Audit Comm. Mtg. - Nov. 27, 2006

[Guest sullinss]

Proceedings of the Audit Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

November 27, 2006

 

Call to Order

 

Chair Jane McCracken called the Audit Committee to order at 12:05 p.m. on Monday, November 27, 2006 in Room 213 of the Lincoln Center. Committee members in attendance were Jane McCracken, K. Dale Getz, Marcy Mutch, and Jack Eagle. Committee members absent were Malcolm Goodrich and Joel Guthals. Also attending were Chief Financial Officer Thomas Harper, Auditors John Jacobsen and Sara Collins of EideBailly LLP, District Clerk Leo Hudetz, and Executive Director of Secondary Education Scott Anderson.

 

Audit Committee Minutes of September 15, 2006

 

Dale Getz moved to approve the Audit Committee minutes of September 15, 2006. Marcy Mutch seconded the motion. The motion carried unanimously.

 

Use of Special Funds for Donations

This item is deferred to a future meeting.

 

Audit Committee Charter

This item is deferred to a future meeting.

 

Review of Draft Annual Financial Report for Year Ended 2006

 

John Jacobsen stated this is the fifth year they have audited our financials, and they continue to see improvements globally. The report expresses an unqualified opinion of the basic financial statements. There were no reportable conditions and no instances of noncompliance material disclosed during the audit of the financial statements. Reportable conditions were disclosed during the audit of internal control over major federal award programs.

 

John explained that reportable conditions relate to deficiencies in the design or operation of the internal control that could adversely affect ability to administer a major federal program. If significant deficiencies rise to a level that is a real and systemic problem, they become a material weakness. Each grant is looked at separately and a materiality level is established for each one.

 

Finding #06-1 National School Lunch Program

2 of 91 individuals tested did not have a current application on file to support being listed as eligible to receive free and reduced lunches. It appears to be a computer software problem used by the contracted food service provider, and they are working to fix the software.

 

Finding #06-2 Fund for Improvement of Education CFDA #84.215

In the Smaller Learning Communities Grant 2 out of 15 expenditures (totaling $208) did not have adequate documentation as a federal grant expenditure as no receipt was available. The new Procurement Card control process will enable monitoring the timely receipt of documentation for expenditures. Expenditures have been corrected in the grant.

 

Finding #06-3 Fund for Improvement of Education CFDA #84.2215

In the Smaller Learning Communities Grant it was noted during testing of expenditures that 3 of 15 expenditures (totaling $525) did not have adequate documentation to determine that they were allowable or within the objectives and goals of the grant. The Director of Secondary Education, Scott Anderson, has implemented additional procedures for oversight and guidance of allowable costs and expenditures with grant funds. The implementation of the Procurement Card control process will also address requirements for timely and original documentation of expenditures.

 

Finding #06-4 Fund for Improvement of Education CFDA #84.215

In the Smaller Learning Communities Grant it was noted that 1 of 15 expenditures did not have proper approval as a federal grant expenditure allowable under the grant because it lacked proper documentation. Subsequent to field work, documentation was provided to the finance department by the approving principal.

 

There was a lot of committee discussion on internal controls and standardized procedures relating to purchase of computers between schools and the warehouse. John summarized to say since the documentation had eventually been received and the purchase was allowable within the grant, he was prepared to remove this item as a finding and add it to the Management Letter recommending improved procedures. This would result in an unqualified opinion.

 

Chair McCracken advised another Audit Committee meeting will be scheduled on December 4, 2006 to review the Management Discussion and Analysis, the Financial Statements, Footnotes, and Management Letter. Jane will report on the audit to the Budgeting For Results Committee and ask them to follow-up on Management Letter items that need to be monitored next year. The Audit Committee will present the audit to the Trustees at their Regular December 18, 2006 meeting for acceptance and approval for submission to the State.

 

Adjournment

 

There being no further business, the meeting was adjourned at 1:37 p.m.

 

 

 

 

 

Jane McCracken, Chair

 

 

 

 

Sherrill Sullins, Recorder