HARDEE COUNTY DISTRICT SCHOOL BOARD INTERNAL FUNDS AUDITED FINANCIAL STATEMENT June 30, 2010
TABLE OF CONTENTS Independent Auditor s Report... 1-2 FINANCIAL STATEMENTS Combined Statement of Cash Receipts, Disbursements, Transfers, and Balances Cash Basis of the Internal Fund Accounts... 3 Notes to the Financial Statements... 4 SUPPLEMENTAL STATEMENTS Combining Statement of Cash Receipts, Disbursements, Transfers, and Balances Cash Basis of the Internal Fund Accounts... 5-6 SUPPLEMENTAL REPORTS Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 7-8 Schedule of Findings and Responses... 9-12 Communication of Deficiencies in Internal Control... 13-18 Page
HARDEE COUNTY DISTRICT SCHOOL BOARD COMBINED STATEMENT OF CASH RECEIPTS, DISBURSEMENTS, TRANSFERS, AND BALANCES - CASH BASIS OF THE INTERNAL FUND ACCOUNTS For the Fiscal Year Ended June 30, 2010 Cash and Cash Equivalents - July 1, 2009 $ 430,801 Receipts: Athletics 257,048 Music 57,659 Class, club, departments 393,917 Trust funds 51,364 General 171,519 Total receipts 931,507 Disbursements: Athletics 244,964 Music 55,457 Class, club, departments 391,573 Trust funds 52,890 General 165,663 Total disbursements 910,547 Transfers: Athletics (2,267) Music (237) Class, club, departments 9,143 Trust funds (1,733) General (4,906) Total transfers - Cash and Cash Equivalents - June 30, 2010 $ 451,761 Cash and Cash Equivalents - Consisting of: Checking account $ 348,299 Certificate of deposit 103,462 Total $ 451,761 See accompanying notes to financial statement. 3
HARDEE COUNTY DISTRICT SCHOOL BOARD NOTES TO THE FINANCIAL STATEMENT June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The internal funds of the Hardee County District School Board (District) are comprised of nine individual funds. There is a fund for each of the eight schools in the District and one for the Hardee Community Recreation Center. This financial statement presents only the internal funds and is not intended to present fairly the financial position and results of operations of the District in conformity with accounting principles generally accepted in the United States of America. The internal funds are included in the District's annual financial report as fiduciary funds. Basis of Accounting It is the policy of the District to account for the internal funds of the schools on a cash basis of accounting. Accordingly, the internal funds increase when cash receipts are recorded and decrease when cash disbursements are recorded. Non-cash transactions are not recognized. Cash and Cash Equivalents Cash and cash equivalents are defined to include cash on hand and cash in banks. Internal funds are authorized to invest in certificates of deposit and time deposits of qualified public depositories, securities guaranteed by the U.S. government or other investments authorized by Florida Statutes. NOTE B - DEPOSITS AND INVESTMENTS Hardee Senior High s internal account pooled its excess cash resources with other funds of the District for investment purposes. The excess funds are invested in demand deposits and time deposits. Custodial Credit Risk Custodial credit risk is defined as the risk that, in the event of failure of the counterparty, the District will not be able to recover the value of securities that are in the possession of an outside party. At June 30, 2010, the entire amount of demand deposits is deposited in State of Florida qualified depositories and is fully insured. 4
SUPPLEMENTAL STATEMENTS
HARDEE COUNTY DISTRICT SCHOOL BOARD COMBINING STATEMENT OF CASH RECEIPTS, DISBURSEMENTS, TRANSFERS, AND BALANCES - CASH BASIS OF THE INTERNAL FUND ACCOUNTS For the Fiscal Year Ended June 30, 2010 Hardee Hardee North Senior Junior Wauchula Wauchula High High Elementary Elementary Cash and Cash Equivalents - July 1, 2009 $ 301,393 $ 27,580 $ 26,604 $ 28,261 Receipts: Athletics 237,199 19,849 - - Music 54,629 3,030 - - Class, club, departments 251,715 75,859 8,213 28,358 Trust funds 7,957 (63) 18,059 12,587 General 17,505 43,536 35,682 16,070 Total receipts 569,005 142,211 61,954 57,015 Disbursements: Athletics 224,924 20,040 - - Music 52,750 2,707 - - Class, club, departments 243,332 79,502 10,224 25,631 Trust funds 9,209-16,464 12,562 General 13,405 49,572 27,265 17,536 Total disbursements 543,620 151,821 53,953 55,729 Transfers: Athletics (2,267) - - - Music (237) - - - Class, club, departments 9,215 - - - Trust funds (1,733) - - - General (4,978) - - - Total transfers - - - - Cash and Cash Equivalents - June 30, 2010 $ 326,778 $ 17,970 $ 34,605 $ 29,547 Cash and Cash Equivalents - Consisting of: Checking account $ 226,316 $ 14,970 $ 34,605 $ 29,547 Certificate of deposit 100,462 3,000 - - Total $ 326,778 $ 17,970 $ 34,605 $ 29,547 5
Zolfo Bowling Pioneer Community Springs Green Hilltop Career Recreation Elementary Elementary Elementary Academy Center Total $ 9,180 $ 11,990 $ 8,279 $ 126 $ 17,388 $ 430,801 - - - - - 257,048 - - - - - 57,659 12,303-17,469 - - 393,917 10,513 2,311 - - - 51,364 13,327 723 9,356-35,320 171,519 36,143 3,034 26,825-35,320 931,507 - - - - - 244,964 - - - - - 55,457 16,114-16,770 - - 391,573 9,773 4,882 - - - 52,890 10,549 2,188 12,272 126 32,750 165,663 36,436 7,070 29,042 126 32,750 910,547 - - - - - (2,267) - - - - - (237) (173) - 101 - - 9,143 - - - - - (1,733) 173 - (101) - - (4,906) - - - - - - $ 8,887 $ 7,954 $ 6,062 $ - $ 19,958 $ 451,761 $ 8,887 $ 7,954 $ 6,062 $ - $ 19,958 $ 348,299 - - - - - 103,462 $ 8,887 $ 7,954 $ 6,062 - $ 19,958 $ 451,761 6
SUPPLEMENTAL REPORTS
HARDEE COUNTY DISTRICT SCHOOL BOARD SCHEDULE OF FINDINGS AND RESPONSES June 30, 2010 North Wauchula Elementary School PRIOR YEAR NWES 2008-01 Cash Receipts In the prior year, our audit procedures disclosed that in five of fifty sampled, monies were not turned in to the school office by the next business day. In those instances, the monies turned in represented collections up to forty-five business days prior. Chapter 7, School Internal Funds, Section III(1.4)(b), of the Financial and Program Cost Accounting and Reporting for Florida Schools (Redbook) states that collections made outside of the school office must be turned in to the school office no later than the next business day, and Section III(1.4)(c) states that in any event, funds collected must be deposited within five working days after receipt. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. In addition, Reports of Monies Collected forms should be properly completed. Current Status: During the current year, our procedures disclosed that in one of fifty receipts sampled, monies were not turned in to the school office by the next business day. There were also three instances in which the Report of Monies Collected form was not properly filled out. Therefore, we were unable to determine if the monies were turned into the school office by the next business day and deposited timely. Management Response: Redbook standards related to proper Monies Collected forms will be monitored for correct completions. We will continue to reinforce to our instructional staff the necessity of turning in to the front office secretary all monies collected on a daily basis. NWES 2009-01 Fund-raising/Student Activity Report In the prior year, our procedures disclosed that financial reports were not being prepared and filed with the principal s office for fundraising and certain student activities. Section III(2.3)(e) of the Redbook states that a financial report shall be filed with the principal s office at the close of each fund-raising activity. This report allows a principal to review and evaluate each activity s receipts, disbursements, and net results. Redbook standards should be enforced to increase the internal controls related to monitoring internal account activities. Current Status: This was not noted in the current year. 9
Bowling Green Elementary School BGE 2009-01 Cash Receipts In the prior year, our procedures disclosed that in nine of thirty-nine receipts sampled, monies were not turned in to the school office by the next business day. Furthermore, a significant number of Reports of Monies Collected Forms were noted as not being dated with the collection date or date received in the front office. In instances where the date initially collected was documented, the monies turned in represented collections up to thirty business days prior to the deposit date. The result is inadequate safeguarding of those assets. Chapter 7, Section III(1.4)(b), of the Redbook states collections made outside of the school office must be turned in to the school office no later than the next business day, and Section III(1.4)(c) states that in any event, funds collected must be deposited within five working days after receipt. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. Current Status: During the current year, our procedures disclosed that in eight of thirty-three receipts sampled, monies were not turned in to the school office by the next business day. Furthermore, one Report of Monies Collected Form was not dated. In those instances, the monies turned in represented collections up to thirty business days prior to the deposit date. Management Response: The principal, assistant principal, and the office manager will oversee and make sure that money is collected, dated, and sent to the office daily. Pioneer Career Academy PCA 2009-01 Internal Controls In the prior year, Pioneer Career Academy (Academy) did not submit monthly financial reports to the District as required by the Redbook and District policies. In addition, documentation of bank statements, bank reconciliations, receipts, and disbursements could not be located upon request. Reprint bank statements were obtained in order to provide support of the fiscal year transactions and year-end bank balance. Per inquiries, the cash balance that was available during the fiscal year was derived from a funding source that has not existed in several years, so there are no regular or reoccurring funding sources. Redbook standards and District policies for the internal accounts should be reviewed and complied with. All monthly financial information should be submitted to the District as required. Also, all documentation should also be maintained and readily available to support the internal account activity of the Academy. Current Status: This was not noted in the current year. 10
Wauchula Elementary School WES 2009-01 Cash Receipts Finding In the prior year, our procedures disclosed that in eleven of forty-five receipts sampled, monies were not turned in to the school office by the next business day. In those instances, the monies were turned in at least ten business days after they were collected. The result is inadequate safeguarding of those assets. Section III(1.4)(b) of the Redbook states collections made outside of the school office must be turned in to the school office no later than the next business day, and Section III(1.4)(c) states that in any event, funds collected must be deposited within five working days after receipt. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. Current Status: This was not noted in the current year. North Wauchula Elementary School CURRENT YEAR NWES 2010-01 Bank Reconciliation and Principal s Monthly Financial Report Our procedures disclosed that the May bank reconciliation, principal s monthly financial report, and related reports were incorrectly prepared. Five disbursements were not entered into the accounting system prior to the month-end close and reporting and were, therefore, excluded from the reports. There was also one disbursement dated in June that was posted to the May reports. Month-end closing procedures should be reviewed to ensure that transactions are included in the proper monthly report. Management Response: The month-end closing procedures will be reviewed to insure that transactions are included in the proper monthly report. A check and balance will occur between the principal and the office manager to assure proper reporting. Bowling Green Elementary School BGES 2010-01 Cash Disbursements Chapter 7, Section III(3.5), of the Redbook contains a list of restricted expenditures. That list includes postage for curricular or classroom use and repairs and maintenance of school board equipment for which school board funds are available. Our procedures identified in three of twenty-nine disbursements sampled, the expenditures were for text book related postage and a license fee for school board equipment. 11
Redbook standards related to restricted expenditures should be reviewed to increase internal controls over cash disbursements. Furthermore, the principal should consider reimbursement from school board funds for the purchases noted above. Management Response: On September 16, 2010, School Board funds reimbursed Bowling Green Elementary School s internal accounts $121.28 for the textbook shipping and elevator license fee. 12
The following are descriptions of other identified deficiencies in internal control that we determined did not constitute significant deficiencies or material weaknesses: Hardee High School PRIOR YEAR HHS 2009-01 Cash Receipts In the prior year, our procedures disclosed that in two of sixty receipts sampled, monies collected were not adequately documented due to missing collection dates on the Report of Monies Collected forms. Chapter 7, Section III(1.4)(a), of the Redbook states that all money collected must be substantiated by reports of monies collected or other auditable records. Redbook standards and District receipting policies specific to the preparation of the Report of Monies Collected form should be enforced to increase the internal controls related to cash collections and deposits. Current Status: This was not noted in the current year. Hardee Junior High HJH 2009-01 Cash Receipts In the prior year, our procedures disclosed that in three of sixty receipts sampled, monies were not turned in to the school office by the next business day. Chapter 7, Section III(1.4)(b), of the Redbook states that collections made outside of the school office must be turned in to the school office no later than the next business day. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. Current Status: During the current year, our procedures disclosed that in four of sixty receipts sampled, monies were not turned in to the school office by the next business day. Management Response: The bookkeeper, principal and others involved at Hardee Junior High School will continue to insure that the faculty and sponsors at the school turn in monies on a daily basis. We have already taken steps this year to insure this by sending memos, having faculty meetings and meeting on an individual basis with these teachers on the matter. 14
Hilltop Elementary School HES 2009-01 Cash Receipts In the prior year, our procedures disclosed that in three of fifty receipts sampled, monies were not turned in to the school office by the next business day. Chapter 7, Section III(1.4)(b), of the Redbook states that collections made outside of the school office must be turned in to the school office no later than the next business day. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. Current Status: During the current year, our procedures disclosed that in three of fifty receipts sampled, monies were not turned in to the school office by the next business day. We also identified one Report of Monies Collected form that was not signed by the person responsible for receiving monies in the front office. Management Response: The bookkeeper, principal and others involved at Hilltop Elementary School will continue to insure that the faculty and sponsors at the school turn in monies on a daily basis. We have already taken steps this year to insure this by sending memos, having faculty meetings and meeting on an individual basis with these teachers on the matter. North Wauchula Elementary School NWES 2009-02 Cash Disbursements In the prior year, our procedures disclosed that in fifteen of forty-five disbursements sampled, purchases commitment/purchase order documentation was not adequate in accordance with applicable standards and sound business practices. Forms lacked dates, signatures, and/or purchase order numbers. We noted that one purchase initially paid for by an employee was reimbursed to that employee twice thereby creating an overpayment. We also noted one disbursement that was not supported by an invoice. All purchase commitments/purchase orders should be accurately and completely filled out and approved. All purchase orders issued should be tracked using a standardized numbering system throughout the fiscal year. Procedures for reimbursements of purchases initially made by teachers, sponsors or others should be reviewed and tracked in an effort to eliminate errors. All disbursements should be supported by original invoices prior to being paid from school internal funds. Current Status: This was not noted in the current year. 15
Zolfo Springs Elementary School ZSES 2009-01 Check Signatures In the prior year, our procedures disclosed that in one out of fifty disbursements tested a check was signed by only one of the authorized signers. The signature on the check was not the principal s signature. Chapter 7, Section III(1.3)(a), of the Redbook states that all checks must be signed with two signatures as prescribed by the principal if not prescribed by school board rule. District policies state that the signature of both the principal and other designated person(s) are required on all checks written. Redbook standards and District policies should be enforced to increase the internal controls related to cash disbursements. Specifically, no disbursements should be released without original signature of the principal. Current Status: This was not noted in the current year. ZSES 2009-02 Cash Receipts In the prior year, our procedures disclosed that in one of fifty receipts sampled, monies were not turned in to the school office by the next business day. Chapter 7, Section III(1.4)(b), of the Redbook states that collections made outside of the school office must be turned in to the school office no later than the next business day. Redbook standards should be enforced to increase the internal controls related to cash collections and deposits. Current Status: In the current year, our procedures disclosed that in one of sixty receipts sampled, monies were not turned in to the school office by the next business day. Furthermore, four receipts of monies were not deposited within five working days of being turned in to the school office. Chapter 7, Section III(1.4)(b), of the Redbook states that collections made outside of the school office must be turned in to the school office no later than the next business day, and Section III(1.4)(c) states that in any event, funds collected must be deposited within five working days after receipt. Management Response: The principal and the office manager recognize that collections made outside the school office must be turned in to the school office no later than the next business day. The principal will restate to the teachers through e-mail the procedure for turning in monies collected. The principal and office manager also recognize that monies collected and turned in to the school office must be deposited within five working days. The principal and office manager will coordinate a schedule that allows for release time from school for making prompt deposits as needed. Proper procedures will be followed to assure compliance with Redbook Section III(1.4)(b) related to cash collections and deposits. 16
CURRENT YEAR Hardee High School HHS 2010-01 Cash Disbursements Our procedures disclosed that in one of sixty disbursements sampled, a teacher was reimbursed for an amount greater than the receipts submitted. Redbook standards and District policies should be enforced to increase the internal controls related to cash disbursements. Specifically, supporting documentation should be reviewed carefully for errors. Management Response: This recommendation will be implemented beginning immediately. The internal accounts bookkeeper will enforce Redbook standards and carefully review supporting documentation to prevent under or overpayment of submitted receipts. HHS 2010-02 Cash Receipts Our procedures disclosed that one reimbursement due from District funds had not been received or followed up on as of June 30, 2010. The reimbursement was submitted in September 2009. Redbook standards and District policies should be enforced to increase the internal controls related to cash receipts. Specifically, a control system should be implemented to track the status of reimbursements due from District funds. Management Response: This recommendation will be implemented beginning immediately. The internal accounts bookkeeper will enforce Redbook standards and utilize a ledger system that tracks the status of reimbursements due from District funds. Hardee Junior High HJH 2010-01 Bank Reconciliations and Principal s Monthly Financial Reports Our procedures disclosed that in two of twelve months, bank reconciliations and principal s monthly financial reports were not reviewed and approved on a timely basis. Furthermore, one principal s monthly financial report was not signed to document the review and approval. Chapter 7, Section II(8), of the Redbook states that bank statements shall be reconciled as soon as received. Chapter 7, Section III(4.1)(a), of the Redbook states that the principal s financial report shall be prepared and submitted according to the schedule and format prescribed in district adopted procedures. Due to the inherent relationship between the bank reconciliations and principal s monthly financial reports, we recommend preparing, reviewing and approving the reports soon after receipt of the monthly bank statement. 17