D19 audit reveals issues
Blackville-Hilda’s District 19 School Board heard a report of the district’s 2016-17 audit in closed session but accepted it in open session and provided a copy immediately upon request. A dive into the details of that audit revealed the discovery of multiple bookkeeping and accounting issues.
The report was presented to the board on Monday, Jan. 8 by Jim McGuire of the accounting firm of C.C. McGregor. When questioned ahead of the meeting of why the report was on the agenda for closed session, Superintendent Dr. Shawn Johnson said that parts of the audit related to specific personnel issues.
In open session, the board simply approved the audit for the fiscal year ending June 30, 2017 “as presented” by McGuire. He said the report was an “unqualified opinion” or clean report meaning that all information had been divulged to auditors. Otherwise, he did not go into any details during the public session.
What the paperwork revealed was that the district overspent revenues by $79,043 between July 1, 2016 and June 30, 2017. The starting overall fund balance on July 1, 2016 was $762,374 but went down to $683,331 by June 30, 2017.
It noted that, “Due to the current economic climate, the District has approved a (tax anticipation note) in the 2016-17 year in the amount of $500,000 to help assist with the cash flow of operations. The district administration and school board is currently planning and will continue to plan for possible budget reductions to continue to build up the fund balance.”
The balance sheet of governmental funds shows a total of assets and liabilities over the fiscal year balanced out at $3,563,012.
In a section of the audit titled “Schedule of Findings and Questioned Costs”, the auditors found 14 control deficiencies related to financial statements, five instances of noncompliance and three audit findings related to major federal award programs.
Details of those findings include:
• Bank accounts were not properly reconciled to the general ledger and not completed in a timely manner. “It was noted that many months went by before bank reconciliations were attempted.”
• Amounts from the county treasurer were not properly reconciled nor done in a timely manner.
• Receivables were never reversed from the prior year which “can result in overspending of budgets, unexpected funds being lost, and/or impedance of financial decision making, including budgeting and spending.”
• Two material payables were improperly accrued resulting in EIA funds having to be sent back to the S.C. Department of Education.
• Health and dental payments were not reconciled resulting in an error.
• Payroll liabilities were not reconciled or reviewed at year-end resulting in undetected errors. The result was “an overstatement of assets, an understatement of liabilities, an understatement of expenditures, a lost opportunity for federal funds, and incorrect liability balances at year-end.”
• A S.C. Retirement System quarterly report was incorrectly filled out for March 2017 resulting in the district under-paying what it owed.
• The general ledger did not balance. In fact, six different funds were out of balance and contributed to the overall general fund being out of balance.
• Balance sheets did not agree with the prior year’s audited balances.
• No transactions were recorded in the Debt Service Fund after September 2016. The result was “No revenues for taxes received by the Treasurer’s office and no note payments paid by the Treasurer are reflected in the general ledger. District is not providing proper stewardship over its funds.”
• Claims for certain expenditures were over-claimed, requiring the district to return funds. “Multiple reimbursements were received for the same expenditures; therefore those funds are owed back.”
• The finance department “set up many new accounts that were incorrect in their accounting number and/or classification...” It noted, “District personnel were unaware, did not use or did not follow accounting guidelines or manuals provided by the SCDE (S.C. Department of Education).”
• In several instances, the district claimed reimbursement for federal funds that had not been expended in advance of the request. Many federal programs require a district to first pay for the expenses of a program and then file for reimbursement.
• Additionally, the district was found not to be in compliance with the Commercial Driver’s License Drug and Alcohol Testing program. The district did not perform pre-employment testing on new drivers and no proof of any alcohol testing was found. “For one driver, no proof of SDL license or medical exam was found,” stated the audit.
The report stated the State Superintendent of Education could declare a “fiscal watch” for the district and “require the district board to submit a financial recovery plan within 60 days after the declaration.”
The auditors recommended the district “be proactive in developing a plan to increase the general reserve fund to a level of at least one month of general operating expenditures.”
Additionally, the report noted in multiple instances that the “Interim Finance Director and Consultant could not appropriately identify from the former Finance Director’s records” the information they sought.
The former finance director was Shereca Anderson. LaPrecious Rivers is the interim finance director and previously served as assistant finance director.
McGuire said a copy of the audit had already been provided to the South Carolina Department of Education.
Numerous attempts were made by The People-Sentinel to contact Dr. Johnson since the meeting for comment on the audit but those calls and email were not returned.