Finding Text
CONDITION: The District did not maintain a general ledger system of accounting for its Cafeteria Fund which reports the financial activity of the federal National School Lunch and School Breakfast Programs. The financial activity occurring in this Fund is maintained in checkbook fashion during the fiscal year. This is a repeat finding (2019-004) from the previous fiscal year. CRITERIA: Prudent internal control over accounting for federal program funds requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the receipt and use of federal funds as stated in 2 CFR Part 200 of the Uniform Guidance. Best practices suggest that the use of a general ledger system of accounting would enable the District to aggregate financial information involving federal funds during the fiscal year in such a manner to properly manage, monitor, and report the financial activity in compliance with federal program guidelines. EFFECT: The lack of maintaining a general ledger system of accounting for the District’s Cafeteria Fund significantly reduces the District-wide internal controls over the ability to properly manage and account for the assets contained within this Fund, as well as reduces the District’s ability to comply with the compliance requirements for internal control over financial reporting for federal programs as stated in 2 CFR Part 200 of the Uniform Guidance. CAUSE: As a result of the minimal staff size in the District’s business office, management has opted to simplify the process by which they account for and monitor the financial activities of the Cafeteria Fund by utilizing a checkbook system of accounting rather than maintaining a general ledger system of accounting for these Funds. QUESTIONED COSTS: None RECOMMENDATION: During the 2018-2019 fiscal year, the District implemented new accounting software that can readily account for the financial activity of all Funds in a manner like the District’s General Fund. I am recommending that the management of the School District utilize the new accounting software to enter the financial activity (Receipts and Disbursements) of the Cafeteria Fund in a manner like the General Fund. This procedure will significantly enhance the District-wide internal controls over financial reporting for the Cafeteria Fund, as well as provide management the ability to produce meaningful financial reports reflecting the activity in the Cafeteria Fund for prudent oversight by the Board of Education. In addition, this procedure will enable the District to comply with the recordkeeping requirements for federal funds as specified in 2 CFR Part 200 of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: See Corrective Action Plan.