Finding #4 – Conduct Annual Audits of Student Activity Funds

advertisement
Student Activities:
Bringing Together Auditing
&
MASBO Guidelines
1
Student Activity Accounting
A View from an Auditor
Mark D. Abrahams, CPA
President, The Abrahams Group
508 788 9172
Bettergov@aol.com
www.theabrahamsgroup.com
2
Auditing –
SAA Audit Requirements
Chapter 66 of the Acts of 1996 and 71:47
• Requires that an annual audit shall be conducted in accordance
with procedures as agreed upon between the School
Committee and the auditor.
• It is DESE’s opinion that since the City/Town/District annual
audit is very broad in scope, and is only exposed to the agency
activity, which is a fiduciary relationship only, that such an audit
does not satisfy the degree of procedures required under
Chapter 71 Section 47.
• Under the law, may be performed internally by a responsible
and qualified individual appointed by the School Committee
who is independent of the student activities
• With the caveat that at least once every three years the
procedures should be performed by an outside independent
auditor if student activity balances exceed $25,000.
3
SAA Problems
• Non-student activities maintained
in a student activity account
• Lack of segregation of duties
• Lack of reconciliation of bank
statements and activity balances
• Inadequate or incomplete
documentation
• Lack of audits
• Lack of agency savings account
• Checking account balances in
excess of School Committee
policy
• Lack of subsidiary ledgers
• Existence of deficit balances
• Use of funds to pay non-student
activity related expenses
• Insufficient bank balance to cover
fund balance as reported by
activity
• Inactive and graduated class
accounts
• Lack of ongoing training
• Misappropriation of funds
4
Auditing –
SAA Audit Requirements
It is within this framework that the SAA DESE Agreed Upon
Procedures and Audit Guidelines have been prepared:
• Based in part on the 1996 MASBO Student Activity
Guidelines
• Based in part on the EOYR Agreed Upon Procedures
Compliance Supplement
• Developed by DESE in conjunction with the Massachusetts
Society of CPA’s Government Audit and Accounting
Committee
• Issued fall 2014
• Effective for FY 2014 SAA audits
5
Audits and Attestations
• Financial Statement Audits
• Attestation Engagements
• Performance Audits
6
Audits and Attestations
• Financial statement audits: The primary purpose of a financial
statement audit is to provide an opinion about whether an
entity’s financial statements are presented fairly in all material
respects in conformity with an applicable financial reporting
framework.
• Attestations:
– Examination
– Review
– Agreed Upon Procedures
Consists of auditors performing specific procedures on the subject matter and issuing a
report of findings based on the agreed-upon procedures. In an agreed-upon procedures
engagement, the auditor does not express an opinion or conclusion, but only reports on
agreed-upon procedures in the form of procedures and findings related to the specific
procedures applied.
7
Annual SAA Audit
• There shall be an annual audit of the student activity funds which shall be
conducted in accordance with procedures as agreed upon between the
School Committee and the auditor based upon guidelines issued by ESE.
• DESE recommends the audit be performed by an outside independent
audit firm once every three years for those with activities greater than
$25,000.
• In the intervening years, the audit may be conducted by a responsible
individual independent of the student activities, with the approval of the
School Committee.
• Such an individual could be the Town Accountant, who already has audit
powers under MGL Chapter 41 the Treasurer, or the School Business
Manager if the School Business Manager is not involved in the
administration or transactional processing of the student activities.
8
Auditing
SAA Guidelines
• Developed for school business officials and
outside independent auditors with a vital
resource that will assist them in the process of
conducting agreed upon procedures of the
internal control system in place used to
administer student activity accounts as well as
the annual transactions and activities of those
accounts.
9
SAA Guidelines
•
•
•
•
•
•
•
•
Overview
Administration
Stewardship and Custodial Responsibility
General Operating Procedures
Revenue, Receipts and Deposits
Purchasing and Disbursements
Class, Inactive Accounts and Deficits
Student Travel
10
SAA Guidelines
•
•
•
•
•
•
•
ESE Policy Guideline or MGL Requirement
Agreed Upon Procedure/Audit Guideline
Results:
Was the result consistent with school committee policy?
___ Yes
___ No
If No, report a finding
About 40 specific procedures for the auditor to perform many
with sub tasks, a total of about 70
11
SAA Guidelines
•
•
•
•
•
•
•
•
•
•
•
Are there policies?
Are policies consistent with the guidelines?
Is there documentation?
Are there procedures?
Do with procedures support the policies?
Are there forms that support the procedures?
Are there sign offs?
Are there reconciliations?
Is there oversight?
How involved is the principal?
Is cash controlled?
12
Student Activities 71:47
SA Agency
Account
Are all SAA $ deposited into the SA Agency
Account by the Treasurer ?
Are checking accounts set up to the
maximum balance set by the SC?
Are transfers from the SA Agency Account
through the warrant process?
Principal’s
Checking Account
Expenditures only?
No receipts?
No check written to “Cash”?
Principal’s
Checking Account
Have Principals given bond?
Are checking account periodically
reimbursed through the warrant
process?
Principal’s
Checking Account
Are funds expended
exclusively for SAA purposes?
Re there individual SAA
balances?
13
Summary
• There is an order to the SAA accounting and auditing
• DESE providing more oversight through agreed upon
procedures
– EOYR
– SAA
• Statutes, policy, and manuals provide proper
accounting procedures; more accurate records
• Less headaches, audit costs and comments
• A happier DESE, DOR, and SAA staff
14
Student Activity Accounting
A View from an Auditee
Sheri Matthews
Business Director, Tewksbury Public Schools
(978) 640-7800
smatthews@tewksbury.k12.ma.us
www.tewksbury.k12.ma.us
15
Tewksbury Public Schools
FINDING #1 – ADOPT SCHOOL COMMITTEE POLICIES AND PROCEDURES FOR STUDENT ACTIVITY
FUND OPERATIONS, CONTROL, AND PUBLIC REPORTING
• The Tewksbury Public Schools is in the process of constructing a new School
Committee Policies and Procedures for Student Activity Fund Operations,
Control and Public Reporting. This policy will be in line with the DESE
(Department of Early and Secondary Education) guidelines. This policy will be
brought forward to the School Committee within the upcoming months for their
approval and adoption. We are making sure that the new Policies and
Procedures will include:
• Appropriate internal controls and segregation of duties in order to ensure
protection of student money.
• Approval of the Principal’s designee(s) to operate and control student activity
accounts.
• Maximum balance amount allowed to be maintained in the School’s checking
account.
• Establishment of periodic reporting and reconciliation processes.
16
Tewksbury Public Schools
FINDING #1 – ADOPT SCHOOL COMMITTEE POLICIES AND PROCEDURES FOR STUDENT ACTIVITY
FUND OPERATIONS, CONTROL, AND PUBLIC REPORTING (CONT.)
• All receipts and disbursements of the student activity funds belong to students
and will be expended for the benefit of the students.
• Policies regarding reimbursements, including reimbursements when personal
credit cards are used that accrue ‘reward’ benefits.
• Policy that specifies how undesignated receipts will be distributed.
• Approval of new and existing student activity funds.
• Policies addressing the disposition of graduated class accounts, inactive
accounts, and remediation of deficit accounts.
• Policies addressing student travel in relation to the student activity fund.
17
Tewksbury Public Schools
FINDING #2 – MAINTAIN ALLOWABLE STUDENT ACTIVITY ACCOUNTS
• The Tewksbury Memorial High School Student Activity Fund will take out the
funds from the Guidance Department line as well as the Class Gift line and put
them in their own revolving account.
FINDING #3 – SEGREGATE DUTIES AND PROVIDE ADEQUATE TRAINING
• The Tewksbury Memorial High School has put a new delegation system in place
where four different employees will be in charge of different responsibilities.
The responsibilities will be broken up between custody, record keeping, deposits
and distribution of student activity funds. We are making sure that internally
each employee involved will have the proper training and their duties and
responsibilities.
FINDING #4 – CONDUCT ANNUAL AUDITS OF STUDENT ACTIVITY FUNDS
• The Business Manager will now be conducting an annual audit of student
activity funds. The Business Manager is not one of the designees that will be
handling the student activities funds during the fiscal year. The Tewksbury
Public Schools will also seek an outside auditor, every three years, for all Student
Activity Funds greater than $25,000.00
18
Tewksbury Public Schools
FINDING #5 – IMPROVE STUDENT ACTIVITY FUND RECONCILIATION PROCEDURES
• Each Student Activity Advisor will send in their activity quarterly to the Assistant
Principal for reconciliation purposes. Both Advisor and Assistant Principal will
then meet to sign off on said reconciliation.
• Additionally, the Town Treasurer sends the bank statement to the Assistant
Principal on a monthly basis. A new form has been created where both parties
will sign off on the reconciliation each month.
FINDING #6 – IMPROVE INTERNAL CONTROLS OVER RECEIPTS
• We are creating a new turnover form with a numeric sequential system. These
will be three part forms which will have a signature line on top for the preparer
and a signature line on the bottom for the receiver of the form.
• We have spoken to all Advisors, Principal’s and/or Principals’ Designees to ensure
that all deposits be turned in within one day or the next business day after
collection of funds. If we are not able to make the deposit to the bank on that
day, we will lock up the deposit in the safe until it can be deposited the following
business day.
• As we are creating new pre-numbered turnover forms, each number will be
assigned to an advisor with the ability to trace back the deposit to a specific
19
student activity. Only one activity will be submitted per form.
Tewksbury Public Schools
FINDING #7 – IMPROVE INTERNAL CONTROLS OVER DISBURSEMENTS
• Any vendor that we will be paying from the Student Activities account will now be
filling out a W-9 form. Annually, in January, the Assistant Principal will print out the
list of vendors that have been paid out more than $600.00 in the previous calendar
year. That list will be used to determine which entity or individual will be issued a
Form 1099-MISC and we will coordinate with the Town Treasurer to make sure that all
1099-MISC Forms be post marked no later than January 31st of any given year.
• Additionally, any reimbursements issued from the Student Activities Agency Account
will not be reimbursed until all proper documentation or purchase is submitted and
approved by the Student Activity Advisor or the Student Treasurer. Lastly, we will
make sure that no reimbursement payment ever includes any sales tax is that the
disbursement was solely for the direct benefit of the students.
FINDING #8 – CLOSE INACTIVE ACCOUNTS
• During our most recent School Committee Meeting, the Assistant Principal submitted
a memo to the School Committee members asking for approval to close out all
inactive account. These are the accounts that no longer have active advisors and need
the approval of the school committee for the funds to be transferred into the Misc.
Account.
• The Assistant Principal and Business Manager will go over all accounts, annually in
20
June, to determine the need for them in the upcoming school year.
Download