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Certified Public Accountant Jim Johnson told Churchill County School Board members recently it is imperative they get qualified help in the business office as soon as possible.
Johnson, who works at Kafoury, Armstrong & Co., recently completed an audit of school district finances for the fiscal year ending June 30.
"When you see the financial office go from the state it was in to going down so fast, it causes us significant concern," Johnson told trustees Thursday. "In the past, we made one or two journal entries. This time we in the vault for a month...If you don't get experienced people in there, it's going to happen again."
Auditors found 20 deficiencies in accounting practices during the audit. A report that accompanied the audit also included 16 pages of journal entries needed to correct errors made throughout the year.
Johnson said a lack of grant monitoring alone caused a loss of $40,000 to the school district.
The following problems were found:
•Cash in the bank had not been reconciled from Oct. 1, 2004 through the end of the fiscal year.
•Investments were not reconciled at the end of the year.
•The budget in the general ledger does not agree with the augmented budget.
•The special education fund and several grants ended with deficit fund balances where expenses were allowed to exceed revenue.
•Several large liabilities, including the salary and benefits for former superintendent Donn Livoni totaling $143,915, proceeds from mines of $85,762 and PERS payments of $150,000, were not recorded.
•Some receipts were posted to the wrong revenue accounts, and in one case to the wrong fund.
•Some expense accounts had credit balances; the warehouse account was found to have a negative balance.
•Invoices were recorded improperly.
•An employee was paid for two months after the employee resigned.
•Internal control issues with absence reporting.
•Improper withholding of both PERS and FICA for four employees.
•Comp time was used in the business office without any documentation or approval by administrators as required by district policy.
•Unspent grant money had to be returned because of lax monitoring.
•Confidential information stored in the vaults accessible to people who are not authorized.
•Seven violations of state law where expenditures exceeded appropriations in special education, vocational programs, federal projects, class size reduction, nutritional programs and adult education.
•A violation of Nevada Administrative Code by not performing inventory of capital assets.
Johnson said the lack of qualified employees and proper supervision in the business office caused the string of errors. In the special education fund alone, he said, there is a deficit of $260,000.
Board Member Paul Hinz asked Johnson what kind of person should be handling the district's finances.
"Most districts use a CPA or person with adequate governmental accounting or a tremendous amount of experience," Johnson said.
He said to get someone capable of doing the job, the district needs to pay $60,000 to $70,000 a year. If someone is paid in the $40,000 range, "you'll have us in the vault six months next year," said Johnson.
"You have got to get some high-level accounting assistance in the near future," he said.
Superintendent Carolyn Ross said she is already working to address the situation.
Johnson said the former Business Office Manager left the position half-way through the audit. Barbara Smith, who has since transferred to federal programs, said at the time that there were not enough people in the office to do the work required.
Johnson attributed the problems to lack of knowledge of accounting principles and lax supervision.
He said the district is in sound financial shape overall, and there was no evidence whatsoever of criminal activity.
"It's not all gloom and doom," he said. "We didn't find anything to even make us suspicious of any kind of fraud, just a lack of knowledge."
Marlene Garcia can be contacted at mgarcia@lahontanvalleynews.com
Johnson, who works at Kafoury, Armstrong & Co., recently completed an audit of school district finances for the fiscal year ending June 30.
"When you see the financial office go from the state it was in to going down so fast, it causes us significant concern," Johnson told trustees Thursday. "In the past, we made one or two journal entries. This time we in the vault for a month...If you don't get experienced people in there, it's going to happen again."
Auditors found 20 deficiencies in accounting practices during the audit. A report that accompanied the audit also included 16 pages of journal entries needed to correct errors made throughout the year.
Johnson said a lack of grant monitoring alone caused a loss of $40,000 to the school district.
The following problems were found:
•Cash in the bank had not been reconciled from Oct. 1, 2004 through the end of the fiscal year.
•Investments were not reconciled at the end of the year.
•The budget in the general ledger does not agree with the augmented budget.
•The special education fund and several grants ended with deficit fund balances where expenses were allowed to exceed revenue.
•Several large liabilities, including the salary and benefits for former superintendent Donn Livoni totaling $143,915, proceeds from mines of $85,762 and PERS payments of $150,000, were not recorded.
•Some receipts were posted to the wrong revenue accounts, and in one case to the wrong fund.
•Some expense accounts had credit balances; the warehouse account was found to have a negative balance.
•Invoices were recorded improperly.
•An employee was paid for two months after the employee resigned.
•Internal control issues with absence reporting.
•Improper withholding of both PERS and FICA for four employees.
•Comp time was used in the business office without any documentation or approval by administrators as required by district policy.
•Unspent grant money had to be returned because of lax monitoring.
•Confidential information stored in the vaults accessible to people who are not authorized.
•Seven violations of state law where expenditures exceeded appropriations in special education, vocational programs, federal projects, class size reduction, nutritional programs and adult education.
•A violation of Nevada Administrative Code by not performing inventory of capital assets.
Johnson said the lack of qualified employees and proper supervision in the business office caused the string of errors. In the special education fund alone, he said, there is a deficit of $260,000.
Board Member Paul Hinz asked Johnson what kind of person should be handling the district's finances.
"Most districts use a CPA or person with adequate governmental accounting or a tremendous amount of experience," Johnson said.
He said to get someone capable of doing the job, the district needs to pay $60,000 to $70,000 a year. If someone is paid in the $40,000 range, "you'll have us in the vault six months next year," said Johnson.
"You have got to get some high-level accounting assistance in the near future," he said.
Superintendent Carolyn Ross said she is already working to address the situation.
Johnson said the former Business Office Manager left the position half-way through the audit. Barbara Smith, who has since transferred to federal programs, said at the time that there were not enough people in the office to do the work required.
Johnson attributed the problems to lack of knowledge of accounting principles and lax supervision.
He said the district is in sound financial shape overall, and there was no evidence whatsoever of criminal activity.
"It's not all gloom and doom," he said. "We didn't find anything to even make us suspicious of any kind of fraud, just a lack of knowledge."
Marlene Garcia can be contacted at mgarcia@lahontanvalleynews.com
