Jackson schools audit finds misappropriation

An audit of the Jackson Parish School Board for the year ended June 30, 2015, showed misappropriation of student athletic funds and five other findings. Three of the findings were specific to the district's Title I program.

At Quitman High School, deposits for student activity funds were not made in a timely manner or could not be determined to have been made in a timely manner. There also were problems with disbursements. Pre-numbered tickets weren't being sold for athletic events to track admissions, so ticket reconciliation was not being properly completed, as required by school board policy. Credit card statements showed one charge was not considered necessary, and supporting documentation was not provided by one receipt.

At Southiside Elementary, checks per number in the book did not agree to the the bank number per the bank statement. Two of 15 sampled cash receipts had exceptions to the amount received and were not deposited; 10 of those lacked the proper supporting documentation. Also, receipts were not written for all cash funds received. A sampling of 30 disbursements found a variety of errors.

According to the audit, which was conducted by Allen, Green & Williamson LLP, during the school year, the district business manager was notified by a school principal that the school athletic fund showed discrepancies of approximately $1,564. The differences were noted after the former athletic sponsor turned over accounting records to the new athletic sponsor. The prior athletic sponsor had served from August 2013 to March 2015.

The principal met with the prior sponsor, who accepted responsibility for the discrepancies and issues a check to the school for $1,564.

The school board reviewed the athletic fund, but a lack of documentation prevented the board and external auditors from determining the full extent of the discrepancies.

The board notified the district attorney and the Louisiana Legislative Auditor of the issue. The employee was transferred to an elementary school and can no longer serve as a sponsor. No formal charges were filed because of a lack of documentation and the the amount that was repaid.

The district business manager will meet with principals throughout the year, and the district planned professional development for receptionists and secretaries to cover the students activity fund policy manual. The district plans to monitor and audit the athletic student activity funds each year. Additionally, the district plans to revise the funds policy after a committee's review.

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Title I targeting

Title I, Part A, is a federal anti-poverty measure that provides schools funds to help educate children ages 5-17. The audit found that prekindergarteners were erroneously included in the district's targeting calculation. Jonesboro Hodge High School qualified as a Title I school but was not offered Title I funding during the year. The application noted this school was funded through other grants, but the school board could not provide proof that the school received an equitable amount of funding.

As a result, the district policy is now that all state and federal grants budget shall be reviewed, approved and submitted by the business manager. Supervisors lack the authority to submit any budget to the state or federal governments, and only the superintendent and business manager can submit budgets to the state department or federal governments. All budgets will be presented to the board in line-item detail.

Vendor disbursements

A review of 74 vendor disbursements, including some from the special education and Title I programs, found that several transactions did not meet policy requirements or lacked documentation. The auditors determined that the transactions should be reviewed and approved prior to being paid to ensure the board had adequate supporting documentation, including receipts.

Effective immediately, all purchases made with state or federal funds are to be preapproved through requisition by the business department.

In a separate finding, the auditor suggested that the special education department also work to maintain good internal controls over vendor disbursements. This finding is expected to be corrected with the same measures being used for the whole district as noted above.

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Vendor suspension and debarment

According to the Code of Federal Regulations, non-federal entities cannot contract with or make sub-awards to parties that are suspended or disbarred with funds received through federal programs. This includes procurement contracts for goods or services equal to or more than $25,000.

The Title I department must verify that vendors are not suspended or debarred from receiving federal funds. The audit noted that unless the department purchased from a state contract or it was a new vendor, the department did not review whether vendors were eligible.

The district plans to track all and assure the eligibility of all future vendors.

Allowable costs over Title I

Expenses for the program should be supported with proper documentation, and any program costs should be paid in line with federal budgets.

Of 41 vendor disbursements tested for the program, the audit found:

• 10 instances where the charge was not considered to be allowable for the proper administration of the program
• four charges noted for furniture or equipment that was not found in the program budget
• one charge noted where equipment should have been charged to another program, but the equipment was charged to Title I in error
• five charges noted that did not appear to be approved based on the program budget

When testing a sample of 10 employees charged to Title I, one employee noted was charged to the program but was not properly approved in the grant budget.

In total, the questioned costs calculated were $33,614, including $2,573 in indirect costs.

The corrective action for this issue shares elements with previously listed findings.

All purchases made with state or federal funds are to be preapproved through requisition by the business department.

All state and federal grants purchases and budgets shall be reviewed, approved or submitted by the business manager. Supervisors lack the authority to submit any budget to the state or federal governments or to encumber state or federal funds without approval by the business manager. Only the superintendent and business manager can submit budgets to the state department or federal governments. All budgets will be presented to the board in line-item detail.

Neither the Title I supervisor, nor any supervisor, can hire or transfer any employee without approval of the superintendent, and all procedures must be followed in such hires or transfers.

Management letter

In a management letter, the auditors listed two comments.

The auditor noted that a large amount of Title I funding was going toward parental involvement, including large expenditures on refreshments primarily bought from an office supply vendor. The amounts paid appeared unreasonable compared to those charged by other vendors.

The district's response noted that the issue can be resolved through the business department's increased vigilance regarding the department's purchases.

The capital asset reports at year-end contained multiple errors on the depreciation schedule, and some assets were included in error. The auditor recommended that the board should establish policies and procedures to ensure that information is complete and correct before and review the reports before submitting them for audit.

The district's accountant will be asked to verify that the capital asset report is correct, reach out to other districts using the same fixed asset software and work with the software developer on professional development.