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FRANCIS HOWELL R-Ill SCHOOL DISTRICT
REPORT TO THE BOARD OF EDUCATION
YEAR ENDED JUNE 30, 2012
Kerber, Eck & Braeckel LLP
Board ofEducation Francis Howell R-Ill School District
CPAs and i•ianagernent Consultants
One South Memorial Drive, Ste. 950 St. Louis, MO 63102-2439 ph 314.231.6232 fax 314.231.0079 www.kebcpa.com
We have audited the fmancial statements of Francis Howell R-Ill School District for the year ended June 30, 2012. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards and OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 25, 2012. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Note A to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2012. We noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the fmancial statements in the proper period.
Accounting estimates are an integral part of the fmancial statements prepared by management and are based on management's knowledge of and experience with past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:
a. Depreciation expense (estimated useful life) b. Allowance for uncollectible property taxes c. Medical and dental claims payable d. Other postemployment benefit obligation e. Compensated absences
Other Locations
Belleville, IL • Carbondale, IL • Springfield, IL • Jacksonville, IL • Cape Girardeau, MO • Milwaukee, WI
We evaluated the key factors and assumptions used to develop the accounting estimates m determining that they are reasonable in relation to the fmancial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management m performing and completing our audit.
Corrected and Uncorrected Adjustments
Professional standards require us to accumulate all known and likely adjustments identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The attached schedule summaries our proposed adjustments detected as a result of audit procedures. All such adjustments were accepted and posted by management.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the fmancial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated December 11, 2012.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves the application of an accounting principle to the District's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition of our retention.
During our audit we became aware of certain matters that are opportunities for strengthening internal control. The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters.
Other Matters
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We also compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
This information is intended solely for the use of the Board of Education and management of Francis Howell R-Ill School District and is not intended to be, and should not be, used by anyone other than these specified parties.
St. Louis, Missouri December 11,2012
MEMORANDUM OF ADVISORY COMMENTS
Segregation of Duties
A fundamental concept in a good system of internal control is the segregation of duties. We believe the following practices could be implemented to further enhance internal control without impairing efficiency.
• One District employee both opens the mail and post checks and other cash receipts to the general ledger. We recommend mail be opened by an employee not responsible for accounting. Receipts should be restrictively endorsed, logged and deposited by this person. The cash receipts log, remittances advices, and copies of checks could then be forwarded to the accounting staff for posting to the general ledger.
• The Human Resources department is primarily responsible for making changes to the payroll master file including changing employee pay rates and additions of new employees. However, employees in the Finance department responsible for processing payroll also have the access to the payroll master files. We recommend that access to the payroll master files be limited to Human Resources.
• The cash requirement report is reviewed and approved by an accounting manager before checks are printed by accounts payable. Subsequent to the check printing process, we recommend the accounting manager compare the cash requirement report to the check register to ensure only approved checks were printed.
Management response: • The District will begin to restrictively endorse checks and will work to segregate the
mail opening and receipts deposit duties.
• The District will work to revise security protocols so that only Human Resources personnel have access to the payroll master file.
• The District implemented the cash requirement recommendation during the audit fieldwork.
Internal Control, Fraud and Risk Assessment
The District developed an Internal Control, Fraud and Risk Assessment document in 2008. This comprehensive document outlines the District's internal controls, fraud and risk assessments including policies, regulations, and procedures that drive the internal control environment for the District. Since policies, regulations, procedures and risk change over time, we recommend the District establish a formal procedure to review and update the document on at least an annual basis.
Management response: The District will establish a formal procedure to annually review and update its Internal Control, Fraud and Risk Assessment document.
~Client; Francis Howell School District
2012 Audit
6130)2012
30- TB
21'·10- Fund Fipancj al-t.djustments
Account Description Debit Credit
Interest
5497-3 Other Federal
Total
5305-1 Local Receivables
Total
Adjusting Journal Entries JE # 3
Total
Total
Total
5113-1
5113-2
5306-1
5306-2
5445-5
5304-1
5445-5
Sales Tax (PropC)
Sales tax receivables
Sales tax receivables
School Lunch Program
Federal Receivables
Food Service Program
School Lunch Program
654,074.00
654,074.00
142,890.00
142,890.00
574,206.00
558,846.00
1 '133,052.00
122,043.00
122,043.00
332,781 .00
332,781.00
654 ,074.00
654,074.00
142,890.00
142,890.00
574,206.00
558,846.00
1 '133,052.00
122,043.00
122,043.00
332,781.00
332,781.00
e lient:
l;ngagement
Period Ending:
l"rial Balam:ec
Werl<pC\pe.~:
Francis Howell School Oistrict
2012 Audit
6/3012'01Z
30- TB
21-10a- G'ollernment~- Wide Financial Adjustments
Account Description Debit Credit
Other Journal Entries1 JE # 121 l:o. de.crease compensated absences ljabilfty and expense.
8008-1 Compensated Absences 55,549.00
8008-2 Compensated Absences 81,723.00
111 0-1 Elementary 750.00
1110-2 Elementary 22,385.00
1130-2 Middle 10,929.00
1150-1 High 140.00
1150-2 High 15,186.00
1211-2 Gifted 780.00
1251-2 Title 1/Culturally Different 450.00
1281-1 ECSE 2,682.00
1281-2 ECSE 7,966.00
2110-1 Attendance 817.00
2120-1 Guidance 499.00
2120-2 Guidance 1,500.00
2130-1 Health, Psych and Speec 962.00
2130-2 Health, Psych and Speec 2,694.00
2210-1 Improvement of Instruction 2,613.00
2220-2 Media Services 1,856.00
2320-2 Executive Admin 9,704 .00
2400-1 Building Level Admin 4,582.00
2400-2 Building Level Admin 7,048.00
2510-1 Business, Fiscal, Internal 4,987.00
2540-1 Operation of Plant 15,919.00
2600-1 Central Office Support 13,688.00
3000-1 Community Services 1,984.00
3000-2 Community Services 1,225.00
3000-7 Community Services 5,926.00
Total 137,272.00 137,272.00
Other Journal Entries1 JE # 122
Elementary
1150-1 High
1211-1 Gifted
1281-1 ECSE
1281-2 ECSE
1300-1 Vocational
2120-1 Guidance
2210-2 Improvement of Instruction
2210-2 Improvement of Instruction
2320-1 Executive Admin
2320-2 Executive Admin
2400-1 Building Level Admin
2510-1 Business, Fiscal, Internal
2540-1 Operation of Plant
2600-1 Central Office Support
3000-1 Community Services
3000-7 Community Services
8008-1 Compensated Absences
8008-2 Compensated Absences
Total
Other Journal Entries1 JE # 123
5200-3
Total
4000-4
4000-D
8005
8006
Total
Accrued Interest Payable
Interest
Facilities Acquisition and Construction
Facilities Acquisition and Construction
Capital Assets-CIP
Capital Assets- Depreciable
9.00
15.00
309.00
404.00
986.00
82.00
40.00
846.00
3,058.00
184.00
225.00
1,225.00
3,058.00
23,404.00
9,496.00
342.00
10,790.00
50,204.00
4,269.00
54,473.00 54,473.00
578,577.00
578,577.00
578,577.00 578,577.00
14,561,404.00
2,375,284.00
2,375,284.00
14,561 ,404.00
16,936,688.00 16,936,688.00
Total
Total
Total
Total
retun,ded bonds.
5200-3
8012
8012
8015-3
5200-3
8002
4000-D
9999
4000-4
4000-D
8006
Interest
Bond Premium
Bond Premium
Deferred amounts on refunding
Interest
Bond Issue Costs
Facilities Acquisition and Construction
Special Item - Gain/Loss on Disposal of Assets
Facilities Acquisition and Construction
Facilities Acquisition and Construction
Capital Assets- Depreciable
Other Journal Entries1 JE # 129 ff0 ac:Jjtist q.lloeation afdepreil:iatlon,expense b'£iunct1on
111 0-4 Elementary
2210-4 Improvement of Instruction
2320-4 Executive Administration
2540-4 Operation of Plant
2551-4 Contracted Transportation
2561-4 Food Services
3000-4 Community Services
4000-4 Facilities Acquisition and Construction
Total
119,523.00
18,369.00
152,636.00
64,867.00
355,395.00
3,418,881.00
3,418,881.00
4,173,638.00
4,173,638.00
3,747,218.00
3,747,218.00
3, 706,098.00
3,339.00
22,552.00
77,273.00
340.00
5,289.00
8,315.00
3,823,206.00
235,872.00
119,523.00
355,395.00
3,418,881.00
3,418,881.00
4,173,638.00
4,173,638.00
3,747,218.00
3,747,218.00
3,823,206.00
3,823,206.00
Other Journal Entries1 JE # 130
Total
8005
8006
4000-4
Capital Assets-CIP
Capital Assets- Depreciable
Facilities Acquisition and Construction
316,629.00
257,006.00
573,635.00
573,635.00
573,635.00
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