The Escambia County District School Board prepared its basic financial statements for the fiscal year ended June 30, 2005, in accordance with prescribed financial reporting standards.  Club and class activity funds of the individual schools and the District’s discretely presented component units were not included within the scope of our audit.

Summary of Report on Internal Control and Compliance

The District has established and implemented procedures that generally provide for internal control of District operations.  The District generally complied with significant provisions of laws, administrative rules, regulations, contracts, and grant agreements.  However, we did note an internal control finding that is summarized below.

Finding No. 1:  Payment and Performance Bonds

Contrary to Section 255.05, Florida Statutes, during the emergency period subsequent to Hurricane Ivan, the District did not obtain payment and performance bonds from contractors hired to repair hurricane‑related damages.

Summary of Report on Federal Awards

We audited the District’s Federal awards for compliance with applicable Federal requirements.  The Child Nutrition Cluster, Title I Grants to Local Educational Agencies, and Public Assistance Grant programs were audited as major Federal programs.  The results of our audit indicated that the District materially complied with the requirements that were applicable to the major Federal programs tested.  However, we did note compliance and internal control findings that are summarized below.

Federal Awards Finding No. 1:  Special Tests and Provisions - Verifications

Federal regulations require school districts to select a sample of applications for free and reduced-price meals to verify the eligibility of students receiving the free or reduced-price meals.  The District used one of the sampling methods (focused sampling) authorized by Federal regulations; however, District personnel did not properly select the sample of applications following the requirements for this sampling method. 

Federal Awards Finding No. 2:  Special Tests and Provisions - Competitive Food Sales

Contrary to Federal regulations and State Board of Education rules, two of four high schools included in our testing had vending machines that contained carbonated beverages in the immediate proximity of the school cafeteria and that were available to students during lunch hours.

Federal Awards Finding No. 3:  Cash Management

The District earned interest of $44,164 on Federal cash advances during the 2004-05 fiscal year and did not remit the earnings to the Florida Department of Education each quarter contrary to Federal regulations.  Subsequent to our inquiry, District personnel remitted these interest earnings in October 2005.

Federal Awards Finding No. 4:  Suspension and Debarment

Except for food service vendors, the District did not determine if vendors were suspended or debarred from receiving Federal funds.  Our tests disclosed $4,575,805 in payments to vendors for which the District should have determined if the vendors had been suspended or debarred. 

Federal Awards Finding No. 5:  Activities Allowed or Unallowed

The District used Title I funds totaling $9,000 to pay for software training at six non-Title I schools.  These payments are considered questioned costs subject to disallowance by the grantor.

Federal Awards Finding No. 6:  Special Tests and Provisions – Identifying Schools Needing Improvement

Federal regulations require school districts to directly notify the parents of students enrolled in schools identified as needing improvement and provide specific information about the identification and the parents’ options regarding their child’s education.  Our review disclosed several deficiencies in the District’s notifications to parents that may have limited the ability of the parents to make informed decisions regarding the educational choices available to the children.

Federal Awards Finding No. 7:  Matching, Level of Effort, Earmarking – Targeting Funds for Choice Related Transportation

The District did not offer middle school students attending schools identified as needing improvement the choice of being transported to other qualifying District schools.  If middle school students had been offered the choice of transferring to other qualifying District schools, we estimate that the cost to transport these students would have been approximately $68,000.  These costs are considered questioned costs subject to disallowance by the grantor.

Federal Awards Finding No. 8:  Special Tests and Provisions – Highly Qualified Paraprofessionals

The District used $14,311 in Title I funds to pay the salaries and benefits of two paraprofessionals.  The District determined that one of these paraprofessionals did not have the qualifications to work in the Title I program and had not determined if the other paraprofessional was properly qualified.  These payments are considered questioned costs subject to disallowance by the grantor.

Audit Objectives and Scope

Our audit objectives were to determine whether the Escambia County District School Board and its officers with administrative and stewardship responsibilities for District operations had:

• Presented the District’s basic financial statements in accordance with generally accepted accounting principles;

• Established and implemented internal control over financial reporting and compliance with requirements that could have a direct and material effect on the financial statements or on a major Federal program; and

• Complied with the various provisions of laws, administrative rules, regulations, and contracts and grant agreements that are material to the financial statements, and those applicable to the District’s major Federal programs.

The scope of this audit included an examination of the District’s basic financial statements and the Schedule of Expenditures of Federal Awards as of and for the fiscal year ended June 30, 2005.  We obtained an understanding of internal control and assessed control risk necessary to plan the audit of the basic financial statements and Federal awards.  We also examined various transactions to determine whether they were executed, both in manner and substance, in accordance with governing provisions of laws, administrative rules, regulations, contracts, and grant agreements.

 Audit Methodology

The methodology used to develop the findings in this report included the examination of pertinent District records in connection with the application of procedures required by auditing standards generally accepted in the United States of America, applicable standards contained in Government Auditing Standards issued by the Comptroller General of the United States, and Office of Management and Budget Circular A-133.

The Superintendent's written response to the audit findings and recommendations are included in this report and may be viewed on the Auditor General Web site.