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Frazee gets clean state audit report

While the district received some advice on procedures, a petitioned-for state audit came back clean for the Frazee-Vergas School District.

Last year, district residents petitioned for a state audit and asked that the state auditor's office look into a few questions about the financials of the district.

Monday evening, Bob Johnson of the state auditor's office appeared before the board, gave it the auditor's findings and left it with some suggestions that might make sense for the district.

"We did limit our scope," he said. "Had we looked into other areas, it might have changed our opinion. We did not conduct a (full) audit."

But, what they did study, they found to be clean.

The petition asked for an audit of the "books, accounts and affairs of the district ... for the years ended June 30, 2007, and 2008." Due to Minnesota statute, the auditor's office is able to limit the audit to a portion, or scope, of the time period in question.

First, petitioners asked the auditor's office to look into the information that was provided to the public during the 2007 operating levy referendum.

Johnson said the petitioners said information given during public meetings "wasn't necessarily, what they felt in their minds, good information for making a decision" on the vote.

During the referendum meetings, it was stated that without the passing of the referendum, the general fund would be $10,000 in the negative. Johnson said it was a "misunderstanding of the petitioners" that the fund was already in the negative.

Johnson said that Superintendent Deron Stender conservatively estimated funds, along with declining enrollment, to come up with that number.

"The district has actually done a really good job" on the fund balance, he added.

After more reliable final numbers came in, Stender replaced his estimate, erasing the original numbers that were handed out at meetings. Johnson said that's one of the things that shouldn't have happened.

"I can't come to a conclusion if those estimates were good estimates or not," he said without the documents. "This record should have been preserved."

He advised the board and superintendent to save any documents that are distributed to the public.

Secondly, the petition questioned student activity accounts and event admissions. Petitioners were concerned that those funds were being transferred to the general fund and wondered if that's legal.

Yes, it's legal, and yes, the interest from the activities fund is transferred to the general fund for maintenance of those activities.

Johnson had two suggestions -- to allocate the funds each year so students would see the reward of the funds they raised and not have it sit in the fund for several years, and secondly, with the activity fees, it might be good for the school to track attendance. Now, attendance isn't tracked, so there's nothing to compare funds to, to make sure all funds are being turned in.

"I'm not suggesting it's not, but there is that opportunity there," he said. "It would just improve your internal control over those funds."

Information for the activity fund analysis was taken from a couple random months, and Johnson said there "aren't any strong indicators" anything is off.

Johnson recommended that the board adopt a policy on student activity accounts just to keep it separate and in check.

Thirdly, the petitioners questioned building improvements and whether or not operating referendum money can be used for repairs and maintenance.

Johnson said that yes, since 1995, the district is allowed to combine the general fund and referendum money to be used for buildings.

And yes, according to the Health and Safety Program, the district is allowed to issue a debt without voter approval for the purpose of maintenance. Maintenance in this instance was used to replace the boiler, sprinkling system and the HVAC system.

Therefore, the scope of the accounts and items the petitioners asked the auditor's office to review were found in line.

Johnson added that Stender and staff were a "great deal of assistance" in gathering information for review.