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No major discrepencies in Frazee School audit

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No major discrepencies in Frazee School audit
Detroit Lakes Minnesota 511 Washington Avenue 56501

With a few discrepancies noted, the Frazee-Vergas School District audit came back without incident.

Heather Johnson of the accounting firm Carlson Highland, which conducted the district's audit, went through the audit with the school board Monday night, which questioned fairly little of last year's activities.

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"It's not an easy job to come into these circumstances," Superintendent Chuck Cheney said, but Business Manager Pam Pontius and Johnson had done a good job of getting the financials in order for the audit.

The few findings Johnson did point out to the board included fundraising funds that weren't reported as revenue that should have been, some construction work hadn't been recorded in the debt service fund and detailed meal receipts were missing for reimbursements.

Johnson said that $92,000 in fundraising monies were held in an emergency fund, but should have been listed as revenue for the district last year. The adjustment was made in the audit.

There are several accounts in the district with fundraising money in them that then goes to sports, banners and other student events.

"They were simply in a liability account and needed to be put into a fund balance account," Pontius said. "It was in a negative liability ... when really it should be in a reserved, where we're reserving it for those specific things."

Another finding was payments for construction work should have gone into the debt service fund, but instead hadn't been transferred. That adjustment was also made in the audit.

"They had a building project two years ago," Pontius said. "In the reserve of that construction money, there was money left over."

The district had secured the money but because of the economy at the time, the project ended up costing much less than estimated and bonded for, so there was a large balance -- over $1 million -- left.

"Because the project was finished in FY 10 (fiscal year 2010), then the balance of the money has to go back into the debt service to lower that debt for the public. Then the public pays less than what was first started because there's money left over."

The bottom line is the money had been left in the construction bond fund and should have been transferred out to the debt service fund. Pontius said there is no need for blame, though.

Maybe the past business office didn't know the project was finished and there wouldn't be anymore cost to pay off, or whatever the reason it wasn't transferred back, the auditors felt it should have been.

The business office had actually moved the money back to the debt service fund, just not as quickly as the audit firm saw fit.

"Because there were no other expenses in the bond fund, she (Heather Johnson) felt it should have been moved in FY 10 and it didn't get moved until FY 11," Pontius said. "I don't think there was anything wrong or illegitimate about it, it's just a prior year adjustment is what the auditors call it."

Lastly, randomly looking through reimbursement receipts, Johnson said several were missing the detailed printout of the receipt and were instead just the summary slip with the total cost spent.

The reason the detailed slip is needed, she said, is because the school cannot reimburse for alcohol, and if there were extra meals paid for than are allotted by the district.

Finally, the last discrepancy Johnson noted was on some student activity financials, an advisor and a student are required to both sign off on the expenditures, and on several, there was only one signature or the other.

"It's a very minor oversight," she said.

Johnson noted that the school district used to have several credit cards held in the administrative office, but now there is only one, which the business manager controls.

Overall, she said, the district is doing very good on costs for Special Education, staff salaries, administrative salaries, etc. She said the Frazee-Vergas district is average with other school its size throughout the state on those costs.

There will be a few more slight adjustments to the preliminary audit, Johnson said, and then the board can approve it at the January meeting.

Another issue the board will be looking at more in January is critical planning issues that Cheney brought to the board Monday night.

Cheney and Chairman Rich Ziegler identified several issues the board will need to take action on in the next six months, but the board decided to wait until January to make any decisions since committees will change that month at the annual re-organizational meeting.

The issues Cheney identified include revision and adoption of the capital improvement plan, build and adopt the preliminary budget for 2012-13, contracted service assessments (Marsden, janitorial; Chartwells, food; Lakes Country Service Center, business office), referendum consideration, administration structure and staffing level, hiring of a superintendent, and determine and act on staffing levels for 2012-13.

The board plans to discuss what direction they want to take on the issues and what committees they want to assign or create for the tasks.

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