The Stephens County school system’s Fiscal Year 2013 audit report from the state shows numerous deficiencies.
State auditors released the Stephens County school system’s Fiscal Year 2013 audit report late Friday afternoon.
In that report, auditors first state that the Stephens County school system failed to balance its budget in Fiscal Year 2013, resulting in a deficit fund balance.
According to auditors, the audit showed that the school system’s General Fund showed a deficit in its fund balance of more than $1.2 million at June 30, 2013.
The audit also says that the school system’s Fiscal Year 2013 budget was not balanced as total anticipated revenues did not equal or exceed total anticipated expenditures.
It puts Fiscal Year 2013 general fund revenues at about $38.8 million and expenditures at about $40.4 million, a $1.6 million shortfall.
Auditors say management did not properly monitor the financial situation during Fiscal Year 2013 and make necessary adjustments to decrease expenditures.
Also, state auditors say that the school system’s accounting procedures were insufficient to ensure that transactions were recorded accurately on the general ledger.
Auditors say the general operating bank statements for October 2012 through June 30, 2013 were not reconciled to the general ledger until March 2014 and that numerous cash reconciling items totaling more than $2.1 million were not adjusted to the general ledger in a timely manner.
According to the audit, the Crossroads account was omitted from the general ledger and the school system’s general ledger reflected an overall deficit balance in the Interfund Cash account of about $3 million, a number that should always be zero.
State auditors also say that several club accounts maintained a negative balance at year end and funds from other agency accounts were used to cover the balances, a use of funds that violates the custodial nature of agency funds.
In addition, auditors say monthly SPLOST receipts totaling more than $3.1 million were not recorded on the school system’s general ledger; debt service principal and interest payments totaling over $2.6 million were not reported on the general ledger; accounts payable was overstated by more than $5.7 million due to the failure to record electronic payments to benefits vendors that were included on the bank statements; salaries and benefits were understated by over $4.3 million due to the failure to accrue July and August payroll related expenditures on 10-month and 11-month employees; notes payable of over $1.9 million were not recorded on the general ledger, and current year cash transfer activity between banks, as well as several journal entries required to tie beginning fund balances for prior year transfers of cash between funds, were not recorded on the general ledger.
Along with all of those findings, state auditors say that the school system did not prepare its financial statements in accordance with generally accepted accounting principles.
State auditors also report that the school system did not comply with conditions of a federal education grant for children with disabilities because it reduced the amount of local and state funds spent for the education of children with disabilities below the amount spent in Fiscal Year 2012, a violation of the federal grant program.
According to the audit, the school system also did not implement internal controls and procedures to ensure expenditures were properly documented and recorded in the correct grant period for both a special education grant and a school nutrition grant.
In the cases regarding findings with grant funds, auditors call on the state Department of Education to review the matter to determine if a reclaim of funds is appropriate, an amount that could total more than $275,000.
This audit report only applies to Fiscal Year 2013, which went from July 1, 2012 to June 30, 2013.