No non-compliance in Stanton School audit

Nolte, Cornman & Johnson P.C. released an audit report on the Stanton Community School District.
The District’s revenues totaled $4,896,746 for the year ending June 30, 2024, a 6.03% increase from the prior year. Expenses for district operations for the year ended June 30, 2024 totaled $4,259,649, a 4.23% increase from the prior year. Revenues from charges for service increased $210,020, which was the primary reason for the increase in total revenues. Support services expenses increased $120,537, which was the primary reason for the increase in total expenses.
Nolte, Cornman & Johnson reported eight findings which address issues related to segregation of duties, gate admissions, questionable expenditures, travel expense, board minutes, deposits and investments, contracts and financial condition. Nolte, Cornman & Johnson provided the District with recommendations to address each of the findings. Three of the eight findings discussed were repeated from the prior year.
When it came to findings related to the financial statements, there were no instances of non-compliance; however, the audit noted internal control deficiencies.
Under segregation of duties criteria, the audit noted the district has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. The effect of this being inadequate segregation of duties which could adversely affect the district’s ability to prevent or detect and correct misstatements, errors, or misappropriation on a timely basis by employees in the normal course of performing their assigned functions.
The firm recommended the district review its control procedures to obtain the maximum internal control possible under the circumstances. The Stanton District responded that it continues to review procedures to obtain the best control possible. As a resource, it uses the source “Segregation of Financial Duties in the Smaller Public School to improve Financial Internal Controls,” a tool developed by the Iowa Association of School Business Officials. The district also noted it has some areas of dual control such as wire transfers and cash receipting, but will review procedures for other areas. The response was accepted.
For gate admissions the firm noted during the audit that the district does not utilize pre-numbered tickets for all events that require admission and does not appear to have a system in place to review or control gate revenue  to ensure all gate money is properly documented, reconciled, deposited, and recorded. The lack of utilizing pre-numbered tickets or other procedures as controls over the gate collection process could result in district gate workers not detecting errors in the normal course of performing their assigned functions.  As a result, this may provide opportunity for misappropriation.
The firm recommended that the district should have internal control procedures established for handling cash for all activity events, including athletic events and communicate the policies and procedures to individuals involved. The board would approve any policies and the district’s business office should be involved in developing the detailed procedures.
The district responded that it utilizes Ipads that tabulate ticket sales and admission counts. There is a report that is downloaded and reconciled to the amount of cash collected. Also, tickets can be purchased on “Bound,” reports are run to reconcile that as well. The athletic director and/or staff responsible taking tickets count money after event and the money bag is returned to the locked high school office and placed in the safe. The secretary or business official counts the money the  next  business day to verify accuracy and makes the deposit. The response was accepted.
Under other findings related to required statutory reporting, the audit noted district expenditures for the year ending June 30, 2024 did not exceed the amended certified budgeted amounts. However, during the audit, it was noted there were instances of expenditures, which did not appear to meet public purpose, as defined in an attorney general’s opinion dated April 25, 1979. The audit noted instances of the district paying sales tax on purchases made with district credit cards. The district is a tax-exempt entity, therefore, expenditures for sales tax do not appear to meet the requirements for public purpose as defined by the earlier noted opinion.
The firm recommended that the district should review their credit card purchasing procedures in place and make the necessary adjustments to comply with the AG opinion. The district responded that at the beginning of the year and throughout the course of the year at staff meetings, employees are reminded to make sure taxes are not applied when making purchases. All attempts must be made, and tax exempt forms are available in the business office and can be distributed to vendors upon request.  The response was accepted.
Also noted were instances of the district incurring interest charges on monthly wage reports submitted to the Iowa Public Employees Retirement System. Interest charges do not appear to meet the requirements of public purpose as defined by the 1979 AG’s opinion. It was recommended that the district should review its procedures in place and make any necessary adjustments to ensure IPERS reports are submitted in a timely manner to avoid interest charges to comply with the AG opinion. The district responded that it will ensure IPERS reports are submitted in a timely manner, and the response was accepted.
No expenditures of district money for travel expenses of spouses of district officials or employees were noted.  No travel advances to district officials or employees were noted. However, the audit noted instances of employees being reimbursed for travel milage at a rate that differed from the rate established in board policy. It was recommended that the district should review its travel reimbursement procedures to ensure compliance with board policy. In response, the district said it will ensure mileage reimbursement is at the federal rate per school policy, and the response was accepted.
Business transactions between the district and district officials or employees did not appear to represent a conflict of interest. Also, no transactions were noted between the district, district officials or district employees and restricted donors in compliance with Chapter 68B of the Code of Iowa.
Surety bond coverage of district officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure the coverage is adequate for current operations. 
The audit noted no transactions requiring board approval which have not been approved by the board, however, there were instances of board minutes not submitted for publication within two weeks following adjournment as required by  Chapter 279.35 of the Code of Iowa. It was recommended that the district should furnish a copy of the board proceedings for publication within two weeks of each meeting in compliance with Iowa code. In response, the district said it will furnish board proceedings to the paper before the publication submission deadline. The response was accepted.
No variances in the basic enrollment data certified to the Iowa Department of Education were noted. No variances in the supplementary weighting certified to the Iowa Department of Education were noted. The firm also noted no instances of non-compliance with the deposit and investment provisions of Chapter 12B and Chapter 12C of the Code of Iowa and the District’s investment policy.
The audit did note instances of the district not receiving the minimum interest rate, as set by the State Rate Setting committee on certificates of deposit. The audit recommended that the district should contact the appropriate bank to rectify the situation. The district responded it had opened up business money market savings accounts, which are now receiving a higher interest rate. The response was accepted.
The Certified Annual Report was certified timely to the Iowa Department of Education. No instances were noted of categorical funding being used to supplant rather than supplement other funds. No instances of non-compliance with the allowable uses of the statewide sales, services, and use tax revenue provided in Chapter 423F.3 of the Code of Iowa were noted. 
During the audit, instances were noted of officiating contracts not being signed by the board president. According to Chapter 291.1 of the Code of Iowa, the board president shall sign all contracts entered into by the District. It was recommended that the district should have the board president sign all contracts  entered into by the district in compliance with Iowa code. The Stanton district responded that sports official and referee contracts are now signed by the athletic director and the board president. The response was accepted.
On June 30, 2024, the district had one deficit account within the student activity fund with a deficit unassigned fund balance of $99. It was recommended that the district should review the deficit account within the student activity fund and develop a workout plan to eliminate the deficit. The district responded that the school board passed a resolution to transfer sports officials and safety equipment expenses from the general fund to the student activity fund to ensure there is not a deficit fund balance. The activity fund is monitored closely. The response was accepted.
To read the complete report, visit auditor.iowa.gov/reports/audit-reports, and search Stanton.