Members of the Board
Southern Columbia School District Catawissa, PA
Report on Compliance for Each Major Federal Program
We have audited Southern Columbia School District’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Southern Columbia School District’s major federal programs for the year ended June 30, 2015. Southern Columbia School District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of Southern Columbia School District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Southern Columbia School District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Southern Columbia School District’s compliance.
Opinion on Each Major Federal Program
In our opinion, Southern Columbia School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015.
Report on Internal Control over Compliance
Management of Southern Columbia School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Southern Columbia School District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Southern Columbia School District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
WAGNER, DREESE, ELSASSER & ASSOCIATES, P.C.
Certified Public Accountants and Consultants Selinsgrove, PA
April 1, 2016
Section I - Summary of Auditor's Results Financial Statements
Type of Auditor's Report Issued:
Internal Control over Financial Reporting:
Material weakness(es) identified X Yes
Significant Deficiencies Identified? Yes X None Reported
Noncompliance Material to Financial Statements Noted? Yes X Federal Awards
Internal Control over Major Programs:
Significant Deficiencies Identified? Yes X None Reported
Type of Auditor's Report Issued on Compliance for Major Program:
Any Audit Findings Disclosed that are Required to be Reported in Accordance with Section 510(a) of
OMB Circular A-133? Yes X
Identification of Major Programs:
CFDA Number Name of Federal Program
84.027 IDEA
84.173 IDEA 619
Dollar Threshold used to Distinguish Between Type A and Type B Programs:
Auditee Qualified as Low - Risk Auditee: X Yes
Section II - Financial Statement Findings There are no Findings to be Reported
Section III - Federal Award Findings and Questioned Costs There are no Findings to be Reported
No
$300,000 Unmodified Opinion
No SOUTHERN COLUMBIA SCHOOL DISTRICT
Schedule of Findings and Questioned Costs For the Year Ended June 30, 2015
Unmodified Opinion
No
SOUTHERN COLUMBIA SCHOOL DISTRICT Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2015
Section II- Financial Statement Findings
2015-1 Internal Control over Financial Reporting Material Weaknesses
Condition: During our audit, we noted that the accounting department employs personnel who understand the District’s operations. While they record the Districts day-to-day transactions in a consistent manner, they lack the expertise to analyze and record complex transactions to ensure that all transactions are properly recorded in the financial statements in accordance with U.S. generally accepted accounting principles (GAAP). Thus we proposed certain material adjustments to long-term debt and capital assets and related depreciation which were accepted and recorded by management.
Criteria: Management is responsible for establishing and maintaining internal controls, including monitoring, and for the preparation and fair presentation in the financial statements of the governmental activities, business-type activities and remaining fund information including the notes to the financial statements, in conformity with U.S. generally accepted accounting principles.
Cause: The District has experienced turnover in key management positions which did not allow for the expertise required to identify, analyze and record certain complex transactions and ensure proper reporting of these transactions in the financial statements and related notes to the financial statements.
Effect: Lack of proper controls, and the monitoring of those controls, could result in the failure to detect and record such transactions and lead to misstatements in the District’s financial statements.
Recommendation: We recommend that management assess the current capabilities of accounting personnel and either (a) develop a training program to ensure that they obtain the skills and technical knowledge necessary to analyze and record the Districts complex transactions and to prepare financial statements in accordance with GAAP or (b) hire accounting personnel with the requisite knowledge and skill to do so.
Views of Responsible Officials: Management is in agreement with the finding. Business Office personnel are being provided training and professional development in all office functions, including ensuring proper bank reconciliations. All Business Office staff will be provided ongoing training and professional development opportunities.
SOUTHERN COLUMBIA SCHOOL DISTRICT Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2015
Section II- Financial Statement Findings-continued 2015-2 Bank Accounts
Condition: During our audit, we noted that the bank reconciliations for four bank accounts did not agree with the Districts detailed accounting records and were not completed in a timely fashion. Further we noted that there was no indication that reconciliations were reviewed and approved by management. In one instance a transfer between the general fund and the payroll fund in the amount of $197,881 had been processed twice by the bank in January of 2015. This error was not detected until April and not corrected until after the District’s year end.
Criteria: Timely preparation of complete and accurate bank reconciliations is key to ensuring that cash receipts, disbursements and transfer are properly recorded. Timely reconciliations reduce the risk that errors will go undetected and/or uncorrected.
Cause: The District has experienced turnover in key positions which did not allow for timely completion of the reconciliations and review and approval by management.
Effect: Failure to complete timely and accurate reconciliations could result in undetected and/or uncorrected errors.
Recommendation: We recommend that management receive the bank statements and review them for unusual checks or other transaction before giving them to accounting personnel to perform the reconciliations. This review will ensure that unusual items are investigated on a timely basis. Management should review completed reconciliations along with the bank statement and sign off on the reconciliation to indicate his or her review.
Views of Responsible Officials: Management is in agreement with the finding. Business Office personnel are being provided training and professional development in all office functions, including ensuring the day-to-day transactions are being recorded in the financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The District will utilize the services of a Business Office consultant knowledgeable with GAAP. The consultant will provide another layer of oversight to ensure proper accounting procedures are being practiced and provide staff with the skills and technical knowledge necessary to analyze and record the District’s complex transactions and prepare financial statements in accordance with GAAP.
SOUTHERN COLUMBIA SCHOOL DISTRICT Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2015
Section III – Federal Award Findings and Questioned Costs
There were no findings or questioned costs for the prior year ended June 30, 2014.