SM 102

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Title: SM 102

1
SM 102 School Business Management Ethics
Audit ComplianceJuly 12, 2011
2
Presented by

L. Freeman Wish, CPA
Clarksville School District
1701 Clark Road
Clarksville, AR 72830
479-705-3200
Freeman.Wish_at_csdar.org

3
School Board Structure

6-13-616. Qualifications of directors.
(a) No person shall be eligible to be a member of
any school district board of directors in this
state unless he or she is a qualified elector of
the school district which he or she serves.
(b) No person who is elected to a school district
board of directors shall be eligible for
employment in that same school district.
History. Acts 1935, No. 30, 4 Pope's Dig.,
11524 Acts 1957, No. 131, 1 A.S.A. 1947,
80-504, 80-504.1 Acts 1989, No. 242, 1 1993,
No. 294, 7 1993, No. 346, 1 1999, No. 1390,
1.

4
School Board Structure

6-13-608. Length of directors' terms.
All members of a school district board of
directors shall be elected to a term of office of
not less than three (3) years nor more than five
(5) years in length and with the expiration of
such terms so arranged that, as nearly as
possible, an equal number of positions are filled
each year. All members of a school district board
of directors shall have terms of office of equal
length.
History. Acts 1981, No. 50, 1 A.S.A. 1947,
80-549 Acts 1999, No. 1078, 35.
Effective Dates. Acts 1999, No. 1078, 92 July
1, 2000.

5
6-13-634. School district board of directors
Size.

(a) All school districts shall have a board of
directors with five (5) members or seven (7)
members or nine (9) members in the case of a
school district having an average daily
attendance of twenty-four thousand (24,000) or
more.
(b) Subsection (a) of this section shall not
apply to those school districts that have a board
of directors of seven (7) members, or in the case
of a school district having an average daily
attendance of twenty-four thousand (24,000) or
more, nine (9) members, if that school district
is operating under a court order or a
consolidation agreement that provides for a board
of directors.

6
6-13-634. School district board of directors
Size.

(c) (1) No board of directors shall have an even
number of directors.
(2) No less than ninety (90) days prior to the
next annual school election, any school district
with an even number of directors shall file a
petition with the State Board of Education to
establish the requisite odd number of directors.
(3) If the number of members of a board of
directors needs to be reduced to create an odd
number of directors, the board of directors in
office on August 12, 2005 shall draw lots to
determine which board positions will be
eliminated.
(d) Any change in the number of directors
serving on the local school board of directors
required under this section shall be effective
upon the directors taking office following the
2005 annual school election.

7
6-13-634. School district board of directors -
Size.

(d) Any change in the number of directors
serving on the local school board of directors
required under this section shall be effective
upon the directors taking office following the
2005 annual school election.
History. Acts 1999, No. 1078, 29 2005, No.
2151, 13.

8
School Board Structure

6-13-109. School superintendent.
(a) The public school districts in the state
shall each employ a superintendent of schools,
whose qualifications and duties shall be
prescribed by the General Assembly and the State
Board of Education.
(b) "Superintendent of schools" is defined as
the executive officer of a school district board
of directors directing the affairs of the school
district and teaching not more than one-half
(1/2) of the time in the school day.
History. Acts 1999, No. 1078, 27.

6-13-617. Oath.
(a) Each director elected or appointed shall,
within ten (10) days after receiving notice of
his election or appointment, subscribe to the
following oath "I,__________________, do
hereby solemnly swear or affirm, that I will
support the Constitution of the United States and
the Constitution of the State of Arkansas, and
that I will not be interested, directly or
indirectly, in any contract made by the district
of which I am a director, except as permitted by
state law and that I will faithfully discharge
the duties as school director in ____________
School District, No. ____________ of ____________
County, Arkansas, upon which I am about to
enter."
(b) The county clerk, upon receipt of the oath
prescribed for a director, shall immediately
commission such persons, and they shall enter at
once upon their duties as directors.
History. Acts 1935, No. 30, 12 Pope's Dig.,
11532 A.S.A. 1947, 80-505 Acts 2001, No.
1599, 20.

6-13-618. Organization - Disbursing officer.
(a) At the first regular meeting following the
annual school election, the board of directors
of each school district shall organize by
electing
(1) One (1) of their number president
(2) One (1) of their number vice president
and
(3) A secretary who may be, but need not be, a
member of the board.
(b) (1) By resolution adopted by majority vote,
the board shall designate one (1) of its members
who shall serve as the primary board disbursing
officer of the district.
(2) In addition, the board may designate one
(1) or more board members as an alternate board
disbursing officer or officers in the absence of
the designated primary board disbursing
officer.
(3) Such a resolution must be filed with the
county treasurer and the Director of the
Department of Finance and Administration.
(c) No warrant or check other than food service
or activity funds warrants or checks shall be
valid in the absence of the following manual or
facsimile signatures
(1) That of the designated board member
serving as disbursing officer for the district
or the designated alternate and
(2) That of the superintendent of the school
district.
History. Acts 1959, No. 78, 1 1967, No. 187,
1 A.S.A. 1947, 80-506 Acts 2003, No. 671,
1.

11
6-13-619. Meetings.

(a) (1) The board of directors shall hold regular
monthly meetings during the school
term and shall meet on call of the president or
secretary or any three (3) members of the board
of directors or when petitioned to do so by a
petition in writing signed by fifty (50)
electors in the school district.
(2) Regular meetings of the school board of
directors and all school board
committees, and special meetings of the school
board of directors and school board committees
that deal with personnel or personnel policies,
shall, except in emergency situations, be held
after 500 p.m.
(3) (A) Not less than ten (10) days prior to
the date of a regular meeting of its board of
directors, a public school district shall publish
on the public school district's website a
notice of the date, time, and place of the
meeting.
(B) Not less than twenty-four (24) hours prior
to a rescheduled regular
meeting, a public school district shall publish
a notice on its website of the change in the
date, time, or place of the regular meeting.

12
6-13-619.Meetings (Continued)

(b) (1) Minutes of regular and special meetings
of the school board of directors shall be kept
by the secretary of the board of directors and
filed by him or her in a permanent record.
(2) This record shall also contain a copy of all
budgets of the school district and all reports
of the county treasurer on the financial affairs
of the school district.
(c) (1) (A) A majority of a quorum voting
affirmatively shall be required for the passage
of any motion or resolution.
(B) Any member who abstains from voting shall be
counted as having
voted against the motion or resolution.
(C) If a member announces a conflict of interest
with regard to the issue,
the member may leave the meeting until the
voting on the issue is concluded, and the member
who abstains from voting thereby shall not be
counted as having voted.

13
6-13-619.Meetings (Continued)

(c) (2) For the purposes of this section, a
quorum shall be a majority of the
membership of the board of directors.
(d) (1) Any member of the board of directors who
misses three (3) regular and consecutive board
of directors meetings during a school year for
any reason other than military service of the
member or illness of the member verified by a
written sworn statement of the member's
attending physician may be removed from office
by a majority vote of the remaining board
members, but only after an opportunity for a
hearing before the board of directors upon
fifteen (15) days notice received by personal
delivery or by certified mail with the return
receipt signed by the addressee only requested.
(2) If the board of directors takes action to
remove the member from office, the remaining
members shall then appoint another individual to
serve until the next annual school election,
when electors shall select in the usual manner a
director to serve the unexpired term of the
removed member.
History. Acts 1931, No. 169, 96 Pope's Dig.,
11534 Acts 1983, No. 855, 1 A.S.A. 1947,
80-507 Acts 1993, No. 608, 1 1995, No. 1347,
1 2007, No. 1588, 1.

14
6-13-620. Powers and duties.

The board of directors of each school district in
the state is charged with the following powers
and required to perform the following duties in
order to provide no less than a general,
suitable, and efficient system of free public
schools
(1) Attend meetings of the school board
(2) Determine the mission and direction of the
school district
(3) Adhere to state and federal laws governing
public schools
(4) Enact, enforce, and obey school district
policies
(5) (A) Employ staff, including
(i) (a) A superintendent of schools to oversee
the day-to- day operations of the school
district.
(b) A superintendent shall be evaluated
annually or no less often than prior to any
extension of his or her employment contract.
(c) Superintendents and assistant
superintendents may be employed under contract
terms and conditions that incorporate all
elements prescribed by the State Board of
Education and

15
6-13-620. Powers and duties. (Continued)

(ii) (a) School district employees under
initial written employment contracts in the
form prescribed by the State Board of
Education, not including day-to-day
substitutes.
(b) The employment contract shall
(1) State the duration of employment,
specific duties of the employee and the
annual salary or hourly wage of the employee
and projected annual earnings in the case of
nonexempt employees under applicable state
and
federal law and
(2) Incorporate all personnel policies
adopted by June 30 to be in effect on
July 1 of the following employee contract
year, subject to the requirements and
exceptions contained in 6-17-204 and
6-17- 205.

16
6-13-620. Powers and duties. (Continued)

(5)(B) Copies of initial written employment
contracts and renewed written employment
contracts issued in accordance with 6-17-1506
and 6-17-1703 shall be distributed as follows
(i) One (1) copy to be given to the employee
(ii) One (1) copy to be retained by the school
board of directors and
(iii) One (1) copy to be retained by the school
district's treasurer or bookkeeper
(6) Understand and oversee school district
finances required by law to ensure alignment
with the school district's academic and facility
needs and goals, including without limitation
(A) Reviewing, adopting, and publishing the
school district's budget

17
6-13-620. Powers and duties. (Continued)

(B) Overseeing and monitoring the school
district finances, including
(i) Revenues
(ii) Expenditures
(iii) Investments
(iv) Debts
(v) Obligations
(vi) Inventory and
(vii) Real property
(C) Borrowing money as necessary, but in no
case shall the school board of directors
permit the school district to end the fiscal year
with a negative legal balance
(D) Entering into contracts for goods and
services necessary to operate the school
district
(E) Buying, selling, renting, and leasing real
property and personal
property on behalf of the school district
(F) Receiving, reviewing, and approving each
annual financial audit
report and presenting it to the public

18
6-13-620. Powers and duties. (Continued)

(7) Ensure that
(A) Necessary and sufficient facilities are
built or obtained, furnished, and maintained
and
(B) All properties belonging to the district
are managed and maintained for the benefit of
the school district
(8) Approve the selection of curriculum and
ensure that students are offered and taught the
courses of study and educational content
required by the State Board of Education
(9) Visit district schools and classrooms when
students are present
no less than annually and attend some events and
functions
(10) Obtain the training and professional
development necessary to serve as active and
informed members of the school board of
directors and
(11) Do all other things necessary and lawful
for the conduct of efficient free
public schools in the school district.

19
6-13-620. Powers and duties. (Continued)

History. Acts 1931, No. 169, 97 Pope's Dig.,
11535 Acts 1939, No. 316, 1 1941, No. 389,
1 1943, No. 96, 1 1949, No. 287, 1 1953,
No. 204, 1 1957, No. 280, 1 1969, No. 327,
1 1973, No. 253, 3 1973, No. 690, 1
1977, No. 658, 1 1983 (Ex. Sess.), No. 41,
1 1983 (Ex. Sess.), No. 53, 1 A.S.A. 1947,
80-509 Acts 1989, No. 822, 1 1993, No. 294,
7 1995, No. 233, 1 1999, No. 391, 3 1999,
No. 1078, 38 2001, No. 581, 1 2001, No.
1747, 1 2003, No. 1738, 1 2007, No. 617,
5, 6 2007, No. 710, 1 2007, No. 1573, 45
2009, No. 1180, 2.

6-13-622. Publication of budget.
(a) The requirement of Arkansas Constitution,
Amendment 40, for publication of the budget shall
be discharged by the board of directors of each
school district by publication of its budget one
(1) time in some newspaper published in the
county in which the district lies or, if the
district lies in more than one (1) county, in the
county in which the district is administered.
(b) The publication shall be made not less
than sixty (60) days before the school election
at which the annual ad valorem property tax for
the district is decided by the electors.
History. Acts 1951, No. 403, 4 A.S.A. 1947,
80-538 Acts 2003, No.1280, 1.

The secret of managing is to keep the guys who
hate you away from the guys who are undecided.
Casey Stengel

22
The Organizational Chart
23
First Exercise of the Day

Take a few minutes and using any piece of paper.
Sketch a rough diagram of your schools
organization chart.
You will not have to show anyone your chart, but
you can refer to it during the presentation.

24
Structure in School Management

The secret to how a structure works is not the
position of the agentsbut the condition of the
LINES IN BETWEEN!

Life is like a dogsled team. If you aint the
lead dog, the scenery never changes.
Lewis Grizzard

Management is efficiency in climbing the
ladder of success leadership determines whether
the ladder is leaning against the right wall.
Steve R. Covey
Author
The Seven Habits of Highly Effective People

27
Why Cant A School Be Run Like A Business?

Business Stockholders invest in a business
voluntarily.
vs.
Voters pay mandatory property taxes to invest in
schools.

28
Why Cant A School Be Run Like A Business?

Businesses are generally run by a board of
directors that has intimate knowledge of the
business environment and industry.
vs.
School Board of Directors only qualification is
that they be a registered voter and be breathing.

29
Differences Between Managers and Leaders

The manager administers.
The leader innovates.
The manager is a copy.
The leader is an original.
The manager maintains.
The leader develops.

30
Differences Between Managers and Leaders

The manager relies on control.
The leader inspires trust.
The manager has a short-range view.
The leader has a long-range perspective.
The manager asks how and when.
The leader asks what and why.

31
Differences Between Managers and Leaders

The manager has his or her eye on the bottom
line.
The leader has his or her eye on the
horizon.
The manager accepts the status quo.
The leader challenges it.

32
Differences Between Managers and Leaders

The manager is the classic good soldier.
The leader is his or her own person.
The manager does things right.
The leader does the right thing.
Managers are necessary.
Leaders are essential.

You can have brilliant ideas, but if you cant
get them across, your ideas wont get you
anywhere.
Lee Iacocca

34
Results of a Ford Motor Company Management Study

Senior Management could identify only 4 of the
problems of the organization
When middle management was added, it went up to
9
Adding all supervisors increase it to 74
When all staff were included it was up to 100
We need to let those under us see how they can
help improve the organization

You do not lead by hitting people over the
head thats assault, not leadership.
Dwight D. Eisenhower

6-20-1805. Training requirements for
bookkeepers.
(a) The State Board of Education shall establish
by rules or regulations appropriate training and
continuing education requirements for individuals
whose job responsibilities include preparing a
budget or classifying, recording, or reporting
receipts or expenditures of a school or school
district.
(b) The State Board of Education shall establish
rules or regulations to assure the proficiency of
school employees or other individuals to properly
classify, record, and report the fiscal
transactions of schools or school districts.
(c) If the State Board of Education determines
that a school or school district is not properly
recording or reporting the fiscal transactions or
budget of the district, the superintendent and
school board may be required to appear before the
State Board of Education to explain why the
school or school district has not complied with
the fiscal recording and reporting requirements.
History. Acts 2003 (2nd Ex. Sess.), No. 40, 2.

37
6-15-2302.General business manager.

(a)As used in this section, general business
manager means a chief financial officer or
business manager, however the position is titled,
who(1)Is responsible for the fiscal operations
of the public school district and(2)Performs
his or her duties under the direction of the
superintendent of schools of the public school
district.(b)(1)On and after July 31, 2007, a
general business manager for a public school
district shall meet the minimum qualifications
established by rule of the Department of
Education.(2)This subsection (b) is intended to
require minimum qualifications for a general
business manager that support the implementation
of best financial management practices for public
school districts.(c)A general business manager
who was employed prior to July 31, 2007, shall be
exempt from the provisions of subsection (b) of
this section.History. Acts 2007, No. 1591, 1.

38
Why Record Management?

Important to the way the school operates
Evidence of decisions, transactions, operations
School history
Strategic Planning

39
What is a Record?

Recorded information, regardless of medium or
characteristics, received by an organization that
is evidence of its operations, and has value
requiring its retention for a specified period of
time.
Information created, received and maintained
by an organization or person in pursuance of
legal obligations or in the transaction of
business.

40
Sources of Information/Records

Correspondence
Invoices
Purchase Orders
Payroll Records
School Board Meeting Minutes
Bond Issues
Elections
E-Mail
Telephone Calls

41
What is Record Management?

The systematic control of all records from their
creation or receipt, through processing,
distribution, organization, storage and retrieval
to their ultimate disposition.

42
Why Do I Need Record Management?

Comply with Government Regulations
Reduce Legal Liability
Control Valuable Company Assets
Reduce Record Archive Size

43
Essential Elements ofRecord Management

Record
File Plan
Retention Schedule
Records Retrieval
Disposition

44
The Andersen Lesson

After a 6-week trial and 10 days of deliberation,
a jury found Arthur Andersen guilty of
obstruction of justice when it destroyed Enron
Corp. documents while on notice of a federal
investigation by the SEC.

45
The Andersen Lesson

The jury rejected Arthur Andersens defense that
the documents were destroyed as part of its
housekeeping duties and not as a ruse to keep
Enron documents away from the regulators.

46
The Andersen Lesson

Arthur Andersen received the maximum sentence of
5 years probation and a 500,000 fine.
35,000 people lost their jobs worldwide.
Court did overturn the Arthur Andersen
conviction, but it was too late to save the
company.

47
The Andersen Lesson

The lesson to be learned from the Arthur
Andersen experience is that a Document Retention
Program, an otherwise critical part of a
companys risk management program, will not save
you from sanction if the policy does not conform
to law, either in content or in implementation.

48
Act 1599 of 2001

Applies to Board Member, Administrators, and
Employees.
Act 1599 sets the guidelines for business
transactions between the school district and its
board, administrators and employees.
May require both local board approval and state
board approval.
Refer to Arkansas Code 6-24-100 through 6-24-120
for detailed information.

49
Act 1599 of 2001

The spirit of this act is to provide for full
disclosure of business activities between the
local school district and its board members,
administrators and employees.
Board Members and Administrators are held to
higher ethical standards, since they are in a
position of control.

50
Act 1381 of 2005

SECTION 2. Arkansas Code 6-24-105 is amended
to read as follows
(a) General Prohibition. Except as otherwise
provided, it is a breach of the ethical standards
of this chapter for a board member to contract
with the public educational entity the member
serves if the board member has knowledge that he
or she is directly or indirectly interested in
the contract.
(b)(1)(A)(i) Employment of Family Members. This
chapter does not prohibit family members of board
members from being employed by the public
educational entity the board member serves if the
board determines that the employment is in the
best interest of the public educational entity A
board member's family member may not be initially
employed by the public educational entity the
member serves during the member's tenure of
service on the local board for compensation in
excess of five thousand dollars (5,000) unless
the Director of the Department of Education
issues a letter of exemption and approves the
employment contract based on unusual and limited
circumstances.

51
Act 1381 of 2005

(ii) The determination of unusual and limited
circumstances shall be at the sole discretion of
the Director of the Department of Education and
may be further defined by rule of the State Board
of Education.
(B) A family member of a school board member who
was employed by the public educational entity
during the school year immediately preceding the
election of the board member may continue
employment with the public educational entity
under the same terms and conditions of the
previously executed contract and any renewal of
the contract under 6-17-1506.
(C) Subject to the local board's written policy,
a qualified family member of a board member may
be employed as a substitute teacher, substitute
cafeteria worker, or substitute bus driver for a
period of time not to exceed a total of thirty
(30) days per fiscal year for the public
educational entity served by the board member.

52
Act 1381 of 2005

(2)(A)(i) No employment contract that is
prohibited under subsection (b) of this section
is valid or enforceable by any party to the
employment contract until approved in writing by
the Director of the Department of Education.
(ii) The Director of the Department of
Education's approval of an employment contract
may include restrictions and limitations that are
by this subsection incorporated as terms or
conditions of the contract.

53
Act 1381 of 2005

(B) Excluding any renewal of a contract under
6-17-1506, any change in the terms or conditions
of an employment contract, a promotion, or a
change in employment status for a family member
of a school board member employed by a public
educational entity that will result in an
increase in compensation of more than two
thousand five hundred dollars (2,500) must be
approved in writing by the Director of the
Department of Education before any change in the
terms or conditions of the employment contract or
promotion or changes in employment status are
effective, valid, or enforceable.

54
WHY BOTHER?

Roslyn, New York
11.2 million dollars stolen
Those involved
Superintendent
District Treasurer
Accounting Clerk (Treasurers niece)
School Auditor

55
What is an audit?

An audit is the process by which an independent
accountant reviews your financial records and
procedures in order to express an opinion of the
fair presentation of your financial statements.
An audit is not designed to detect fraud.
An audit is not designed to make your life
miserable.

56
Planning the Audit

Audit Planning Form Completion
Internal Control Questionnaire Completion
Risk and Control Assessment
Tests of Controls Assessment
Substantive Testing of Financial Data

57
Why do we have an audit?

Required by state law.
Required by federal law.
Required by debt agreements.
Required by bonding companies.
Citizens like them.
Evaluation of the performance of management.

58
How Can I Make This Easier?

Visit with your auditor.
Find areas for improvement.
Keep records up to date.
Maintain all minutes in timely manner.
Reconcile all bank statements in a timely manner.
Record all asset additions and retirements
promptly.

59
(No Transcript)
60
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61
Comparison of Findings

June 30, 2000

June 30, 2009

1. Fixed Asset Findings
2. Accounting Records
3. Employee Records/ Payments
4. Uncollaterized Bank Accounts
5. Federal Compliance
6. Activity Funds
7. Bids, Bonds, Etc.
8. Unauthorized Transactions
9. Self Construction
10. Conflicts of Interest

1. Federal Compliance
2. Internal Control
3. Bid, Bonds, Etc.
4. Unauthorized Transactions
5. Error In Calculation of 40 Pullback
6. Conflicts of Interest
7. Misappropriation of Funds
8. Employee Records/ Payments
9. Uncollaterized Bank Accounts
10. Davis-Bacon Act

62
Allowable Costs/Cost Principles

Finding
The majority of findings in this category
involved the failure to maintain periodic time
certifications or monthly personnel activity
reports were not prepared for employees who
worked with Federal programs.
Fix
Maintain accurate time sheets for all employees,
especially those working in federal programs

63
Sample Time Sheet
Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District Clarksville School District
Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet Monthly Time Sheet

Name Social Security Number (Last 4 Digits Only) Social Security Number (Last 4 Digits Only) Social Security Number (Last 4 Digits Only) Social Security Number (Last 4 Digits Only) Social Security Number (Last 4 Digits Only) Social Security Number (Last 4 Digits Only)

School

Job Assignment Job Assignment Source of Federal Funding Source of Federal Funding Source of Federal Funding Source of Federal Funding

For Month Ending July 31, 2010 For Month Ending July 31, 2010 For Month Ending July 31, 2010 For Month Ending July 31, 2010

(Please record the hours worked each day.) (Please record the hours worked each day.) (Please record the hours worked each day.) (Please record the hours worked each day.) (Please record the hours worked each day.) (Please record the hours worked each day.)
Regular Regular Overtime Overtime
Saturday Saturday Sunday Sunday Monday Monday Tuesday Tuesday Wednesday Wednesday Thursday Thursday Friday Friday Hours Hours Hours Hours
Total
For the week of For the week of Fed Non-Fed Fed Non-Fed Fed Non-Fed Fed Non-Fed Fed Non-Fed Fed Non-Fed Fed Non-Fed Hours Fed Non-Fed Fed Non-Fed

July 1-2

July 3-9

July 10-16 July 10-16

July 17-23 July 17-23

July 24-30 July 24-30

July 31

Totals

This represents a true and accurate record of time worked. This represents a true and accurate record of time worked. This represents a true and accurate record of time worked. This represents a true and accurate record of time worked. This represents a true and accurate record of time worked. This represents a true and accurate record of time worked. This represents a true and accurate record of time worked.

Codes
I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above I certify that the hours shown above reflect the actual time the employee worked for the Federally Funded Program indicated, and that the employee listed above
S Sick Leave S Sick Leave was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds. was paid from the non-fedeal funds only for the hours indicated. Hours other than those spent in the Federally Funded Program were paid by other district funds.
P Personal Leave Paid P Personal Leave Paid P Personal Leave Paid
H Holiday H Holiday Signature of Employee Signature of Employee Signature of Employee Date
V Vacation V Vacation
X Absent without leave X Absent without leave X Absent without leave Signature of Supervisor Signature of Supervisor Signature of Supervisor Date
PD Professional Development PD Professional Development PD Professional Development PD Professional Development

Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet Overtime Approval/Authorization Forms Must Be Attached To This Time Sheet

64
Fixed Asset Problems

Finding
Inadequate or Non Existent Records.
Fix
If you have no asset records you must inventory
all fixed assets and create a listing of them.
Be sure to include all known data
a. Date Purchased
b. Cost
c. Asset Tag Number
d. Location
e. Estimated Life
Once the asset listing is complete, you must
maintain an annual recap of additions and
deletions.
Recommend that the local school board adopt a
capitalization policy for asset acquisitions.
Record lease/purchase in fixed asset records at
the time of purchase.
Police report is needed for any stolen assets.

65
(No Transcript)
66
Accounting Records

Finding
Bank accounts not reconciled.
Fix
Adopt an accounting policy of having all district
bank accounts reconciled within 7 days of the end
of the month. This includes any activity fund
accounts.

67
Accounting Records

Finding
Expenditures were made without proper
documentation.
Fix
Do not pay any invoices before item is received.
Use purchase orders and other means to insure
that the items purchased were authorized by the
proper personnel.
Make sure that the amount paid agrees with the
invoice.
Verify that the items invoiced were received.
Pay only on original invoices. No photocopies.
Record all expenditures in the period in which
they were paid.

68
Accounting Records

Finding
Revenues were not properly receipted or accounted
for.
Fix
Deposit all monies received on a timely basis.
(Preferably daily)
Receipt all monies as they are received by the
district.
Record receipts in the period received.
In order to assist the auditor, record range of
receipt numbers on the deposit slip.
Instruct all sponsors to turn in activity funds
promptly. (Within one day is preferable)

69
Accounting Records

Finding
Travel expenses are not properly documented.
Fix
Document all travel and meeting expenses with
original receipts.
Meal and motel tickets, detailing the
expenditures by item, must be maintained for
inspection by the auditor. Credit card slips are
not adequate!
Travel expenses must be for school personnel and
school related activities only. No payments can
be made for spouse or children.
Adopt a district policy on amounts that can be
allowed for mileage reimbursement and for meal
reimbursement.
Try to avoid advancing cash for travel. You are
much better off reimbursing an employee.

70
Bank Accounts Not Adequately Collateralized

Finding
Bank accounts in excess of the FDIC insured limit
were not collateralized.
Fix
Instruct bank in writing that all monies
deposited with their institution must be
collateralized by proper securities.
Review monthly bank reconciliations and verify
that collateralization amounts are adequate.
Be aware of any unusual transfers (ex bond
proceeds) that may be wired to your bank. They
will need to make arrangements to have these
amounts collateralized on the day received.
Deposit funds only in approved institutions.
(Those with federal insurance guarantees)

71
Employee Records/Payments

Finding
Salary schedule and contracts did not reflect
actual pay practices.
Fix
Pay according to salary schedule and contract
amounts.
No salary advances.
Maintain accurate records on leave balances.
No borrowing from next years leave. (However,
a district can establish a leave bank that
employees donate to)
Uncompensated leave must be deducted from the
current year contract.

72
Other Issues - Bids

Maintain a file for all items on which bids were
taken and received. Retain proof of mailing,
faxing or email, response received from vendor,
and amount of bids.
If you accept anything other than the low bid,
you should document the reason(s) that the low
bid was rejected. Have the board approve any bid
acceptance that is not the low bidder.

73
Other IssuesLease/Rental Agreements

Maintain a file on all lease items.
Maintain a repayment schedule an all items that
are acquired through a lease/purchase agreement.

74
Other Issues - Insurance

Maintain adequate insurance coverage for
equipment, vehicles, buildings, etc.
Maintain copy of each policy and binder.
Maintain a copy of builders risk insurance for
projects under construction.

75
Other Issues - Budgets

Adjust for any additional revenues received
and/or expenditures incurred after original
budget is complete.

76
INTERNAL CONTROL

How to get rid of that irritating comment in the
audit that says
The District had inadequate control over cash
transactions because of insufficient segregation
of duties due to a limited number of personnel.

77
Internal Control

Internal control comprises the plan of
organization and all of the coordinate methods
and measures adopted within a business to
safeguard its assets, check the accuracy and
reliability of its accounting data, promote
operational efficiency, and encourage adherence
to prescribed managerial policies.

78
Internal Control Procedures

Separation of Duties

79
How to Separate Duties

Each transaction should require more than one
person for approval.
Purchase Orders must be approved by someone other
than the person placing the order.
Invoices must be approved by someone other than
the person responsible for writing the check.
Divide a transaction into multiple steps from
being initiated until completion with different
people approving different steps.

80
Internal Control Procedures

Written Procedures

81
Written Procedures

Use a written accounting procedures handbook.
(Green Book)
Make sure that all administration and staff are
familiar with the written accounting procedures
handbook.
Follow your written procedures.
Any departure from the written procedures must be
approved by more than one person. (Approving
persons should not be party to the transaction)

82
Internal Control Procedures

Board Approved Policies

83
Board Approved Policies

Have the local board approve your accounting
policies.
One section of your board policies should address
fiscal procedures.
Board policies should address minimum
capitalization amounts.
Board policies should address amounts that
require board approval and amounts that the
superintendent is allowed to approve.

84
Internal Control Procedures

1. Separation of Duties
2. Written Procedures
3. Board Approved Policies
4. Adherence to Items 1-3.

That old law about an eye for an eye leaves
everybody blind. The time is always right to do
the right thing.
Rev. Martin Luther King, Jr.

86
Summary Statement

School business management is as complex an area
to work in as any profession I know. The
variable and complicated elements of human
resources, changing legislation, and
technological society make our duties challenging
and sometimes overwhelming.