1. The School Federal projects fund had a cash overdraft of $243,598 as of June 30, 2017.
Hale said the first finding was the “most pressing,” and stemmed from a situation where reimbursements didn’t hit the federal projects fund account until after the budget was submitted on June 30.
“We knew the revenue was coming, the revenue was approved, so the statements were balanced, but technically speaking, on the day of June 30, the federal projects fund was $243,598 in the negative,” he said.
The board already has already taken steps to alleviate this issue in the future by transferring $500,000 from the general fund to the federal projects fund, to act as a sort of cushion to help prevent the fund from showing a negative balance.
2. Budgets for the central cafeteria and school federal projects funds were not prepared properly and approved timely.
A deficit in the central cafeteria fund triggered this finding as a result of the budget not being balanced in a timely manner. Hale said this can be avoided in the future by sending the cafeteria fund to the board and the County Commission along with the general fund and the federal projects fund for approval in the future, something that hasn’t been done in the past.
3. The office had deficiencies in budget operations.
Hale explained that a line item in the budget can go in the negative without getting audited, but if a category comes up in the negative, it will result in an audit. A high electric bill the board received in June pushed a category over by $69,615.
“We had to take that budget amendment to the county the first of June, so there was no way to see that coming,” Hale said.
The official response to the finding reads, “Going forward a more detailed analysis will be conducted to ensure the proper dollars are budgeted.”
4. Used vehicles were purchased without obtaining competitive bids.
The department purchased five used vans last year totaling $92,000. The audit said the proper procedure is to get a National Automobile Dealers Association or another nationally-recognized value on used vehicles. The department’s purchase should be within 5 percent of the stated value of the vehicle.
The department will keep the proper documentation on hand when purchasing used vehicles in the future.
5. A tax deposit to the Internal Revenue Service was not remitted properly resulting in the assessment of interest and penalties totaling $845.
This finding stemmed from payroll taxes for the central cafeteria fund not being submitted on time. The audit finding states “this assessment was the result of inadvertently not paying the employer’s share of Social Security and Medicare taxes.”
The department responded that the central cafeteria fund will make tax deposits in a timely manner moving forward.
6. The department had deficiencies in the maintenance of capital assets records
The finding noted purchases of land for $659,852 and buses totaling $714,220 were omitted from the school department’s capital assets records. These omissions resulted in capital assets and current-year depreciation expense being understated by $1,374,072 and $5,952, respectively.
Hale said this finding boiled down to a timing issue, and closer communication between himself and the Washington County Director of Finance Mitch Meredith would be key in fixing this issue in the future.
7. The office had not formally documented internal controls.
The last finding was the absence of a book documenting internal controls that was lost by the time Hale took the position as the department’s director of finance last year. He said he is working on a new internal records document that will be completed for the 2018 fiscal year.