Summary

Summary of Report on Financial Statements

The Okaloosa County District School Board prepared its basic financial statements for the fiscal year ended June 30, 2006, in accordance with prescribed financial reporting standards. 

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 internal control and compliance findings that are summarized below.

Summary of Audit Findings

Finding No. 1:  Relocatable Building Inspections

The District did not provide for the required inspections for its new relocatable buildings prior to occupancy. Failure to provide for the required inspections of relocatable buildings could increase the risk that students are exposed to unsafe building conditions. 

Finding No. 2:  Food Service Operations

The District’s food service program has incurred operating deficits for the past four fiscal years and the District transferred General Fund moneys during the 2004-05 and 2005-06 fiscal years to the food service program.  Continued use of unrestricted General Fund resources to subsidize the school food service program reduces moneys available for the District’s other educational programs.

Summary of Report on Federal Awards

We audited the District’s Federal awards for compliance with applicable Federal requirements.  The Title I Grants to Local Educational Agencies, Special Education Cluster (Special Education – Grants to States and the Special Education – Preschool Grants), Federal Pell Grant Program, and the Hurricane Education Recovery 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, with the exception of the Federal Pell Grant program.  We noted compliance and internal control findings that are summarized below. 

Federal Awards Finding No. 1: 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 notification 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. 2:  Matching, Level of Effort, Earmarking – Targeting Funds for Choice Related Transportation

Although required by Federal regulations, the District did not offer students at four elementary schools identified as needing improvement the choice of being transported to other qualifying District schools. 

Federal Awards Finding No. 3:  Allowable Costs/Cost Principles (Documentation of Employee Time and Effort)

The District paid salaries and benefits to employees from its Title I, Part A, grant program, and from its Special Education cluster programs.  Our tests disclosed that the required semi-annual time certifications were not obtained until June 2006 from those employees dedicating 100 percent of their time to grant activities during the first six months of the fiscal year.  In addition, $2,671 in salary and benefits for one employee was charged to the Title I, Part A, grant program in excess of the allowed costs for the time dedicated to grant activities.  These costs are considered questioned costs subject to disallowance by the grantor.

Federal Awards Finding No. 4:  Federal Program Review

The United States Department of Education (USDOE) conducted a focused program review of the Title IV, Pell Grant program, for the 2003-04 and 2004-05 fiscal years at the Okaloosa Applied Technology Center (OATC) in August 2005.  OATC was attempting to correct the findings noted in this review and was in the process of training new personnel, revising procedures, and remediating its records for the 2005-06 fiscal year.  Since OATC was in a transition period, several deficiencies had not been corrected and the results of our audit were similar to those noted by the USDOE review team.

Audit Objectives and Scope

Our audit objectives were to determine whether the Okaloosa 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;

• Established management controls that promote and encourage:  1) compliance with applicable laws, administrative rules, and other guidelines; 2) the economic, effective, and efficient operation of the District; 3) the reliability of records and reports; and 4) the safeguarding of District assets;

• 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; and

• Corrected, or are in the process of correcting, all deficiencies disclosed in our report Nos. 2004‑068 and 2004-191.

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, 2006.  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 District Superintendent's response can be viewed in its entirety on the Auditor General Web site.