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Audit shows school district has improved internal controls

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Some small issues found with activity accounts, but overall no major deficiencies identified

By Mallory Bilger

Spencer County Superintendent Chuck Adams and school board members were pleased to hear at the November board meeting that, unlike the previous year, the July 1, 2010 - June 30, 2011 independent auditor’s report came back free of deficiencies.
Gilbert Brown of Brown & Company Certified Public Accountants presented the annual report to the board Nov. 27, noting that the audit was largely free of problems. He noted that the audit addresses four main components: district financial statements, the district’s internal control system, federal program expenditures and district activity funds.
“Overall we had a very clean audit,” Brown said. “Everything is in line with the (Kentucky Department of Education). Knock on wood, they will stay out of our hair for another year.”
Brown said the audit found that the district’s financial statements were all accurately reported and that issues noted in the previous year’s audit in regards to the internal control system were all addressed. Last year’s audit addressed concerns with the the district’s internal control structure governing the payroll process. The problems were largely attributed to the finance department being short-staffed, which was addressed during the 2011 fiscal year. According to the 2010 audit, some payroll processes were performed late, resulting in penalties for the district. Another issue was that many processes were performed and reviewed by the same person, limiting the number of those involved in the payroll process.
However, Brown told the board that those issues were adequately handled and are no longer a problem.
According to the 2011 audit, “During our current year engagement, we found the weaknesses mentioned in the prior year’s audit to be strengthened and we are pleased to find that the district has hired additional staff to assist the finance department.”
Brown said some small issues were found when examining the district’s activity funds, however they were not noted as deficiencies or issues of non-compliance. The audit found that some school activity fund treasurers were not documenting that two people had seen and initialed deposit tickets before sending them to the bank.
The audit gave the district this recommendation: “Although this is not a direct violation of the ‘Redbook’ procedures, we feel that it is a sound practice procedure to have two sets of eyes review the deposit tickets before the deposits leave the schools. We recommend that the district implement a procedure for the treasurers to follow, requiring the documentation of two people reviewing the deposit ticket before it leaves the school.”
According to the audit, the firm encountered no problems with district management while completing the audit and the district is in compliance with all laws and regulations.