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HomeMy Public PortalAboutBrewster 2016 End of Year School Audit R. E. BROWN & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 25 CEMETERY STREET — P. O . BOX 230 Mendon , Massachusetts 01756 Phone : (508) 478 - 3941 Fax $ (508 ) 478 - 1779 June 27, 2017 Michael Embury Town Administrator Town of Brewster 2198 Main Street Brewster, MA 02631 Dear Mr. Embury : We are pleased to confirm our understanding of the nature and limitations of the services we are to provide for the Brewster Public Schools . We will apply the agreed-upon procedures which the Massachusetts Department of Elementary and Secondary Education has specified, listed in the attached schedule, to the 2015 - 2016 End of Year Financial Report (hereinafter referred to as the "End-of--Year Report") of the Brewster Public Schools as of and for the year ended June 30 , 2016 , as prepared in accordance with Massachusetts Department of Elementary and Secondary Education guidelines and school finance regulations as defined in Chapter 70 of the Massachusetts General Laws . This engagement is solely to assist the Brewster Public Schools and the Massachusetts Department of Elementary and Secondary Education in order to determine whether the "End- of--Year Report" includes all activity of the reporting period, are supported by applicable accounting records, and are fairly presented in accordance with State requirements . Our engagement to apply agreed-upon procedures will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants . The sufficiency of the procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the sufficiency of the procedures described in the attached schedule either for the purpose for which this report has been requested or for any other purpose . If, for any reason, we are unable to complete the procedures, we will describe any restrictions on the performance of the procedures in our report, or will not issue a report as a result of this engagement. Because the agreed-upon procedures listed in the attached schedule do not constitute an examination, we will not express an opinion on the completeness and accuracy of the "End-of-Year Report" as filed with the Massachusetts Department of Elementary and Secondary Education for the year ended June 30 , 2016 . In addition, we have no obligation to perform any procedures beyond those listed in the attached schedule . We will submit a report listing the procedures performed and our findings . This report is intended solely for the use of the management of the Brewster Public Schools and the Massachusetts Department of Elementary and Secondary Education, and should not be used by those who did not I I , agree to the procedures and take responsibility for the sufficiency of the procedures for their purposes . Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We plan to begin our procedures on or after June 27 , 2017 and, unless unforeseeable problems are encountered, the engagement should be completed by July 6 , 2017 . At the conclusion of our engagement, we will require a representation letter from management that, among other things, will confirm management ' s responsibility for the presentation of the "End-of-Year Report" in accordance with the compliance requirements described in the Massachusetts Department of Elementary and Secondary Education Compliance Supplement. Our fee for these services will be $ 3 , 500 . The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered. If significant additional time is necessary, we will discuss it with you before we incur additional costs . We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions , please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us . If the need for additional services arises, our agreement with you will need to be revised. It is customary for us to enumerate these revisions in an addendum to this letter. If additional specified parties of the report are added, we will require that they acknowledge in writing their responsibility for the sufficiency of procedures . Very truly yours , to zq �. - G°vl� Certified Public Accountants RESPONSE : This letter correctly sets forth the understanding of the Brewster Public Schools By: Title : "TDw �J 14b1M11�( Sc�-l�Taf� Date : SPECIFIC COMPLIANCE REQUIREMENTS Schedule 1 - Revenue & Expenditure Summary I . Revenues A. Revenue from Local Sources 1 . Trace Revenues from Local Sources reported on Schedule 1 to the municipal and district accounting ledgers . Also, trace the revenues reported on district's accounting ledgers to revenues reported on Schedule 1 . These amounts should agree . C, D , and E . Revenues from Federal Grants, State Grants and Revolving & Special Funds 2 . Trace the revenue from state aid, federal grants , state grants , and revolving and special funds to the detail in District's accounting ledgers . Also , trace the revenues reported on district's accounting ledgers to revenues reported on Schedule 1 . These amounts should agree with the possible exception of revenue from state aid, federal grants and state grants , which are entered by the State based on allotments . Determine if the district verified the grant amounts received with the detail posted on the DESE website and pre populated by D ESE. Note : Amounts deposited in legally authorized revolving accounts (e. g . School Choice) cannot be transferred to the General Fund, II . Expenditures A. By School Committee and B . By City or Town 3 . Trace the amounts reported for general fund education expenditures from Schedule 1 line 1850 to the municipal accounting ledgers and to the district accounting ledgers . Also trace the expenditures reported on district's accounting ledgers to expenditures reported on Schedule 1 . These amounts should agree . If a " crosswalk" exists between the accounting ledgers and the EOYR, verify that the crosswalk agrees with the accounting ledgers in total and trace a sample of expenditures from the crosswalk to the accounting ledger. 4 . Trace the amounts reported for a sample of ESE functions (i. e. teaching, principal) , State Objects (i. e. professional salaries (01) , other salaries ( 02) , and other expenditures (04-06) and ESE programs (i. e . regular day, SPED , etc. ) in Schedule 1 to the detail in the accounting ledgers or to the crosswalk, if applicable . These amounts should agree. 5 . Test Extraordinary Maintenance expenditures for the following (4300) : Verify that expenditures do not include salaries . Verify that the expenditures include applicable principal portions of a loan or the cost of a lease/purchase agreement. Verify that expenditures classified as Extraordinary Maintenance (4300) do not exceed the per project dollar limit for extraordinary maintenance ( $ 150 , 000) . Trace the expenditures to the detail in the accounting ledgers . I r r 6 . Determine how expenditures for fringe benefits are assigned or allocated to Schedule 1 Employee Benefits , Insurance (5100 , 5200) . Trace the reported cost to the detail in the accounting ledgers using the methodology indicated . These amounts should agree . Determine if the district reported Insurance for Retired Employees (5260) separately and appropriately . 7. Verify that expenditures charged to Line(s) 1683 and 2060 - Short-term Interest (5400) relate exclusively to Revenue Anticipation Notes (RAM's) . 8 . Verify that expenditures charged to Line 1684 and 2065- Short-term Interest - BAN's (5450) relate exclusively to Bond Anticipation Notes (BAN's) . 9 . Identify expenditures reported as long-term School Construction debt for principal ( 8100) and interest ( 8200) . Verify that bond anticipation notes are not included in these functions . Trace the reported costs to the Treasurer's debt schedule . Trace the reported amount to the detail in the accounting ledgers . These amounts should agree . Note : If the district received a lump sum wait list or progress payment from the Mass . School Building Authority, verify that the revenue was reported on line 13o and that expenses were reported for paydown of principal (8100) , or Purchase of Land and Buildings (7100 ,7200) if applicable . 10 . Trace the expenditures for tuition payments : to other school districts in state (9100) , to out of state schools (9200) , to non-public schools (9300) , to member collaboratives (9400) , and assessments to member regional school districts (9500) to the detail in the accounting ledgers . These amounts should agree. Note : If the district prepaid FY' 17 Special Education Tuition, verify prepaid tuition was not included as an FY' 16 expense . If the district prepaid FY' 16 tuition from FY' 15, that amount should be included as an FY' 16 expense . 11 . For municipal expenditures that result in services directly related to the school committee : a . Obtain a copy of a written agreement between the School Committee and Municipal officials documenting agreed upon methodologies to be used when allocating, distributing or assigning Municipal expenditures to the District. b . Test the amounts reported using the documented methodology. These amounts should agree . 12 . Expenditures from Federal Grants, State Grants and Special Funds a. Determine amounts reported in Column 1 by expenditure classification agree with filed Final Grant Expenditure reports for SFSF and Ed Jobs grants . b . Trace amounts claimed as Circuit Breaker expenses on line 3080 Column 5 to the Accounting ledgers or journals . Schedule 3 13 . For Schedule 3 expenditures . a. Trace the amounts reported by school location on the linked file to the accounting ledgers . These amounts should agree . b . If staff is assigned to more than one school, determine if the District maintains a payroll system or spreadsheet to document the assignment of staff salaries by school location . c . If allocations are used to assign staff salaries to schools , programs , functions or objects , was the allocation supported by a documented methodology? d. If allocations are used for non-salary expenditures , determine if the District maintains a documented methodology for consistency in application . Allocations are acceptable on Schedule 3 for non-salary expenditures although direct assignment or charging is preferable . Schedule 4 14 . Ascertain the methodology used to allocate, distribute or assign SPED costs to the placement on Schedule 4 and review the propriety of the methodology. Test the amounts reported on Schedule 4 using this methodology. These amounts should agree . Schedule 7 15 . Trace the transportation expenditures reported on Schedule 7 to the transportation expenditures reported on Schedule 1 . These amounts should agree . Determine the methodology used to allocate transportation expenditures on Schedule 7 and verify the accuracy of the allocations . Also if applicable, verify that reimbursable expenditures have been reduced by transportation revenue received from students transported. 16 . Trace the pupils reported on Schedule 7 to the detailed transportation records and verify that the amounts reported on Schedule 7 are accurate and consistent with the detailed records . 17. Determine if the district's accounting system separates costs in order to facilitate reporting as outlined in Schedule 7 (In or Out of District, Pre- School, Non-Public, School Choice & Charter School) . Determine if reimbursable expenditures claimed on Line 4283 (Homeless to Outside the District) and Line 4285 Homeless from Outside the district) are supported by adequate documentation . If a cost allocation plan was used to determine reimbursable expenditures , review the propriety of the plan and test the expenditures reported. Schedule 19 18 . Determine if the School District has reported all changes to Schedule 19 Part A. 1 - Appropriation by School Committee to the ESE . Compare the final School Committee Appropriation to Schedule 19 Part A. 1 as filed/ amended to determine if all changes were reported. 19 . Determine amounts budgeted in Schedule 19 Part A. 2 are consistent with methodologies outlined in the agreement noted in procedure II A. 4 a . above . 20 . Determine that retiree health insurance (5250) is reported separately. �\ \ \ � TOWN OF BREWST£R T�M$$AMUS£TTS BREWSTER PUBLIC CHOOh8 » . x INDEPENDENT ArCA T TS RFFFRT ON APPLYING AR�#D ON PROC£D ao Y£� £ tD �£ 3 ¢ 21 \ \ y , yL it f IF 1 4to ~ IF. y ? L 3 « < \ - w « : \ ^ - doo 2 ? > ;> IF yw\ \ ~ 2 . . § , j �y 7 » ; : d ? %® ^ � X % z . - - . t « \ c > lot . yy y S ' 1 » t 4 1 F, FIN ? \ y r : y , . \ IF I » ? ' ` ~ « � � '\ d IF ° \o_ - - . F- » « ~ 'IF F F . 4 S I- ` IF � © r _ C ` © : oo � / / , , � 14 . « ; < 2 IF. z �x TOWN OF BREWSTER MASSACHUSETTS BREWSTER PUBLIC SCHOOLS JUNE 309 2016 CONTENTS PAGE Inde endent Accountants ' Re ort on A 1 in A d-U Procedures 1 pp Y g ree p p g p I : _, LIP I . Specific Compliance Requirements " ` 2 — 6 _ } 5 Add I Findings and Recommendations " , 7 4 IL LdI I - s. Id LL. ILL _ PIPPILLIT / PIIf �r _ If d- 4 d �\ PILL L If. `` \ ' 'L jP, 1 ' fI If 1 61 •, � ' ` . R. E . BROWN & COMPANY CERTIFIED PUBLIC ACCOUNTANTS P. O. Box 230 - 25 CEMETERY STREET Mendon , Massachusetts 01756 Phone: (508) 478 -3941 Fax: (508) 4784779 INDEPENDENT ACCOUNTANTS!=REPORT ON APPLYING AGREED -UPON4R' ,OCEDURES It 4 To the Honorable Members of the School Committee ,. ' : : a And the Honorable Board of Selectmen - IFIk Town of Brewster, Massachusetts ` We have performed the procedures enumerated in the attached appendix, which were4 agreed to by the management of the Town of Brewster, Massachusetts (the;`Town") and the Brewster Public Schools, solely to assist you in evaluating the completeness and accuracy , of the Town ' s Massachusetts Department of Elementary and Secondary Education '(tthe "Department") End. =of,Year Financial Report for the year ended June 30, 2016, and to demonstrate I4 111 t Town's compliance %with 'the requirements for preparing that report as specified by the Department. The T wn of Me vsfer ,and the •Brewster Public School ' s management are responsible for:tl e End-of-Yoear-Tinaneial: Repgrt for the year ended June 30, 2016 . This f - - \ agreed-upon procedures engageme4t was performed in.accordance:with attestation standards established by the American Institute of Certified Public Accountants . The sufficiency of these procedures is solely the responsibility of the speeihed use of the report , Consequently, we make no representation regarding the sufficiency of the procedures. desorxbad jn the accompanying appendix that follows either for the 14 _ - purpose forwhiich this report has been: rd-quested' or, for any� other purpose , -- . a TA f' We we .e not engaged to, 'and:did noiIIcoduct an audit; -te objective of which would be the expression of an opinion= on the completenessAnd accuracy of the End-of-Year Financial Report filed with the � . Department:Accordingly, we dq riot express; such an opinion . Had we performed additional procedures, other matters might have come to4�our. attention- that would have been reported to you . This report is intende solely for the information and use of the specified parties listed above and is not . . - , intended to be and shod d'1hot be,Ju8I_ anyone other than those specified parties . III ::= y Certified Public Accountants June 28 , 2017 SPECIFIC COMPLIANCE REQUIREMENTS Schedule 1 - Revenue & Expenditure Summary I. Revenues A. Revenue from Local Sources 1 . Trace Revenues from Local Sources reported on Schedule 1 to the municipal and district accounting ledgers;' Also , trace the revenues reported on district's accounting ledgei"b6revenues reported on Schedule 1 . These amounts should agree . C, D , and E . Revenues from,FederaI Grants State Grants and Revolving & Special Funds Z `' ; = > ` : : .. dd. . 2 . Trace the revenue from state,aid, federal grants , state'grants , and revolving and special funds to the detaifin District's;, accounting4ledgers . Also , trace the revenues reported on district's . accotiillting ledgers to Ifeyenues reported on Schedule 1. These, amounts sliould'agree with the possible exception of revenue from state'aid; federal grants, and state grants, which are entered by the State as allotments .allotments . Determine if the district verified the I grant-amounts received with, he detail` posted on the DESE website ,and pre=popu lated `by,,DESE : ; ; l : '�TTote : Amounts deposii I[Viii legally authorized revolving accounts (e. g. � —, I`: 3 \ ",a School Choice)__cannot be. transferred to the General Fund. dd— �,If If ; II. Expenditures:_ " = '" ;.' ' ;� ; ` t \ It By School Committeet, and.,B . By City or Town Idd If 3 :I- rp3 . Trace the amounts reported for general fund education expenditures from `\` Schedule fl ,1 line 1850 to the municipal accounting ledgers and to the district a gledgers .countin Also trace the expenditures reported on district's`.accounting. ledgers to expenditures reported on Schedule 1 . These amounts should agree . If a " crosswalk" exists between the accounting ledgers and the EOYR, verify that the crosswalk agrees with the accounting ledgers in total and trace a sample of expenditures from the crosswalk to the accounting ledger. -2 - SPECIFIC COMPLIANCE REQUIREMENTS 4 . Trace the amounts reported for a sample of ESE functions (i . e . teaching, principal) , State Objects (i . e . professional salaries (01 ) , other salaries (02) , and other expenditures (04-06) and ESE programs (i . e . regular day, SPED , etc . ) in Schedule 1 to the detail in the accounting ledgers or to the crosswalk, if applicable . These amounts should agree . 5 . Test Extraordinary Maintenance expenditures for the following (4300) : Verify that expenditures do not include salaries . Verify that the expenditures include applicable principal portions of a loan or the cost of a lease/purchase agreement. Verify that' e enditures classified as Extraordinary Maintenance (4300); do not;`exceed the per project dollar limit for extraordinary maintenance ($ 150';000) . Trace the expenditures to the detail in the accounting`ledgers . 6 . Determine how expenditures for fringe benefits ai&'. signed or allocated to Schedule 1 Employee Benefits " Insurance (5100 ,`5200) . Trace the reported cost to the detail in tl e - accqur tiag ledgers using, the methodology indicated. These. amounts shoul&vee. Determine if the district reported Insurance .for. Retired Employees (5260) separately and appropriately. t` 7 . Verify that expendi f .es chargedJ6 Lines) `1683 and 2060 - Short-term Interest (5 00) relate exclus': vely to Revenue Anticipation Notes (RAM's) . ; '. . 8 . Ve fy,that expenditures c`hatged to Line 1684 and 2065 - Short-term ~ , Interest ' BAN-s: (5.450) relate exclusively to Bond Anticipation Notes -41 ,(BAN' s) ,. \ _ j .> ` ' ` 9 . Identi ' %,ex enditures reported as long-term School Construction debt for principal: (8100) ' aAd .interest ( 8200) . Verify that bond anticipation notes are not included in` these functions . Trace the reported costs to the Treasure " debt schedule . Trace the reported amount to the detail in the , .. „ accounting ,ledgers . These amounts should agree . NOTE : If the district received;;a Pump sum wait list or progress payment from the Mass . School` Building Authority, verify that the revenue was reported on line '30 and that expenses were reported for paydown of principal (8100) , or Purchase of Land and Buildings (7100 ,7200) if applicable. -3 - SPECIFIC COMPLIANCE REQUIREMENTS 10 . Trace the expenditures for tuition payments : to other school districts in state (9100), to out of state schools (9200) , to non-public schools (9300) , to member collaborative (9400) , and assessments to member regional school districts (9500) to the detail in the accounting ledgers . These amounts should agree . NOTE : If the district prepaid FY' 17 Special Education Tuition, verify prepaid tuition was not included as an FY' 16 expense . If the district prepaid FY' 16 tuition from FY' 15 , that amount should be included as an FY' 16 expense ./': !'- 11 . f 11 . For municipal expenditures that result M services directly related to the school committee : ,.% a. Obtain a copy of a/ "' , tten agreement between the School Committee and(IVlutiioipal officials doebinenting agreed upon methodologies to .be. ;used when allocating *` d Stributing or assigning Munici ) al' e penditures to the District. , -Ni b . Test the amounts reported:usng the documented methodology. These amounts should agree: 12 . Expenditures from, deral Grants; , State `Grants and Special Funds = .,a: Determine amo ts`reported` M 61umn 1 by expenditure _. classification agree with filed Final Grant Expenditure reports for SFSF_ and Ed Jobs 'grants . ' } ;b. Tkaceyamounts claimed- as Circuit Breaker expenses on line 3080 C01*11in 5 to the Accounting ledgers or journals . .j " Schedule 3 IN 13 . For Schedule 3 expenditures : f : 4 ; , ':' - , : Trace the amounts reported by school location on the linked file to the accounting ledgers . These amounts should agree . b . If staff is assigned to more than one school, determine if the District maintains a payroll system or spreadsheet to document the assignment of staff salaries by school location. c . If allocations are used to assign staff salaries to schools, programs, functions or objects , was the allocation supported by a documented methodology? -4- SPECIFIC COMPLIANCE REQUIREMENTS d . If allocations are used for non- salary expenditures, determine if the District maintains a documented methodology for consistency in application. Allocations are acceptable on Schedule 3 for non- salary expenditures although direct assignment or charging is preferable . Schedule 4 14 . Ascertain the methodology used to allocate; distribute or assign SPED costs to the placement on Schedulel14 acid review the propriety of the methodology. Test the amounts deported on Schedule 4 using this methodology. These amounts'Isould agreeall ; \ f , Schedule 7 r . ` >` 15 . Trace the transportation expenditures reported on Schedule 7 to the transportation,.expenditures reported or Schedule 1 . These amounts should agree . Determiri6 the methodology used to allocate transportation expenditures oii Schedule .7 and verify the accuracy of the allocations . Also if applicable; verify thatreimbur'sabll I e expenditures have been reduced by transportation revenue t, all _received from students transported . Ia f _ 11 „ : . 16: Trace the pupils reported ori Seliedule Tfo: ,the detailed transportation _ a all, eeords and' verify that the amounts reported on Schedule 7 are accurate and ,consiste _/ t:With the detailed records . -,: 17 Deteriral uie �f the distrct's;. accounting system separates costs in order to all 6' I;e l facilitate reporting as outlined in Schedule 7 (In or Out of District, Pre- ` " ; Scl ool;;,Nori=Public, School Choice & Charter School) . Determine if }'". reimbut'sable ex en'ditures claimed on Line 4283 Homeless to Outside the P \ ' ` a IN ) `and Line 4285 (Homeless from Outside the Distri District) are supported <, by adequate documentation . If a cost allocation plan was used to determine <, , reimbursable expenditures, review the propriety of the plan and test the eIF xpenditures reported . allSchedule 19 - >'''` 18 . Determine if the School District has reported all changes to Schedule 19 Part A. 1 - Appropriation by School Committee to the ESE . Compare the final School Committee Appropriation to Schedule 19 Part A. 1 as filed/amended to determine if all changes were reported. - 5 - f + i SPECIFIC COMPLIANCE REQUIREMENTS 19 . Determine amounts budgeted in Schedule 19 Part A. 2 are consistent with methodologies outlined in the agreement noted in procedure II A. 4a. above . 20 . Determine that retiree health insurance (5250) is reported separately . r4 t - : .It I 4 6r It �r�'•- It _ - 41 „i 1 14 �t. , 14 j - 6- FINDINGS AND RECOMMENDATIONS 1 . Finding: Schedule 1 — requirement 3 — In our review of the crosswalk between Schedule 1 School Committee total expenditures (line 1850) to the School Department ' s accounting ledger and the Municipalities accounting ledger, we noted the following : • The School Committee total expenditures per Schedule One (line 1850) exceeded the School Department' s accounting ledger by $ 341 , 931L The total School Committee expenditures on line 1850 should have been $ 7 , 0.97; 788 not $ 7 ,439 , 719 as reported. • The amount reported as purchase of Land and Buildings (7100 , and 7200) as shown on Line 2100 Column 5 (Undistributed);-b Nthe Municipality was Overstated by IF $ 144 , 800 . The total amount on Line 2,1110P.-Colum. 5 sliou dhave been $ 185 , 236 not $ 330 , 036 as reported. 4 ' _IF k `` I IF t IF R ,, IF Criteria : • The total School Committee expenditures as reported on Schedule One (line 1850) IF should agree to the School DepartmeritsIF In . accounting`ledger expenditures in total . I IF =; • All Munic palify expenditures as recorded on the .Erid of Year Report should agree with the NluricipalitiesAccounting�ledgers . IF ILL �i. IN IF F 4 Recofnm. 'endatiQns: _ 4 IF 1 F14 'L IF 'IF , , _- Vie recommeridthat the`School Department report the total expenditures as recorded %on.'the School Departments` acIF:counting ledger to Schedule One (line 1850) . , .; . \ . 1% 44a, t k4 .. • We recommend that�th, End of Year Report only report expenditures as recorded on t _ the Municipalities Accounting ledgers . Response: • School District personnel will exercise due diligence to ensure the proper reporting of all education expenditures as recorded in the School 's accounting ledgers on either the School Committee or Town 's section of Schedule I.An amendment has been made to the End of Year Financial Report to correct this finding in line 1850 of Schedule 1 which was reported twice - 7- Town Response ; Finding ; Schedule 1 — Requirement 3 The Town concurs with the auditor' s recommendation . The Town will continue to work diligently with the schools to ensure records are reconciled for the End of Year Financial Report . i �I i i