Internal Audit Department

Internal Audit Department Steven Martin, CPA/CFF, CFE, CGMA, CIGI September 11, 2014 Director of Internal Audit To Dorthery West, Area Director: Independent Auditor s Report on Applying Agreed-Upon Procedures We have performed the procedures enumerated below, which were agreed to by you, solely to assist you to determine if Webb Middle School is in compliance with Garland ISD Board Policy CFD (Local) and the Garland ISD Campus and Department Accounting Procedures (CDAP) Manual regarding activity fund deposits and petty cash. Garland ISD is responsible for its activity fund deposits and petty cash records. This agreed-upon procedures engagement was conducted in accordance with U.S. generally accepted government auditing standards. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Definitions of required CDAP Manual forms are provided in Appendix One., criteria per the CDAP Manual in Appendix Two, and descriptions of the reviewed activity funds are in Appendix Three. Methodology We selected eleven activity fund deposit transactions from the Webb Middle School 2013-2014 school year Oracle GISD Accounting Detail Reports for campus activity (461), student activity (865), and other activity (876). We compared manual GISD receipts to General Money Collection Forms, Bulk Sales Worksheets, or game reports (Middle School Ticket Reports), and to Activity Fund Deposit Tickets We compared Oracle GISD Receipts Registers and Oracle bank deposit receipts to manual bank deposit slips and supporting documents We compared commission and donation supporting documents to manual bank deposit slips We reviewed sales tax status Phone: 972.487.3109 GARLAND INDEPENDENT SCHOOL DISTRICT Street Address: Garland, Rowlett and Sachse Mailing Address: 501 South Jupiter Road Harris Hill Administration Building PO Box 469026 Garland, Texas 75042 www.garlandisd.net Garland TX 75046-9026

We verified approvals of fundraisers and principal s review of Financial Recap forms (Note that a February 21, 2012 internal audit demonstrated the Activity Fundraising Application and Financial Recap forms were inconsistently used. The former campus principal responded that the procedural issue would be addressed and put into practice.) We also counted the petty cash and compared it to the amount recorded in Oracle and the CDAP authorized amount. Findings and Observations Deposit One This $110 deposit is from a PTA donation of $50 and cell phone administrative fees of $60 (Oracle Campus Accounting Detail: fund 461, activity account 90010 - General Campus, deposit batch 10492472, dated 4/11/14, donations). Findings: 1) The Activity Fund Deposit Slip shows that $60 was from cell phone fees and $50 from a PTA donation yet in Oracle $92.45 is credited to the General Campus activity and $17.55 to General Student. The GISD Receipt Register shows $92.45 was from cell phones and donation, and $17.55 from donations, yet no supporting documentation is provided stating why a $50 PTA donation was split between two activities. 2) Students and parents did not receive manual GISD receipts at the time cell phone administrative fees were paid. Furthermore, no General Money Collection Form or other similar document was provided to support the Activity Fund Deposit Ticket, which is supposed to be signed by the collector. Additionally, only the campus secretary s last name is written beside the principal s initials. 3) Per the August 2013 GISD Management Plan and Student Code of Conduct, a cell phone fee not to exceed $15 may be charged for a first offense and a $15 fee will be charged for a second offense, when a cell phone has been confiscated and retrieved by a parent or student. However, the school receptionist stated that school policy was to charge $10 to students on the first offense (no charge to parents) and $15 on the second (parents pay $10). Accordingly, charging parents $10 on the second offense is not per policy. Observation: This $110 deposit was credited to two activities- $92.45 to General Campus and $17.55 to General Student. However, the manual deposit slip shows that $60 was from cell phone fees and $50 from a PTA donation. There is no documentation showing why the different activities were credited as they were. Furthermore, the CDAP, section 1.3 states, The school principal/department head is responsible for the proper collection, disbursement and control of all activity funds at the school/department. This means a principal could collect $200 in band fees and place them into an art activity account. 2

Deposit Two This $641 deposit was for a Halloween dance (Oracle Campus Accounting Detail: fund 461 activity 90020 - General Student, deposit batch 10492396, dated 10/28/13, Webb dance cash, $641). Findings: 1) There was no supporting documentation of funds collected for the fundraiser dance other than the Activity Fund Deposit Ticket with the former principal s last name on the signature line. Funds were not recorded on a General Money Collection Form or Bulk Sales Worksheet, nor were manual GISD receipts issued. 2) An Activity Fund Fundraising Application and Financial Recap Form was not completed and verified by the sponsor and principal s secretary. Deposit Three This $1,448 deposit is from yearbook sales (Oracle Campus Accounting Detail, fund 461, activity 90360 - Journalism, deposit batch 10492398, dated 11/13/13, yearbook, $1,448). Findings: 1) The Activity Fund Fundraising Application and Financial Recap Form was incomplete. The following were not included: taxable status, purpose for the funds, expected net income, former principal s approval, account number, vendor phone and address, and the Financial Recap section with the sponsor and principal s secretary s signatures. Furthermore, the yearbook deposit was entered in Oracle as non-taxable without support of the Activity Fund Fundraising Application and Recap Form to designate the yearbook sale as tax-free before the sale occurred. 2) The teacher did not receive an Oracle GISD Receipt when the money and supporting documentation was delivered for deposit. Deposit Four This deposit consisted of T-shirt sales totaling $434, a 5 for $5 fundraiser totaling $135, and candy sales totaling $140, totaling $709 (Oracle Campus Accounting Detail: fund 461, activity 90540 - Theatre, deposit batch 10492467, dated 04/04/14, T-shirts Guys and Dolls theatre, $654.97). Findings: 1) The entire deposit was entered as taxable when only the T-shirt sales were. Accordingly, Oracle calculated sales tax at $54.03 instead of the correct amount of $33.08. Disclosure: Internal audit notified the Business Office for correction to the general ledger. 2) The teacher turning in the funds did not receive an Oracle GISD Receipt. 3) The teacher relinquishing the funds to the secretary did not sign or date the two Activity Fund Deposit Tickets. 3

4) An Activity Fund Fundraising Application and Financial Recap Form was not completed. Deposit Five This $814 deposit was for a boys athletic fundraiser (Oracle Campus Accounting Detail: fund 461, activity 92010 - Athletics Boys, deposit batch 10492455, dated 03/19/14, Boys athletics fundraiser, $814). Finding: An Activity Fund Fundraising Application and Financial Recap Form was not completed. Deposit Six This $1,162.79 deposit was from a Webb Middle School girls athletic fundraiser (Oracle Campus Accounting Detail: fund 461, activity 92020 - Athletics Girls, deposit batch 10492492, dated 05/27/14, fundraiser/donations, $1,162.79). Findings: 1) The teacher turning in the funds did not receive an Oracle GISD Receipt. 2) The General Money Collection Form was not totaled. Accordingly, there was no total that reconciled it to the Activity Fund Deposit Ticket. 3) The Activity Fund Deposit Ticket was not signed or dated by the teacher. 4) An Activity Fund Fundraising Application and Financial Recap Form was not completed. Deposit Seven This $4,965.75 deposit was collected by a cheerleading organization per the Activity Fund Deposit Slip (Oracle Campus Accounting Detail: fund 461, activity 92070 - Cheerleaders, deposit batch 10492494, dated 05/27/14, cheerleaders, $4,965.75). Finding: Supporting documentation was not appropriate because the source of funds, teacher s name, organization, date and signature were not included. No Activity Fund Fundraising Application and Financial Recap Form was completed, nor a General Money Collection Form or Bulk Sales Worksheet. A spreadsheet listing the names of the cheerleaders who paid from $100 to $392 was provided, but the spreadsheet provided none of the other information required to determine why the funds were collected or if they were taxable. Deposit Eight This $349 deposit was for Instrument Usage Fees per a spreadsheet provided as supporting documentation (Oracle Campus Accounting Detail: fund 461, activity 92500 - Band, deposit batch 10492406, dated 11/26/13, band usage fees, $349). 4

Observation: The supporting spreadsheet was not signed or dated by the teacher. However, the CDAP only states that the General Money Collection Form, Bulk Sales Worksheet, or some other appropriate documentation should be utilized. Although the General Money Collection Form and Bulk Sales Worksheet require signatures and dates of signatures, the CDAP is silent on what other appropriate documentation requires. Second, the CDAP states that such supporting documents should be utilized, not that they are required. Deposit Nine This deposit consisted of instrument rentals totaling $40, shirt re-sales totaling $152, and food fundraisers totaling $1,870 (Oracle Campus Accounting Detail: fund 461, activity 92520 - Orchestra, deposit batch 10492391, dated 10/18/13, Fundraiser Orchestra, $2,062). Findings: 1) The deposit was incorrectly entered into Oracle as non-taxable because the shirt re-sales deposit amount should have been entered in Oracle as taxable, with $11.58 of the $152 deposit routing to sales tax liability calculated at the 8.25% tax rate. Disclosure: Internal audit notified the Business Office for correction to the general ledger. 2) An Activity Fund Fundraising Application and Financial Recap Form was not completed. Deposit Ten This $359 deposit was for a Volleyball game (Oracle Campus Accounting Detail: fund 876, activity 96010 - Athletic Revenues, deposit batch 20492089, dated 10/25/13, Webb vs. Jackson Vv-ball, $359). Findings: 1) The Middle School Ticket Report was not completed as required because printed names were on the Ticket Collector and School Administrator lines instead of signatures. 2) Other documentation which was not signed or dated by the ticket collector was used in lieu of the required Activity Fund Deposit Ticket. Deposit Eleven This $1,286.55 deposit includes funds from a faculty basketball game, cell phone fines, and a $279.55 commission check from Fresh Choice Vending (Oracle Campus Accounting Detail: fund 461, activity 90010 - General Campus Funds, deposit batch 10492449, dated 3/21/14, faculty game / cell phone / Fresh Vending, $1,286.55). Findings: 1) Manual GISD receipts were not issued to students and parents at the time cell phone retrieval administrative fees were paid. Neither was a General Money Collection Form prepared. 5

2) There was no supporting documentation of administrative fees collected from parents or students for retrieval of their personal cell phones or funds collected for the faculty B-ball game other than an Activity Fund Deposit Ticket with the principal s secretary s last name and the former principal s initials on the Collector Signature line of the form. It cannot be determined how much of the deposit was from the basketball game and how much was from cell phone fines. 3) The Fresh Choice Vendor statements shows receipts of $1,331.20, and a 22% commission of $279.55. However, 22% of $1,331.20 is $292.86. 4) An Activity Fund Fundraising Application and Financial Recap form was not completed for the faculty basketball game fundraiser. Observation: Supporting documentation included a Fresh Choice Vending January 2014 statement in the amount of $279.55. The manual deposit slip was dated March 20, 2014. There was no supporting documentation to verify the date of the commission check. If the check was received in January 2014, the deposit on March 20, 2014 was not timely. Furthermore, the only other commission statement from this vendor on this campus was for February 2014, despite the vendor servicing the school for approximately nine years. Neither the school nor the Purchasing Department has the contract with this vendor. Accordingly, it cannot be determined if additional commissions are due. Additionally, Coyle Middle School has an agreement with Fresh Choice Vending effective September 1, 2011. The agreement states Fresh Choice Vending will pay the school 22% of the gross sales monthly, however, Fresh Choice Vending s payments are irregular and for 21% of gross sales, per its statement. Petty Cash We counted petty cash totaling $400 and matched it to the balance in the accounting records. These amounts also matched the $400 allowable for middle schools in the CDAP Manual. The principal s secretary stated that she does not use petty cash. Petty cash was last reconciled in Oracle on October 10, 2012. Additional Finding - Collection of Cell Phone Administrative Fees Finding: The campus was not in compliance with the regulations set forth for students in the August 2013 Garland ISD Division of Education Operations Management Plan and Student Code of Conduct by not consistently charging $15 if a phone was confiscated a second time, and not maintaining a record for the collection of cell phone retrievals and administrative fees, noting first, second, third and following infractions. We reviewed the collection of cell phone administrative fees for deposits #1 and #11, according to the following criteria: 6

The August 2013 Garland ISD Division of Education Operations Management Plan and Student Code of Conduct is the District s response to requirements of Chapter 37 of the Texas Education Code. A letter from Superintendent Bob Morrison to parents and students on page 61 of the Management Plan and Student Code of Conduct includes the following statement: It is important that every student understand the Management Plan and Student Code of Conduct, and be encouraged by his/her parents or guardians to follow the rules and regulations set forth in the plan and code. Following, is a portion of the section titled, Possession of Telecommunications and Entertainment Devices: An authorized District employee may confiscate a personal telecommunications device, including a mobile telephone, used in violation of applicable campus rules. The parent shall be notified after the telecommunications or cellular phone is confiscated. A parent may retrieve the device without charge on the first infraction. 1) When the device is confiscated and retrieved by the student an administrative fee not to exceed $15 may be charged. 2) If confiscated a second time and retrieved by the parent or the student, an administrative fee of $15 will be charged for the return of the device. 3) Three violations may result in confiscation of the device for the remainder of the school year. During the time period under audit, the office receptionist maintained a personal Excel spreadsheet record of the return of cell phones to parents and/or students that included a record of cell phone administrative fees she collected personally. She explained that the campus charged $10 to a student for a first infraction and $15 for a second infraction. Parents paid $10 the second time they retrieved cell phones. Per the Excel spreadsheet, there were 213 infractions listing the students first and last names, student identification numbers (for some of the students), cell phone pick up date, and a column to note when a parent or grandparent picked up a cell phone, or when an exception or free pass was granted from the former principal, an assistant principal, counselor or teacher. There was not a column for recording the infraction number (i.e.: infraction #1, #2 or #3). However, because student names were listed alphabetically, we determined the number of infractions by how many times the same student s name was listed: 176 (83 percent) were first infractions and 37 (17 percent) were second or third infractions. Of the 37 second or third infractions, 35 (95 percent) were incorrectly charged or not charged and two (five percent) were correctly charged. An assistant principal stated that when the receptionist was not available to collect the fees, the principal s secretary, assistant principals, or principal collected the fees, but did not update the spreadsheet. She stated that there was no known record to determine 7

cc: Board of Trustees, Garland ISD Bob Morrison, Superintendent Linda Chance, Deputy Superintendent of Instruction Rene Barajas, Deputy Superintendent of Business Jovan Grant-Wells, Associate Superintendent, Division of Curriculum, Instruction and Assessment Kenneth Washington, Webb Middle School Principal 9

Appendix One Descriptions of CDAP Manual forms: 1. Activity Fund Fundraising Application and Financial Recap Form The application portion of the Activity Fund Fundraising Application and Financial Recap Form is completed by the teacher/sponsor and signed by the principal. The Financial Recap portion of the form is completed and signed by the teacher/sponsor and verified and signed by the principal s secretary. Both the teacher/sponsor and the principal s secretary are to retain copies of the completed form. The form, available from the GISD Print Shop and on the GISD Intranet under the Business Department, is required and intended as an aid to the school principal to evaluate fundraiser requests and to provide financial results for each sale. The principal should review and initial the completed recap and obtain explanations for significant differences between expected net income and actual net income (17.1 Fundraising Policy, 17.3 Fundraising Procedures (6) p.3). Observation: There is not a line on the Activity Fund Fundraising Application and Financial Recap Form for the principal to document his or her review of the event by either his/her initials or signature (17.3 Fundraising Procedures (6) p.3). 2. Manual GISD receipt Manual GISD receipts should be issued by teachers or sponsors to individuals giving money. Consecutive identifying numbers are printed on the receipts. Receipt books are available from the GISD Print Shop (4.2 Receipt of Monies by Teacher/Sponsor, p.1). Observation: Although the CDAP mentions submission of the GMCF and Bulk Sales Worksheet with collected funds to the secretary or accounting clerk, it is silent on submitting copies of manual GISD receipts. 3. General Money Collection Form (GMCF) The General Money Collection Form, available on the GISD Intranet under the Business Department, enables the teacher or sponsor to adequately track checks and cash that have been received from students (4.2 Receipt of Monies by Teacher/Sponsor, p.1). 4. Bulk Sales Worksheet The Bulk Sales Worksheet, available on the GISD Intranet under the Business Department, enables the teacher or sponsor to determine that funds are properly accounted for when it is not practical to enter each sale. An example would be the operation of a concession stand (4.2 Receipt of Monies by Teacher/Sponsor, p.1). 5. Middle School Ticket Report / High School Ticket Report (referred to as a Game Report Worksheet in the CDAP Manual) The Middle School Ticket Report / High School Ticket Report is the document required for the ticket seller to record the amount collected for athletic competitions (gate receipts) (4.4 Athletic Competition Receipts, p.3). Beginning and ending 10

student and adult ticket numbers are entered on this form, enabling a reviewer to verify that tickets sold before and after the ticket sales recorded on the report are consecutive. The worksheet is provided to the campus by the Athletics Department. 6. Activity Fund Deposit Ticket (referred to as a Deposit Ticket Form in the CDAP Manual) The Activity Fund Deposit Ticket, available on the GISD Intranet under the Business Department, is completed by the teacher/sponsor and is used to detail currency, coins and cash submitted to the secretary/accounting clerk (4.2 Receipt of Monies by Teacher/Sponsor, p.2). Additionally, the form contains the following fields: date, organization, teacher/sponsor, reason for deposit (donations, cocurricular / extracurricular, re-sales), collector signature/date, and an Accounting Use Only section in the upper left hand corner to record the type of fund and activity, the deposit slip number, and the receipt number. Observation: Although currency and coin are totaled, there is no total line for the Reason for Deposit which can then be compared to Total Currency. Furthermore, receipts are not separated into taxable and non-taxable amounts. 7. Manual Bank of America deposit slip The manual Bank of America deposit slip is the transmittal form sent to the bank with the deposit, and is obtained from the cash manager in the Business office. The deposit slip, titled Receipt Batch on the Oracle GISD Campus Accounting Detail Report, includes the identifier number on the lower left-hand side of the slip (e.g., 10491234). The first digit identifies the activity fund (e.g., 1-Campus Activity, 2- Student Activity). The next three digits identify the assigned campus number. The remaining four digits identify the actual deposit. The manual bank deposit slips serve as the record of monies deposited in the bank on specific dates (2.1 Basic Bookkeeping Requirements). 8. Oracle unnamed form receipt (referred to as an official district receipt or cash receipt via Oracle in the CDAP Manual) The Oracle unnamed form receipt is printed from Oracle and issued by the campus secretary or accounting clerk to the person submitting money and supporting documentation (2.1 Basic Bookkeeping Requirements (1); 4 Receipt of Cash; 4.1 Receipt of Monies by the Campus Secretary/Accounting Clerk). This document includes the manual Bank of America deposit slip number and the reference/receipt number entered by the principal s secretary, an Oracle generated document number, the customer, taxable status, comments (i.e., a description of the purpose for the deposit), the activity fund, the deposit amount, and the receipt date. 9. Oracle GISD Receipt Register The GISD Receipt Register is printed from Oracle when a bank deposit slip is prepared (2.1 Basic Bookkeeping Requirements). This document includes the deposit slip number, activity fund, Oracle generated document number from the related Oracle unnamed form receipt, receipt date(s), deposit amount(s), reference/receipt number(s), Paid From, and the account code(s). 11

10. Oracle GISD Campus Accounting Detail Report The Oracle GISD Campus Accounting Detail Report may be accessed through the Inquiry and Reports responsibility within Oracle. The accuracy of deposit postings into Oracle may be verified by reviewing the Oracle GISD Campus Accounting Detail Report for the campus (2.1 Basic Bookkeeping Requirements (4)). The Receipt Batch number identified on this report is the manual Bank of America bank deposit slip number entered into Oracle. This number is titled the Deposit Slip Number on the Oracle unnamed form receipt and the Oracle GISD Receipt Register. The Description column on the Oracle GISD Campus Accounting Detail Report is under Comments on the Oracle unnamed form receipt. Observation: Titles of Forms The CDAP Manual and actual form titles differ: Title of Form Middle School Ticket Report / High School Ticket Report Activity Fund Deposit Ticket No title (auditor reference: Oracle unnamed form receipt) Oracle GISD Receipt Register CDAP Manual Reference Game Report (Worksheet) Deposit Ticket Form (CAP-127) Official district receipt, cash receipt via Oracle Entry to Oracle cash receipt 12

Appendix Two Criteria per the GISD Campus and Department Accounting Procedures Manual Basic Bookkeeping Requirements, Section 2.1 The following records are required to account for receipt of funds. (1) Cash Receipts The means for accurately recording monies received and to provide support for each bank deposit. Official district receipts will be printed in Oracle at receipt entry (auditor s note: a receipt printed from Oracle is referred to in this audit report as an Oracle unnamed form receipt). (2) Deposit Slips serves as the transmittal device to the bank and are the record of monies deposited in the bank on specific dates (auditor s note: a deposit slip is a manual Bank of America deposit slip). (4) Entry to Oracle cash receipts (auditor s note: an entry to Oracle cash receipt is an Oracle GISD Receipt Register). The accounting records are the responsibility of the campuses/departments. This will be accomplished with the GISD Campus/Department Accounting Detail Report which may be accessed through the Inquiry & Reports responsibility within Oracle. Receipt of Cash, Section 4 Proper accounting for the receipt of all cash and checks received at the campus/department is required. Only official Garland ISD receipts printed from Oracle are to be used. Proper cash receipting requires planning, control, and accountability over the process (auditor s note: a Garland ISD receipt referenced in the CDAP Manual is an Oracle unnamed form receipt). Receipt of Monies by the Campus Secretary/Accounting Clerk, Section 4.1, p.1 An official district receipt shall be issued when cash or checks are received by the campus secretary/accounting clerk. The only exception to this is for the collection of sundry cash advance and travel advance refunds to the Business Office. For all other receipts of cash and/or checks received at the campus level by the secretary/accounting clerk, an official district receipt printed from Oracle is to be issued to the person submitting the money. Under no circumstance shall a cash receipt be altered (auditor s note: an official district receipt or a cash receipt referenced in the CDAP Manual is an Oracle unnamed form receipt). Receipt of Monies by Teacher/Sponsor, Section 4.2, pp. 1-2 When an authorized teacher or sponsor of an organization is collecting money for a fundraising campaign or activity, the General Money Collection Form (GMCF), Bulk Sales Worksheet, or some other appropriate documentation should be utilized. Individuals giving money should be issued a receipt by the teacher/sponsor. Receipt books are available from the Print Shop (auditor s note: a receipt issued by the teacher/sponsor referenced in the CDAP Manual is a manual GISD receipt). The General Money Collection Form will enable the teacher or sponsor to adequately track checks and cash 13

that have been received from students. The Bulk Sales Worksheet will enable the teacher or sponsor to determine that funds are properly accounted for when it is not practical to enter each sale. An example would be the operation of a concession stand. When the campaign or activity is complete, a Deposit Ticket Form must be completed. All information from the General Money Collection Form (GMCF) and the Deposit Ticket Form should tie back to each other (auditor s note: a Deposit Ticket Form referenced in the CDAP Manual is an Activity Fund Deposit Ticket). The totals of checks and cash should match the totals on the Deposit Ticket Form and the form supporting the receipts (GMCF, Bulk Sales Worksheet, etc.). The teacher/sponsor responsible for collecting the funds should sign off on both forms. A receipt for the money submitted will then be issued to the teacher/sponsor. Teachers/sponsors should make every effort to ensure that forms are completed and monies transferred to the secretary/accounting clerk as quickly as possible. Always remember that every monetary transaction that occurs must be documented as noted and by an issuance of a cash receipt by the secretary/accounting clerk via Oracle. Individual sponsors/collectors should keep copies of their documentation for two years for audit purposes. Receipt of Monies from Teacher/Sponsor, Section 4.3, p.3 It is the intent of the district that as little money as possible remain in the schools overnight. Make deposits as often as is necessary to achieve this goal. Athletic Competition Receipts, Section 4.4, pp. 3-4 The campus principal/athletic Office is responsible for the proper collection of funds for athletic competitions (gate receipts) held on their campus. The amount collected is to be indicated on a game report (worksheet) for the particular sports event. One copy of the game report is given to the campus secretary/accounting clerk, one copy is sent to the Athletic Department, and one copy is maintained by the Stadium Manager/Gym Supervisor (auditor s note: a game report worksheet referenced in the CDAP Manual is a Middle School Ticket Report / High School Ticket Report). A Deposit Ticket Form is to be completed and the money given to the campus secretary to be deposited as athletic revenues in Fund 876. Upon receipt of the funds, an official district receipt is prepared by the campus secretary/accounting clerk through Oracle. One copy of the receipt is given to the employee in charge of the gate receipts. The other copy of the receipt is forwarded to the Athletic Office, along with a copy of the worksheet for that event. All athletic competition receipts are to be accurately and timely given to the campus secretary / accounting clerk, no later than the next business day after the athletic event. Procedures for the Preparation of Bank Deposits, Section 5.2, p.1 The sum of the amounts of the supporting cash receipts must agree with the amount of the deposit slip. 14

State and Local Sales Tax, Section 16.1 Sales tax must be paid on all taxable items sold by any group or organization of the school. In general, if an item is purchased to enable the school to fulfill its educational purpose, it is exempt from sales tax. The school is exempt. However, students and faculty of the school are not exempt. Sales Taxable Items, Section 16.4, p.2 Items on which sales tax must be collected are listed in this section. Tax Exempt Sales, Section 16.5, p.3 Items which are exempt from sales tax are listed in this section. One-day Tax-Free Sales, Section 16.6, pp.3 and 4 Each campus can designate two one-day, tax-free sales or auctions per calendar year. Each student group can also designate two one-day, tax-free sales or auctions per calendar year. For additional clarification on the issue of designated one-day tax-free sales or auctions, please refer to the following: Educational organizations qualifying for exempt tax status may conduct a one-day tax-free sale twice each calendar year (January December). If two or more organizations go in together on a sale, that would count as one of the tax-free sales for all of the organizations involved. A declaration that the sale is a one-day taxfree sale must be made in writing before the sale occurs. Items to be sold at the oneday sale may be purchased tax free by issuing an exemption certificate to the seller. The certificate must state that the taxable items are to be resold at the one-day sale. It is the responsibility of the principal and the campus secretary/accounting clerk to track one-day tax-free sales. The sale of yearbooks can be chosen by a school to be one of its two one-day taxfree fundraisers. Yearbooks fall under an old special provision of the state comptroller s rules that is still in effect today. Yearbooks are taxable unless chosen to be a tax-free sale. Fundraising Policy, Section 17.1, p.1 In order to provide administrative control over the extensive fundraising activities promoted by the school and its various school organizations, the Activity Fund Fundraising Application and Financial Recap form is required. The application section of the form provides information concerning the planned project, which will aid the school principal in evaluating the request. The Activity Fund Fundraising Application and Financial Recap form will provide the financial results (receipts and disbursements) for the sale. The sponsor and principal may then evaluate the financial results. 15

Fundraising Procedures, Section 17.3, (6), p.3 As the Fundraising Project ends, the club sponsor will complete the bottom portion of the white and canary forms, and meet with the campus secretary/accounting clerk to verify the Financial Recap section. The campus secretary/accounting clerk will sign to verify the information is correct and in agreement with the school Activity Fund records. The campus secretary / accounting clerk will retain the canary copy of the completed form and attach with the pink copy already on file to close the fundraiser. The teacher/sponsor will retain the white copy for his/her records. The principal should review and initial the completed recap and obtain an explanation for significant differences between expected net income and actual net income. This form must be completed in its entirety. Observation (Auditor s note: The word should infers obligation, but not an absolute necessity. Accordingly, when an action is required, it is more precise to use the word must. Some findings included herein are based on interpreting should as must. ) In Section 4 of the CDAP manual, should, instead of must is stated in the following sentences: An actual cash count should be made by the person signing the receipt in the presence of the person turn in the money, whenever possible. When an authorized teacher or sponsor of an organization is collecting money for a fund raising campaign or activity, the GMCF, Bulk Sales Worksheet, or some other appropriate documentation should be utilized. Individuals giving money should be issued a receipt by the teacher/sponsor. All information from the GMCF and the Deposit Ticket Form should tie back to each other. The totals of cash and checks should match the totals on the Deposit Ticket Form and the form supporting the receipts. The teacher/sponsor responsible for collecting the funds should sign off on both forms. Two separate individuals should count the cash. Teachers/sponsors should make every effort to ensure that forms are completed and monies transferred to the secretary/accounting clerk as quickly as possible. Individual sponsors/collectors should keep copies of their documentation for two years for audit purposes. When the secretary/accounting clerk receives the GMCF, Bulk Sales Worksheet or other appropriate documentation, and the Deposit Ticket, the monies should be reverified and a Cash Receipt issued to the teacher/sponsor. 16

Cash Receipts should be printed from Oracle and never altered with ink. The top copy of the Deposit Slip should accompany the deposit. For each deposit, you should keep on file for seven years for audit purposes the following documentation: 1) GMCF, Bulk Sales Worksheet, or other appropriate documentation 2) Deposit Ticket Form 3) One tape of checks 4) Deposit Slip 17

Reviewed Activity Funds Descriptions Appendix Three Fund 461 Campus Activity Funds are governmental funds generated from student fees, vending and fundraising. These funds are administered by the campus principal in compliance with State purchasing guidelines to promote the general welfare of the campus and educational development and morale of students and staff. Fund 865 Student Activity Funds are agency funds generated and controlled by student groups governed by an elected body. Expenditures are approved by the student group, sponsor and principal for the benefit of the students. Fund 876 Other Activity Funds are agency funds collected at campuses and sent to administration offices or controlled by the campus employees. 18