WILLIAMSBURG - North Callaway Schools' annual audit report was not as positive for fiscal year 2010 as it has been for the previous few years.
Auditor Jim McGinnis presented his report to the school board Thursday night, and it was not the ringing endorsement members had become used to in the recent past. He started off by noting the district's financial status at the end of the fiscal year on June 30.
"The district had deficit spent this year in the amount of $523,000," McGinnis said, noting that figure included a $143,000 deficit in the operating fund, a $65,000 deficit in the debt service fund and a negative balance in the capital projects fund to the tune of $350,000.
He did point out that the debt service fund balance decreased for 2010 from $478,309 to $412,452, which he noted "is still ample to pay 100 percent of your (general obligation) debt service requirement for this year."
Financial highlights included in McGinnis' report also included a note that expenses for the district's operating funds (general and teachers funds) increased $541,633 over the previous year, and above the district's budget. He noted the increase can be attributed primarily to increased retirement, health insurance benefit costs and mandated spending of ARRA (American Recovery and Reinvestment Act) funded programs.
It was when McGinnis moved on to accounting policies that the review was not as positive as it had been in the past.
According to the communication letter accompanying his report, "We identified certain deficiencies in internal control that we consider to be significant deficiencies ... A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance."
McGinnis said many of the issues involved classification problems in which revenues and expenditures were placed in the wrong accounts.
"When we started your books weren't in perfect shape, but they are now. All the errors we found were corrected," he said. "The problem is efficiency."
Another problem he highlighted was budget compliance.
"When we compared the general ledger balance on June 30, 2010, and the approved budget, they didn't agree," McGinnis said, noting this problem, too, was fixed. "Spending in two of your funds (debt service and capital projects) actually exceeded the amount budgeted. The budget should be monitored and amended if needed, or spending should be scaled back (to comply with the budget)."
He said there also were a few errors in attendance reporting, noting several students had incorrect attendance codes.
"These types of errors have the potential to cost the district money," McGinnis said.
Despite those missteps, and noting a somber reaction from the school board, he said he wanted to end on a more positive note.
"Kelly was given a very difficult task in picking up the pieces of the bookkeeping system. She's done a good job," McGinnis said. "Your books are good and there is a tremendous prospect for getting this right next year so we don't have to talk about audit adjustments."