Audit Firm Praises, Makes Suggestions to St. Michael School District

Schlenner Wenner and Co. associates Molly Thompson and John Archer joined last week's school board meeting to discuss what went right and what could have gone better in regards to the financial handling in fiscal year 2011.

The fiscal year ran from July 1, 2010-June 30, 2011, and Thompson referred to theirs as a “clean audit.” However, clean doesn’t mean perfect, and some suggestions for improvement were made for the district’s financial house.

For instance, Thompson said the audit showed a lack of proper segregation of duties, which essentially means having multiple sets of eyes on financial goings-on to prevent improper handling or other problems. This is a common issue for school districts to struggle with, especially smaller districts with a limited number of district management staff.

“Segregation of duties is always going to be a challenge,” superintendent Dr. Jim Behle said. “I was in a district twice this size with twice the number of accounting people, and we still had segregation of duties in all of our audit reports. It’s just the nature of the amount of staff.”

In St. Michael-Albertville’s case, business manager Ginny Verbrugge does the majority of the accounting work, though others do assist. To increase their segregation of duties, Behle will join in on the process on a monthly basis.

Thompson also recommended a better review process for journal entries and a better process for compiling time certification sheets-documents that prove that the district is meeting the intent of its federal funding. This year’s audit report showed that some of these time certifications were missing. Additionally, Thompson suggested creating a policy for dealing with old or outstanding checks and drafting an approved vendor list for staff purchases.

Behle said in his discussions with Schlenner Wenner about this last issue, he noted that there are good and bad points of having an approved vendor list. While it gives the district control over which companies their money is going to, it also restricts the school’s staff to using certain vendors, which often limits their ability to find better prices. As an alternative, Behle and Verbrugge have introduced the idea of a P-Card, which is a credit card system that has controls on it. Behle said it would have a $2,000 maximum credit limit on it and the card could only be used at certain types of facilities. Receipts will need to be turned in for purchases on the P-Cards as another control. Verbrugge added that the program has a small cash rewards kickback, providing another benefit to the district for using this system.

Thompson had good things to say about the district’s improvement in areas they brought up at last year’s audit, such as creating better mileage logs and fixing an accounting issue with the school’s free and reduced lunch program. She also praised the district’s decision to pay off their capital loan and finance under more favorable terms, a process they completed in November.

“I think it will be a very good thing for your district,” she said.

After spending time going over these audit findings with Schlenner Wenner and Co., Behle told the board he would likely be bringing three new policies to the board for approval this year to improve the districts’ accounting practices.