NORTH BOLIVAR CONSOLIDATED SCHOOL DISTRICTLocal Government

Material Weakness: Finding 2023-001: CRITERIA: Management is responsible for establishing an internal control system that ensures strong financial accountability and safeguarding of assets. A critical aspect of financial management is the maintenance of accurate accounting records. CONDITION: (1) During our testing of cutoff surrounding accounts payable, we noted multiple instances of expenditures that should have been accrued in fiscal year 2023 but were not. In addition, we noted errors in recording retainage payable on construction contracts. These errors, totaling $1,095,264, were corrected by audit adjustment. (2) During our testing of capital assets, we noted the district is not effectively tracking and accounting for completed and ongoing construction projects. In addition, we noted the district is not properly maintaining the subsidiary ledger and reconciling the asset ledger to the general ledger and other underlying accounting records. There were material corrections made by the auditor. CAUSE OF CONDITION: The cause is a result of not properly implementing a designed system of accounting and internal controls. EFFECT OF CONDITION: The effect of this condition could result in the financial statements being materially misstated and misappropriation of assets. RECOMMENDATION: It is recommended that the district implement policies or procedures to establish an internal control system that will ensure strong financial accountability and accurate accounting records. VIEWS OF RESPONSIBLE OFFICIALS: Management will implement policies or procedures to establish an internal control system that will ensure strong financial accountability and accurate accounting records.

Material Weakness in Internal Controls:

Material Weakness/Material Non-Compliance 2021-006 Finding Accounts payable testing and internal controls. Programs: Title I Grants to Local Educational Agencies, CFDA #84.010 Special Education ? Grants to States, CFDA #84.027 Elementary and Secondary School Emergency Relief Fund I, CFDA #84.425D Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: None Criteria: An effective system of internal control is the responsibility of management. Management should establish an internal control system that ensures strong financial accountability and safeguarding of assets. This includes maintenance of accurate accounting records and following the proper purchasing procedures. Condition: During our testing of forty-five (45) invoices, we noted the following exceptions: 1. Three (3) invoices tested were paid more than 45 days after the invoice date. 2. Twelve (12) instances where the purchase order was dated after the invoice date. 3. Forty (40) invoices were not properly cancelled to indicate invoices was paid. 4. Twenty-Two (22) instances of no indication, signature and/or dated by the employee, of receipt of goods or services. Context: Internal control procedures were tested for accounts payable in the major federal funds. Cause: The district did not properly implement an effective internal control system for accounts payable and did not follow the purchasing procedures required by the state. Effect: Without a proper internal control system being in place to ensure accurate accounting records, there is an increased risk that the financial statements could be materially misstated. Questioned Cost: None Recommendation: District should implement policies and procedures to establish an internal control system that will require accountability with regard to accounts payable and purchasing. This will ensure the proper safeguarding of assets and accurate accounting records. Response: Please refer to the Auditee?s Corrective Action Plan beginning on page 79.

Significant Deficiency/Non-Compliance 2021-007 Finding Cash management excessive cash and fund balances. Programs: Title I Grants to Local Educational Agencies, CFDA #84.010 Special Education ? Grants to States, CFDA #84.027 Compliance Requirement: Cash Management Repeat Finding: None Criteria: Management is responsible for complying with the requirements of the Mississippi Department of Education Special Education Policy and Procedures Manual, which recommends that expenditures should be expended before the reimbursements are requested. Condition: We noted the following exceptions during our review of cash management: 1. The cash balance was excessive for Title I Fund and IDEA Part B Fund in the amount of $43,304 and $11,053 respectively. These amounts were included in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. 2. The amounts were presented as deferred revenues on the district?s financial statements. Context: Federal funds were reviewed for excessive cash balances and/or fund balances at year end. Cause: Improper internal controls resulted in the district not recording expenditures and reimbursements accurately and timely. Expenditures and reimbursements for request were not properly reconciled. Effect: The effect could lead to fraud and errors occurring if transactions are not properly recorded accurately and timely. Improper internal controls concerning these particular fund allocations could result in questioned cost by the federal agencies. Questioned Cost: Title I School Grants to local educational agencies - $43,304 Special Education ? Grants to States - $11,053 Recommendation: The district should implement stronger internal controls to ensure that all reimbursements are requested accurately in each area when the expenditure is expended by the district. Response: Please refer to the Auditee?s Corrective Action Plan beginning on page 79.

Material Weaknesses/Non-Compliance 2019-008 Finding Repeat Finding 2018-003 Cash management review. Programs: Title I Grants to Local Educational Agencies, CFDA #84.010 Supporting Effective Instruction state grants, CFDA #84.367 Special Education ? grants to states, CFDA #84.027 Special Education ? preschool grants, CFDA #84.173 Twenty-First Century Community Learning Centers, CFDA #84.287 Enhancing Education through Technology grant, CFDA #84.318 Passed through the Mississippi Department of Education Compliance Requirement: Cash Management Questioned Cost: $33,308.39 Criteria: Management is responsible for complying with the requirements of the Mississippi Department of Education Special Education Policy and Procedures Manual, which recommends that expenditures should be expended before the reimbursements are requested. Condition: We noted the following items during our review of cash management: 1. The cash balance was excessive for Title I Fund by $15,768.74 in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. 2. The cash balance was excessive for the Title II Supporting Effective Instruction State Grants by $2,321.35 in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. 3. The cash balance was excessive for the E2T2 Formula Grant by $5,532.40 in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. 4. The cash balance was excessive for the SPED Cluster by $5,642.49 in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. 5. The cash balance was excessive for the 21st Century Grant by $4,043.41 in the allocation of funds to the district for reimbursement of expenditures that had not been expended by the district. Cause: Improper internal controls resulted in the district not requesting reimbursements accurately. Effect: By requiring more than one staff member to review the reimbursement request reduces the risk of fraud and errors occurring and not being detected within a timely period. Improper internal controls concerning these particular fund allocations could result in questioned cost by the federal agencies. Recommendation: The district should implement stronger internal controls to ensure that all reimbursements are requested accurately in each area when the expenditure is actually expended by the district.

Significant Deficiency/Non-Compliance 2019-009 Finding Repeat Finding 2018-004 Child Nutrition Cluster reporting requirements. Program: Child Nutrition Cluster, CFDA #10.553, 10.555, and 10.559 Passed through the Mississippi Department of Education Compliance Requirement: Reporting Criteria: Management is responsible for the compliance with Mississippi Department of Education?s policies and procedures manual for child nutrition programs which require submissions of monthly claim reporting to the Mississippi Department of Education by the 10th of the following month. Condition: Three out of ten monthly claim reports submitted for reimbursement were not submitted to the Mississippi Department of Education by the deadline of the 10th following the reporting month. Cause: The monthly claim for reimbursement reports for school lunch and breakfast were not submitted timely on a consistent basis. Effect: The district?s lack of internal controls regarding the timely submission of reports by the deadline could result in the district not receiving federal reimbursement in a timely manner to cover program expenditures. Recommendation: The district should implement policies and procedures to ensure compliance with the reporting requirements of the Child Nutrition Cluster.

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