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Auditing firm gives schools clean audit

Management discussion and analysis 
Assistant Superintendent of Ashe County Schools Phyllis Yates included critical information concerning state and local funding in the report as well. 

State and federal 

• The final statewide cut to public school funding by the General Assembly was 9.7 percent and was inclusive of the recurring LEA discretionary reduction enacted in the 2010 state budget 

• The 2011/12 funding from the state for Ashe County was based on average daily membership of 3,205 students as compared to 3,263 in 2010/211. 

• Based upon the first month in FY 2011/12, actual student enrollment in Ashe was 3,138 as compared to 3,187 based upon the first month of 2010/11. 

• Due to the state's economic concerns, teachers, school-based administrators, instructional support and support personnel did not receive a salary increase for a third year. The salary schedule was again shifted up on step for experience credit but the pay level remained the same. 

• The state retirement contribution increased from 10.51 percent to 13.12 percent. 

• Hospital insurance realized the smallest increase, from $4,929 per employee to $4,931. However, employees had to pay an additional premium for the standard 80/20 plan. There was no required premium for the basic 70/30 plan. 

• House bill 1473 provides supplemental funding for small school systems and in 2007/08 increased to hold harmless provision to seven years (previously five) after which the LEA becomes ineligible. Counties with less than 3,239 ADM are entitled to funding. Ashe County was eligible for funding base don 3,205 enrollment (Year 0 of 7). Funding in this category for Ashe County is approximately $1.5 million per year. 

• Regulations and operations for the More at Four Program had always been under the umbrella of the Department of Public Instruction. However, following legislation enacted by the General Assembly, the Division of Child Development and Early Education and the Division of Health and Human Services assumed all functions of regulation, monitoring, payment and reimbursement for the More at Four Program in 2011/12. Funding for the pre-kindergarten program was $477 per slot per month and had an enrollment of the 75 students. 

• Due to the state's continuing economic woes, the General Assembly once again required the school system to return a portion of its state allotments to cover budget shortfalls. The total discretionary reduction for 2011/12 was $756,447 as compared to $673,918 in 2010/11. Although school districts were given flexibility by the state board of education within state funding allotments to help offset the discretionary reduction, the change in the conversion rates for principals, assistant principals, and teachers implemented by the General Assembly further reduced the school system's ability to maximize funding. 

• The school system used its remaining balance of $1,112,509 in American Recovery and Reinvestment (ARRA) and EduJobs to help offset the loss in state funding. 

• On July 1, 2011, the state’s sales tax rate dropped from 5.75 to 4.75 percent and the income and corporate temporary taxes expired. 

• The North Carolina General Assembly voted to lift the cap on charter schools, increased the rate at which charters were allowed to grow, and instituted new accountability requirements. Charter schools continue to reduce available funding for public education. 

• The board ranked 35th out of 115 school systems in per pupil expenditures. The per pupil expenditure, including child nutrition, in 2011/12 was $9,578 as compared to $9,292 in 2010/11. 

Local Level

• The county commissioners increased funding in current expense by $125,000 from $3,635,520 to $3,760,520. Capital outlay remained at level funding of $300,000. The county continued its support of the technology program and again appropriated $118,072. 

• The county paid $874,966 in debt service for Westwood Elementary and $760,105 in debt service for Ashe County High School. 

• Notification was received on June 16, 2010 that the State Board of Education approved the allocation of $2,896,202 in Qualified School Construction Bonds (QSCB) to fund the addition of four classrooms at Ashe County High School, total roof replacement at Mountain View Elementary and the replacement of the roof over the vocational section at Ashe County High. Branch Banking and Trust (BB&T) financed the bonds for the term of 15 years, and the school system is using its state lottery proceeds to repay the bonds. The board later decided to replace the roof at Blue Ridge Elementary rather than add the four additional classrooms at Ashe County High. Bids were let for the three roofing projects in 2011/12. 

• The Child Nutrition program continues to experience increases in expenditures that stem primarily from the increases in food production ( benefits, food and food processing supplies). Due to improved management strategies, all schools again operated in the black. The legislature again delayed the implementation of the new nutrition standards for elementary schools previously adopted by the State Board of Education. Session law required that funds for school breakfast be used to provide breakfast free of charge to those qualifying for reduced-price meals. 

Originally published: Dec. 5, 2012
Last modified: Dec. 5, 2012

Adam Orr

Ashe County Schools were given a clean audit during Monday's board of education meeting, according to a Statesville-based accounting firm. 

On Dec. 3, Mike Wike, of Anderson Smith & Wike, presented results for the firm's audit of Ashe County Schools for the year ended June 30. Wike told board members, after reviewing the system's financial transactions and records, and examining the school system's compliance with major state and federal programs, the firm was able to issue an “unqualified opinion” for the 2011/2012 school year. 

“I'm pleased to say this is an unqualified report, or what's called a clean report,” said Wike. “The term ‘unqualified' means, during our testing, there was nothing that would cause us to qualify the report.” 

Wike said “unqualified” was the highest level of assurance the auditing firm could give when reviewing financial documents. 

Wike's firm was tasked with issuing an opinion on financial statements and compliance with state and federal programs. A clean audit means there are no indications of financial danger or noncompliance with state and federal programs. 

Wike's presentation also included a discussion of Ashe County School's financial statements.

“What we mean is compliance with specific state and federal laws, related to funding sources your district gets,” said Wike. “Funding sources come in from different agencies, and each of those have different compliance requirements, and the (board of education) is responsible for meeting each of those.”

Wike said his firm is then tasked with determining if the funds given were spent in the appropriate manner. 

The internal control aspect of that means the controls are designed to prevent fraud and theft within the school district. 

No exceptions or qualifications were noted. Wike also said the firm found “no compliance findings,” which means there were no compliance violations that needed to be reported to the board and the federal government. 

“There were no such items,” said Wike. 

Wike told board members his firm is required to communicate certain things to the board, including the planned scope and timing of the audit, the quality of estimations, and difficulties encountered during the audit. 

“We're pleased to say that the time of the audit went as planned,” said Wike. “There wasn't anything that made us delayed, and nothing that made us limit the scope.” 

Wike told the board of education that estimations within the board's accounting figures had “solid backup and support for the numbers,” and said no difficulties were encountered with management during the process. 

“Management was very open and helpful to all our requests,” said Wike. “We felt we were granted full access to anything that we wanted to look at.”

For more information and stories, see Ashe Mountain Times.