HomeMy WebLinkAboutNantucket Schools AUP 2015TOWN OF NANTUCKET PUBLIC SCHOOLS
STUDENT ACTIVITY ACCOUNTS
REPORT ON APPLYING
AGREED-UPON PROCEDURES
OVER COMPLIANCE IN RELATION TO THE
STUDENT ACTIVITY ACCOUNTS GUIDELINES
FOR MASSACHUSETTS SCHOOL DISTRICTS
YEAR ENDED JUNE 30, 2015
TOWN OF NANTUCKET PUBLIC SCHOOLS
STUDENT ACTIVITY ACCOUNTS
REPORT ON APPLYING
AGREED-UPON PROCEDURES
OVER COMPLIANCE IN RELATION TO THE
STUDENT ACTIVITY ACCOUNTS GUIDELINES
FOR MASSACHUSETTS SCHOOL DISTRICTS
YEAR ENDED JUNE 30, 2015
TABLE OF CONTENTS
INDEPENDENT ACCOUNTANT’S REPORT ON
APPLYING AGREED-UPON PROCEDURES…………………………………………… 1
FINDINGS (Schedule I)….………………………………………………………………….. 2-12
INDEPENDENT ACCOUNTANT’S REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Superintendent of Schools
And School Committee
Nantucket Public School District:
Dear Mr. Cozort:
We have performed the procedures specified in the Agreed Upon Procedures and Audit Guidelines for
Student Activity Funds issued in 2015 by the Massachusetts Department of Elementary and Secondary
Education (the “Guidelines”), which was agreed to by the Office of the Superintendent of Schools of the
Nantucket Public Schools (the District). The procedures were performed, solely to assist you in
evaluating the District’s assertion that with regards to its student activity accounts of its elementary
schools, it has complied with these Guidelines. This engagement to apply agreed-upon procedures was
performed in accordance with attestation standards established by the American Institute of Certified
Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties
specified in this report. Consequently, we make no representation regarding the sufficiency of the
procedures performed, which are set forth in the Guidelines, either for the purpose for which this report
has been requested or for any other purpose.
We have attached to this report our findings as Schedule I.
We were not engaged to, and did not conduct an audit, the objective of which would be the expression of
an opinion on the District’s compliance with the Guidelines. Accordingly, we do not express such an
opinion. Had we performed additional procedures, other matters might have come to our attention that
would have been reported to you.
This report is intended solely for the information and use of the District, its management, the School
Committee and the Massachusetts Department of Elementary and Secondary Education and is not
intended to be and should not be used by anyone other than the specified parties. However, this report is
a matter of public record and its distribution is not limited.
Roselli, Clark and Associates
Certified Public Accountants
Woburn, Massachusetts
October 17, 2015
Nantucket Public Schools Page 1 of 12 Student Activities
Roselli, Clark and Associates
SCHEDULE I – FINDINGS AND OBSERVATIONS
FISCAL YEAR ENDED JUNE 30, 2015
Introduction
A student activity account shall be used for monies raised by students or student organizations and which
will be expended by those students or student organizations for their benefit. Monies deposited to a
student activity account are governed by Massachusetts General Law (“MGL”) Chapter 71 paragraph 47,
as well as the policies of the School Committee. These provisions include procedures with respect to (1)
the establishment of an interest bearing bank account and a checking account through the involvement of
the Town Treasurer, (2) certain disbursement procedures, and (3) auditing and reporting requirements.
Recently, the Massachusetts Department of Elementary and Secondary Education (ESE) issued a
compliance supplement summarizing the major mandates of maintaining compliant student activity funds
with appropriate checklists that are used for audit. We have used this checklist and conducted the
suggested procedures contained within the document. Resultant of this process is a summary of our
observations highlighted in this report. We are hopeful this will assist the District to gain further
compliance with the applicable laws and regulations.
This report is broken up into four sections:
Section 1 – General findings and discussion that relate to all 3 Schools in the Nantucket Public School
District.
Section 2 – Specific findings that relate to Nantucket Elementary School
Section 3 – Specific findings that relate to the Cyrus Peirce Middle School
Section 4 – Specific findings that relate to the Nantucket High School
Nantucket Public Schools Page 2 of 12 Student Activities
General Comments
During fiscal year 2013 the schools underwent their first ever audit of the student activity accounts;
resultant of this process was the observation of numerous findings and deficiencies reported to the School
Committee in a report dated December 5, 2013. The Superintendent and School Committee have worked
diligently to improve this process and this audit will serve as an update to communicate areas that have
been improved since this last audit and areas that still require attention.
Comment 1 – improvements
In response to our comments included in our communication to management in our report dated
December 5, 2013 the following summarizes those areas that have been addressed and improved:
1. The Superintendent engaged a consultant to provide training to all three student activity
administrators as well as the principals, school office manager and superintendent himself.
Resultant of this is a more informed, qualified and educated process of completing student
activity transactions. This transition went well at the elementary school and high school however
there have been some challenges at the middle school (see comments under middle school). All
invoices appear to now be appropriate student activities, which are all supported by adequate
backup.
2. In our prior report, we suggested that the Superintendent evaluate the possibility of appointing
one individual to oversee the activities of all 3 schools. This seemed practical given the close
proximity of the schools and the need to appoint a more qualified individual to administer the
financial activities of these funds. We are happy to report that this has been evaluated and such
an individual has been appointed, effective fiscal year 2016. In addition to this, in order to bolster
the resources supporting the activities, we believe that the School Business Manager should also
be involved in this process at least once on a monthly basis.
3. The activity administrators at the elementary school and the high school are currently reconciling
internal records to the checking account on a monthly basis.
4.Requests for reimbursements from the Treasurer’s Agency account are now supported by backup
documentation which is reviewed by the accounting department prior to receipting funds to the
individual schools.
5. Subsidiary ledgers including amounts available for each club are maintained internally by the
activity coordinators; a great improvement over the prior audit in which amounts were maintained
lump sum of all activities.
6. Disbursements for curriculum items out of student activity accounts are now avoided and are paid
from the school budget.
Nantucket Public Schools Page 3 of 12 Student Activities
7. The lost books account balance has been transferred to the Treasurer and is now accounted for as
a revolving fund in the Town’s general ledger in accordance with school revolving fund statutes.
8. Student activity policies and procedures have been adopted by the School Committee.
9. All activities are now approved by the School Committee prior to commencement of activities.
10. Attempts to return dormant class account money have increased and policies regarding the
disposition of excess class funds in future years have been developed.
11. A consolidated effort was undertaken with the assistance of the consultant to close dormant
accounts with balances and subsidize dormant accounts with deficits; the remaining balances
were spread across the active accounts using a reasonable allocation methodology and approved
by the School Committee.
12. Checking account balance limits at the individual schools have been reduced to more reasonable
levels.
Comment 2 – Treasurer’s reconciliation of Agency accounts to the General Ledger
Presently, the Treasurer and the Assistant Town Accountant balance their respective records in total
between the cash book and the general ledger. There is no effort to balance the individual student activity
agency balances between the reconciled bank balance and the agency account in the general ledger.
We prepared this reconciliation and it is summarized as follows:
While the variance is not material to the overall balance, it is important under student activity regulations
that these accounts are reconciled monthly. Since Treasurer’s cash in total is in balance, the variance
most likely is an over or under fund to the checking account from the agency account.
Comment 3 – School activities reconciliation from subsidiary records to the General Ledger
Currently, there are no attempts by any of the schools to reconcile activity and balances at the school level
to activity and balances at the Town level. This has resulted in activity recorded inconsistently, such as
High Middle Elementary
School School School Total
Treasurer's records 259,200.37 21,311.80 33,000.80 313,512.97
General Ledger 242,197.37 21,311.80 31,446.80 294,955.97
Warrants payable 16,003.00 - 1,554.00 18,557.00
Adjusted general ledger 258,200.37 21,311.80 33,000.80 313,512.97
Variance 1,000.00$ -$ -$ -$
Nantucket Public Schools Page 4 of 12 Student Activities
interest earned, void checks, bounced checks and other transactions. As a consequence the ending
balances of the subsidiary ledger do not balance to the ending balances in the general ledger. Detail of
this assertion is summarized in the individual sections by school later in this report.
Comment 4 – Fidelity Bond
ESE recommends, and the School Committee has it written into their policies, that all cash
handlers are required to be insured against theft or loss of cash through a fidelity bond. We
inquired of this requirement in all three schools and presently, principals and their assistants are
bonded but none of the volunteers or other cash handlers. We understand the School Business
Office is currently investigating blanket coverage for all cash handlers.
Comment 5 – Form 1099 requirements
We did not observe any vendors that exceeded the $600 limit for 1099 reporting requirement to the IRS
however one vendor, the High School DJ was close. Despite this, a process needs to be put in place when
engaging a vendor which would consist of receiving a form W9 from the vendor to avoid the need to
initiate backup withholdings and also to accommodate 1099 reporting in the instance that a vendor
exceeds the $600 threshold. The Schools could piggyback the Town in order for the process to be more
efficient.
Comment 6 – Dormant class accounts
We discussed earlier that there has been a more aggressive approach to try to return dormant class money
back to class officers. We are encouraged by this since the regulations specifically indicate that the
student activities are for students only, and graduating students are not included. At June 30, 2015, there
was still about $125,000 in those dormant class accounts, and we urge that these efforts to return this
money is continued or disposed of in accordance with School Committee policy.
Comment 7 – Photographer revenue
Typically, students usually receive a stipend from the school photographer in return for allowing the
photographer to perform their services at the school. We scanned the revenue ledgers for each of the
schools and did not observe any of this revenue at any of the schools and consider this unusual. We
suggest the schools investigate this and determine why this has occurred.
Comment 8 - Online registration
In order to improve efforts regarding cash handling, the School should evaluate whether an online
registration process for year books and other high volume items makes most sense. In the instance of
year books, an online process would keep track of who has purchased the book, keep kids from having to
bring money to school, keep teachers from handling the money and place the money in the bank faster. In
essence, it would go directly from the parents to the bank and remove at least 6 cash handling steps.
Nantucket Public Schools Page 5 of 12 Student Activities
Nantucket High School Comments
Overall processes have improved dramatically at the High School. This was discussed under general
comments. We are encouraged with the efforts and expect these to continue to improve under the control
of the new bookkeeper. The following are comments that relate specifically to the High School that we
observed during our procedures.
Comment 1 – Excel spreadsheets
The current activity administrator maintains subsidiary ledgers in Excel which includes a spreadsheet for
each club. This is a common way to maintain such records; however the Excel spreadsheets used are not
designed to utilize the spreadsheet formulas available and essentially operate as a word processing
spreadsheet which defeats the purpose of maintaining in Excel since a calculator is required to perform
calculations and clerical errors could easily occur. We suggest that these Excel spreadsheets are
programmed such that a calculator is not needed and also reduce the risk of error.
Comment 2 – Deficits in specific clubs
The following clubs ended the year in a deficit balance.
This is not allowed under ESE regulations for Student Activities. It appears that these deficits resulted
due to inaccurate estimates at the time of consolidating all accounts at the beginning of 2015. The PSAT
account could be the result of coding errors with the SAT Prep program since that account has over
$5,000. We suggest those two accounts are consolidated since they are in the same family of transactions
and the remainder deficit accounts are funded form Student Council balances at the authorization of the
School Committee.
Comment 3 – Reconciliation of subsidiary ledgers to the overall cash in the general ledger and
checking account
As previously discussed there are no efforts to reconcile cash between the subsidiary ledgers and the
corresponding records at Town Hall. This is important to perform since the Treasurer’s accounts include
interest earned, bank charges, bounced checks and other activity that the School may be unaware of in
addition to assuring that all transactions are properly and consistently reported between the two sets of
records. The table on the following page summarizes the reconciliation we prepared in detail. Overall,
bank balances are $2,328 short of activity balances. We suggest this process is reviewed between the
Town and the School to determine if this variance can be resolved.
Activity Balance
Class of 2004 (333.00)$
PSAT (1,793.00)
Library (408.89)
National Honor Society (166.60)
(2,701.49)$
Nantucket Public Schools Page 6 of 12 Student Activities
Unadjusted Adjusted
Club Balance Bad check Interest Bad check charge Balance
AP testing 2,396.00 2,396.00
Art Club 1,053.89 1,053.89
Building Club 3,008.08 3,008.08
Chinese Club 185.00 185.00
Class of 1990 950.00 950.00
Class of 1997 4,720.79 4,720.79
Class of 1998 6,465.04 6,465.04
Class of 1999 403.42 403.42
Class of 2000 2,314.00 2,314.00
Class of 2001 1,500.00 1,500.00
Class of 2004 (333.00) (333.00)
Class of 2005 2,915.38 2,915.38
Class of 2006 4,511.07 4,511.07
Class of 2008 18,460.77 18,460.77
Class of 2010 12,770.40 12,770.40
Class of 2011 16,782.71 16,782.71
Class of 2012 14,519.13 14,519.13
Class of 2013 12,290.46 12,290.46
Class of 2014 27,629.03 27,629.03
Class of 2015 21,722.98 21,722.98
Class of 2016 6,998.90 6,998.90
Class of 2017 388.00 388.00
Class of 2018 2,893.00 2,893.00
College Fair Trips 343.30 343.30
Culinary Arts 2,553.03 2,553.03
Diversity Club 377.57 377.57
Drama Club 8,060.39 8,060.39
Envirnomental Club 1,113.20 1,113.20
French Club 869.66 869.66
GSA 500.98 500.98
Latin 338.27 338.27
Literature/Journalism 372.00 372.00
Library (408.89) (408.89)
Mathletes 1,807.71 1,807.71
Music Department 13,824.40 13,824.40
National Honor Society (166.60) (166.60)
Peer helping peers 3,043.04 3,043.04
PSAT (1,793.00) (1,793.00)
SAT Prep program 5,688.64 5,688.64
School Career 8,129.20 8,129.20
Science Fair 235.41 235.41
Spanish Club 22,776.19 22,776.19
Student Council 3,296.89 514.82 (25.00) 3,786.71
Team Tanzania 126.69 126.69
Veritas 4,043.26 (106.25) 3,937.01
Yearbook 5,429.00 5,429.00
245,105.39 (106.25) 514.82 (25.00) 245,488.96
Agency balance 242,197.37$
Checking balance 1,003.38
Bank Balance 243,200.75
variance (2,288.21)$
Transactions recorded by the Treasurer and not by the School
Nantucket Public Schools Page 7 of 12 Student Activities
Comment 4 – Cash Handling
Upon review of subsequent cash receipts at the Treasurer’s office it was determined that many checks in
minor amounts had been held at the High School office for a number of months. These had been
overlooked during the transition period. It is important that all deposits are made immediately in
accordance with School Committee policies and reminders should be sent periodically in order to satisfy
this.
Nantucket Public Schools Page 8 of 12 Student Activities
Cyrus Pierce Middle School Comments
The Middle School had the most difficulty transitioning to the new system. Per our review there were
numerous deficiencies that need to be addressed and improved upon and this should be made a priority
for the new bookkeeper appointed by the Superintendent.
Comment 1 – Excel spreadsheets
The current activity administrator maintains subsidiary ledgers in Excel which includes a spreadsheet for
each club. This is a common way to maintain such records; however the Excel spreadsheets used are not
designed to utilize the spreadsheet formulas available and essentially operate as a word processing
spreadsheet which defeats the purpose of maintaining in Excel since a calculator is required to perform
calculations and clerical errors could easily occur. We suggest that these Excel spreadsheets are
programmed such that a calculator is not needed and also reduce the risk of error.
Comment 2 – Unauthorized disbursements
Four payments were made from the yearbook account cash as it was collected. This money should have
been deposited first and then a request for check made.
The 4 disbursements were for staples $15.94 (includes tax); Fusaro’s Homemade Italian Pizza $37.45
(includes tax), Stop and Shop $13.74 soda (includes tax) and Stop and Shop $17.50 (includes tax).
Comment 3 – Double paid disbursement
The yearbook adviser was reimbursed an extra $16 as a duplicate invoice was submitted in the
reimbursement sheet and paid out by the School. While this is not a significant amount and it appears this
was an honest mistake; it still highlights the need to carefully review every disbursement package,
particularly those in which numerous credit card receipts are involved.
Comment 4 – Cash handling
Yearbook money is not always brought to the principal’s office for safekeeping at the end of the night. In
addition it is not always turned over timely and is kept in drawers by teachers. At the end of the year a
deposit was made on July 7, and recorded by the Treasurer on July 13, despite school ending on June 25.
Efforts should be undertaken to more properly safeguard cash and follow the policy of cash turnover.
Comment 5 – Cash handling reconciliation
While a reconciliation is prepared for the dance money received, formal documentation supporting the
reconciliation is not maintained.
Additionally, there is no reconciliation prepared for year book cash collected verse year books
sold/distributed.
Cash reconciliations are an important part of internal control. We suggest such policies are enforced
immediately and documented.
Nantucket Public Schools Page 9 of 12 Student Activities
Comment 6 – Subsidiary ledger input errors
As discussed previously, the middle school keeps track of each activity in a subsidiary ledger maintained
in Excel. We discovered several input errors while reviewing the activity.
1. A deposit made on July 7 was recorded as $950. The actual deposit was $905.
2. Two checks totaling $1,039.42 were voided and replaced. When they were voided, an adjustment
to reinstate cash was not made so cash was charged twice for these transactions in the subsidiary
ledger.
3. Three deposits for dances and three disbursements for dance supplies were made to the Student
Council activity despite a subsidiary account for dances being established.
Since the activity balances are never reconciled, these errors were not discovered.
Comment 7 – Reconciliation of subsidiary ledgers to the overall cash in the general ledger and
checking account
As previously discussed there are no efforts to reconcile cash between the subsidiary ledgers and the
corresponding records at Town Hall. This is important since the Treasurer’s accounts include interest
earned, bank charges, bounced checks and other activity that the School may be unaware of in addition to
assuring that all transactions are properly and consistently reported between the two sets of records. The
following table summarizes the reconciliation we prepared in detail. Overall, bank balances are $1,010.91
greater than activity balances. We suggest this process is reviewed between the Town and the School to
determine if this variance can be resolved.
Unadjusted Bounced Adjusted
Club Balance Check Interest void check Balance
Yearbook 401.74 401.74
Bookfair (278.61) (278.61)
Class of 2019 1,464.15 1,464.15
Class of 2020 289.79 289.79
Class of 2021 1,479.00 1,479.00
Drama 91.79 91.79
Student Council 5,500.04 40.33 1,039.42 6,579.79
Honor Society 502.00 502.00
Student Assistance 6,298.17 6,298.17
Grade 6 Field Trip 1,000.75 1,000.75
Grade 7 Field Trip 1,150.00 1,150.00
Grade 8 Field Trip 1,293.00 1,293.00
Music Trip 20.00 20.00
Spanish Field Trip 409.32 409.32
19,621.14$ -$ 40.33$ 1,039.42$ 20,700.89
Agency balance 21,311.80$
Checking balance 400.00 a
Bank Balance 21,711.80
variance 1,010.91$
a Since checking account is not properly reconciled due to errors, balance is
estimated, based on bank balance and subsequent year activity.
Nantucket Public Schools Page 10 of 12 Student Activities
Nantucket Elementary School Comments
The elementary school processes the least amount of disbursements; only 13 were processed through the
checking account during 2015. Many improvements were noted in the processing as curriculum items
have been eliminated, subsidiary accounts were set up, the checking account is reconciled and activity is
processed through quick books. During our review we observed the following that the school should
address:
Comment 1 – Subsidiary Ledgers
Despite the subsidiary ledgers being set up, activity is recorded through quickbooks and closes to one
equity account. This defeats the purpose of setting up subsidiary accounts. Since there was very little
activity we created an accounting spreadsheet in Excel to show roll forward activity by subsidiary ledger
club using the beginning balances set up during the consolidation. A template was left with the principal
and should be used to maintain balances moving forward.
Comment 2 - Reconciliation of subsidiary ledgers to the overall cash in the general ledger and
checking account
As previously discussed there are no efforts to reconcile cash between the subsidiary ledgers and the
corresponding records at Town Hall. This is important since the Treasurer’s accounts include interest
earned, bank charges, bounced checks and other activity that the School may be unaware of in addition to
assuring that all transactions are properly and consistently reported between the two sets of records. The
following table summarizes the reconciliation we prepared in detail.
Beginning Ending
balance Revenues Expenses Transfers Interest balance
Fifth Grade 500.00$ 44,468.00$ (37,174.90)$ -$ -$ 7,793.10$
Fourth Grade 549.00 9,380.00 (9,445.00) - - 484.00
Third Grade 500.00 - - - - 500.00
Second Grade 500.00 - - - - 500.00
First Grade 500.00 - - - - 500.00
Kindergarten 500.00 - - - - 500.00
Pre K 500.00 - - - - 500.00
Playground 1,000.00 - - - - 1,000.00
Children's incentives 5,016.23 4,504.53 (397.52) - 96.71 9,219.95
Fund raiser - 855.00 (855.00) - - -
Breakfast Buddies 1,500.00 - (49.65) - - 1,450.35
Literacy events 4,000.00 - (62.94) - - 3,937.06
Guest Speakers 3,000.00 - - - - 3,000.00
School Council Events 500.00 - - - - 500.00
Student Assistance 5,550.00 - - - - 5,550.00
24,115.23$ 59,207.53$ (47,985.01)$ -$ 96.71$ 35,434.46$
Agency per School 20,838.44$ 59,207.53$ (39,011.50)$ (9,614.38)$ 96.71$ 31,516.80$
Checking per School 3,276.79 - (8,973.51) 9,614.38 3,917.66
24,115.23$ 59,207.53$ (47,985.01)$ -$ 96.71$ 35,434.46$
Per Agency General Ledger - Town 31,446.80$
Per Checking account - School 3,917.66
35,364.46
variance 70.00$
Nantucket Public Schools Page 11 of 12 Student Activities
Comment 3 – Subsidiary ledger input errors
As discussed previously, the elementary school keeps track of activity in a subsidiary ledger maintained
in quickbooks. We discovered input errors while reviewing the activity.
1. A deposit made on February 18 varied from the actual deposit by $145.
2. A deposit made on June 22 for $1,000 was not recorded in the subsidiary ledgers.
Since the activity balances are never reconciled, these errors were not discovered.
Nantucket Public Schools Page 12 of 12 Student Activities