Guest sullinss Posted October 8, 2008 Report Share Posted October 8, 2008 Proceedings of the Audit Committee School District No. 2, Yellowstone County High School District No. 2, Yellowstone County Billings, Montana October 02, 2008 Call to Order Trustee Peter Gesuale called the Audit Committee to order at 12:08 p.m. on Thursday, October 02, 2008 in Room 213 of the Lincoln Center. Committee members in attendance were Marcy Mutch, Tim Trafford, Joel Guthals, Peter Gesuale, and Jack Eagle. Also attending were Chief Financial Officer Thomas Harper, Auditor Edie Hanson of EideBailly LLP, and District Clerk/Internal Auditor Leo Hudetz. Elect New Committee Chair Tim Trafford moved to nominate Marcy Mutch as Committee Chair. Joel Guthals seconded the motion. There were no further nominations. The motion carried unanimously. Marcy Mutch chaired the rest of the meeting. Approval of Minutes of March 28, 2008 Joel Guthals moved to approve the minutes of March 28, 2008. Peter Gesuale seconded the motion. The motion carried unanimously. Audit Scope FY2007-08 Edie Hanson of EideBailly LLP reported field work will begin October 6th for two weeks. They will test Title I and Title II grants in the single audit section. The District is considered a “low-risk” auditee which means they can do less testing than if we were a “high-risk” auditee. The audit should be complete before December. They will also do legal compliance testing. Major programs are audited once every three years on a rotational basis. Major programs exceed 3% or more of the expenditures for the year, such as food cluster, Title I, Title II, and IDEA (Special Education). No major programs were due this year, but to keep ahead of the requirement they will test Title I and Title II. Smaller programs are those over $100K but less than the 3% expenditure threshold of a major program, and they are tested individually if they appear to be high risk. Our smaller programs were all low-risk, and no issues from prior years existed so they do not have to test these this year. Small Learning Communities is one of these smaller programs. Not a lot of detailed testing is done on non-federal programs. They look at the Statement of Operations and may do detailed testing based on their analysis of procedures or other inquiries and comparisons to budgets. The legal compliance testing has a lot of detailed testing on expenditures (extracurricular funds, etc.). Edie said auditors check for things which relate specifically to Montana law regarding purchase requests, approvals, receipts, and postings in the financial system. Marcy asked who determines how extracurricular account funds are spent, and if the information is available to the public. Thomas advised the District is doing some internal control procedure checks with regards to extracurricular accounts in the schools and fund-raisers, etc. to verify if procedures in the handbook are being followed. The Board approves the addition of any new account. Those accounts are reconciled monthly, and purchasing flows through the normal authorized purchasing approval process. Leo advised the information is available for the public to view as every check is displayed on the website under bills paid in the Board’s e-mail. Thomas said the extracurricular handbook, under the direction of the Director of Activities, has detailed procedures on how funds are managed. Edie explained the new SAS 112 Risk Assessment Standard has a lot to do with gaining an understanding of the way internal controls work. The auditors will track the internal control process from the cash receipt to its record in the general ledger. They will test one of each kind of expenditure starting with the request for funds and trace back through authorizations to the posting and financial statements. Thomas is writing up procedures of internal controls. Potential problems would likely be from lack of following procedures and a training issue rather than a lack of procedures. Edie said if they find a problem, it would be an “other” finding and not a “material” finding; and, it would be reported in a SAS 112 letter in an internal control section. Peter asked if testing is distinguished between the elementary and high school districts. Edie explained it is not since financials are combined. Joel added there was a special committee that determined that assets are under their proper elementary or high school names; but at some future point, adjustments may be needed between the districts. Thomas said the two Districts have common management and a common Board. Thomas explained the majority of our cost allocation process between the elementary and high school districts is based on enrollment proportions, and it does not vary much year to year. Thomas said the EideBailly LLC firm is starting their seventh year with us. The Board extended their contract for three years. Their fee FY2007-08 is $58,000. Thomas would like to bring the audit forward to the Board in December. Audit Committee Charter Committee members reviewed the charter. Jack stated that the charter had not changed since last year; and, last year the Committee advised the Board no changes were necessary. Tim questioned the charter requirement that members should have appropriate financial and accounting backgrounds; and, since three members must be trustees, it may not be possible to always meet this requirement. Committee consensus was that background doesn’t necessarily mean education; and, trustees are experienced in reviewing District financials; and, therefore, they are qualified for Audit Committee membership. The Committee is seeking an additional community member to serve. Jack Eagle moved to approve the Charter as it stands. Peter Gesuale seconded the motion. Since the suggested action stated Board approval was necessary only if there were any revisions, the motion and second was withdrawn since no changes were recommended. CAFR Certificate of Excellence FY2007 The Committee congratulated Thomas for the District receiving the Certificate of Achievement for Excellence in Financial Reporting for the fiscal year 2006-07. Thomas said last year was the first year for the CAFR. There were minor comments, and they have been corrected. These comments will be forwarded to Committee members. The reviewers have a tremendous amount of expertise in terms of format and financial standards, which is additional verification of our financial statements. When the awards are received, Thomas would like the Committee to present one to the Finance Department, and the District award at the Board meeting. The award should also be publicized. Adjournment Peter moved to adjourn the meeting. Tim seconded the motion. There being no further business the meeting was adjourned at 1:00 p.m. Marcy Mutch, Chair Sherrill Sullins, Recorder Link to comment Share on other sites More sharing options...
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