Melrose Mindoro School District

2025-001 Segregation of Duties Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The limited size of the District’s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District’s general ledger, has access to all phases of the District’s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District’s general ledger. Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.

2025-001 Segregation of Duties; District management is cognizant of their internal control structure and continues to evaluate cost effective opportunities to further improve segregation of duties. In addition, they will continue to closely monitor the financial operations of the District.

2024-001

2025-002 Preparation of Financial Statements Condition: The District relies on its audit firm to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, the audit firm cannot be considered part of the District’s internal control system. The District’s personnel do not have sufficient financial reporting and accounting knowledge to perform a review of the financial statements and related disclosures to provide a high level of assurance that any potential material omissions or other errors would be identified and corrected. Criteria: Preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Effect: As a result of this condition, there is a higher risk that any potential material omissions or other errors would not be identified and corrected. Cause: The District’s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the District’s financial statements and related disclosures. However, it is not practical for the District to hire additional employees just to improve financial statement preparation abilities. Recommendation: When this condition exists, management’s close supervision and review of accounting information and regular discussions with its assurance service providers concerning new accounting principles is the best means of preventing and detecting potential material omissions or other errors. Response: The District has evaluated the cost/benefit of outsourcing the task of preparing the financial statements to the auditors. The District has determined that it is in the best interest of the District to continue to do so. The District will carefully review the draft of the financial statements and notes prior to approving them and accept responsibility for their content and presentation. The District’s finance team pursues continuing education to the extent that budget finances and time constraints allow.

2025-002 Preparation of Financial Statement; District management believes that the cost of employing internal resources to draft financial statements and related notes under the GASB 34 model, including the related GASB 24 conversion entries, would outweigh the benefits received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the financial statements.

2024-002

Condition: The District's cash accounts were not reconciled accurately. Criteria: A properly designed system of internal controls includes timely and accurate financial reporting, including reconciliation of bank accounts. Effect: As a result of this condition, there is a higher risk that errors or misappropriations could occur and not be detected in a timely manner. Cause: The District's personnel complete a monthly reconciliations, but it is not balanced to the general ledger. Recommendation: When completing the monthly bank reconciliatins, the Finance Administrator should compare general ledger and bank transactions, focusing on blanancing monthly deposits and electronic fund transfers. In addition, a policy should be created to have the reconciliations reviewed monthly by the Board. Response: The District will update the police and procedures for posting of cash transactions and bank reconciliations, including setting roles of those involved, implemening new reporting for ACH transactions, daily postings, and monthly Board reviews.

2025-003 The District will update the policy and procedures for posting of cash transactions, including setting roles of those involved, implementing new reporting for ACH transactions, daily posting of transactions, reconciliation to the general ledger, and monthly Board reviews.

2025-004 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance Condition: As is the case with many school districts, the District administers a vast array of federal and state grants. The District was unable to provide us with a schedule of federal and state expenditures with the appropriate allocation of funds by CFDA number and funding source. Criteria: Uniform Guidance, section 300, requires that the District “identify, in its accounts, all federal awards received and expended and the federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the federal agency, and name of the pass-through entity. In addition, the District is required to “prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section 310.” A similar requirement exists for state programs. Effect: Because the auditors do not have the in-depth knowledge of the District’s general ledger detail, it is possible that a grant award could be missed or reported in error. Cause: The District did not have the resources to devote to preparing the schedules. Recommendation: We recommend that the District assign an individual internally that is qualified to prepare these schedules. Response: The District agrees with this finding and will work to alleviate this issue. District staff reviewed and took responsibility for the schedules.

2025-004 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance; District management believes that the cost of employing internal resources to draft the Schedule of Expenditures of Federal Awards and State Financial Assistanace Statement and related notes would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement.

2024-004

2024-001 Segregation of Duties Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The limited size of the District’s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District’s general ledger, has access to all phases of the District’s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District’s general ledger. Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.

2024-001 Segregation of Duties; District management is cognizant of their internal control structure and continues to evaluate cost effective opportunities to further improve segregation of duties. In addition, they will continue to closely monitor the financial operations of the District.

2024-002 Preparation of Financial Statements Condition: The District relies on its audit firm to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, the audit firm cannot be considered part of the District’s internal control system. The District’s personnel do not have sufficient financial reporting and accounting knowledge to perform a review of the financial statements and related disclosures to provide a high level of assurance that any potential material omissions or other errors would be identified and corrected. Criteria: Preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Effect: As a result of this condition, there is a higher risk that any potential material omissions or other errors would not be identified and corrected. Cause: The District’s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the District’s financial statements and related disclosures. However, it is not practical for the District to hire additional employees just to improve financial statement preparation abilities. Recommendation: When this condition exists, management’s close supervision and review of accounting information and regular discussions with its assurance service providers concerning new accounting principles is the best means of preventing and detecting potential material omissions or other errors. Response: The District has evaluated the cost/benefit of outsourcing the task of preparing the financial statements to the auditors. The District has determined that it is in the best interest of the District to continue to do so. The District will carefully review the draft of the financial statements and notes prior to approving them and accept responsibility for their content and presentation. The District’s finance team pursues continuing education to the extent that budget finances and time constraints allow.

2024-002 Preparation of Financial Statement; District management believes that the cost of employing internal resources to draft financial statements and related notes under the GASB 34 model, including the related GASB 24 conversion entries, would outweigh the benefits received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the financial statements.

2024-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance Condition: As is the case with many school districts, the District administers a vast array of federal and state grants. The District was unable to provide us with a schedule of federal and state expenditures with the appropriate allocation of funds by CFDA number and funding source. Criteria: Uniform Guidance, section 300, requires that the District “identify, in its accounts, all federal awards received and expended and the federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the federal agency, and name of the pass-through entity. In addition, the District is required to “prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section 310.” A similar requirement exists for state programs. Effect: Because the auditors do not have the in-depth knowledge of the District’s general ledger detail, it is possible that a grant award could be missed or reported in error. Cause: The District did not have the resources to devote to preparing the schedules. Recommendation: We recommend that the District assign an individual internally that is qualified to prepare these schedules. Response: The District agrees with this finding and will work to alleviate this issue. District staff reviewed and took responsibility for the schedules.

2024-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance; District management believes that the cost of employing internal resources to draft the Schedule of Expenditures of Federal Awards and State Financial Assistanace Statement and related notes would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement.

2023-001 Segregation of Duties Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The limited size of the District’s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District’s general ledger, has access to all phases of the District’s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District’s general ledger. Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.

2023-001 Segregation of Duties; District management is cognizant of their internal control structure and continues to evaluate cost effective opportunities to further improve segregation of duties. In addition, they will continue to closely monitor the financial operations of the District.

2022-001

2023-002 Preparation of Financial Statements Condition: The District relies on its audit firm to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, the audit firm cannot be considered part of the District’s internal control system. The District’s personnel do not have sufficient financial reporting and accounting knowledge to perform a review of the financial statements and related disclosures to provide a high level of assurance that any potential material omissions or other errors would be identified and corrected. Criteria: Preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Effect: As a result of this condition, there is a higher risk that any potential material omissions or other errors would not be identified and corrected. Cause: The District’s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the District’s financial statements and related disclosures. However, it is not practical for the District to hire additional employees just to improve financial statement preparation abilities. Recommendation: When this condition exists, management’s close supervision and review of accounting information and regular discussions with its assurance service providers concerning new accounting principles is the best means of preventing and detecting potential material omissions or other errors. Response: The District has evaluated the cost/benefit of outsourcing the task of preparing the financial statements to the auditors. The District has determined that it is in the best interest of the District to continue to do so. The District will carefully review the draft of the financial statements and notes prior to approving them and accept responsibility for their content and presentation. The District’s finance team pursues continuing education to the extent that budget finances and time constraints allow.

2023-002 Preparation of Financial Statement; District management believes that the cost of employing internal resources to draft financial statements and related notes under the GASB 34 model, including the related GASB 24 conversion entries, would outweigh the benefits received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the financial statements.

2022-002

2023-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance Condition: As is the case with many school districts, the District administers a vast array of federal and state grants. The District was unable to provide us with a schedule of federal and state expenditures with the appropriate allocation of funds by CFDA number and funding source. Criteria: Uniform Guidance, section 300, requires that the District “identify, in its accounts, all federal awards received and expended and the federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the federal agency, and name of the pass-through entity. In addition, the District is required to “prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section 310.” A similar requirement exists for state programs. Effect: Because the auditors do not have the in-depth knowledge of the District’s general ledger detail, it is possible that a grant award could be missed or reported in error. Cause: The District did not have the resources to devote to preparing the schedules. Recommendation: We recommend that the District assign an individual internally that is qualified to prepare these schedules. Response: The District agrees with this finding and will work to alleviate this issue. District staff reviewed and took responsibility for the schedules.

2023-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance; District management believes that the cost of employing internal resources to draft the Schedule of Expenditures of Federal Awards and State Financial Assistanace Statement and related notes would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement.

2022-003

2022-001 Segregation of Duties Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The limited size of the District?s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District?s general ledger, has access to all phases of the District?s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District?s general ledger. Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.

2022-001 Segregation of Duties; District management is cognizant of their internal control structure and continues to evaluate cost effective opportunities to further improve segregation of duties. In addition, they will continue to closely monitor the financial operations of the District.

2021-001

2022-002 Preparation of Financial Statements Condition: The District relies on its audit firm to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, the audit firm cannot be considered part of the District?s internal control system. The District?s personnel do not have sufficient financial reporting and accounting knowledge to perform a review of the financial statements and related disclosures to provide a high level of assurance that any potential material omissions or other errors would be identified and corrected. Criteria: Preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Effect: As a result of this condition, there is a higher risk that any potential material omissions or other errors would not be identified and corrected. Cause: The District?s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the District?s financial statements and related disclosures. However, it is not practical for the District to hire additional employees just to improve financial statement preparation abilities. Recommendation: When this condition exists, management?s close supervision and review of accounting information and regular discussions with its assurance service providers concerning new accounting principles is the best means of preventing and detecting potential material omissions or other errors. Response: The District has evaluated the cost/benefit of outsourcing the task of preparing the financial statements to the auditors. The District has determined that it is in the best interest of the District to continue to do so. The District will carefully review the draft of the financial statements and notes prior to approving them and accept responsibility for their content and presentation. The District?s finance team pursues continuing education to the extent that budget finances and time constraints allow.

2022-002 Preparation of Financial Statement; District management believes that the cost of employing internal resources to draft financial statements and related notes under the GASB 34 model, including the related GASB 24 conversion entries, would outweigh the benefits received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the financial statements.

2021-002

2022-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance Condition: As is the case with many school districts, the District administers a vast array of federal and state grants. The District was unable to provide us with a schedule of federal and state expenditures with the appropriate allocation of funds by CFDA number and funding source. Criteria: Uniform Guidance, section 300, requires that the District ?identify, in its accounts, all federal awards received and expended and the federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the federal agency, and name of the pass-through entity. In addition, the District is required to ?prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section 310.? A similar requirement exists for state programs. Effect: Because the auditors do not have the in-depth knowledge of the District?s general ledger detail, it is possible that a grant award could be missed or reported in error. Cause: The District did not have the resources to devote to preparing the schedules. Recommendation: We recommend that the District assign an individual internally that is qualified to prepare these schedules. Response: The District agrees with this finding and will work to alleviate this issue. District staff reviewed and took responsibility for the schedules.

2022-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance; District management believes that the cost of employing internal resources to draft the Schedule of Expenditures of Federal Awards and State Financial Assistanace Statement and related notes would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement.

2021-003

2021-001 Segregation of Duties Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The limited size of the District?s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District?s general ledger, has access to all phases of the District?s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District?s general ledger. Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.

2021-001 Segregation of Duties; District management is cognizant of the District's internal control structure and continues to evaluate cost effective opportunities to further improve segregation of duties. In addition, they will continue to closely monitor the financial operations of the District.

2021-002 Preparation of Financial Statements Condition: The District relies on its audit firm to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, the audit firm cannot be considered part of the District?s internal control system. The District?s personnel do not have sufficient financial reporting and accounting knowledge to perform a review of the financial statements and related disclosures to provide a high level of assurance that any potential material omissions or other errors would be identified and corrected. Criteria: Preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Effect: As a result of this condition, there is a higher risk that any potential material omissions or other errors would not be identified and corrected. Cause: The District?s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the District?s financial statements and related disclosures. However, it is not practical for the District to hire additional employees just to improve financial statement preparation abilities. Recommendation: When this condition exists, management?s close supervision and review of accounting information and regular discussions with its assurance service providers concerning new accounting principles is the best means of preventing and detecting potential material omissions or other errors. Response: The District has evaluated the cost/benefit of outsourcing the task of preparing the financial statements to the auditors. The District has determined that it is in the best interest of the District to continue to do so. The District will carefully review the draft of the financial statements and notes prior to approving them and accept responsibility for their content and presentation. The District?s finance team pursues continuing education to the extent that budget finances and time constraints allow.

2021-002 Preparation of Financial Statement; District management believes that the cost of employing internal resources to draft financial statements and related notes under the GASB 34 model, including the related GASB 24 conversion entries, would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the financial statements.

2021-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance Condition: As is the case with many school districts, the District administers a vast array of federal and state grants. The District was unable to provide us with a schedule of federal and state expenditures with the appropriate allocation of funds by CFDA number and funding source. Criteria: Uniform Guidance, section 300, requires that the District ?identify, in its accounts, all federal awards received and expended and the federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the federal agency, and name of the pass-through entity. In addition, the District is required to ?prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section 310.? A similar requirement exists for state programs. Effect: Because the auditors do not have the in-depth knowledge of the District?s general ledger detail, it is possible that a grant award could be missed or reported in error. Cause: The District did not have the resources to devote to preparing the schedules. Recommendation: We recommend that the District assign an individual internally that is qualified to prepare these schedules. Response: The District agrees with this finding and will work to alleviate this issue. District staff reviewed and took responsibility for the schedules.

2021-003 Preparation of Schedule of Expenditures of Federal Awards and State Financial Assistance; District management believes that the cost of employing internal resources to draft the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement and related notes would outweigh the benefits to be received. Furthermore, District management will continue to employ personnel who have the capability to review, approve and accept responsibility for the Schedule of Expenditures of Federal Awards and State Financial Assistance Statement.