Ouachita Parish schools audit has 2 findings
An audit of the Ouachita Parish School board conducted by Huffman & Soignier yielded two findings. One pertained to the operations of the master bank account and one related to compliance with the Local Government Budget Act.
While not a finding, the audit noted that the Louisiana Legislative Auditor is "performing a limited review of certain school activity funds which was not complete as of the date the financial statements were issued. ... Management does not deem the results to have a material impact on the financial results of the school board, as school activity funds are accounted for as agency funds in its financial statements."
Ouachita Parish School Superintendent Don Coker said a principal expressed concern over school activity account balances at one of the schools. He said because of the ongoing investigation, which was not completed by the LLA at the time the statements occurred, he cannot comment any further.
Master Bank Account Operations
Three bank accounts at two area banks comprise the master bank account. These accounts are used for accounts payable, payroll and other significant revenue transactions.
There was one finding related to the operations of the master account, which has three elements: the timely preparation of bank reconciliation, unreconciled differences and the Uniform Unclaimed Property Act.
Timely preparation of bank reconciliation: Auditors said they did not receive the June reconciliation for the master bank account until late in November. Upon inspecting the reconciliation, auditors said they found "sizeable" unreconciled differences and asked the board to revise the reconciliation as necessary. It was not finalized until mid-December.
Auditors recommended that the business director monitor the general fund accountant responsible for bank reconciliations to ensure they are completed in a timely manner.
Unreconciled differences: In November, auditors noted a $106,438 difference between the recorded general ledger balance and the reconciled (but unadjusted) general ledger balance. When they received the revised reconciliation in December, they noted $88,682 in unrecorded payroll transactions between the general ledger book balance ($28,362,036) and the reconciled book balance ($28,273,355). Auditors also noted an unreconciled difference of $35,060 ($28,273,355 book balance after the $88,682 adjustment versus the $28,238,294 reconciled bank balance).
Management believed the unreconciled differences primarily were direct deposits for accrued payrolls voided prior to June 30 that should have been reversed but were not. This resulted in an overstatement of cash and salaries payable of $87,013.
"The majority of the unreconciled difference was the result of failing to make an accounting entry to reclassify voided net accrued payroll checks that were paid in error with our summer accrued payrolls for the month of June," Coker said. "The payments were appropriately recorded as voided checks at year end, but due to the End of Year closing process, those were previously reclassified as salaries payable and the voided transactions were not reclassified for the EOY close, which resulted in the error being discovered by our auditors."
Management attributed the remaining difference to the handling of voided checks and refunds to overpayments made to employees throughout the fiscal year.
Again, the auditors recommend that the business director monitor the general fund accountant responsible for reconciliations. Additionally, they suggested the board create a policy to require that reconciling items "be corrected via journal entry once the aggregate amount of misstatement exceeds a reasonable, low dollar threshold."
Though the misstatements were not material in the aggregate, auditors said enhanced procedures are needed for the handling and posting of voids and overpayment refunds to ensure the book balance of cash is accurate at all times.
Coker addresses chamber about parish schools
Uniform Unclaimed Property Act: Louisiana Revised Statute 9:151 requires that entities review records each year to determine whether they are in possession of abandoned property and forward property meeting certain criteria to the Louisiana Department of the Treasury Unclaimed Property Division as unclaimed property.
During the auditor's review of cash, they found the board was in possession of 99 outstanding payroll checks totaling approximately $55,000 that were more than a year old and six payroll checks in excess of five years old that were totaled at about $1,000.
The board had not been filing the required annual reports.
Auditors recommended that the general fund accountant begin the process of compliance with the Uniform Unclaimed Property Act and review outstanding check lists to remove amounts that already have been paid from those lists. The board also should forward any checks that meet the requirements of unclaimed property to the Unclaimed Property Division.
"The staff responsible for filing these reports and monitoring employees checks did not have a clear understanding of how to file state unclaimed property reports," Coker said. "The district has attempted to contact employees to see why they have not cashed/deposited their checks in the past."
Management's response: The board will work to ensure a complete and accurate June reconciliation.
The board also will institute a firm deadline for full reconciliations by the close of the following month. These reconciliations will be submitted to the business director for review and approval by month's end.
The board also will follow the timeline set forth by the Uniform Unclaimed Property Act to determine whether checks should continue to be outstanding.
Local Government Budget Act
The Local Government Budget Act dictates that when expenditures exceed the budget by 5 percent or more and that a budget should not be adopted when expenditures would surpass available funds. In the last fiscal year, the board's State Grant Fund (a special revenue fund) had budgeted revenues of $3,768,233 and actual revenues of $2,992,505 for a $775,728 or 20.59 percent negative variance.
In the management's response, the board said the variance was caused by the anticipated receipt of Medicaid reimbursement payments that were not received within 60 days of year end.
"In the future, we will limit our budgeting of revenues in this fund to what we have received at the time of the final revision to the budget because of the long delays in receiving the Medicaid payments," the management's response read. "It should also be noted that we did not rely on receiving those revenues to fund current year operations since we had adequate amounts to cover expenditures."