Dec. 7, 2005

[Guest sullinss]

Proceedings of the Audit Committee

District No. 2, Yellowstone County and

High School District No. 2, Yellowstone County

Billings, Montana

 

December 7, 2005

 

Call to Order

 

Chair Jane McCracken called the Audit Committee to order at 12:02 p.m. on Wednesday, December 7, 2005, in Room 213 of the Lincoln Center. Committee members in attendance were Jane McCracken, Marcy Mutch, Stan Moser, Joel Guthals, and Conrad Stroebe. Absent was member K. Dale Getz. Also in attendance were Business Manager Thomas Harper, Internal Auditor/District Clerk Leo Hudetz, and auditors John Jacobsen and Sara Collins of Eide Bailly LLP.

 

Review of Draft Annual Financial Report For Year Ended 2005

 

Committee members met to review the draft report. John Jacobsen explained under GASB 34 there are flow charts to determine what is considered a governmental unit used in the financial statements. While the elementary and high school districts are legally separate entities, they are to be presented as one governmental unit. The fund presentation is driven partially by the requirements of OPI as well as GASB 34. The way this report is presented to users (OPI, Feds. and the public) is consistent with the past and with the requirements of OPI and GASB 34. We also have a “blended” Board of Trustees which suggests we need to have a combined governmental unit.

 

There are other opportunities for presentation such as CAFR (Comprehensive Annual Financial Report) which is the highest level of financial statement reporting for governmental units. This requires a large amount of additional information with a significant level of detail. Up to this point the School District has not wanted to expend considerable additional resources to produce this report. Under this method you are not as restricted as you are under GASB 34; you can have a lot of separate schedules and combined statements. The Audit Committee will meet next March or April to discuss the benefits of a CAFR report vs. the additional resources and large commitment it would require to produce it.

 

Minutes of September 9, 2005

 

Joel moved to approve the minutes of September 9, 2005 as presented. Conrad seconded the motion. The motion carried unanimously.

 

Review of Draft Annual Financial Report For Year Ended 2005 (continued)

 

John stated this year’s audit was very clean. There were only two small adjustments made as a result of the audit and they did not affect the Trustee’s Report that had been submitted.

 

Each page of the report was reviewed by the Committee and editing changes will be made for the final report.

 

Interest on long term debt $308k was due to interest earned on the elementary $10M bonds.

 

The compensated absence balance is currently $18M and consists of accrued vacation, service credit, and sick leave and is a huge unfunded balance. About 43% of our employees are eligible to retire. It’s a growing problem but the expectation is that it won’t need to be paid any time soon. The Business Committee has reviewed this item. Conrad asked why we aren’t legally required to fund compensated absence. John believes that even though compensated absence is underfunded it is different in that an employee has that time off work, yet they still receive their payroll on a regular basis. Our District gives more “hours off” than a typical private company. Also, on any given day 10-12% of the workforce is absent which is a large financial burden to the District for substitute fees.

 

Stan Moser left the meeting at 1:07 p.m. Joel Guthals left the meeting at 1:25 p.m. Chair McCracken said there would be a request sent out via e-mail for approval to forward the report to the Business Committee. If there were any objections to approval, members could reply via e-mail.

 

There was no relinquishment of unspent Federal Awards funds. There was about $33K that was rolled over to next year’s grants. The Schedule of Expenditures of Federal Awards is a standardized reporting format by Grant Number and Federal CFDA Number which in turn is utilized by the Federal Government for their purposes.

 

There were no Management Letter comments on Extracurricular Funds. The Business Office has done a lot of follow-up training with the field; and, the schools have done a good job in managing their funds.

 

The opinions under the Government Auditing Standards and the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement were both “clean.”

 

The two findings were discussed at the last meeting. Thomas handed out the District’s responses to the Committee for review, and they will be integrated into the final report. The Chair believes the responses should make a more definitive statement that the District has corrected the problem and has addressed the overriding issues. Marcy said it could be expanded to say we did obtain reimbursement when appropriate. Conrad thinks we should say we expanded the scope internally to make sure all issues were corrected when appropriate and the policy has been reaffirmed. Thomas stated an internal examination should be completed by the December 19th Board Meeting. The Chair stated when the Audit Committee makes a recommendation to the Board to accept the report they can also make a recommendation that the findings be reviewed in detail by our Internal Auditor in accordance with the appropriate policy.

 

Adjournment

 

There being no further business, the meeting was adjourned at 2:00 p.m.

 

 

 

 

Jane McCracken, Chair

 

 

 

 

Sherrill Sullins, Recorder