Nearly $1 Million Siphoned from General Fund
The Fairfield County School District received an “unqualified” report on its annual audit, a Spartanburg CPA told the Board during its Nov. 20 meeting, in spite of two minor findings and questions about a transfer of nearly $1 million from the general fund into the food services fund last summer for the purchase of new cafeteria equipment.
Chuck Talbert, a CPA with the McAbee, Talbert and Halliday firm, told the Board that the pupil activity fund had been operating in a decentralized manner, creating issues with internal controls over financial reporting. According to the audit, “There is a lack of segregation of duties at all schools related to pupil activity cash receipts and disbursements. This lack of segregation of duties is both in receipts and disbursements as the bookkeeper was responsible for collecting receipts, making the deposits, preparing disbursements and reconciling the bank statements.”
At Geiger Elementary School, auditors found “instances of missing support for bank deposits and instances of missing supporting documentation for checks.” Also at Geiger, auditors found “instances of bank reconciliations not being completed on a timely basis.”
At Fairfield Central High School, auditors found “a lack of segregation of duties involving bank reconciliation and documentation for checks drawn on the account; no approval of checks over $500 by the Office of Finance; lack of approval on invoices for payment of goods and services from the checking account; unable to locate canceled checks.”
These issues, the audit stated, “may be indicative of other internal control deficiencies for pupil activities at the schools.” But, Talbert told the Board, improvements have already been made.
“We have worked with administration and we concur with procedures they have taken going forward,” Talbert said. “Previously, much of the activity of the pupil activity funds was on a decentralized basis. That is now centralized. I really feel like that is a better control component, to have that centralized.”
Auditors also found minor issues with the District’s federal financial assistance, including Title I grants. Districts are required to check the Excluded Parties List System for vendors who have been suspended or debarred before expending money from federal programs, the audit states. The Fairfield County School District did not do so. As a result, the audit states, “The District could be subject to claims or future funding could be limited or suspended by the funding agency for failure to comply with the requirements.” Nevertheless, Talbert said, the District received a clean opinion on that matter as well.
The audit noted that the fund balance for the District at the end of the 2011-2012 fiscal year was $4,611,728 – down $179,584 from the 2010-2011 fiscal year, in spite of the District taking in $600,000 in additional tax revenue this year. This finding sparked questions from Board members about a transfer of $910,460 from the general fund into the food services fund last summer for the purchase of kitchen equipment for District cafeterias.
“That fund balance transferred over into the food service program was supposed to be approved by the Board,” Annie McDaniel said. She later confirmed that it was not.
Bobby Cunningham asked if the food service fund was supposed to be a self-supporting entity, and McDaniel said it was designed to be such. But Talbert said the District had changed the food services fund to a special revenue fund.
“If that occurred, the Board never took action on it,” McDaniel said.
