1. 2003 Schools Workshop Lou Adams, Audit Manager Team SP JoLynn Berge, Asst. Audit Manager Team SP

2. School Planning Guide

3. Audits of Apportionment Enrollment, Staff Mix and Transportation

4. Overview Your local knowledge Statewide analysis of data Current approach fulfills legislative mandate Location of plans and other information Audit Memo (must use worksheets provided) Include ALL apportionment work in your TeamMate w/p – special ed too Assigned apportionment specialist for each team

5. Enrollment Alternative Learning Program (statewide theme) Summer School (FTE restrictions) September to October enrollment drop Special Education – state enrollment (conducted by SP staff)

6. Staff Mix Acquire latest S275 from school district Bachelor Degree – LEAP boarder line New Hires – records on file Social Security Number Verification FAWF districts Follow up on prior issues

7. Transportation Team SP compared ridership to enrollment over 3 years. Reconciled 1022As to 1026 funding report Analyzed trends in route type ridership Plans are specific for individual districts Mode check on 3-yr accountability audits FAWF filed districts Follow up from prior audit issues

8. Financial Section Update

9. Changes to F-196 FY02-03 ALL districts implemented GASB 34 requirements, IF they want a GAAP opinion. The F-196 are school districts fund financial statements and these were revised to meet GASB 34 fund statement requirements. Districts issuing only the F-196 statements will receive an unqualified OCBOA opinion. Districts are not required to fully implement GASB 34 requirements. Government-wide statements and MDA are not required.

10. Changes to F-196 Funds are now reported in GAAP order (GF, ASB, DSF, CPF, TVF and Permanent Fund) Expendable and nonexpendable trust funds were removed General Long Term Debt Account Group and General Fixed Asset Account Group were removed Add Trust and Agency Funds (Private Purpose Trust and Pension and Other Employee Benefit Trust Funds) Added Permanent Fund

11. New F-196 Edits Informational edit; Due From Other Funds must equal Due to Other Funds Informational edit; Reminds districts to send a letter of explanation if the district has a negative Ending Total Fund Balance

12. Changes to Certification Sheet Total Revenues and Other Financing Sources have been combined Retitled Transfers In/Out to Other Financing Uses

13. Changes to Balance Sheet/Statement of Revenues, Expenditures and Changes in Fund Balance General ledger accounts have been rolled up ABFR manual lists the GL accounts, including those that are combined in the roll ups Trust and Agency Funds and Permanent Fund entries are manually input Residual Equity Transfers have been removed Retitled Transfer In/Out to Other Sources/Uses

14. Statement of Changes in Fiduciary Net Assets For Trust and Agency Funds New statement in FY02/03 Most entries are manually input Other Trust Column will only be used by districts with a Pension and Other Employee Benefits Trust or Agency Fund

15. Schedule of Long-Term Debt New in FY02/03 Beginning outstanding debt balance as of 9/1/02 should equal ending balance as of 8/31/02 Manually input Similar to what has been required by BARS manual

16. Changes to Notes Note 1 has been revised to include new language for Other Comprehensive Basis of Accounting

17. Updates to Auditing Standards Opinion Units Effective for audits of financial statement periods ending after June 15, 2003 For schools this is FY02/03 TAS will be including this in A&A training in December Only GAAP audits (CAFRs) will be receiving audit reports with opinion units All other reports will remain basically the same and no additional audit work will be needed TeamMate will be updated to include opinion unit requirements in financial statement section (materiality work)

18. Updates to Auditing Standards SAS No. 99 – Consideration of Fraud in a Financial Statement Audit Effective for audits of financial statements for periods beginning on or after Dec. 15, 2002 For schools this is FY03/04 Teams will be notified when this information is updated in TeamMate

19. Permanent Fund and Trust Funds Districts closed out their expendable and non-expendable trust funds, and from these balances, determined the beginning balance amounts in the new Permanent Fund and Private-purpose Trust Fund Auditors need to determine whether the beginning balances are fairly stated. Recommend tracing the ending balances from old funds to how the new balances were determined.

20. Trust Fund activity in the ASB Fund Non-charitable fundraising is allowed by RCW to remain in the ASB Fund (6000 accounts). However, auditors need to determine whether this activity is material to either the balance sheet or income statement and whether booking this activity in the ASB Fund has materially misstated the fund’s activity reported on the financials. If this activity materially misstates the ASB fund financial information, Districts should restate their financials to properly account for this activity.

21. Evaluating and Assessing Financial Condition Districts are required to report to the board monthly, WAC 392-123-115 requires “Monthly budget status report”. The WAC also requires written explanations for significant deviations in revenues or expenditures. Review information that the board is receiving and verify that it agrees with actual financial records. Does it agree with requirements?

22. Evaluating and Assessing Financial Condition Cont.- Refer to the Planning Guide for additional financial condition indicators and areas of risk: Enrollment projections Year end journal entries Fund balance Some additional thoughts if financial condition is poor: Determine what current fund balance is at time of audit Perform analytical procedures on budget to actual information (budgeted vs. actual beginning and ending fund balance and revenues and expenditures), are there overwhelming differences? Use of restricted funds

23. Reservations and Designations of Fund Balance Perform analytical procedures at detail component level of fund balance (FAP). Are all items in fund balance appropriately categorized (reserves vs. designations). Reservations of fund balance only for: Resources not available for spending (inventory and imprest offsets) Legal restrictions on spending (bond funds, I-728)

24. Reservations and Designations of Fund Balance All reserves need to meet one of the two criteria. Board resolution to “set aside” money is not a reservation. Designations represent management’s intended use of resources. May be made by board or management Must be supported by appropriate documentation

25. I-728 Moneys Financial statement work Properly presented on financials reservation of fund balance is ok for unspent portion Booking unspent portion as deferred revenue is not proper treatment Legal compliance work (only during accountability audits) Public hearing was held by May 1st Funds were spent on allowable activities and on those activities agreed upon based on public hearing input

26. Miscellaneous General Fund Fundraising Need to determine where district is coding this to for analytical purposes (revenue code 2900) State grants Learning Assistance Program state moneys will be tested at a few districts that receive very large allocations. Teams will be notified for districts to test

27. K-12 Education System Report First year out the door Profiles the education industry Common audit areas examined FY02 audit results (findings, issues and other conditions of note) Recommendations Audit focus for FY03

28. Current Hot Topics

29. General Fund Fundraising AGO issued February 19, 2003 Concludes that districts have authority to raise funds in the general fund for educational purposes. School districts do not have authority to create enterprises that have no direct relationship to their educational programs. See guidelines in handout. Controls and monitoring should be similar to ASB fundraising.

30. Interlocal Agreements & Piggybacking AGM Issued April 1, 2003 Not legally necessary to enter an interlocal agreement prior – however it’s a good business practice Buyer bears burden of ensuring purchase is made in compliance with bid requirements Interlocal Cooperation Act does not relieve buyer of statutory obligations

31. Open Public Meetings Act Informal opinion issued July 1, 2003 to Washington State School Directors Assoc. Questioned whether meetings to discuss operational strategies in the event of a strike are exempt from the Act. Analysis by AG is no, these meetings are not exempt and not considering to be part of the collective bargaining process

32. U.S. Communities Purchasing Alliance AGM issued June 23, 2003 National organization that has contracted with Office Depot. The Alliance claimed local government could avoid compliance with its statutory competitive bidding requirement by entering an interlocal agreement under RCW 39.34. Aggressively pursued school districts. AGM concludes that statutory requirements can not be avoided by entering into interlocal agreements.

33. Other Topics PTA interest in ASB rules Consistency in reporting issues – early communication is key New webpage for School Programs Audit Issues Database – email ALL exit items, management letters and findings at conclusion of audit. FY02 challenges with audit reports