Summary

Summary of Report on Financial Statements

We have issued an unqualified opinion on the respective financial position of the governmental activities, the aggregate discretely presented component units, and Capital Projects – Other Fund for the Polk County District School Board as of June 30, 2006, and the respective changes in financial position and cash flows for the year then ended.  We have issued a qualified opinion on the General Fund financial statements referred to above because of the lack of sufficient competent evidentiary matter for inventory balances reported in the General Fund. 

Summary of Report on Internal Control and Compliance

The District has established and implemented procedures that generally provide for internal control of District operations, except as noted below.  The District generally complied with significant provisions of laws, administrative rules, regulations, contracts, and grant agreements.  Our internal control and compliance findings are summarized below. 

Summary of Audit Findings

Finding No. 1:  Inventories

The District did not have effective controls in place to accurately account for and value the amounts recorded as inventory at year-end.

Finding No. 2:  Information Technology – User Account Management

The District could enhance controls related to requesting, approving, assigning, and removing employee access to District information systems.

Finding No. 3:  Payroll Record Keeping

Although weaknesses in payroll record keeping were identified at schools examined by District Internal Audit staff, the District had not taken the appropriate action to communicate the importance of such requirements to the remainder of schools in the District.

Finding No. 4:  Self-Insurance Claims Disbursements

Improvements were needed in controls over the District’s self-insurance plans.  Our review disclosed that the District did not provide for periodic reviews of claim payments made from its self-insurance plans. 

Finding No. 5:  Fingerprinting Requirements

The District had not performed fingerprinting and background checks for all contractual personnel as required.

Finding No. 6:  Interfund Loans

Improvements were needed in establishing controls over interfund loans to ensure that temporary transfers between funds are properly identified and repaid within 13 months, as required by Section 1011.09(2), Florida Statutes.

Finding No. 7:  Procedures Manuals

The District had not developed comprehensive procedures manuals pertaining to the District’s financial operations and related activities.  Procedures manuals are necessary to ensure appropriate training of new staff, as well as to provide an aid in bridging the transition in the event of changes in key business services or finance-related personnel.

Finding No. 8:  Internal Audit Function

The effectiveness of the internal audit function could be enhanced by including audits of District operations and internal controls that are considered to be high risk.

Finding No. 9:  Policies for Reporting Fraud

The District had not developed a formal fraud policy to provide guidance to employees for communicating known or suspected fraud to the appropriate level.

Finding No. 10:  School Advisory Council Allocations and School Improvement Plans

Improvements were needed to ensure that all District schools were properly allocated enhancement trust funds and that all schools within the District prepared and submitted a school improvement plan, as required.

Finding No. 11:  Investment of Funds Policy

Contrary to Board policy, District personnel did not perform an investment review, performance reporting, or review of compliance with controls over investments.

Finding No. 12:  Banking Services

The District had not, of record, solicited proposals from financial institutions or prepared formal analyses to determine whether the provisions of their long-standing banking arrangement continued to be cost effective.

Finding No. 13:  Unclaimed Property

Improvements were needed to provide for the reporting and remittance of unclaimed property to the  Florida Department of Financial Services, as required by law.

Finding No. 14:  Accounts Receivable

Improvements were needed in controls over accounts receivable.  Our review disclosed that the District had not established adequate control procedures that provide for the effective monitoring, recording, collecting, and adjusting of receivable balances.

Finding No. 15:  Employee Daycare and Medical Reimbursement Program

Improvements were needed over the District’s monitoring of the flexible spending accounts to provide for reconciliations between claims payments and balances on hand; periodic reviews of claims paid; and the withdrawal of forfeitures at the end of each plan year.  In addition, the contracted provider of the plan did not hold a valid certificate of authority from the Florida Office of Insurance Regulation.

Finding No. 16:  Sick Leave Pool

Improvements were needed in the District’s monitoring of the sick leave bank in order to preclude the award of sick leave from the bank when sufficient amounts are not available.

Finding No. 17:  Facility Inspections

Improvements were needed in facility inspections for firesafety, casualty, and sanitation to ensure that the required safety inspection reports are properly completed and that appropriate corrective action has been taken.

Finding No. 18:  Construction Contracts – Change Orders

Contrary to Board policy, construction contract change orders in excess of $10,000 were approved by persons other than the Board.  In addition, change orders approved by other authorized parties were not reported to the Board or entered into the official minutes.

Finding No. 19:  Architect Liability Insurance

The District had not adopted policies to establish minimum insurance coverage requirements for design professionals or implemented procedures to ensure that adequate insurance is in effect prior to awarding a contract for architectural services.

Finding No. 20:  Relocatable Building Inspections

Our review of 31 District relocatable buildings disclosed that the District had not posted annual inspection reports in 16 relocatable buildings, although required by Section 1013.20(2), Florida Statutes.  Further, District staff was unable to provide duplicate copies for 9 of the 16 missing inspection reports to demonstrate that the required inspections were actually performed.

Finding No. 21:  Educational Plant Survey and Facilities Work Program

The District had not completed an educational plant survey since the last one expired in June 2003.  The District’s tentative educational facilities plan did not include planning information for the 10‑year period and the 20-year period and was not signed by appropriate District officials, although required.

Finding No. 22:  Budget – Capital Outlay

The District’s annual budget did not include a capital outlay budget required by Section 1013.61, Florida Statues.

Finding No. 23:  Public Education Capital Outlay Expenditures

The District expended $19,251.35 from Public Education Capital Outlay Funds for items that were not allowable uses of such funds and therefore represent questioned costs.

Summary of Report on Federal Awards

We audited the District’s Federal awards for compliance with applicable Federal requirements.  The Child Nutrition Cluster and the Title I 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:  Suspension and Debarment

The District did not have the necessary controls in place to verify that, for certain Federal transactions, vendors were not suspended or debarred.

Federal Awards Finding No. 2:  Expenditure Approvals

Improvements were needed in controls over certain Child Nutrition Cluster grant expenditures in order to ensure that such charges are subject to oversight by persons knowledgeable of the program and limited to allowable charges.

Audit Objectives and Scope

Our audit objectives were to determine whether the Polk 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 law, 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 No. 2004‑156 and the audit reports for the 2003-04 and 2004-05 fiscal years prepared by other auditors. 

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 Superintendent's response to the audit findings and recommendations is included in the full report.