VASBO – Annual Report & Audits�Business Manager 101

Brenda Fleming, CPA. SFO

Director of Business & Finance

Rutland Northeast Supervisory Union

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Annual Report

• § 562. Powers of electorate
• At a school district meeting, the electorate:
• (1) Shall conduct meetings in accordance with Roberts Rules of Order, unless other rules of order are specifically adopted at a meeting.
• (2) Shall elect a moderator at the annual meeting who shall preside at the district meetings, regulate the business thereof, decide questions of order, and make a public declaration of every vote. The moderator may administer oaths to district officers and newly elected school board members. In the moderator's absence, a moderator pro tempore shall be chosen to preside.

§ 562. Powers of electorate�

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• (3) May elect a school district clerk at the annual meeting who shall keep a true record of all proceedings at each district meeting, certify its records, make an attested copy of any records of the district for any person upon request, and tender of reasonable fees therefor, if so appointed serve as secretary of the school board, and perform such other duties as may be required by law.
• (4) May authorize the school board to retain a public accountant, licensed in this State, to examine the accounts of the treasurer and the school board at the close of each fiscal year and at such other times whenever necessary, and report to the district whether the same are correctly cast and properly vouched.
• (5) May vote annual salaries for school board members.
• (6) May authorize the payment of actual and necessary expenses of school board members when traveling in the performance of duty.
• (7) May authorize the school board to enter into leases of real property for more than three years, to purchase buildings or sites for school purposes, to locate and erect schoolhouses, and to sell, or otherwise dispose of, schoolhouses or sites for same.

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§ 562. Powers of electorate

The Budget is the line by line budget as presented to voters and approved by voters in the aggregate.

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Title 16, section 562(8)….the board shall determine how the authorized funds shall be expended.

(8) Shall authorize at each annual school district meeting an amount of money from all revenue sources to be expended by the board for the support of public schools; and, except for one-time purchase items that the board warns as a separate article, the board shall determine how the authorized funds shall be expended.

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§ 562. Powers of electorate

• (9) May authorize the school board to borrow money not in excess of anticipated revenue for the school year by issuing bonds or notes.
• (10) Shall elect school board directors and other officers as are required for each class of school district.
• (11) May grant general authority to the school board, at the request of the board, to incur debt at any time within the subsequent five years to finance the cost of school-building energy improvements not to exceed $350,000.00 per building in any three-year period and payable over a maximum term coextensive with the useful life of the financed improvements, but not to exceed ten years, provided that the avoided costs attributable to the financed improvements exceed the annual payment of principal and interest of the indebtedness. No indebtedness shall be incurred under this subdivision unless the entity appointed as an energy efficiency utility under 30 V.S.A. § 209(d)(2), an independent licensed engineer, or an independent licensed architect has certified to the district the cost of the improvements to be financed, the avoided costs attributable to the improvements, and the adequacy of debt service coverage from the avoided costs over the term of the proposed indebtedness.

§ 563. Powers of school boards; form of vote

• (8) Shall establish and maintain a system for receipt, deposit, disbursement, accounting, control, and reporting procedures that meets the criteria established by the State Board pursuant to subdivision 164(15) of this title and that ensures that all payments are lawful and in accordance with a budget adopted or amended by the school board. The school board may authorize a subcommittee, the superintendent of schools, or a designated employee of the school board to examine claims against the district for school expenses and draw orders for such as shall be allowed by it payable to the party entitled thereto. Such orders shall state definitely the purpose for which they are drawn and shall serve as full authority to the treasurer to make such payments. It shall be lawful for a school board to submit to its treasurer a certified copy of those portions of the board minutes, properly signed by the clerk and chair, or a majority of the board, showing to whom, and for what purpose each payment is to be made by the treasurer, and such certified copy shall serve as full authority to the treasurer to make the payments as thus approved.

§ 563. Powers of school boards; form of vote

• (9) Shall establish with the advice and consent of the Auditor of Accounts and the Secretary, a system of accounts for the proper control and reporting of school district finances and for stating the annual condition of the school district.

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• AKA Internal Control Questionnaire

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§ 563. Powers of school boards; form of vote

• (10) Shall prepare and distribute to the electorate, not less than ten days prior to the district's annual meeting, a report of the conditions and needs of the district school system, including the superintendent's, supervisory union treasurer's, and school district treasurer's annual report for the previous school year and the balance of any reserve funds established pursuant to 24 V.S.A. § 2804. At a school district's annual meeting, the electorate may vote to provide notice of availability of the report required by this subdivision to the electorate in lieu of distributing the report. If the electorate of the school district votes to provide notice of availability, it must specify how notice of availability shall be given, and such notice of availability shall be provided to the electorate at least 30 days before the district's annual or special meeting.

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• (11)(A) Shall prepare and distribute annually a proposed budget for the next school year according to such major categories as may from time to time be prescribed by the Secretary.

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Annual Report

• a report of the conditions and needs of the district school system, budget report
• including the superintendent's,
• supervisory union treasurer's, on budget
• and school district treasurer's annual report for the previous school year on budget
• and the balance of any reserve funds established pursuant to 24 V.S.A. § 2804. from audit

Paper Annual Report

• (10) Shall prepare and distribute to the electorate, not less than ten days prior to the district's annual meeting, a report of the conditions and needs of the district school system, including the superintendent's, supervisory union treasurer's, and school district treasurer's annual report for the previous school year and the balance of any reserve funds established pursuant to 24 V.S.A. § 2804.

Electronic Annual Report

• At a school district's annual meeting, the electorate may vote to provide notice of availability of the report required by this subdivision to the electorate in lieu of distributing the report. If the electorate of the school district votes to provide notice of availability, it must specify how notice of availability shall be given, and such notice of availability shall be provided to the electorate at least 30 days before the district's annual or special meeting.

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Questions?

The Audit

Reading & understanding the report

Being a good consumer of the Audit Report

The Opinion

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit……………

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Opinion

In our opinion, the financial statement referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information…….

The Audited Financial Statements

Governmental Wide Statements: These statements are designed to mimic commercial entities and include assets and long term liabilities

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Fund Basis Statements: These statements align with our funding and budgeting structure in Vermont and do not include assets or long term liabilities (beyond 1 yr). Under the Fund Basis system revenue to pay for these liabilities will be raised annually through the voter budget approval process.

Fund Equity

Fund Balances:

Unassigned – available for the future budget

Assigned – available for the budget beginning July 1^st.

Footnotes

Note 1: Summary of Significant Accounting Policies – this is the longest footnote and outlines how the organization operates, defining statements, funds, accounting basis, etc..

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Dry but a MUST read…..

Other Footnotes

• Cash & repurchase agreements – outlines our risk of excess cash on hand and bank failure.
• Accrued vacation & leave time – defines our policies & our liability reported on the governmental wide statements that will be either used or funded with future budgets.
• Capital Leases & Long Term Debt – Important information about future budget obligations & a schedule of debt payments.

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Other Footnotes

• Restricted, Committed & Assigned Fund Balances – important information about all funds (construction, special activities, grants & general fund) balances at year end as well as their restrictions, commitments or assignments.

Other Footnotes

• Retirement Systems: important information about how the statewide system is operated and our financial obligation to it.

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• Vermont Teachers’ Retirement System
• Vermont Municipal Employees’ Retirement System
• Local Plans?

Other Schedules

• The Other Schedules in the audit report are provided for information purposes, as noted in the audit opinion letter.
• The Other Schedules are an important reminder of the various funds a district may have, including in active funds.

The “other” Audit Reports

First ‘other’ report

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANICAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS

Why it is important? &�What is this “other report” telling us?

Lowest level of importance:

Deficiency in internal controls exist when the design or operations of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis.

Most significant level of importance

Material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

This could affect the audit opinion

More than a management suggestion

Significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe then a material weakness, yet important enough to merit attention by those charged with governance.

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The Administration should prepare and share a plan as to how this the weakness will be addressed and improved, auditors can assist in recommending improvements.

The ‘next’ report

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INDEPENDENT AUTIDOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

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Read this report – this report could result in financial loss & federal grant fund payback.

Schedule of Findings & Questioned Costs

• Documents any questioned costs
• Documents the level auditor’s risk assessment
• Documents the dollar value of a major program & the name/fund of the district’s major program

This report documents potential financial liabilities….

Schedule of Expenditures of Federal Awards

This schedule documents all the federal funds SPENT during the fiscal year. This does not outline all the federal funds available in grants received ONLY all that were spent.

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This is important information to understand how much of the district’s budget is paid with federal funds.

And Finally….

Report addressed to the School Board identifying the following:

• Potential weaknesses in operations, some are “nature of the beast” ie. Fixed asset life estimates AND some are recommendations for improvement.
• Conflicts with management & other matters

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What you expect to find in this report:

• We noted no transaction entered into by the government unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

• We encountered no significant difficulties in dealing with management in performing and completing our audit.
• No uncorrected to material misstatements
• No disagreements with management

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Questions?