WASHINGTON COUNTY BOARD OF EDUCATIONLocal Government

Criteria: According to Board policy 8300, effective accounting, financial reporting, and management control systems will be designed, maintained, and periodically reviewed to (a) enable the board and school system to have access to accurate, reliable, and relevant data; (b) provide assurance that school system obligations are paid in a timely manner and that accounts are not overspent; (c) provide assurance that fund and records are safeguarded at all times; and (d) permit audits and periodic reports adequate to show that those in charge have handled funds within legal requirements and in accordance with Board policy. Condition: During our testing of bank reconciliations, it was noted that reconciliations are not being prepared properly or timely. It was also noted that reconciliations are not being reviewed in a timely manner. Furthermore, it was noted during testing of cash that deposits are not being entered into the accounting system in a timely manner. Effect: The possibility exists that financial transactions may not be accurate, reliable, and relevant due to the lack of cash controls. Cause: Board policies and procedures were not followed. Questioned Costs: There are no questioned costs associated with this finding. Context: We reviewed all bank reconciliations prepared during the year for all funds, noting reconciliation date and date of review. We reviewed the June 2021 bank reconciliations for all funds in detail as a part of testing cash balances. Recommendation: I recommend that Board policy 8300 and procedures put in place due to Board policies be followed to ensure proper and timely reconciliation of all bank accounts, as well as timely recording of all deposits. Views of responsible officials and planned corrective actions: Bank reconciliations are done monthly at the school level and submitted to the CFO. The CFO reviews and submits to the Deputy Finance Officer to reconcile the district accounts. All bank statements come to the CFO and forwarded to the Deputy Finance Officer. The reconciliations are done and loaded to a shared drive in Google. The breakdown is getting the receipts entered into the financial software system. Effective 12-1-21 the CFO will enter all receipts and deposits for all funds except for fund 5. This will ensure timely recording of deposits into the system. See attached Corrective Action Plan for further details.

FINDING: 2019-003 SIGNIFICANT DEFICIENCY Criteria: North Carolina General Statutes 115C-441 states that no obligation may be incurred unless the budget resolution includes an appropriation authorizing the obligation and an unencumbered balance remains in the appropriation sufficient to pay for that obligation in the current fiscal year. Evidence that the budget includes the appropriation is generally in the form of a purchase order. Evidence that a sufficient balance remains to cover an expenditure is provided by the finance officer's preaudit as required in N.C.G.S 115C-441(a)(1). Condition : During our testing of expenditures from the Child Nutrition Fund, we noted one disbursement for which there was no preaudit and two disbursements for which there was no documentation attached to substantiate the expenditure. Effect: The Board was not in compliance with N.C.G.S. 115C-441. Cause: Purchase orders and preaudits were not always completed prior to incurring the obligation. Questioned Costs: none noted Context: Samples were selected for testing from all funds. For the Child Nutrition Fund, we noted one disbursement for which there was no preaudit and two disbursements for which there was no documentation attached to substantiate the expenditure. Recommendation: We recommend that the procedures set forth in the N.C.G.S. be followed. Views of responsible officials and planned corrective actions: The Board is utilizing the encumbrance system and pre-audit in accordance with Washington County Schools Board Policy 8510 and N.C.G.S. 155C-441. The CFO has worked with personnel that have purchasing authority to train them on the established procedures. The encumbrance system and pre-audit has been implemented and is the current practice.

FINDING: 2019-004 SIGNIFICANT DEFICIENCY Criteria: Bank accounts should be properly reconciled on a timely basis. Condition : Bank accounts are not being reconciled timely. Effect: Management is not aware of the reconciled bank account balance on a timely basis with which to make accurate decisions. Cause: The bank reconciliations are not prepared timely. Questioned Costs: There are no questioned costs associated with this finding. Context: For the Child Nutrition Fund, two months were reconciled one month late, two months were reconciled two months late, two months were reconciled three months late, two months were reconciled four months late, and one month was reconciled five months late. This equates to July-November 2018 reconciled in December 2018, and February-June 2019 reconciled in August 2019. Recommendation: We recommend that bank accounts be reconciled on a monthly basis. Views of responsible officials and planned corrective actions: The bank reconciliations are being reconciled monthly and submitted to the CFO for review. The CFO is documenting that date of the review with a stamp, initial, and date.

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