Summary

Summary of Report on Financial Statements

The Brevard County District School Board prepared its basic financial statements for the fiscal year ended June 30, 2007, in accordance with prescribed financial reporting standards.  Four of the District’s legally separate 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 internal control and compliance findings that are summarized below.

Finding No. 1:  Financial Reporting

Improvements are needed in District procedures to ensure the accuracy and completeness of the District’s financial statements.

Finding No. 2:  Comprehensive Procedures Manual

The District has developed a comprehensive procedures manual pertaining to the District’s financial operations and related activities.  However, the District has not established procedures to ensure that the manual is revised when significant processes are modified. 

Finding No. 3:  Bank Reconciliations

The District’s monthly bank reconciliation procedures were inadequate to ensure that the cash assets agree with the accounting records, and that unrecorded or improperly recorded transactions are promptly detected and corrected.

Finding No. 4:  Capital Asset Controls

Improvements are needed in the District’s accounting procedures for capital outlay and capital asset transactions.

Finding No. 5:  Unreconciled and Unsupported Account Balances

The District did not perform reconciliations to supporting documentation for various accounts, including Due from Other Agencies and Deferred Revenue accounts in its Special Revenue – Federal Fund.  Additionally, some payroll liability account balances in the District’s General Fund either had debit balances (normally, these accounts have credit balances) or had unreconciled differences between postings to the payroll records and postings to the general ledger. 

Finding No. 6:  Health Self-Insurance - Monitoring

Our review disclosed deficiencies in the District’s monitoring procedures over the claims payment and reimbursement process for its self-insurance health program.

Finding No. 7:  Health Self-Insurance – Net Assets

The District’s employee self-insurance health program has accumulated net assets in excess of program needs.

Finding No. 8:  Cash Management

Our review of Federal cash advances received through the Florida Department of Education during the 2006-07 fiscal year to fund various Federal programs disclosed that advances of cash sufficient to meet expenditure needs of Federal programs were not requested by the District.

Finding No. 9:  Payroll Processing

The credit union utilized by the District to process employee direct deposits is not designated as a qualified public depository.  In addition, the District did not monitor this account to determine if undisbursed funds should be transferred back to the District’s primary financial institution.  Nor was the rate of return earned on these funds competitive with other District investments.

Finding No. 10:  Bank Services

The District has not periodically solicited proposals and prepared formal analyses to compare the provisions of its banking agreement (minimum required balances, interest earned, cost of services provided, etc.) with other available financial institutions to ensure that it is receiving those services at the lowest and best price. 

Finding No. 11:  Cellular Telephones

District procedures do not require, and employees are not providing, records of each cellular telephone call and its business purpose.  As such, the District should have reported to the Internal Revenue Service the value of cell phone services provided to each employee assigned a cell phone.  Additionally, although the District is exempt, our review of cell phone invoices disclosed instances in which the District paid the local communication services tax and the wireless E911 fees. 

Finding No. 12:  Information Technology – Separation of Duties

We noted instances of questionable employee access privileges that should be made more restrictive by the District to enforce an appropriate separation of duties.  Specific details of these issues are not disclosed in this report to avoid the possibility of compromising District information. 

Summary of Report on Federal Awards

We audited the District’s Federal awards for compliance with applicable Federal requirements.  The Impact Aid and Title I Grants 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.

Audit Objectives and Scope

Our audit objectives were to determine whether the Brevard 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 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 response to the audit findings and recommendations is included in the full report.