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Hernando Today

District Audit Yields Improvement, Minor Adjustments

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By LINNEA BROWN

Published: January 8, 2008

BROOKSVILLE - BROOKSVILLE - It's a game of one step forward, three steps back.
In the Hernando County School Board's annual financial audit for 2006-07, released last month, the district has shown major improvement in an area where it has been historically cited. For the first time in three yearas, its unreserved fund balance has risen from 2.5 to 3.5 percent, meaning the district's annual "financial condition finding" warning has been eliminated.
The finding was a previous warning from auditors pointing toward the district's low level of resources for unanticipated needs.
While property taxes generate revenue for local government — giving local government officials the power to determine how much money they collect — school district funding is determined by the state. If the money is not spent, it goes into a separate reserve fund for emergencies.
While independent auditors have consistently recommended that school districts keep their reserve between 3 to 5 percent, the average district in Florida holds a reserve of 8 percent.
"I'm always relieved not to have that one," finance director Deborah Bruggink said. "We always want to make sure we have an adequate safety net."
However — while state auditor general David Martin noted that the district generally complied with laws and regulations — it found three internal control and compliance findings in which implementation may cost the district more than it saves.
The district has already made policy changes in all three areas.
One was in district-paid cellular telephone use, in which auditors cited district officials for not developing and implementing policies and procedures requiring employees to document the business use of cellular telephones.
Now, the district plans to expand polices and procedures that require employees to submit records to substantiate the business use of assigned cell phones. If phones are used for personal use, the district will either bill employees or report the appropriate amount as income in accordance with federal requirements.
Coordinator of safety and security Barry Crowley explained that the district has 20,000 pooled minutes a month, to be used between 250 phones, many of which are emergency phones and not used on a daily basis. The district has never gone over its minutes and has strict policies regarding personal use, he said.
While the district doesn't get charged for additional costs of personal calls, the IRS is now requiring the district to prorate each bill, creating hours of extra paperwork and costing the district thousands of dollars to pay less than $20 in taxes for the calls — which are few and far between, Crowley said.
It's just ridiculous they way they're making us do this," he said. "We have a firm policy about not using phones for personal use. But the IRS requires it across the board, so we're going to comply."
Another was in the Information Technology department, in which the district was cited for not maintaining appropriate records to evidence that terminated employees' access privileges were removed immediately. Its tests found that four former employees continued to have IT access privileges after their employment termination dates.
"We've changed some of the software settings that now show (who) did the disabling and (when) it was done," director Cynthia Peters said.
Another was in payroll record keeping, in which auditors determined that improvements were needed in controls of timesheets to support salary and benefit costs.
In September, the district expanded its review of time records maintained by schools and departments. Based on the auditor's report, Bruggink and her staff are developing detailed instructions to schools and departments on the required time records to be maintained, in accordance with district policy and the Fair Labor Standard Act.
"This was the first (year) they had me submit the backup and payroll certification, and that's when we discovered that not all of the departments maintained them," Bruggink said.
At the district's annual training for timekeepers in November, officials explained the audit finding, provided a sample timesheet to be implemented and provided clarification to timekeepers on how time worked should be property documented for different employee classifications.
"We're working with our schools and departments to (make sure they have) timesheets they can use, with technical guidance," Bruggink said.
While the auditors conduct the audit annually, the information they ask for changes, based on findings in other districts and other factors.
"I always look at (the audit) like it's another set of eyes," Bruggink said. "Sometimes you don't see everything, and we always appreciated the thing they point out."
The goal for district officials now is to make sure the new protocol continues in all three areas, to avoid repeat findings in the 2007-08 year.
"To me, it was a good audit, because all three of the things are fixable," Bruggink said.
"We're crossing our fingers that these three go by the wayside, and hopefully, we won't have anything else next year."

Reporter Linnea Brown can be reached at 1-352-544-5289 or lbrown@hernandotoday.com

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