MB Circular A-133 require that we plan and perfrm the audit t btain reasnable assurance abut whether nncmpliance with the types f cmpliance requirements referred t abve that culd have a direct and material effect n a majr federal prgram ccurred. An audit includes examining, n a test basis, evidence abut the Schl Bard's cmpliance with thse requirements and perfrming such ther prcedures as we cnsidered necessary in the circumstances. We believe that ur audit prvides a reasnable basis fr ur pinin. ur audit des nt prvide a legal determinatin f the Schl Bard's cmpliance with thse requirements. 65

76 In ur pinin, the Schl Bard cmplied, in all material respects, with the requirements referred t abve that are applicable t each f its majr federal prgrams fr the year ended June 30, Internal Cntrl ver Cmpliance The management f the Schl Bard is respnsible fr establishing and maintaining effective internal cntrl ver cmpliance with the requirements f laws, regulatins, cntracts and grants applicable t federal prgrams. In planning and perfrming ur audit, we cnsidered the Schl Bard's internal cntrl ver cmpliance with requirements that culd have a direct and material effect n a majr federal prgram in rder t determine ur auditing prcedures fr the purpse f expressing ur pinin n cmpliance and t test and reprt n the internal cntrl ver cmpliance in accrdance with MB Circular A-133. We nted certain matters invlving the internal cntrl ver cmpliance and its peratin that we cnsider t be reprtable cnditins. Reprtable cnditins invlve matters cming t ur attentin relating t significant deficiencies in the design r peratin f the internal cntrl ver cmpliance that, in ur judgment, culd adversely affect the Schl Bard's ability t administer a majr federal prgram in accrdance with the applicable requirements f laws, regulatins, cntracts, and grants. Reprtable cnditins are described in the accmpanying schedule f findings and questined csts as Findings and A material weakness is a reprtable cnditin in which the design r peratin f ne r mre f the internal cntrl cmpnents des nt reduce t a relatively lw level the risk that nncmpliance with applicable requirements f laws, regulatins, cntracts, and grants caused by errr r fraud that wuld be material in relatin t a majr federal prgram being audited may ccur and nt be detected within a timely perid by emplyees in the nrmal curse f perfrming their assigned functins. ur cnsideratin f the internal cntrl ver cmpliance wuld nt necessarily disclse all matters in the internal cntrl that might be reprtable cnditins, and accrdingly, wuld nt necessarily disclse all reprtable cnditins that are als cnsidered t be material weaknesses. Hwever, f the reprtable cnditins described abve, we cnsider Findings and t be material weaknesses. Schedule f Expenditures f Federal Awards We have audited the financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f the Schl Bard as f and fr the year ended June 30, 2004, and have issued ur reprt theren dated January 14, ur audit was perfrmed fr the purpse f frming pinins n the financial statements that cllectively cmprise the Schl Bard's basic financial statements. The accmpanying Schedule f Expenditures f Federal Awards is presented fr purpses f additinal analysis as required by MB Circular A-133 and is nt a required part f the basic financial statements. Such infrmatin has been subjected t the auditing prcedures applied in the audit f the basic financial statements and, in ur pinin, is fairly stated, in all material respects, in relatin t the basic financial statements taken as a whle. This reprt is intended slely fr the infrmatin and use f the Bard, the Schl Bard's management, the Legislative Auditr f the State f Luisiana, and federal awarding agencies 66

77 and pass-thrugh entities, and is nt intended t be and shuld nt be used by anyne ther than these specified parties. Under Luisiana Revised Statute 24:513, this reprt is distributed by the Legislative Auditr as a public dcument. & January 14,

78 00 (N 00 tn t-1 \ ' ' tf S H I, td *?= S VI «A dd (J> (S r] J- M3 v 5_, i i t- ^. fa «-S 'u if e u en 5 S -3 < ^I 2 t> "3 f e C B U B "^. '^ CL ^"" tf " Cj 3 y 3 a B -5 " ' - C * 'S ^ R g g. S 1" 1 3 s 1 J 1" W J = W -3 T3.2 t^-* <.a (2 H -a S -a 5 w.» 7 - _rt S 'tis J~ * 1 '~ I ^ su ^ s. l ^ f g ^ ^ l ^ ^ ^S S u '3 *Si u 5 M * S ^" ^ M I *'2 l-bl 3 Kg CjS-gB 13 " S ^ -r te ^wzw S * "8 ^ 1 SI 1 SI ^.2 *j L> 3 "3 c 1 Grants t Lcal Educati w H S M, C -S 'u U 00 < "3.0 S I Grants t Lcal Educati u H _,.P A, «-S 'cj a u < "3.0 sd =1 a "3 s I Grants t Lcal Educati u H ^^ I 1 &*n B 'g S ' H "3 ' II, Part A, Teacher and Pri JB H ^*, u m tj c- I*s s=a a.s '~ a ^-H 1 II, Part A, Teacher and Pri.H H,, <N tb BJ> U «i 00 B ^g ^-^ i u II, Part A, Teacher and Pri _*> H a 8^8 Sṉr ncemer B w un 3 U) J fc B '3 III- English Language Acq Ji H 1) 1 a e "Su ' ts a P-i _W) dfl c w 1 E chievement Prgram fr Li <,, fi 1 a 1w u ie U ul " u IV - Safe and Drug-Free S 5 H S u (S a a 1C [fl u 2 is us " *5 IV - Safe and Drug-Free S i P ^f ^ C'l 2- S- U) (0 'GJI "E ^^ ii Js w w M n S S V Innvative Educatin P V Innvative Educatin P U V P H 68

79 ^^ Q Cd >^ 2< H U i 0 ^"^ J ^M Cz] U Q t/] y -< fa d M ^ U r T ^^ s W e P^ CITY F HEDULE F EXPEND] U cc rs u e -s c W 1- rt *u c* pc ^ u. Li- w 1 L. W f i s H i. i 2 M ^ a 5 ft- S 1 b B * -, ass-thrugh am Title Federal Grantr/P; Grantr/Prgr ment f Educatin i atin: igh Luisiana Dep M V*l fs -^ ^? < C CD CD \ "/"I VI VI **! fl c*l c*l V Innvative Edu e a 8 * H <N \ > ri rs > r- ^g^ c ^-^ 'JJ ^ u 9 9 J. fn tn S s s ess C k- 1- D H 0- D, "? I: s Achieveis Strategies (02-03 c/ Educatin Educatin Achieve) Educatin Achievei 1 and Lw Incme 1 and Lw Incme III (N rr r- vi ^ * *f ^ u-. r^ tt r-i r- -H ~~. ^-, C-C. CQ 1 a- S I 1 Q HI "3 E tj P- is U U M 1 g * " * «" J3 JS J= 2 a U U U 1 1W W W a Grana 1 and Lw Incme ial Educatin ial Educatin - Pre w en CN in v fs ^ t** ^t ^"< ^ \ r^ \ 00 t ^ "* ^ s CQ a. fi rt rf 00 2 *) 0 (S 0 < < M»N M = 0 : ?Y03 Carryvei gram and Federal Funds I L! and State Grant Pr 1 -i-a J ~ I"! "3 *3 ^ i. t Educatin - State t Educatin - Fede: 3 3 d fs -* fi * (N ^ 0 S3 X M 0 States Carl Perkins FIRSTTech i 1.y 'S CQ ^, t Educatin - Fede: Ltinal Educatin - atinal Technlg; 3 U a 3 t \ vi 1 r VI r* 1 * f*i <N ^t t r- V) fc4 X X vi M m m ^D M i Students Enhancing Educati n Thrugh Tec SCHL Tech LJNCSfrTechnk)gy Grant IPPY Crps 3 p T; ^ a S -2 ^ ^ Technlg; a u uatinal ncing Technlgy atinal Technlg; t3 3 3 VI VI \Q iatinal Technlg; X m 00 I >> r*l r- ^ ^ ^ -^ (*1 <N c- V ' v ^ \ \ ) S 1 1 \ «r^ M Tt V * Tj- c*^ r^i ^ *N i < <C, C- (S fi 1/1 fl fn.... ^c. I/I 1 u cu p lgy Prgram - Erne ITT i ^ J *i 1 rll Y Americrps Stai.ing First State Gra l Renvatin, IDl & 8 -S S K W JT* ^. 00 VI *" jf Educatin "c t u Q «Ttal United Stal Q % ^ «.< U.2 Z u *> u u Z ^ Q k. k. b. tn,,, w U U 4> 4J '3-10. w. w.2 2 '55 'S 'w 'w. U i> y u H t- 69

80 Q t D 3 H 5^ u^^ W5 9 P < < ^f. ICHL B DERAL AW June 30, 200- M W -a < t «s? 2 *S g«pi >- td t H a- NN * ^l U *^l t t t D Qt X U c M c2 LI M J= ^ " E J» i tn «_i S c 2 0 L. <( «X Ma 5 s H H «at Eg a» ^ SL U g "S ^ S u b. 1 1 n C ii a g, ^ 1 < % ^ u U J- 5 «t«u 0 u S 1 8 C «J < 3 u E "s -Su tu 1 H S *5 ^ > ^C d> (N c6fl 5 ' 1 U i.0 a gt u D. { n. u 1 u a a I EA B ^ a u S J*3 > aj ^2 U Ul & U I a C [S Tt f> U ^ a 1 w s, u s B Q C 3 70

81 BGALUSA, LUISIANA NTES T THE SCHEDULE F EXPENDITURES F FEDERAL AWARDS Fr the Year Ended June 30, 2004 NTE 1 - SUMMARY F SIGNIFICANT ACCUNTING PLICIES Basis f Presentatin The accmpanying Schedule f Expenditures f Federal Awards has been prepared n the accrual basis f accunting. Grant revenues are recrded fr financial reprting purpses when the Schl System has met the qualificatins fr the respective grants. Several prgrams are funded jintly by the State f Luisiana apprpriatins and federal funds. Cst incurred in prgrams partially funded by federal grants are applicable against federal grant funds t the extent f revenue available when they prperly apply t the grant. The infrmatin in this schedule is presented in accrdance with the requirements f MB Circular A-133, Audits f States, Lcal Gvernments, and Nn-Prfit rganizatins. Therefre, sme amunts are presented in, r used in the preparatin f, the basic financial statements. 71

82 SCHEDULE F FINDINGS AND QUESTINED CSTS Fr the Year Ended June 30, 2004 A. SUMMARY F AUDITR'S RESULTS 1. The auditr's reprt expresses an unqualified pinin n the basic financial statements f the City f Bgalusa Schl Bard (the "Schl Bard"). 2. Seven (7) reprtable cnditins in internal cntrl relating t the audit f the financial statements f the Schl Bard are reprted in the Independent Auditr's Reprt n Internal Cntrl ver Financial Reprting and n Cmpliance and ther Matters Based n an Audit f Financial Statements Perfrmed in Accrdance with Gvernment Auditing Standards. These reprtable cnditins are identified in Sectin B f this reprt as Findings thrugh Findings thrugh are cnsidered t be material weaknesses. 3. Six (6) instances f nncmpliance material t the basic financial statements f the Schl Bard are reprted in the Independent Auditr's Reprt n Internal Cntrl ver Financial Reprting and n Cmpliance and ther Matters Based n an Audit f Financial Statements Perfrmed in Accrdance with Gvernment Auditins Standards. These cmpliance findings are identified in Sectin B f this reprt as Findings 04-8 thrugh Tw (2) reprtable cnditins in internal cntrl relating t the audit f majr federal award prgrams are reprted in the Independent Auditr's Reprt n Cmpliance with Requirements Applicable t Each Majr Prgram and n Internal Cntrl ver Cmpliance in Accrdance with MB Circular A-133. These reprtable cnditins are identified in Sectin C f this reprt as Findings and These tw findings are cnsidered t be material weaknesses. 5. The auditr's reprt n cmpliance fr the majr federal award prgrams fr the Schl Bard expresses an unqualified pinin. 6. There were n findings that are required t be reprted in accrdance with Sectin 510(a) f MB Circular A A management letter dated January 14, 2005 was issued fr the year ended June 30, The prgrams tested as majr prgrams include: CFPAN. Title I A IDEA B Special Educatin A Preschl Special Educatin A Reading First A Schl Renvatin A 9. The threshld fr distinguishing between type A and type B prgrams was $300, The Schl Bard was nt determined t be a lw-risk auditee. 72

83 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 B. FINDINGS RELATED T THE FINANCIAL STATEMENTS INTERNAL CNTRLS Finding 04-1 Bank Recnciliatins Cnditin: We bserved that management transfers cash frm ne fund t anther by writing checks. Checks fr these transfers may be apprpriately listed as utstanding checks n the bank recnciliatin fr the transferring fund, but typically the depsit in transit is nt apprpriately listed n the bank recnciliatin f the receiving fund. Accunting fr transfers in this way creates a discrepancy in transfers between funds. Further, we bserved several f these interfund transfer checks were listed as utstanding fr six mnths r mre n the bank recnciliatins f the transferring fund. Writing checks and then hlding them results in an incrrect cash balance in the financial and accunting recrds. Criteria: Bank accunt recnciliatins shuld be prepared crrectly and accunt fr disbursements in the prper perid. Effect: Cash balances were misstated. Cause: Management was disbursing and hlding checks, the bank recnciliatins were nt perfrmed crrectly, and the interfund transactins were nt recnciled timely. Recmmendatin We wuld recmmend that the interfund transfer f mney nt be perfrmed near the end f the mnth r when n cash is available t cver the transfer. These transfers shuld nt be utstanding n the bank recnciliatins. The interfund transactins shuld remain in the interfund receivables and payables until funds are available fr the transfer. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Invice Apprval Cnditin: We bserved that the frmer Superintendent was nt reviewing actual checks and supprting dcumentatin. The apprval prcess was fr the frmer Superintendent t review a listing f all checks written ut f the General Fund prir t the checks being released. Hwever, we bserved several instances were payments were made by the Schl Bard which he had nt 73

84 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30,2004 apprved. Further, while perfrming ur audit prcedures, we bserved numerus expenditures that lacked the supprting dcumentatin such as invices. Criteria: All expenditures f the Schl Bard shuld be authrized and apprved. Effect: Unauthrized expenditures were made. Cause: Unauthrized expenditures were made as a result f inadequate apprval prcedures. Recmmendatin The Superintendent shuld review a listing and the actual checks and supprting dcumentatin prir t the checks being released, but after the Business Manager apprves the invice package dented by his initials n accunts payable vucher. The superintendent shuld indicate his apprval n the accunts payable vucher. The checks shuld be prmptly mailed by an emplyee independent f the accunting and bkkeeping functins. After the Superintendent has apprved the accunts payable vucher, the invice package shuld be returned t the Accunts Payable clerk t be filed alphabetically by vendr. The invice shuld be stamped "PAID" befre filing. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Held Checks Cnditin: We bserved that apprximately $660,000 f checks were prepared and then held t be released at a later date. This appears t be a rutine practice. Criteria: Checks shuld be released as sn as they are disbursed. Checks shuld nt be disbursed when there are insufficient funds. 74

85 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Effect: Cash was understated and accunts payable was understated. Cause: The disbursed checks were held due t cash flw deficiencies. Recmmendatin The invices shuld be prmptly entered int the accunts payable system and checks shuld nt be prepared until the disbursement is ready t be made. All supprting dcuments shuld have been frwarded t the accunt payable clerk befre the check is prepared such as requisitin, purchase rder, invice, receiving reprt, etc. Checks shuld nt be prepared if insufficient funds are available t release the check. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Financial Reprting Cnditin: Mnthly financial statements including budget-t-actual cmparisns are nt prepared and presented t the Schl Bard. nly ne financial statement was prepared by the business ffice during the year ended June 30, The Schl Bard cannt make accurate and timely financial decisins unless they are prvided with accurate mnthly financial statements. It was nted n the ne interim financial statement given t the Bard that interfund receivables and payables d nt balance. During the year, the System recrds transactins t the general ledger n the basis f cash receipts and disbursements. At the end f the year, the bks are cnverted t mdified accrual basis as required by gvernmental accunting standards. Criteria: The Schl Bard shuld utilize accurate mnthly financial statements frm which financial management decisins can be made. Effect: The Schl Bard is nt able t make timely financial management decisins. Cause: There is a lack f persnnel with financial expertise. 75

86 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Recmmendatin We recmmend that budget t actual cmparisn statements be prvided t the Bard members and the Superintendent n a mnthly basis s that apprpriate cash management decisins can be made. Interfund receivables and payables must be balanced fr the statements t be accurate. A written plicy shuld be adpted that prvides the nature, extent, and frequency f financial reprting infrmatin that shuld be prvided t management and the gverning bdy. The bks shuld be maintained n the mdified accrual basis f accunting fr the entire year since it results in financial statements that reflect the cmplete effects f the Schl Bard's financial transactins fr the perid. Als, in rder t make the financial reprts generated by the accunting system as meaningful as pssible, the Schl Bard shuld recncile the general ledger accunts fr accunts receivable and accunts payable t supprting dcumentatin n a mnthly basis. A benefit f mnthly recnciliatins is that errrs d nt accumulate but can be identified and attributed t a particular perid, which makes it easier t perfrm future recnciliatins. ther accunt balances such as fixed assets and accrued expenses payable shuld als be adjusted t the crrect balances n a mnthly basis. These recnciliatins and adjustments will ensure meaningful and accurate financial statements. The financial statements can then be used t help in the management decisin-making prcess. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Fixed Assets Cnditin: Fixed asset inventry is nt always safeguarded r tagged. New cmputers and printers were left in the lbby and break rm f the Schl Bard ffice fr several weeks. Bth f these areas were unlcked cmmn areas t which the public has access. The Schl Bard des nt cde purchases f fixed assets t a separate expense accunt in each fund. Therefre, it is difficult t recncile additins t the fixed asset subsidiary ledger t the fixed asset purchases recrded in the general ledger. Fixed asset listing fr June 30, 2004 was incmplete and inaccurate. Fixed asset listing shuld be recnciled as t additins and deletins n a mnthly basis. Additins f apprximately $1,000,000 were nt recrded n the fixed asset listing. Criteria: The fixed asset listing shuld be updated timely. Effect: The fixed asset listing was understated and fixed assets were nt mnitred and secure. 76

87 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Cause: Inadequate maintenance f the fixed asset inventry listing. Recmmendati n We recmmend that the System perfrm peridic physical cunts f prperty and equipment and cmpare the results t the detailed fix asset subsidiary ledger. Accunts shuld be created in each fund fr "Capital utlay - Tracking Purpses" and "Capital utlay - Capitalized". Sales prceeds frm the sale f fixed asset shuld be recnciled t the fixed asset subsidiary ledger as well. Schedules f sales transactins reflecting sales price, cst, and gain (lss) shuld be maintained fr use in preparing the gvernment-wide financial statements. We recmmend that a frm be develped that will be cmpleted when assets are dispsed f r sld. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Payrll Fund Cnditin: The System is accunting fr payrll expenditures thrugh a payrll fund and a payrll bank accunt. The payrll fund is suppsed t clse ut t the General Fund at the end f the fiscal year. The payrll fund shuld reprt emplyee withhldings payable and salaries payable at the end f each mnth. The payrll fund withhlding balances at June 30, 2004 were verstated by apprximately $200,000 and an audit adjustment was required in bth the payrll fund and the general fund t crrect the withhldings. Criteria: The payrll fund shuld reflect accurate balances in the withhlding accunts. Effect: The payrll withhlding accunts were verstated in the payrll fund by apprximately $200,000. Cause: The payrll accunts were nt recnciled timely. Recmmendatin We recmmend that the payrll fund be recnciled mnthly. 77

88 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Purchasing Cnditin: We fund 23 invices ttaling $129,000 fr services perfrmed during the year ended June 30, 2004 fr which requisitins had been issued and apprved; hwever, the purchasing department had nt issued purchase rders fr the services. Since purchase rders were nt issued the invices did nt reach the accunting ffice and payables and expenditures were understated fr $129,000. Purchase rders are nt being issued fr apprved requisitins in sme cases due t lack f cmmunicatin between the departments. The Purchasing agent received the requisitins in Nvember Criteria: Purchasing prcedures shuld be centralized and shuld include budgetary cntrls t prevent deficit spending. Further, cntrls shuld be designed t prevent unauthrized transactins. Effect: Expenditures and accunts payable were understated fr the year ended June 30, Cause: A miscmmunicatin between the departments ccurred. Recmmendatin All requisitins shuld be ruted t purchasing fr a purchase rder nce the requisitin is apprved. Disputes ver purchase rder issuance shuld be handled immediately. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. 78

89 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 CMPLIANCE Finding 04-8 Purchasing Gifts with Public Funds Cnditins: The Schl Bard used public funds t purchase flwers and gifts fr emplyees and retirees. Greeting cards were als purchased by the Schl Bard. While we were unable t quantify all f the expenditures fr gifts, we bserved specific transactins ttaling apprximately $2,000. Criteria: The Luisiana Cnstitutin Article VII Sectin 14 (A) states that things f value may nt be dnated t r fr any persn, assciatin, r crpratin, public r private. Effect: The Schl Bard vilated the Luisiana Cnstitutin Article VII Sectin 14 by purchasing gifts with public funds. Cause: There was an verall lack f knwledge f State law in the area. Recmmendatin: The Schl Bard shuld refrain frm purchasing gifts with public funds. The Schl Bard has a "Hspitality" bank accunt which is funded by emplyee cntributins. This accunt is used t purchase flwers and ther gifts fr emplyees. nly this accunt shuld be used fr these types f expenditures. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding 04-9 Bid Law Cnditins: Bids were nt btained fr the purchase f ffice supplies. Ttal expenditures fr ffice supplies t ne vendr during the year were apprximately $48,

90 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Criteria: Luisiana Revised Statute 38:2212 requires that all purchases f any materials r supplies exceeding the sum f twenty thusand dllars t be paid ut f public funds shall be advertised and let by cntract t the lwest respnsible bidder wh has bid accrding t the specificatins as advertised. Effect: The Schl Bard vilated Revised Statute 38:2212, by nt sliciting bids fr materials and supplies. Cause: The cumulative expenditures were nt estimated fr ffice supplies. Recmmendatin: The Schl Bard shuld cnsider the cumulative effect f expenditures that are spread ut ver a year. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Annual Reprt Filing Cnditins: The annual reprt was nt filed with the Legislative Auditr's ffice within six mnths f the Schl Bard's year end. Criteria: Luisiana Revised Statute 33:463 requires that annual financial statements be transmitted t the Legislative Auditr's ffice within six mnths f the clse f the fiscal year. The Schl Bard's fiscal year end is June 30, 2004 and the deadline fr transmitting the financial reprt was December 31,2004. Effect: The Schl Bard vilated Revised Statute 33:463 by nt filing its annual reprt within six mnths f the Schl Bard's year-end. 80

91 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Cause: Inadequate accunting recrds cmbined with turnver at the Superintendent level cntributed t the delinquent reprt. Recmmendatin: The Schl Bard shuld implement ur recmmendatins pertaining t accunting prcedures and cntrls. We believe this will cntribute t mre timely financial reprting. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Adptin f Budget Amendments fr Special Revenue Funds Cnditin: The Schl System did nt fllw prper prcedures relating t amending budgets fr the year ended June 30, Budget amendments were prepared during the year fr IDEA B Special Educatin Special Revenue fund and Preschl Special Educatin Special Revenue fund. These amendments were apprved by the Superintendent and sent t the State grantr agency. These amendments were nt presented t the Bard fr apprval. ther budget amendments fr Title I, Title II, Title III, Title IV, Title V, REAP, TANF, and Hippy Special Revenue funds were presented t the Bard fr apprval by the Department Supervisr. These amendments were apprved by the Bard in a public meeting. Criteria: Luisiana Revised Statues 39:1310 and 1311 require that the Superintendent ntify the Bard in writing when a budget amendment is required. The Superintendent shuld retain this written ntificatin. The Superintendent r Business Manager shuld present the budget amendments t the Bard in a public meeting fr apprval. Effect: The Schl System is nt in cmpliance with the Lcal Gvernment Budget Act fr the year ended June 30, Cause: The Schl System was unaware f these prvisins f the Lcal Gvernment Budget Act. 81

92 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Recmmendatin: In the future, the Schl System shuld fllw prper prcedures relating t the adptin f budget amendments as required by State law. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Preparatin f Budgets fr Special Revenue Funds Cnditin: The Schl System did nt amend the budget when ttal revenues and ther surces fr the year failed t meet ttal budgeted revenues and ther surces by five percent r mre fr the fllwing funds: Negative Variance % Fd Service Special Revenue Fund ($199,229) (14.22) Summer Fd Special Revenue Fund ($98,223) (78.68) Preschl Special Revenue Fund ($27,267) (102.30) ESYP Special Revenue Fund ($2,556) (14.80) Title III Special Revenue Fund ($722) (81.21) Title II Special Revenue Fund ($74,536) (23.76) Title V Special Revenue Fund ($5,155) (25.02) REAP Special Revenue Fund ($25,781) (26.40) Title I Special Revenue Fund ($404,660) (35.74) The Schl System did nt amend the budget when ttal actual expenditures and ther uses fr the year exceeded ttal budgeted expenditures and ther uses by five percent r mre fr the fllwing funds: Negative Variance % Leeway Maintenance Special Revenue Fund ($112,211) (20.43) 82

93 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 The Schl System did nt amend the budget when actual beginning fund balance did nt meet estimated beginning fund balance by five percent r mre and fund balance was used t fund current expenditures fr the fllwing funds: Variance % General Fund ($263,550) (85.30) Leeway Maintenance Special Revenue Fund $ 12, Fd Service Special Revenue Fund $126, Summer Fd Special Revenue Fund $ 45, IDEA B Special Revenue Fund $ 16, Criteria: Luisiana Revised Statues 39:1310 and 39:1311 requires that the budget be amended when any f the fllwing ccur: (1) Ttal revenue and ther surces plus prjected revenue and ther surces fr the remainder f the year, within a fund, are failing t meet ttal budgeted revenues and ther surces by five percent r mre. (2) Ttal actual expenditures and ther uses plus prjected expenditures and ther uses fr the remainder f the year, within a fund, are exceeding ttal budgeted expenditures and ther uses by five percent r mre. (3) Actual beginning fund balance, within a fund, fails t meet estimated beginning fund balance by five percent r mre and fund balance is being used t fund current expenditures., Luisiana Revised Statute 39:1311(6) exempts special revenue funds which are expenditure driven frm the requirement t adpt amended budgets if prjected revenues r expenses deviate mre than 5% frm the adpted budget; hwever, such funds are nt exempt frm the requirement t cmmunicate in writing these deviatins t the Bard. Effect: The Schl System is in vilatin f the Lcal Gvernment Budget Act fr the year ended June 30, Cause: The Schl System des nt utilize the budget as a financial tl in its day t day peratins; therefre, the budget law requirements fr amending the budget were nt mnitred during the year. 83

94 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 Recmmendatin: The Schl System shuld prepare and adpt prcedures fr preparing and mnitring the budget n a mnthly basis. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Lan Frm Schl Fd Prgram Cnditin: The Schl Bard brrwed funds frm the Schl Fd prgram and vilated the Luisiana Fd and Nutritin Prgrams Plicies f peratin Chapter 3 Paragraph 303(7)(a). Criteria: The Luisiana Fd and Nutritin Prgrams Plicies f peratin Chapter 3 Paragraph 303(7)(a) requires that lans frm the Schl Fd prgram be supprted with a lan agreement with a stated interest rate f at least 1% and be repaid within the same fiscal year. Effect: The Schl Bard vilated the Chapter 3 Paragraph 303(7)(a). Luisiana Fd and Nutritin Prgrams Plicies f peratin Cause: The System brrwed apprximately $333,000 frm the Fd Service Fund during the year. The lan dcument was never drawn up and executed. Further, the Bard r the Superintendent did nt apprve this lan frm Fd Services. Interest due n this lan was $3,651 at June 30, Recmmendatin: The lan shuld be paid back as sn as pssible with interest as the lan is ver ne year ld. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. 84

95 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 C. FINDINGS AND QUESTINED CSTS RELATED T MAJR FEDERAL AWARD PRGRAMS INTERNAL CNTRLS Finding Federal Prgrams Accunted Fr in the General Fund Cnditin: Numerus federal prgrams are accunted fr in the general fund such as Reading First Grant, First Tech, etc. It is difficult t match the federal revenues with the respective prgram expenditures while cmmingled with the ther general fund transactins. Further, management des nt have prcedures in place t match the federal revenues with the respective expenditures. Criteria: Federal prgram transactins shuld be islated frm the ther general fund transactins. Effect: Summaries f reimbursement requests and ther dcuments had t be cmpiled t prepare Schedule f Federal Financial Assistance. Cause: The federal prgram transactins are nt adequately identified n the general funds general ledger. Recmmendatin We recmmend that the federal prgram transactins be islated. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. Finding Cash Management f Federal Funds Cnditin: We bserved that the federal reimbursement requests were filed and the funds were electrnically wired t General Fund. Hwever, the payment f the expenditures was nt made in a timely manner. In sme cases, we bserved that the payment f certain accunts payable amunts fr which reimbursement had already been received was nt made fr 30 days r mre after the reimbursement had been received. An additinal prblem incurred by these payment 85

96 SCHEDULE F FINDINGS AND QUESTINED CSTS (CNTINUED) Fr the Year Ended June 30, 2004 delays are that vendrs wh supplies services and supplies that were reimbursed by federal funds have refused t prvide credit t the System due t the lack f timely payment f these expenditures. Criteria: The Department f Educatin plicy is that requests fr federal r state reimbursements may nly be made when actual expenditures fr which he/she has issued a check fr payments. Salaries and fringe benefits are the nly exceptin t this plicy. Reimbursements fr ther than salaries and benefits must be based n actual expenditures nt accunts payable Effect: Reimbursement requests are prepared disbursements. frm accunts payable instead f actual cash Cause: Federal fund expenditures are nt made timely. Recmmendatin We recmmend that the Schl Bard cmply with the Department f Educatin Plicy. Management's Respnse and Crrectin Actin Plan: Management cncurs with ur finding. See Management's Crrective Actin Plan fr their respnse. 86

97 SUMMARY SCHEDULE F PRIR YEAR FINDINGS AND QUESTINED CSTS Fr the Year Ended June 30, 2004 SECTIN I FINDINGS RELATED T THE FINANCIAL STATEMENT Finding Related Party Transactins. Reslved. The tw emplyees in questin are n lnger emplyees f the Schl Bard. SECTIN II FINDINGS AND QUESTINED CSTS RELATED T MAJR FEDERAL AWARD PRGRAMS Nne. SECTIN III BSERVATINS REPRTED IN THE MANAGEMENT LETTER bservatin Expense Classificatin. Unreslved. See bservatin in the current year management letter. 87

98 CRRECTIVE ACTIN PLAN Fr the Year Ended June 30, 2004 INTERNAL CNTRLS Finding 04-1 Bank Recnciliatins Recmmendatin We wuld recmmend that the interfund transfer f mney nt be perfrmed near the end f the mnth r when n cash is available t cver the transfer. These transfers shuld nt be utstanding n the bank recnciliatins. The interfund transactins shuld remain in the interfund receivables and payables until funds are available fr the transfer. Crrective Actin: Management cncurs with this finding. Interfund transfers f mney will nt be perfrmed near the end f the mnth r when n cash is available t cver the transfer. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Invice Apprval Recmmendatin The Superintendent shuld review a listing and the actual checks and supprting dcumentatin prir t the checks being released, but after the Business Manager apprves the invice package dented by his initials n accunts payable vucher. The superintendent shuld indicate his apprval n the accunts payable vucher. The checks shuld be prmptly mailed by an emplyee independent f the accunting and bkkeeping functins. After the Superintendent has apprved the accunts payable vucher, the invice package shuld be returned t the Accunts Payable clerk t be filed alphabetically by vendr. The invice shuld be stamped "PAID" befre filing. Crrective Actin: Management cncurs with this finding. The current Superintendent is reviewing the actual checks and supprting dcumentatin prir t the checks being released, and after the Business Manager apprves the invice package dented by his initials n accunts payable vucher. Checks will be prmptly mailed by an emplyee independent f the accunting and bkkeeping functins. After the Superintendent has apprved the accunts payable vucher, the invice

99 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30,2004 package will be returned t the Accunts Payable clerk t be filed alphabetically by vendr. The invice will be stamped "PAID" befre filing. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Held Checks Recmmendatin The invices shuld be prmptly entered int the accunts payable system and checks shuld nt be prepared until the disbursement is ready t be made. All supprting dcuments shuld have been frwarded t the accunt payable clerk befre the check is prepared such as requisitin, purchase rder, invice, receiving reprt, etc. Checks shuld nt be prepared if insufficient funds are available t release the check. Crrective Actin: Management cncurs with this finding. We will cntact the sftware prgrammers t determine necessary changes in prcedures r prgramming t enter invices int the accunts payable system and prepare checks when disbursements are t be made. All supprting dcuments will be frwarded t the accunts payable clerk befre the check is prepared such as requisitin, purchase rder, invice, receiving reprt, etc. Checks will nt be prepared if insufficient funds are available t release the check. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985)

100 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Finding Financial Reprting Recmmendatin We recmmend that budget t actual cmparisn statements be prvided t the Bard members and the Superintendent n a mnthly basis s that apprpriate cash management decisins can be made. Interfund receivables and payables must be balanced fr the statements t be accurate. A written plicy shuld be adpted that prvides the nature, extent, and frequency f financial reprting infrmatin that shuld be prvided t management and the gverning bdy. The bks shuld be maintained n the mdified accrual basis f accunting fr the entire year since it results in financial statements that reflect the cmplete effects f the Schl Bard's financial transactins fr the perid. Als, in rder t make the financial reprts generated by the accunting system as meaningful as pssible, the Schl Bard shuld recncile the general ledger accunts fr accunts receivable and accunts payable t supprting dcumentatin n a mnthly basis. A benefit f mnthly recnciliatins is that errrs d nt accumulate but can be identified and attributed t a particular perid, which makes it easier t perfrm future recnciliatins. ther accunt balances such as fixed assets and accrued expenses payable shuld als be adjusted t the crrect balances n a mnthly basis. These recnciliatins and adjustments will ensure meaningful and accurate financial statements. The financial statements can then be used t help in the management decisin-making prcess. Crrective Actin: Management cncurs with the finding. Budget t actual cmparisn statements will be prvided t the Bard members and the Superintendent n a mnthly basis s that the apprpriate cash management decisins can be made. Interfund receivables and payables will be balanced fr the statements t be accurate. A written plicy will be adpted that prvides the nature, extent, and frequency f financial reprting infrmatin that shuld be prvided t management and the gverning bdy. The bks will be maintained n the mdified accrual basis f accunting fr the entire year since it results in financial statements that reflect the cmplete effects f the Schl Bard's financial transactins fr the perid. Financial reprts generated by the accunting system will be recnciled t the general ledger accunts fr accunts receivable and accunts payable fr supprting dcumentatin n a mnthly basis. ther accunts balances such as fixed assets and accrued expenses payable will be adjusted t the crrect balances n a mnthly basis. Implementatin Date: Immediately. 90

101 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Cntact: David Neely, Business Manager, (985) Finding Fixed Assets Recmmendatin We recmmend that the System perfrm peridic physical cunts f prperty and equipment and cmpare the results t the detailed fix asset subsidiary ledger. Accunts shuld be created in each fund fr "Capital utlay - Tracking Purpses" and "Capital utlay - Capitalized". Sales prceeds frm the sale f fixed asset shuld be recnciled t the fixed asset subsidiary ledger as well. Schedules f sales transactins reflecting sales price, cst, and gain (lss) shuld be maintained fr use in preparing the gvernmentwide financial statements. We recmmend that a frm be develped that will be cmpleted when assets are dispsed f r sld. Crrective Actin: Management cncurs with this finding. The System will perfrm peridic physical cunts f prperty and equipment and cmpare the results t the detailed fixed asset subsidiary ledger. Accunts will be created in each fund fr "Capital utlay-tracking" and "Capital utlay-capitalized". Sales prceeds frm the sale f fixed assets will be recnciled t the fixed asset subsidiary ledger as well. Schedules f sales transactins reflecting sales price, cst, and gain (lss) will be maintained fr use in preparing the gvernment-wide financial statements. The current frm will be mdified and used when assets are dispsed f r sld. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Payrll Fund Recmmendatin We recmmend that the payrll fund be recnciled mnthly. 91

102 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Crrective Actin: Management cncurs with this finding. The Payrll Fund will be recnciled mnthly and the sftware prgrammers cnsulted as necessary t ensure accuracy f recrds. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Purchasing Recmmendatin All requisitins shuld be ruted t purchasing fr a purchase rder nce the requisitin is apprved. Disputes ver purchase rder issuance shuld be handled immediately. Crrective Actin: Management cncurs with this finding. All requisitins will be ruted t purchasing and apprved by the current Superintendent befre a purchase is issued. Disputes ver purchase rder issuance will be handled immediately. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) CMPLIANCE Finding 04-8 Purchasing Gifts with Public Funds Recmmendatin: The Schl Bard shuld refrain frm purchasing gifts with public funds. The Schl Bard has a "Hspitality" bank accunt which is funded by emplyee cntributins. This accunt is used t purchase flwers and ther gifts fr emplyees. nly this accunt shuld be used fr these types f expenditures. 92

103 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Crrective Actin: Management cncurs with this finding. The purchase f flwers and gifts will nt be made frm public funds. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Findine 04-9 Bid Law Recmmendatin: The Schl Bard shuld cnsider the cumulative effect f expenditures fr materials and supplies that are spread ut ver a year and slicit bids as required. Crrective Actin: Management cncurs with this finding. The cumulative expenditures fr ffice supplies will be estimated at the beginning f year and bid ut as necessary t be in cmpliance with the bid law. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Annual Reprt Filing Recmmendatin: The Schl Bard shuld implement ur recmmendatins pertaining t accunting prcedures and cntrls. We believe this will cntribute t mre timely financial reprting. 93

104 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30,2004 Crrective Actin: Management cncurs with this finding. The recmmendatins f the audit will be implemented t ensure cmpliance with plicies and laws resulting in timely financial reprting. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Adptin f Budget Amendments fr Special Revenue Funds Recmmendatin: In the future, the Schl System shuld fllw prper prcedures relating t the adptin f budget amendments as required by State law. Crrective Actin: Management cncurs with this finding. The Schl System will prepare and adpt prcedures fr preparing and mnitring the budgets n a mnthly basis. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Preparatin f Budgets fr Special Revenue Funds Recmmendatin: The Schl System shuld prepare and adpt prcedures fr preparing and mnitring the budget n a mnthly basis. Crrective Actin: Management cncurs with this finding. The Schl System will prepare and adpt prcedures fr preparing and mnitring the budgets n a mnthly basis. 94

105 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) Finding Lan Frm Schl Fd Prgram Recmmendatin: The Schl Fd Service lan shuld be paid back as sn as pssible with interest as the lan is ver ne year ld. Crrective Actin: Management cncurs with this finding. Funds will be repaid t Schl Fd Service as sn as pssible with interest. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985) INTERNAL CNTRLS FR FEDERAL AWARDS Finding Federal Prgrams Accunted Fr in the General Fund Recmmendatin We recmmend that the federal prgram transactins be islated fr identificatin in the General Fund. Crrective Actin: Management cncurs with this finding. Federal prgram transactins (revenues and expenditures) will be islated and identified individually. Implementatin Date: Immediately. 95

106 CRRECTIVE ACTIN PLAN (CNTINUED) Fr the Year Ended June 30, 2004 Cntact: David Neely, Business Manager, (985) Finding Cash Management f Federal Funds Recmmendatin We recmmend that the Schl Bard cmply with the Department f Educatin Plicy fr cash management f federal fund expenditures. Crrective Actin: Management cncurs with this finding. The Schl Bard will cmply with Department f Educatin plicy. The Business ffice will submit requests fr reimbursements in the future and crdinate the expenditures with prgram directrs. Implementatin Date: Immediately. Cntact: David Neely, Business Manager, (985)

107 STATE REPRTING SECTIN

108 SCHEDULES REQUIRED BY STATE LAW (R.S. 24:514 - PERFRMANCE AND STATISTICAL DATA)

109 REBWE & CMPANY CERTIFIED PUBLIC ACCUNTANTS CNSULTANTS A PRFESSINAL CRPRATIN 3501 N. Causeway Blvd. Suite 810 P.. Bx 6952 Metairie, LA Phne (504) Fax (504} rebwe@rebwe.cm INDEPENDENT ACCUNTANT'S REPRT N APPLYING AGREED-UPN PRCEDURES Members f the Schl Bard f City f Bgalusa Schl Bard We have perfrmed the prcedures included in the Luisiana Gvernmental Audit Guide and enumerated belw, which were agreed t by the management f the City f Bgalusa Schl Bard ("Schl Bard") and the Legislative Auditr, State f Luisiana, slely t assist users in evaluating management's assertins abut the perfrmance and statistical data accmpanying the annual financial statements f the Schl Bard and t determine whether the specified schedules are free f bvius errrs and missins as prvided by the Bard f Elementary and Secndary Educatin. This agreed-upn prcedures engagement was perfrmed in accrdance with attestatin standards established by the American Institute f Certified Public Accuntants and applicable standards f Gvernment Auditing Standards. The sufficiency f these prcedures is slely the respnsibility f the specified users f the reprt. Cnsequently, we make n representatin regarding the sufficiency f the prcedures described belw either fr the purpse fr which this reprt has been requested r fr any ther purpse. ur prcedures and findings relate t the accmpanying schedules f supplemental infrmatin and are as fllws: General Fund Instructinal and Supprt Expenditures and Certain Lcal Revenue Surces (Schedule 1) 1. We selected a randm sample f 25 transactins and reviewed supprting dcumentatin t determine if the sampled expenditures/revenues are classified crrectly and are reprted in the prper amunts fr each f the fllwing amunts reprted n the schedule: Ttal General Fund Instructinal Expenditures, Ttal General Fund Equipment Expenditures, Ttal Lcal Taxatin Revenue, Ttal Lcal Earnings n Investment in Real Prperty, Ttal State Revenue in Lieu f Taxes, Nnpublic Textbk Revenue, and Nnpublic Transprtatin Revenue. 97

110 Educatin Levels f Public Schl Staff (Schedule 2) 2. We recnciled the ttal number f full-time classrm teachers per the schedule "Experience f Public Principals and Full-time Classrm Teachers" (Schedule 4) t the cmbined ttal number f full-time classrm teachers per this schedule and t schl bard supprting payrll recrds as f ctber 1, We recnciled the cmbined ttal f principals and assistant principals per the schedule "Experience f Public Principals and Full-time Classrm Teachers" (Schedule 4) t the cmbined ttal f principals and assistant principals per this schedule. 4. We btained a list f full-time teachers, principals, and assistant principals by classificatin as f ctber 1, 2003 and as reprted n the schedule. We traced a randm sample f 25 teachers t the individual's persnnel file and determined if the individual's educatin level was prperly classified n the schedule. Number and Type f Public Schls (Schedule 3) 5. We btained a list f schls by type as reprted n the schedule. We cmpared the list t the schls and grade levels as reprted n the Title 1 Grants t Lcal Educatinal Agencies (CFDA ) applicatin and/r the Natinal Schl Lunch Prgram (CFDA ) applicatin. Experience f Public Principals and Full-time Classrm Teachers (Schedule 4) 6. We btained a list f full-time teachers, principals, and assistant principals by classificatin as f ctber 1, 2003 and as reprted n the schedule and traced the same sample used in prcedure 4 t the individual's persnnel file and determined if the individual's experience was prperly classified n the schedule. Public Staff Data (Schedule 5) 7. We btained a list f all classrm teachers including their base salary, extra cmpensatin, and RTC r rehired retiree status as well as full-time equivalent as reprted n the schedule and traced a randm sample f 25 teachers t the individual's persnnel file and determined if the individual's salary, extra cmpensatin, and full-time equivalents were prperly included n the schedule. 8. We recalculated the average salaries and full-time equivalents reprted in the schedule. Class Size Characteristics (Schedule 6) 9. We btained a list f classes by schl, schl type, and class size as reprted n the schedule and recnciled schl type classificatins t Schedule 3 data, as btained in 98

111 prcedure 5. We then traced a randm sample f 10 classes t the ctber 1, 2003 rll bks fr thse classes and determined if the class was prperly classified n the schedule. Luisiana Educatinal Assessment Prgram (LEAP) fr the 21st Century (Schedule 7) 10. We btained test scres as prvided by the testing authrity and recnciled scres as reprted by the testing authrity t scres reprted in the schedule by the Schl Bard. The Graduatin Exit Exam fr the 21st Century (Schedule 8) 11. We btained test scres as prvided by the testing authrity and recnciled scres as reprted by the testing authrity t scres reprted in the schedule by the Schl Bard. The IWA Tests (Schedule 9) 12. We btained test scres as prvided by the testing authrity and recnciled scres as reprted by the testing authrity t scres reprted in the schedule by the Schl Bard. N exceptins were fund as a result f applying the abve prcedures. We were nt engaged t, and did nt; perfrm an examinatin, the bjective f which wuld be the expressin f an pinin n management's assertins. Accrdingly, we d nt express such an pinin. Had we perfrmed additinal prcedures, ther matters might have cme t ur attentin that wuld have been reprted t yu. This reprt is intended slely fr the use f management f the Schl Bard, the Luisiana Department f Educatin, the Luisiana Legislature, and the Legislative Auditr, State f Luisiana, and shuld nt be used by thse wh have nt agreed t the prcedures and taken respnsibility fr the sufficiency f the prcedures fr their purpses. Under Luisiana Revised Statute 24:513, this reprt is distributed by the Legislative Auditr as a public dcument. & January 14,

112 GENERAL FUND INSTRUCTINAL AND SUPPRT EXPENDITURES AND CERTAIN LCAL REVENUE SURCES Fr the Year Ended June 30, 2004 Schedule 1 General Fund Instructinal and Equipment Expenditures General fund instructinal expenditures: Teacher and student interactin activities: Classrm teacher salaries ther instructinal staff activities Emplyee benefits Purchased prfessinal and technical services Instructinal materials and supplies Instructinal equipment Ttal teacher and student interactin activities ther instructinal activities Pupil supprt activities Less: equipment fr pupil supprt activities Net pupil supprt activities Instructinal staff services Less: Equipment fr instructinal staff services Net instructinal staff services Ttal general fund instructinal expenditures Ttal general fund equipment expenditures Certain Lcal Revenue Surces Lcal taxatin revenue: Cnstitutinal ad valrem taxes Renewable ad valrem tax Debt service ad valrem tax Up t 1% f cllectins by the Sheriff n taxes ther than schl taxes Sales and use taxes Ttal lcal taxatin revenue State revenue in lieu f taxes: Revenue sharing - cnstitutinal tax Ttal state revenue in lieu f taxes Nnpublic transprtatin revenue 9,360,567 1,116,377 3,151, , ,696 1,097, ,026 $ 13,961,558 1,097, ,026 S 15,697,896 $ 129, ,900 2,486, ,345 $ 4,886,162 $ 201,798 $ 201,798 5,

113 s CX3 0) N 00 CQ u (U u w Q PQ PL. 101

114 NUMBER AND TYPE F PUBLIC SCHLS Fr the Year Ended June 30, 2004 Schedule 3 Type Elementary Middle/Jr. High Secndary Cmbinatin Ttal Number Nte: Schls pened r clsed during the fiscal year are included in this schedule. 102

115 (N <N <N (N C N m CX i i C 'C PH 103

116 S «< s 9 fa «U. M 3 5 g 0 ^ «, J 5 a «-g " 38S^ 3 * b M 03 «<j > Sal g s > PH fa H,- w S r ^ «g ^3 H «Q ^ C^ S e.a H t>0 * ^ la 2 fe 73 3 p^ ^ w X C fjj t) sl-\ S hs w G r^ M J-H c3 U ed U < t-^ m \ f! /J * r- in cs r & CJ 'S Average Classrm Teachers' Salary Including Extra Cmpens m u~i * m /} N s fs rf n 6^ c 'S w Average Classrm Teachers' Salary Excluding Extra Cmpen es cs CN ^ m CN «_0> u ^S...S e n «Number f Teacher Full-1 Equivalents (FTEs) used Cmputatin f Average 3 a J3 *" 1 1 C "2 E *+3 ra cd «u u G ^ -*- R«l S T 2. e a «R v- u u s 3 a U Cg _ b u - '^3 u <u u *- IH I-. S W Is 2 fe "3 -S s g b G *- a u fa» rl..,^ 9 104

117 9 ^^ tt -J ffi CJ C ALUSA m u. >H H HH U n (S <s fs ^ c^ uhh H C/3 S Ed \RACT S U Ed N M C/J cc (/I ^J U n M ^ 1 4 fc. 4> X) *J u *»H <A < s Schedu &JD a 2 C V3 (rt 0 Tf S r- ^ «s - « ** avu u u V 1 9 a u 4) XI S 9 fl V w J^ 4) XI S 9 ~s u a. u C. "3 -C (/I CN ^_ in CN CN N [Element1- in in in in 1 j u p^* * "* > t3 ^5* 00 (N fs^, 1 T 1 00 CN a ^ HH t- m in in Cfl <D C U * "? "_n yt JJ ^^ a * ^ C ±i [Element [Middle/; [Middle/.,-, in fi cs CN r 1 * T 1,_, \Q r*^ cs in T 1 in C/3 ) w C<3 U t* ffi e ' Cmbin; w i >^ T-l J^ > 1-H 1 j ' Cmbin; rt r-i tn ^ U C I i/i U Tf «3 03 «ID S.."H j y 8 ^1 "C3 U N -B i I S C/l S U S -2!: 3! -g, & w 2 ^ w G t3 >^ ta - l M a "B S S 8 1 fr«*- vq U (N M «as ^ a g & ^3 en c3 T3 nl -g & W G j 0 g 00 u [A <U 2 1 S ^ 4> * a -S S t -. P^ 0) Efl _- X3 J3 w u q w S J3 C 2 3 S S S W3 U I S1-S c t i S H J3 P V-. «1^ 3 u 0 ~" ffl -S <D nj fs & w.. 3 Q> 1 I.tn V-i.S «s S J 2U 2^ ^ «!I S ^* TC B *-» W IH 3 g U r-i a "S S 11 R 3.2 > 105

118 CN CN S u1- X i- 1 Z "'-" ^ «' ^- 'rf CN CN TJ- m rn "J"i CN ^3 ^ in 1 1 m CN CN en c u 1- X t- e 3 Z ^- r-~ ^ en in N r^ Tien CN CN i CN N N CN en N * ^ """" tn in tn VI S i JS 1 m CN ^) u V 1, 1-1 z: r-- in r- i r- m r- m CN CN ^ ^ N \ ^ CN m > m CN f- V 3 3 «"3 " en CN i a3-1 t- E 3 Z if _ en en CN en en (N r l N r ' ~* *f 00 - ' en rn CN "5 u0 ^ u 1 3 Z ^ TT -H r- ^" en CN rj- CN i i N ^T r-* CN -<t N «-< M3 TT fn ^ CN 1 1 I- u Z 00 ^H N \D ^ Tf «n" 00 rs m m i_h ^i ) (JS ^H f- iy*j in m cs 2 CN CN Q u ^ t* 1 * > VI -H 00 CN N N «- en fn CN ' 00 en r- «n f\ CN CN CN g u u ^ u 1 3Z >:} en N N»n en en < ' > " * N m N m fn Ml M S 00 E9 2 JS VI am a CN g u, <u X, <u a E3 \ qi * > r^ r- -«fn CN T 00 Si u s <H u en CN *-* c au fcu 1 3 Z ^ ^- CN en en es CN r- en -<t in N ^D *n ^H r** N ^r 1^ en CN CN C 1 IH i-- S 1 ^" \ m '"C -^ ^ en N ^f en i H ' CN en 00 r- -H ^ ^f fn ~, ^ g CN S u X u. Q S3 Z ^^ in m ^ ^r <N en N1 4 CN wn ' <n ^ * r-i r-* en t-* CN In ^t 1 ""^ *-> a<u > District Achie 3 *i tf "a! V (Students ^ 1 x 'S3 S b (s 5 d S S'S a ~ re 9 4-> «u, i-i nj -3 g > Jg '53 ft 2 < S S - "D 1 a > 1 1 i s ts > 1 ^ 5 u «& s ^ i e JJ >, w ^ E- i4> a 3/i Sit-all *K "3 ^ (S 5, e <, 2 CQ <, D 106

119 CA V a E cu rt " (N CN r CN Tf CN CN CN + * c CJ u X J- 1 1 t-l c H w X u s 3 2: 4 t c u <u X >-. u *-> c p X u i i \ i" 1 ^I r -- rr CN <N ^ r- in s -^ r-- in T-. s > r Tf ^- C4 Tf ^H «n CN r cn c i ^ i^. i^ ^^ «"t r ^ "* «S? CN? i CN rf~> UTl f~^ «M I-N. _ «f*- C C 'sd T 1,_ Tf <n \ - \ ^H c ^t CN CN CN CN CA.- S w is "3 cc rn CN r CN ^ CN C U 1- <u H l_ W 1 3 z c (j cu 0) J S 3 ^^C 1-1 u H 1Ū XI 3 z c u u cn fx CN <5 ^t r- -H r t TT c» Tt TJ- r- c ~H «n c <$ CN *n s in CN ' -^f r in t^ *~* r^ CN CN Tf S cn ' Tf >n ^t cs S ^ ^t CN Tf V <* CN CN r i,_> """" 7S *-i Jl ^M s fl J CA "ei a.** 3 u <«* u 5 CA 3 r CN (N EA +J "3 CA *j PH ai,3 z, ^_, c u CJ u. JJ X i~ E 3 z 4_1 c i- Q en 4~> U 3 /) s s ^ ' *«Tf C CN r- ^ C Tf ' s ^ CN S CN T i r-i s S ' U 'i «^ c 2 5 ^M 1 ^ 4) *S 2 -S I " c3 «^ 3.g S 3 rt > *y S P. en U -0 P «t D, C < CX CQ < P a> u a '5 C/J ^ ^ CM ' 3 & 3 >J /I C «> r CN u -Q 3 ^t CM 3 i I s C u 1- a> PH s u I- (U CX. u 3 z j PS * < 'aj -4 3 cu T3 3 crt t^ CN i <n c c r r ' -<t 00 s s r c^ in ^ c ^^ r r ^ ^ *-" ^ *n ^~ > 'w cd T3 *- IS ^ «- 1 1 a W > ^3 "tn G. en»- T3 P rt D, C < «< P ^- r 1 107

120 THE IWA TESTS Schedule Cmpsite Test f Basic Skills (ITBS) Grade 3 Grade 5 Grade 6 Grade Tests f Educatinal Develpment (ITED) Grade Scres are reprted by Natinal Percentile Rank. A student's Natinal Percentile Rank shws the student's relative psitin r rank as cmpared t a large, representative sample f students in the same grade frm the entire natin. A student with a scre f 72 indicates that the student scred the same r better than 72 percent f the students in the nrm grup. 108

121 RECEIVED LEGISLATIVE AUDIFR 05FEB-3 PM ht BGALUSA, LUISIANA MEMRANDUM F ADVISRY CMMENTS Fr the Year Ending June 30, 2004 Cntact: David Neely Business Manager (985)

122 TABLE F CNTENTS AUDITR'S REPRT 1 Page BSERVATINS, RECMMENDATINS, AND MANAGEMENT'S CRRECTIVE ACTIN PLAN 1. Cash Management - Excess Balances 2 2. Cash Management - Negative Balances 2 3. Blank Checks 3 4. Check Signing Machine 4 5. Access t Check Signing Machine 4 6. Disbursements 5 7. Bank Recnciliatins 5 8. Federal Grants 6 9. Insurance Renewals Travel Cellular Phnes Credit Cards Ethics Plicy Backup and Cntingency Plan Accunting fr Cash at Special Events Payrll Filings Bank Accunts E-Rate Matching Requirements Payrll General Business ffice Prcedures Schl Accunts Reimbursement Requests Segregatin f Duties Cntrls ver Cash Receipts and Disbursements Cntrls ver Purchasing Budgeting Prcedures 24

123 REBWE & CMPANY CERTIFIED PUBLIC ACCUNTANTS CNSULTANTS A PRFESSINAL CRPRATIN 3501 N. Causeway Blvd. Suite 810 P.. Bx 6952 Metairie, LA Phne (504) Fax (504) rebwe@rebwe.cm January 14, 2005 Members f the City f Bgalusa Schl Bard Bgalusa, Luisiana We have audited the basic financial statements f the City f Bgalusa Schl Bard (the "Schl Bard") fr the year ended June 30, 2004 and have issued ur reprt theren dated January 14, As part f ur audit, we cnsidered the Schl Bard's internal cntrl ver financial reprting in rder t determine the nature, timing and extent f ur auditing prcedures fr the purpse f expressing an pinin n the financial statements and nt t prvide assurance n the internal cntrl. Hwever^ during ur audit we became aware f matters that are pprtunities fr strengthening internal cntrl and perating efficiency. The memrandum that accmpanies this letter summarizes ur bservatins and recmmendatins regarding these matters. We previusly reprted n the Schl Bard's internal cntrl in a separately issued reprt entitled Independent Auditr's Reprt n Cmpliance and n Internal Cntrl ver Financial Reprting Based n an Audit f Financial Statements Perfrmed in Accrdance with Gvernment Auditing Standards dated January 14, This letter des nt affect ur reprt dated January 14, 2005 n the financial statements f the Schl Bard. We will review the status f these matters during ur next audit engagement. We have discussed ur recmmendatins with management f the Schl Bard and have included their Crrective Actin Plan. We will be pleased t discuss these recmmendatins with yu in further detail at yur cnvenience, perfrm any additinal analysis f these matters, r assist yu in implementing ur recmmendatins. Sincerely, &

124 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN June 30,2004 BSERVATIN 04-1: CASH MANAGEMENT - EXCESS BALANCES We bserved that sme f the funds f the Schl Bard such as Leeway Maintenance had large cash balances at times during the year. These funds were maintained in nn-interest bearing accunts. RECMMENDATIN We recmmend that prcedures be implemented t mnitr available cash and expected cash needs. nce these mnitring prcedures are in place, drmant funds culd be depsited in interest bearing accunts r used t purchase shrt-term gvernment securities r certificates f depsits. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Prcedures will be implemented t mnitr available cash and expected cash needs. Drmant funds will be depsited in interest bearing accunts r used t purchase shrtterm gvernment securities r certificates f depsits. BSERVATIN 04-2: CASH MANAGEMENT - NEGATIVE BALANCES The Schl Bard's cash management and cntrl activities are weak, as evidenced by the number f cash accunts with negative bk balances and the lack f infrmatin abut the Schl Bard's cash psitin and cash needs at any pint in time. Because f the chrnic cash shrtage and the lack f adequate cash cntrls, unnecessary charges fr penalties and interest have been incurred and shrt-term brrwings have been required. RECMMENDATIN We recmmend the fllwing t imprve cash management: 1. Prepare cash psitin reprts and budgeted cash flw statements t anticipate bth cash needs and cash availability and t prvide infrmatin fr planning the timing f discretinary expenditures and the need fr temprary brrwings. 2. Schedule the writing f checks fr rutine payments fr a given day f the week r mnth s that plans can be made t have cash available t cver the checks and t make it easier fr management t review disbursements. 3. Cntact vendrs as needed t arrange fr payment f the Schl Bard's past due invices. Vendrs shuld be cntacted immediately when invices are nt able t be

125 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, paid n time. It was nted during the year that numerus vendrs discntinued service r withheld services fr lack f payment. 5. Mnitr n a mnthly basis the securities pledged t ensure that Schl Bard depsits were fully secured and that their investments cmply with state law. 6. The Schl Bard has 31 bank accunts, sme f which have been drmant fr ver a year. Many f the accunts were established fr narrw purpses and have few transactins and small balances. Drmant accunts are susceptible t unauthrized transactins nt being detected and crrected timely. Further, maintaining unnecessary bank accunts results in mre cmplex and inefficient administratin. We recmmend that Management peridically review the functin f all bank accunts t determine whether they are necessary. Time needed t recrd accunting transactins, as well as time and fees incurred in auditing and accunting services, culd be reduced if the System eliminated r cmbined bank accunts when pssible. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The Schl District will prepare statements t anticipate cash availability and needs t include temprary brrwing t pay vendrs mre timely. Vendrs will be cntacted as needed t arrange payment schedules. The district will mnitr pledged securities t ensure depsits are prperly secured. The number f bank accunts will be reduced t the minimum and placed in interest bearing accunts. BSERVATIN 04-3: BLANK CHECKS We bserved that blank checks were being maintained in the payrll ffice. The payrll department ffice was lcked when the payrll clerk was ut f the building. The Superintendent, the business manager, and the payrll clerk had the nly keys. Hwever, at times during the day, her ffice is unlcked and unattended. RECMMENDATIN We recmmend that blank checks be kept in a lcked drawer r cabinet accessible nly t thse with prper authrizatin and the checks peridically be accunted fr. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985)

126 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 Actin Planned - Blank checks will be kept in a lcked drawer r cabinet. BSERVATIN 04-4: CHECK SIGNING MACHINE The Schl Bard uses a check signing machine n all checks. Checks requiring manual signatures are subject t mre careful scrutiny and thereby cash is cntrlled mre clsely. RECMMENDATIN We recmmend that a maximum amunt be determined fr thse checks t be signed by use f the check signing machine, and all checks with amunts greater than this designated figure shuld be manually signed. These manual checks shuld have dual signatures just as the checks signed by the machine. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The check signing machine will be used nly fr payrll checks. All ther checks will have an riginal signature. BSERVATIN 04-5: ACCESS T CHECK SIGNING MACHINE We bserved that the key t the check signing machine is maintained in an unlcked drawer in the business manager's ffice. The business manager des lck the dr t his ffice after hurs. Hwever, at times during the day, his ffice is unlcked and unattended. We als nted that the persns authrized t sign checks with the machine (business manager, accunts payable clerk, and payrll clerk) d nt take the machine readings befre and after each use. RECMMENDATIN We recmmend that dual cntrl ver the check signing machine be implemented. Perhaps the key t the machine culd be lcked in a drawer r cabinet under the cntrl f smene ther than the Business Manager and the machine culd be lcked in a separate cabinet under the cntrl f the Business Manager. Tw peple shuld be present when checks are signed t ensure that the number f checks signed (meter reading) are agreed and recnciled t the number f checks listed n the accunts payable check register. The recnciliatin shuld be signed and dated by bth individuals and given t the business manager fr review. The business manager shuld ensure that all payments are apprpriate, supprting dcumentatin is available, invices are apprved, and the number f checks written agrees t thse signed by the check-signing machine.

127 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The key t the check signing machine will be kept by the business manager wh will nt have a cde (als needed t activate). Tw peple will be present when payrll checks are prcessed and a lg maintained f the number f checks written. BSERVATIN 04-6: DISBURSEMENTS While perfrming ur audit prcedures, we bserved numerus disbursements that were cded t the wrng general ledger accunt. This was a cmment in the prir year management letter. RECMMENDATIN We recmmend that the Schl Bard reemphasize the need t recrd transactins accurately. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The district will prperly cde disbursements t crrect accunts. Purchase rders will be issued nly fr the purchase f services r materials where required. BSERVATIN 04-7: BANK RECNCILIATINS We bserved that bank statements in sme accunts were accumulated fr several mnths befre they were recnciled t the apprpriate general ledger cntrls. Nt recnciling the accunts n a mnthly basis means that errrs r ther prblems might nt be recgnized and reslved n a timely basis. Recnciliatins are nt perfrmed n the inactive bank accunts r the bank accunts with n recnciling items. RECMMENDATIN We recmmend that recnciliatins be prepared n all bank accunts whether there is activity r recnciling items. We recmmend that the bank recnciliatins be reviewed fr accuracy and cmpleteness n a timely basis by the business manager. The review shuld include test f mechanical accuracy and tracing f items n the recnciliatin t the relevant surce dcuments. The recnciliatins shuld be signed and dated by the preparer as well as the reviewer.

128 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Recnciliatins will be prepared n all bank accunts whether there is activity r recnciling items. Recnciliatins will be reviewed fr accuracy and cmpleteness n a timely basis by the business manager. The review will include test f mechanical accuracy and tracing f items n the recnciliatin t the relevant surce dcuments. The recnciliatins will be signed and dated by the preparer as well as the reviewer. BSERVATIN 04-8: FEDERAL GRANTS A federal grant received t replace the rfs at several schls was depsited and accunted fr in the General Fund. RECMMENDATIN A grant fr capital expenditures shuld be reprted in a capital prject fund. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Grants fr capital expenditures will be reprted in a capital prject fund. BSERVATIN 04-9: INSURANCE RENEWALS The System did nt btain qutes r bids n the cst f insurance fr its varius insurance plicies. There have been substantial increases in the premiums f all insurance plicies. RECMMENDATIN We recmmend that the business manager r purchasing agent btain qutes annually t keep insurance premiums as lw as pssible. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985)

129 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, 2004 Actin Planned - Qutes fr insurance cverage will be scheduled befre the expiratin f current plicies and in time fr sufficient review and apprval. BSERVATIN 04-10: TRAVEL The System has n written plicy relating t travel by emplyees r bard members. There was n dcumentatin f apprval r justificatin fr the ldging travel expenses f a bard member and the business manager t attend a tw-day seminar held in Batn Ruge. It was als nted n several travel reimbursements that they did nt include all apprpriate dcumentatin supprting the business nature f the travel. RECMMENDATIN The travel plicy shuld be adequate t meet the needs f the System. It shuld prvide specific guidance as t what is allwable relating t business, cnference, and seminar travel. Travel shuld be reasnable and dne nly when necessary and when such travel benefits the entity. The travel plicy shuld particularly address travel f the Superintendent and the Bard members. As part f its travel plicy, the System shuld require dcumentatin t substantiate the cst and benefit t the System and the necessity fr any early travel t seminars r wrkshps. All dcumentatin shuld be reviewed and apprved by the Superintendent befre the travel is allwed. In the case f the Superintendent, the travel shuld be apprved by the Bard president. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The travel plicy will be included in the review and planned adptin f all schl district plicies currently in prgress. BSERVATIN 04-11: CELLULAR PHNES There is n frmal plicy that prvides guidance fr the business use and care f cellular phnes. Significant cell phne usage was nted n sme cell phnes which may indicate persnal calls were being made and received. Als, it was nted that a supervisr's cell phne was issued t a schl bus driver. The cell phne rates fr that phne were never changed t the schl bus driver rate f $10.00 per mnth.

130 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 RECMMENDATIN The written plicy fr the business use and care f cellular phnes shuld: establish criteria fr issuing cell phnes t emplyees based n emplyee duties and respnsibilities; require that the cellular phne cntract be reviewed at least annually t determine the minimum amunt f airtime minutes needed per mnth and negtiate a new cntract when the existing cntract expires; require emplyees that are issued cellular phnes t review their mnthly phne bill and identify persnal calls made r received and prvide written certificatin that they identified all persnal calls; require that the business manager bill each emplyee, at a standard rate fr each minute, fr persnal calls; and require that the business manager review the detailed mnthly bills fr prpriety and reasnableness f phne usage and that the plicy is being fllwed. We als recmmend that the System determine if cell phne charges can be lwered by applying t E-Rate. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - A cell phne plicy will be included in the review and planned adptin f all schl district plicies currently in prgress. Thse prcedures included in the recmmendatin will be included in the adpted plicy. BSERVATIN 04-12: CREDIT CARPS The Schl Bard has n frmal written plicy relating t the usage f business credit cards. The credit card statement alne is nt adequate dcumentatin as it des nt prvide enugh detail t supprt the prpriety f charges. We nted several charges n the credit cards fr which there was n detail t supprt the charge including a recurring mnthly charge fr internet service. RECMMENDATIN The Schl Bard shuld have a written plicy that prvides fr guidance fr the business use and supprting dcumentatin expected t be maintained. Detailed receipts and invices shuld be submitted fr supprting dcumentatin. Als, any recurring mnthly charges shuld nt be charged t credit cards, but shuld be made thrugh the nrmal purchasing prcess. Business purpses fr charges shuld be dcumented n the receipts. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately

131 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - A credit card plicy will be included in the review and planned adptin f all schl district plicies currently in prgress. Thse prcedures included in the recmmendatin will be included in the adpted plicy. BSERVATIN 04-13: ETHICS PLICY The System des nt have a written ethics plicy. RECMMENDATIN The Schl Bard shuld adpt an ethics plicy and distribute it t all emplyees. Als, the System shuld require annual certificatin letters frm bard members and emplyees attesting t their cmpliance, CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - An ethics plicy will be included in the review and planned adptin f all schl district plicies currently in prgress. Thse prcedures included in the recmmendatin will be included in the adpted plicy. BSERVATIN 04-14: BACKUP AND CNTINGENCY PLAN They System des nt have written back-up cntingency and recvery plan in the event f a disaster. File back-up fr schls is being perfrmed by the business manager at his hme. The cmputer rm at the Central ffice is lcated in an unlcked rm. RECMMENDATIN A plan shuld be develped and the recvery prcess shuld be tested annually. We recmmend that the System have autmatic backup set up at each schl similar t the daily autmatic backup f the Central ffice. Als, the Schl shuld have written plicies and prcedures fr backup and ther cmputer use. Physical access t the cmputer rm shuld be limited t nly authrized individuals. We recmmend that this area be lcked s access is limited with keys nly issued t business manager and the Superintendent. The System needs t develp plicies and prcedures relating infrmatin systems, including wh can update internal files n a server and what are critical data and nn-critical data.

132 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, 2004 CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The Schl District will include a written plicy and the prcedures necessary t have a backup and disaster recvery plan fr schl data. The plicy will include wh can update server files and identify critical and nn-critical data. BSERVATIN 04-15: ACCUNTING FR CASH AT SPECIAL EVENTS The ftball games are the largest recurring revenue generating event fr the High Schl. Revenue is generated thrugh the sale f tickets. General admissin and reserved tickets are sld at the ftball games. Cntrls ver cash appear t be adequate fr the general admissin sales. Hwever, cntrls culd be strengthened ver reserved tickets. The bkkeeper is respnsible fr selling seasn tickets which are mstly cash sales. She has cntrl f the reserved seating tickets which are nt prenumbered and she recnciles the tickets sld t the depsits. This lack f segregatin f duties increases the risk that an unauthrized transactin culd ccur and nt be detected in a timely manner. RECMMENDATIN We recmmend that access t the reserved tickets be restricted t schl emplyees nt assciated with the recnciliatin prcess. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Access t the reserved tickets will be restricted t schl emplyees nt assciated with the recnciliatin prcess. This will be included in the adptin f verall plicies currently under review fr adptin. BSERVATIN 04-16: PAYRLL FILINGS We bserved that penalties and interest ttaling $5,067 were paid t the IRS, Department f Labr, and the Department f Revenue during the year. Numerus ntices frm the agencies were nted including ne ntice frm the State that was a final ntice befre seizure. There was ne instance f an verpayment t the IRS ttaling $26,353, which tk several mnths t receive. 10

133 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 RECMMENDATIN Payrll frms filed with the IRS and the State including mnthly payrll tax depsits shuld be reviewed by smene ther than the preparer. Payrll frms and tax depsits shuld be accurate and filed n a timely basis. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Payrll frms filed with the IRS and the State including mnthly payrll tax depsits will be reviewed by smene ther than the preparer. These dcuments will be signed and dated by the reviewer. Payrll frms and tax depsits will be accurate and filed n a timely basis. BSERVATIN 04-17: BANK ACCUNTS We bserved that there were tw bank accunts f which management was nt aware and as a result they were nt subject t review and were nt being included in any financial reprt. RECMMENDATIN We recmmend that all bank accunts be mnitred and subjected t mnitring and accunting prcedures such as recnciliatins. Further, bank accunts shuld be clsed when the accunt becmes inactive. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Bank accunts will be mnitred and subjected t mnitring and accunting prcedures such as recnciliatins. Further, bank accunts will be clsed when the accunt becmes inactive. BSERVATIN 04-18: E-RATE MATCHING REQUIREMENTS E-rate pays 80 t 90 percent f the prgram expenditures directly t the vendr and the Schl Bard is required t match the E-Rate's cntributins by paying the remainder f the vendr's charges t the vendr. The Schl Bard is required t pay their prtin within 90 days f the 11

134 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 receipt f the invice. The Schl Bard's prtin f the E-Rate expenditures ttaling $128,757 fr the perid Nvember 2003 t May 2004 has nt been paid as f January 14, RECMMENDATIN We recmmend that the Schl Bard pay the amunt wed t the E-rate vendrs and remain current with E-rate invices in the future. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The Schl Bard will pay the amunt wed t the E-rate vendrs and remain current with E-rate invices in the future. BSERVATIN 04-19: PAYRLL We bserved the fllwing issues pertaining t payrll and payrll prcessing that are areas in which internal cntrls can be imprved r made mre efficient: 1. There are n written plicies and prcedures relating t payrll prcessing. Written prcedures aid in cntinuity f peratin and fr crss-training fr staff. Written plicies and prcedures are necessary as a clear understanding f what shuld be dne, hw, wh, and when it shuld be dne, and that the prcedures fllwed meet management's expectatins. 2. There are n written plicies relating t time/attendance recrds. Emplyees d nt file time/attendance reprts. 3. Nt all emplyees are required t cmplete simple time reprts t dcument hurs wrked. 4. It was nted that absentee frms being submitted t the payrll department which indicate vacatin and sick time were nt always signed by the emplyee nr was there indicatin f supervisr and superintendent apprval nted. All emplyees are nt signing the daily attendance lg in the Central ffice. 5. Daily attendance lgs at the schls and the central ffice are nt cmpared and recnciled in a timely manner. We bserved numerus instances in which emplyees had fewer days f leave reprted n the absentee frms cmpared t the daily sign-in lgs. 6. There are n prcedures fr the recrding and mnitring f vertime. Emplyees are respnsible fr reprting their vertime t the payrll department. 7. We bserved that reprts filed with the payrll department relating t attendance, vacatin, sick, and vertime (time sheets, absentee reprts, etc.) are nt recnciled by the payrll department befre payrll checks are issued. 12

135 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, Payrll is nt subject t final apprval befre payment by smene independent f payrll preparatin and timekeeping. 9. Emplyees with payrll respnsibilities are nt required t take vacatins 10. The taxable salaries being reprted n the Frm 941 's and State withhlding frms were incrrect. Grss salaries were reprted as taxable salaries. The amunt reprted shuld have been grss salaries less cafeteria plan deductins, retirement deductins, and ther tax-exempt deductins. The errr in the reprting f wages t the IRS and State ttaled $1,829,587 fr the year ended June 30, Payments t the IRS and the State were crrect and emplyee W-2s were crrect. 11. Payrll reprts used t prepare the mnthly payrll are nt reviewed by smene independent f payrll. 12. Cpies f Frm W-4 are nt being frwarded t the Internal Revenue Service when an emplyee claims mre than 10 withhlding allwances r exemptin frm withhlding when the emplyee's wages wuld nrmally be mre than $200 per week. 13. Plicy relating t attendance fr less than ne day needs t be evaluated. This plicy is nt written. The current prcedure being utilized is the teacher attendance data reprting plicy fr the Luisiana Department f Educatin. The data reprting plicy relates t data cllectin nly; hwever, the System is using this plicy t determine hw all emplyees are paid fr days they d nt wrk a full day. All emplyees nt just teachers that nly wrk ne hur up t fur hurs are required t take a ne-half vacatin day. Vacatin and sick time is nt reduced fr actual hurs taken ff but by half day increments. 14. There is cnfusin in the payrll department abut whether sme individuals are emplyees r independent cntractrs. Sme emplyees received payments fr stipends that shuld have been treated as emplyee wages, but these payments were treated as if they were an independent cntractrs. 15. We nted that ne f the tw sabbaticals taken during the year was nt apprved by the Schl Bard. We als nted that the required reprts, stating hw the sabbatical was being spent, were nt being filed prperly. 16. Persn preparing the payrll is nt independent f ther payrll duties. The payrll clerk recrds payrll data in the system prepares and prints checks, uses the check-signing machine t sign the checks, and distributes the checks. Per discussins with the clerk, there is n supervisry review f any f her duties. 17. Grss and net pay amunts as shwn n payrll tax frms are nt recnciled t ttal payrll n the payrll register and the general ledger. 18. We bserved that the payrll clerk has the ability t cnduct file maintenance transactins such as changing pay rate, address, etc. in the payrll system. Further, a cmputer-generated reprt is nt generated each mnth that shws all changes made t payrll fr the mnth. 19. Based n dcumentatin prvided, we were unable t determine if emplyees receiving stipends and extra pay perfrmed the services utside f nrmal business hurs. 20. The payrll perid fr each mnth cuts ff arund the 15th f the mnth. Payrll checks are issued arund the 24th f the mnth. As attendance plicies and prcedures are 13

136 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, 2004 weak, this payrll cut-ff can result in emplyees being paid fr time they have nt earned. 21. As the Systems payrll liability exceeds $100,000 fr a pay perid, it is required t make payrll tax depsits either electrnically r by phne t the IRS by the next business day. The System has elected t call the depsits in by phne. When using this methd the depsit has t be made the same day as the payrll checks are issued as payments made by phne are nt psted until the next business day. It has been difficult fr the business department t arrive at the crrect depsit amunt and make the depsit n the same day when using the telephne methd f payment. 22. Based n discussins with payrll, retirement cntributins are being paid directly by PIPS and ther gvernment agencies. It appears that these revenues and retirement expenses are nt being recrded n the general ledger. 23. Ttal annual vacatin and sick leave fr each emplyee is psted t the vacatin and sick leave sftware in July f each year instead f accruing the time as earned. 24. Emplyees are nt given a printut f their vacatin, sick, and cmpensatry time accrued n a quarterly basis. 25. It was nted that there was n dcumentatin f apprval fr vacatin, extended sick leave, and cmpensatry time f the Superintendent. 26. It was nted in several instances that there was n dcumentatin fr sme emplyee's vacatin time. 27. Amunts paid fr retirement cntributins are nt being recnciled t the amunts ging int the general ledger. Retirement cntributins that were payable at June 30, 2004 were verpaid in July resulting in an verpayment f arund $50, We bserved that the payrll department is nt always infrmed when emplyees (particularly teachers) are hired r leave emplyment whether thrugh resignatin, terminatin, retirement, r lng-term illnesses. RECMMENDATIN We recmmend that the fllwing recmmendatins be implemented pertaining t payrll and payrll prcessing. 1. Written plicies and prcedures relating t payrll prcessing shuld be drafted and adpted by the Bard. 2. Written plicies and prcedures shuld be develped relating t time/attendance reprting. The plicies shuld include the maintenance f a daily attendance lg, require all emplyees t sign-in, require principals and supervisrs t accunt fr all emplyees daily and recrd this infrmatin in a reprt, and require the persnnel department t cmpare daily absentee lists received frm principals and supervisrs t the absentee reprts filed t verify the accuracy f leave hurs used and earned. Als, this infrmatin shuld be recrded in the vacatin and sick time sftware n a daily basis. 14

137 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, All emplyees ther than teachers shuld be required t cmplete simple time reprts t dcument hurs wrked. The time reprts shuld be signed by the emplyee. The emplyee's supervisr shuld review and sign with apprval. 4. Emplyees and their supervisrs shuld sign absentee frms. 5. Daily attendance lgs at the schls and the central ffice shuld be cmpared and recnciled in a timely manner. We recmmend that Management recncile the absentee frms t the daily sign-in lgs. 6. A request frm shuld be develped fr the emplyee t request apprval t wrk vertime which will be treated as cmpensatry leave. This frm shuld be cmpleted by the emplyee and signed. The frm shuld be submitted t their supervisr wh reviews and apprves with signature. This frm shuld be frwarded t the payrll department and attached t the emplyee's timesheets with the vertime wrked. 7. All reprts filed with the payrll department relating t attendance, vacatin, sick, and vertime (time sheets, absentee reprts, etc.) shuld be recnciled by the payrll department befre payrll checks are issued. This will prevent emplyees being paid fr time they did nt wrk. 8. Payrll shuld be subject t final apprval befre payment by smene independent f payrll preparatin and timekeeping. 9. Emplyees with payrll respnsibilities shuld be required t take vacatins and ther emplyees shuld be required t perfrm thse functins when the emplyee is absent. 10. The Schl Bard staff shuld btain additinal training t learn hw t prepare Frm 941 and State withhlding frms crrectly. 11. The payrll reprts shuld be reviewed and signed by the preparer and then reviewed. 12. Cpies f Frm W-4 shuld be frwarded t the Internal Revenue Service when an emplyee claims mre than 10 withhlding allwances r exemptin frm withhlding when the emplyee's wages wuld nrmally be mre than $200 per week. 13. Vacatin and sick-time shuld be reduced by the actual hurs taken ff. 14. Prcedures ver determining whether individuals are emplyees r independent cntractrs needs t be strengthened. 15. We recmmend that the Bard establish prcedures t ensure that all sabbaticals are apprved by the Bard befre they are taken. It is als recmmended that the required reprts are prperly filed. 16. We recmmend that the incmpatible duties f the payrll clerk be segregated. We further recmmend that a supervisry review be perfrmed n all f her duties. 17. Grss and net pay amunts as shwn n payrll tax frms shuld be recnciled t ttal payrll n the payrll register and the general ledger. These recnciliatins shuld include the accruals fr salaries at beginning and end f year. 18. A cmputer-generated reprt shuld be generated each mnth that shws all changes made t payrll fr the mnth. This reprt shuld be reviewed by smene independent f payrll. Further, we recmmend that the system capabilities be investigated t determine if payrll file maintenance transactins such as changing pay rate, addresses, etc. be restricted t an emplyee ther than the payrll clerk. 15

138 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, Plicies fr payments f stipends and extra pay need t be reviewed. Prcedures shuld be implemented that increase the accuntability and dcumentatin supprting the services received in exchange fr the pay. 20. We recmmend issuing payrll checks n earlier that the end f the mnth and strengthening attendance accuntability. 21. We recmmend that the Schl Bard began making the payrll tax depsits electrnically n the next business day after payrll is issued. The payment is psted immediately and reprt is generated which indicates the payment was made timely. Als, this methd gives the business department mre time t calculate the crrect amunt f payrll tax liability t be remitted. 22. Retirement cntributins paid directly t the retirement systems n the Schl Bard's behalf shuld be recrded n the general ledger even thugh there is n impact n the fund balance. 23. The sftware shuld be updated t accrue the vacatin and sick time each mnth as earned. Therefre, the reprts f vacatin and sick time at any pint in time wuld give an accurate value f vacatin and sick time earned. 24. Emplyees shuld be given a printut f their vacatin, sick, and cmpensatry time accrued n a quarterly basis. This printut shuld be reviewed by the emplyees and the supervisrs. Emplyees and supervisrs shuld sign and date their apprval and return t payrll. 25. Prcedures shuld be established and put in writing fr the bard apprval f vacatin, sick, and cmpensatry time f the Superintendent. 26. All vacatin requests shuld be submitted by written frm t the emplyee's supervisr and the Superintendent fr apprval befre the vacatin is taken. The emplyee, the supervisr, and the Superintendent shuld sign the frm. 27. Amunts paid fr the retirement cntributin shuld be recnciled t the general ledger. 28. All schls and departments shuld ntify the payrll department immediately when emplyees leave emplyment r are n extended sick leave. We recmmend that a written ntice be frwarded t the payrll department which dcuments prper reasns fr emplyee nn-attendance and require apprval f an apprpriate fficial. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The recmmendatins included abve will be included in the plicies currently under review fr adptin. Sftware prgrammers will be cntacted t determine thse prcedures necessary t btain the desired results. 16

139 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 BSERVATIN 04-20: GENERAL BUSINESS FFICE PRCEDURES We bserved the fllwing issues pertaining t general business ffice prcedures that are areas in which internal cntrls can be imprved r made mre efficient: 1. Insurance invices have been verpaid during the year. The business ffice des nt review insurance invices and cmpare t plicies. Insurance n schl buses was verpaid fr the year. Bus drivers pay 75% and the System pays 25%. The System has been paying a larger percentage than the 25%. 2. The general ledger system des nt allw fr the printing f financial statements after the mnth is clsed. Als, the financial statements generated by the sftware need t be tailred t the needs f the Schl Bard, s that they are mre cnducive t financial decisins. 3. The business department cded numerus transactins t a miscellaneus revenue accunt (Balance was $207,490). Many f the revenues in this accunt were state and federal grants. 4. We bserved the interfund receivables and payables did nt recncile. 5. We bserved that sme prir year's audit adjustments were nt recrded in the general ledger. 6. Revenues frm Medicaid, federal grants, state grants, and ther revenues were nt reprted in the prper perid. 7. Indirect cst payments received frm ther funds were nt accunted fr prperly. 8. We nted numerus fixed asset purchases that were nt listed n the fixed asset listing. It appears that the schls and varius departments are nt frwarding fixed asset purchases t the business department. 9. Regular evaluatins f persnnel perfrmance are nt cnducted fr key supervisry and accunting staff psitins. 10. Emplyees are nt being prvided the current emplyee manual. Sme emplyees are nt familiar with System plicies and prcedures. 11. The rganizatinal structure appears t be inefficient in that duties are nt delegated dwnward in such a way t maximize the results with limited resurces. 12. The System des nt have written plicies and prcedures fr its administrative r business ffice functins. 13. Staff in the business department d nt appear t be adequately supervised. 14. The accunting sftware is nt being fully utilized by the business department fr mdules such as the accunts payable and financial statement mdule. 15. The accunting fr grants is nt centralized. 16. The Schl Bard maintains an excessive number f funds including inactive funds. 17. A review f interim financial statements after year-end indicates that the Business ffice is reprting deficit fund balances in numerus funds (excluding General Fund). 18. The chart accunts has t many accunts including accunts nt in use and it is difficult t determine if the accunt is an asset, liability, fund balance, revenue, r expenditure. 17

140 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, The System cdes numerus expenses t an accunt called "ther Expenses". The accunt cntained expenditures ttaling $355,000 fr travel, cmputer services and equipment, ther capital utlay, and ther charges which shuld be cded t ther accunts in the general ledger. 20. Jurnal entries made by accunting persnnel are nt reviewed by the business manager. 21. The System des nt have a recrd retentin plicy. RECMMENDATIN We recmmend that the fllwing recmmendatins be implemented pertaining t general business ffice prcedures. 1. We recmmend that insurance invices be reviewed and cmpared t plicies. 2. The Schl Bard shuld investigate the general ledger system capabilities and make apprpriate adjustments t the system s financial statements can be printed after the mnth is clsed. Als, the financial statements shuld be tailred t the needs f the Schl Bard, s that they are mre cnducive t financial decisins. 3. The business department shuld limit the use f the miscellaneus revenue accunt. 4. The business department shuld discntinue the practice f using numerus interfund receivables and payables with general fund. 5. The audit adjustments shuld be made prmptly at the cmpletin f an audit. 6. Reimbursement type grants and revenues shuld be reprted in the year that the expenses are reprted. 7. Indirect cst payments received frm ther funds shuld be reprted as transfers in general fund and the paying fund. 8. We recmmend that the Schl Bard perfrm a fixed asset inventry and stress the need fr timely submissin f purchases t the business department. 9. Regular evaluatins f persnnel perfrmance shuld be cnducted fr key supervisry and accunting staff psitins. 10. The System needs t update and develp a new emplyee manual. We recmmend that an emplyee manual be develped, distributed t emplyees in either hard cpy frm r electrnically and peridically updated as necessary. A cmprehensive and up-t-date persnnel manual can help cmmunicate, and encurage adherence t, System plicies; prevent pssible cnfusin r misunderstandings amng persnnel; and prvide a measure f liability prtectin t the System in case f emplyee legal challenges f System actins. 11. We recmmend that management review the current alignment f business department staff and their varius duties t ensure that the staff time is being used efficiently. We especially recmmend this in light f the high amunt f vertime the business department staff has been incurring and the number f bkkeeping inaccuracies that were nted. We acknwledge that sme realignment f the duties f the business department persnnel is in prcess and that a management-by-bjective prgram is being instituted. This presents a gd pprtunity t prepare a revised rganizatin chart fr 18

141 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 the entire Central ffice and t clearly define the duties f each psitin in writing. By describing the jb descriptins in writing, Management can get a clear idea f the distributin f respnsibilities. As part f this prcess, Central ffice persnnel shuld prepare a jb descriptin fr their psitins as well as fr psitins reprting t them. 12. We recmmend that the System develp and maintain a plicy and prcedures manual. A plicy and prcedures manual will dcument hw the System perates and will supprt crss-training and emplyee turnver when necessary. 13. All emplyees f the business department shuld be adequately supervised and their wrk shuld be reviewed by the business manager in a timely manner. 14. The Schl Bard shuld investigate the accunting sftware capabilities t maximize its use. The accunting sftware shuld als be used t extract grant prgram data and t prepare the mnthly request fr reimbursements sent t the Department f Educatin. 15. The business department shuld place ne individual in charge f accunting fr the varius grant prgrams. This individual wuld be respnsible fr btaining cpies f grant dcuments, cpies f reimbursement requests and ther reprts filed with the state and federal agencies, mnitring the grant budgets and the timely filing f reprts, verifying that reprts filed are accurate, and verifying that the grant revenue and expenditures are reprted prperly in the general ledger. This individual wuld als infrm the department supervisrs when grant revenues related t their prgram were received and prvide them access t view the data n the system. 16. The business department shuld evaluate the need fr the number f funds being maintained by the System (25). Funds that are inactive shuld be eliminated. Multiple funds fr the same grant prgram shuld be cnslidated int ne fund. Material grant prgrams being accunted fr in the general fund shuld be recrded in a separate fund. Numerus funds t accunt fr result in cmplexity and inefficient administratin. Time needed t recrd accunting transactins, as well as time and fees incurred in auditing and accunting services, culd be reduced if the System eliminated r cmbined funds when pssible. 17. Financial statements shuld nt be presented with deficit fund balances in funds ther than general fund. Transfers frm general fund shuld be recrded t avid the reprting f deficit fund balances in these funds. 18. The chart f accunts shuld be revised. Inactive accunts shuld be eliminated and accunt names shuld clearly indicate if the accunt is an asset, liability, fund balance, revenue, r expenditure. 19. The System shuld discntinue the active use f the ther expense accunt. 20. The Business Manager shuld review jurnal entries n a mnthly basis, 21. The System shuld develp a recrd retentin plicy that is in accrdance with State f Luisiana guidelines. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately 19

142 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The recmmendatins abve will be included the verall plicy manual currently under review fr adptin. The recmmendatins are sund and will be implemented. BSERVATIN 04-21: SCHL ACCUNTS We bserved the fllwing issues pertaining t schl accunts that are areas in which internal cntrls can be imprved r made mre efficient: 1. We nted a capital lease being paid thrugh the High Schl Accunt that is nt reprted in the financial statements nr is the crrespnding asset. 2. The High Schl had a certificate f depsit fr which the business ffice had n dcumentatin nr was it recrded n the financial statements. 3. A schl activity accunt at Clumbia Street has never been recrded r mnitred. We discvered the accunt during ur cash testing. 4. Activity in the Schl accunts is nt reviewed by the business ffice. Balance sheets are prepared each mnth but there is n review f actual transactins. 5. We bserved sme ld interfund receivables and payables included in the schl accunts. RECMMENDATIN We recmmend that the fllwing prcedures be implemented pertaining t general ffice prcedures. 1. Invices fr fixed assets and cpies f leases shuld be frwarded t the business ffice. 2. All bank accunts and investments shuld be prperly dcumented s the prper accunting can be applied. 3. We recmmend that all bank accunts and schl activity accunts be accunted fr. 4. The Business ffice shuld review all Schl accunt activity. 5. ld interfund receivables and payables shuld be cleared and/r written ff. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The recmmendatins abve will be implemented. 20

143 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, 2004 BSERVATIN 04-22: REIMBURSEMENT REQUESTS Federal Reimbursement Requests are nt always accurate. Fr instance, requests filed that indicate the expenditures are fr the perid July 1 t July 31 may have June and prir mnth expenditures n them. Further, requests fr reimbursement fr Special Educatin prgrams are nt being filed in a timely manner. Sme f the reimbursement requests were filed in ctber and Nvember f 2004 fr June 2004 and prir expenditures. RECMMENDATIN Expenditures fr the fiscal year shuld be reprted mnthly n a request which indicates the prper reimbursement perid. Further, smene ther than the preparer shuld als review the requests befre they are submitted. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - Expenditures fr the fiscal year will be reprted mnthly n a request which indicates the prper reimbursement perid. Smene ther than the preparer will als review the requests befre they are submitted. BSERVATIN 04-23: SEGREGATIN F DUTIES The business manager prepares the depsit slip fr ad valrem and sales taxes when received. He als psts these payments, recnciles the accunt, and makes the depsit. Allwing these functins t be cntrlled by the same persn increases the risk that errrs r misapprpriatin culd ccur and g undetected. RECMMENDATIN We recmmend that these incmpatible duties be segregated. All cash receipts shuld be pened and cntrlled by a persn independent f the persn respnsible fr the accunting f these transactins. The accunts payable clerk culd pen the mail, endrse the checks, and prepare the depsit slip and daily list f receipts. The checks and depsit slip wuld then be frwarded t the business manager fr depsit. The daily list f receipts wuld be frwarded t the accunting clerk wh psts the payments. The daily list f receipts shuld be cmpared t the receipted depsit slip in accunting. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately 21

144 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30,2004 Persn Respnsible - David Neely, Business Manager, (985) Actin Planned - The Schl District will separate these duties between peple s that n ne persn perfrms all functins. BSERVATIN 04-24: CNTRLS VER CASH RECEIPTS AND DISBURSMENTS We bserved the fllwing weaknesses in the cntrl ver cash disbursements and receipts: 1. At present, the System has tw authrized check signers, the Superintendent and the Bard President. Bth f their signatures are required n all checks. In the event f the resignatin, terminatin, r death f ne f these individuals, checks wuld nt be able t be issued. 2. Althugh a check signing facsimile machine is used t sign checks, the System des have manual check stamps fr the Superintendent and the Bard President. These check stamps are secured in ffices that are nt always lcked during business hurs. 3. There is n written plicy fr the prcessing, reviewing, and apprving f cash disbursements. 4. Accunting persnnel perfrm bank recnciliatins and pen the bank statements. RECMMENDATIN We recmmend that the fllwing prcedures be implemented pertaining t cntrls ver cash disbursements and receipts: 1. All Bard members shuld be added as authrized check signers in the event f the resignatin, terminatin, r death f the Bard President r Superintendent. 2. Check stamps shuld be secured in separate lcked drawers r cabinets. 3. A written plicy shuld be develped fr the prcessing, reviewing, and apprving f disbursements. The plicy shuld specifically address disbursements fr expenditures f Bard members and the Superintendent. 4. We recmmend that smene independent f the accunting department pen the bank statements and review them fr any unusual checks r ther transactins befre giving them t the accunting department t perfrm the recnciliatins. This independent review f the bank statement will ensure that unusual items are investigated n a timely basis. CRRECTIVE ACTIN PLAN Implementatin Date - Immediately Persn Respnsible - David Neely, Business Manager, (985)

145 BSERVATINS, RECMMENDATINS, AND CRRECTIVE ACTIN PLAN (CNTINUED) June 30, 2004 Actin Planned - The recmmendatins abve will be included in the plicies that are under review and fr adptin by the Schl Bard. BSERVATIN 04-25: CNTRLS VER PURCHASING We bserved the fllwing weaknesses in the cntrl ver the purchasing system: 1. We nted that requisitins fr materials and supplies are prepared by the department heads. We nted numerus requisitins, that the Superintendent did nt apprve befre a purchase rder was cmpleted. Als, the Superintendent r the department head did nt cnsult with the business department t determine if funds were available t purchase the materials and supplies. 2. There is n plicy in purchasing that indicates if certain purchases wuld nt need a purchase rder such a recurring mnthly charges and cntracts. 3. The System is using a manual purchase rder system. Purchase rders are issued if a requisitin was issued. There are n cntrls in place t determine if funds are available fr the purchase. 4. Purchase rders are nt reviewed and apprved by smene independent f the purchasing ffice t determine cmpliance with bid law and that cmpetitive qutes where btained when the dllar threshld is lwer than the bid law including verificatin f bid dcumentatin. 5. We nted several instances were the dllar amunt f the requisitins did nt match the invice. RECMMENDATIN We recmmend that the fllwing prcedures be implemented pertaining t cntrls ver the purchasing system: 1. We recmmend that the Superintendent apprve all requisitins befre a purchase rder is issued. The requisitin shuld be signed and dated by the department supervisr and the Superintendent. 2. We recmmend that the purchasing plicy be revised t indicate hw purchases shuld be handled fr cntracts and ther recurring mnthly charges where a requisitin may nt be needed. 3. We recmmend that the System purchase an autmated purchase rder system that will nt allw purchase rders t be created and invices t be paid when an accunt is ver budget. 4. Purchase rders shuld be reviewed and apprved by smene independent f the purchasing ffice t determine cmpliance with bid law and that cmpetitive qutes where btained when the dllar threshld is lwer than the bid law including verificatin f bid dcumentatin. Apprval shuld be indicated n the purchase rder. 5. Requisitins shuld be reviewed fr accuracy befre apprval. 23