Summary of Report on Financial Statements

The Duval County District School Board prepared its basic financial statements for the fiscal year ended June 30, 2007, 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.

Finding No. 1:  Ad Valorem Taxation

The District incurred costs of $24,134,525 from its capital outlay millage levy funds that were not, of record, allowable under the provisions of Section 1011.71(2), Florida Statutes.

Finding No. 2:  Purchasing Practices – Computer Software

District records did not evidence the reasonableness of the direct negotiation process for purchases of instructional software costing $21,134,525 or that the receipt of training and consulting services was properly monitored.

Finding No. 3:  Competitive Selection of Professional Services

The District did not utilize the public announcement and formal competitive selection and negotiation process, contrary to Section 287.055, Florida Statutes, when acquiring construction-related services for numerous maintenance and construction projects.

Finding No. 4:  Related Party Transactions

Contrary to the provisions of Sections 112.313(7) and 1001.42(10)(i), Florida Statutes, the District entered into a banking services agreement with a bank that employs a District School Board member. 

Finding No. 5:  Third-Party Administrator – Employee Benefits Cafeteria Plan

The District could improve its monitoring and accountability procedures for moneys held by a third‑party administrator for the District’s employee benefits cafeteria plan. 

Finding No. 6:  Allocation of Interest Earnings

The District did not properly allocate interest earnings on pooled investments to the respective funds owning the investments. 

Finding No. 7:  Information Technology – Access Authorization Controls

The District’s access controls within its enterprise resource planning environment and the supporting network environment needed improvement.

Finding No. 8:  Internal Audit Function

Although the Board had adopted a policy and designated the Board as an audit committee, the Board had not met as an audit committee and had not planned, initiated, or reviewed any internal audit activities.

Finding No. 9:  Decentralized Collection Procedures

Improvements were needed in the District’s collection procedures at decentralized locations. 

Finding No. 10:  Food Service – Cash Collections

The District’s food service cash collections were not always timely deposited.

Finding No. 11:  Schultz Center Regional Professional Development Academy

The Schultz Center for Teaching and Leadership could not demonstrate the ability to be self‑supporting through fees for services, grants, or private contributions without District support. 

Finding No. 12:  Monitoring of Charter Schools

District charter school monitoring procedures did not include verifying that insurance coverage required by the charter school agreements was maintained. 

Finding No. 13:  Cell Phones

District procedures were not adequate to ensure that cell phone use was in accordance with Board Policy.  Additionally, a cell phone provider incorrectly charged the District a monthly wireless E911 fee.

Finding No. 14:  Construction Administration - Board Policies

Instances were noted in which change orders exceeded the Board policy dollar threshold without Board approval, and a Board policy had not been established to prequalify contractors.

Finding No. 15:  Land Acquisitions and Appraisals

The Board was not, of record, provided with copies of the appraisals for a land purchase and was not advised, of record, that the recommended purchase price exceeded the average of the two appraisals received by the District.

Finding No. 16:  Construction Administration

The District’s administration of construction management and design-build projects could be enhanced by requiring that copies of subcontractor bid tabulations and subcontracts be provided and maintained, that documentation of self-performed work benefits the District, that District records evidence verification of appropriate licensure of project subcontractors, and that final payments are not made prior to the Board’s final acceptance of the project.

Finding No. 17:  Design-Build Contract

Contrary to the requirements of Section 287.055(9), Florida Statutes, District records did not evidence that a licensed design professional prepared a design criteria package and was designated to serve as the District’s representative for the New High School “AAA” design-build project.

Finding No. 18:  Inspections of Relocatable Facilities

The District’s annual relocatable inspection report summaries indicated that a substantial percentage of the District’s relocatable classrooms did not meet the standards to be rated satisfactory. 

Finding No. 19:  Information Technology – District Security Program

The District’s entitywide security program needed improvement.

Finding No. 20:  Information Technology – Disaster Recovery Plan

The District’s disaster recovery plan had not been officially adopted and lacked certain key provisions.

Summary of Report on Federal Awards

We audited the District’s Federal awards for compliance with applicable Federal requirements.  The Food Donation, Child Nutrition Cluster and Magnet Schools Assistance Program 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 Child Nutrition Cluster.  In addition, we noted internal control and compliance findings that are summarized below.

Federal Awards Finding No. 1:  Procurement – Contract Monitoring

District procedures were not adequate for monitoring the contract payments made to the food service management company, and other terms and conditions of the food service management agreement. 

Federal Awards Finding No. 2:  Program Income – Exclusive Beverage Contract

The District did not properly allocate a portion of the program income from its exclusive beverage contract to the food service program.

Federal Awards Finding No. 3:  Special Tests and Provisions – Competitive Food Sales

The District did not comply with applicable Federal Regulations and State rules relating to the sale of competitive food and beverage items.

Federal Awards Finding No. 4:  Cash Management – Food Service Program

Contrary to Federal regulation, the District’s food service program subsidized the cost of certain nonprogram food service activities. 

Federal Awards Finding No. 5:  Allowable Costs/Cost Principles – Contract Provisions

Improvements were needed in District procedures to provide for required provisions in contracts funded with Federal moneys.

Federal Awards Finding No. 6:  Debarment and Suspension

District records did not always evidence compliance with Federal suspension and debarment requirements.

Federal Awards Finding No. 7:  Matching, Level of Effort, and Earmarking – Planning Costs

The District reported expenditures for planning activities in its Magnet Schools Assistance Program for the second and third award years that exceeded the program requirements by $366,984.

Federal Awards Finding No. 8:  Allowable Costs/Cost Principles – Documentation of Employee Time and Effort

Enhancements were needed in District procedures for documenting salaries and benefits charged to the Magnet Schools Assistance Program. 

Federal Awards Finding No. 9:  Activities Allowed or Unallowed

The District’s contracted payments to the Schultz Center for Teaching and Leadership from the Improving Teacher Quality State Grants program included costs that do not appear necessary and reasonable for the program, resulting in payment amounts exceeding the Center’s costs by $483,408 for the 2006-07 fiscal year. 

Audit Objectives and Scope

Our audit objectives were to determine whether the Duval 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 the previous audit reports.

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, 2007.  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 can be viewed in its entirety on the Auditor General's web site.