Summary 

Summary of Report on Financial Statements

The Bay County District School Board prepared its basic financial statements for the fiscal year ended June 30, 2007, in accordance with prescribed financial reporting standards.  Club and class activity funds of the individual schools and the District’s Foundations 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

Controls over financial reporting could be improved to ensure the accuracy and completeness of the financial statements.

Finding No. 2:  Audits - School Internal Funds and Direct-Support Organizations

Procedures could be enhanced to ensure completion of the required annual audit of the school internal funds and direct-support organizations for consideration in the audit of the District’s financial statements.

Finding No. 3:  Wire Transfers

The District did not timely revise its banking agreements to prevent a former employee from performing wire transfers, and the agreements did not restrict transfers to only Board accounts.

Finding No. 4:  Beacon Learning Center Fees

Enhancements in control procedures over the Beacon Learning Center fee collections could be made.

Finding No. 5:  Purchasing Practices

District purchasing practices could be improved to ensure that all custodial services are obtained pursuant to competitive bids, as required, that amounts paid are in agreement with bid amounts, and that payments are not made before services are received.

Finding No. 6:  School Food Service Operations

Improvements were needed in internal controls to strengthen accountability for a la carte food sales and food service inventories. 

Finding No. 7:  Composition of School Advisory Councils

Improvements were needed in procedures to ensure that school advisory council memberships are representative of the ethnic and racial communities served by the schools.

Finding No. 8:  Information Technology – Security Controls

The District’s information technology (IT) security controls could be improved, the specific details of which are not disclosed to avoid any possibility of compromising IT resources.

Finding No. 9:  Fingerprinting Requirements

The District could not provide evidence that the required background checks and fingerprints were obtained for eight contractual personnel. 

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, Special Education Cluster, and Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) 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 GEAR UP program.  We noted compliance and internal control findings as summarized below. 

Federal Awards Finding No. 1:  Matching, Level of Effort, Earmarking

The District did not adequately document that the matching requirements of the GEAR UP grant had been met, resulting in questioned costs, totaling $33,507.84.

Federal Awards Finding No. 2:  Procurement

Controls over food service inventories and related purchases using Federal funds could be enhanced.

Audit Objectives and Scope

Our audit objectives were to determine whether the Bay 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. 2007‑112.

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.