Superintendent and B.O.E.

January 4, 2012

Mr. Richard LeMay,

Supervising Accounts Manager,

Office of Internal Audit

Department of Education

State of Connecticut

Box 2219

Hartford, CT  06145

Dear Mr. LeMay,

I write to you in response to your letter dated December 15, 2011 wherein you requested that we address the audit findings for the year 2009-2010 and that we develop a Corrective Action Plan. The Corrective Action Plan, is attached herewith. Included in the Plan are actions already taken, actions to be implemented, and a summary page of the timeline for implementation of specific actions which you will find on page 13. Our response includes four sections:  this cover letter; corrective action plans for each of the auditor’s findings; appendices to support changes implemented in the Corrective Action Plan; and documentation for the expenditures made from grant funds. Each of the four categories is offset by a tab entitling the appropriate subsection. 

In advance of your review of the Plan, please know that we are well aware of the magnitude of the recommendations of the 2009-2010 audit and that we work diligently to fix and improve upon the practices used in our Business Services Office that created the auditor’s findings. Furthermore, we anticipate that our new practices and procedures will not only rectify the reoccurrence of findings in this audit, but also serve to provide a more transparent and fiscally responsible manner in which to account for funding our educational programs.

A number of steps have already been taken to improve the practices used within our school district and many of the people, at all ends of our organization, who were involved in the audit year’s work have been replaced. Among those newly installed are our Board Chair, Superintendent, and Director of Business Services who holds a license as a Certified Public Accountant. Furthermore, we have instituted a reorganization on the Board of Education by establishing a Board of Education Finance Committee comprising the entire board. This Committee’s function includes the monthly review and approval of financial statements. We have instituted fresh communications with the Board of Selectmen, hired a software consultant, and in August, 2011, within the week of the hiring of our new superintendent, we hired a Certified Public Accountant to serve as a consultant to carry us through the overdue audit.

In addition to these steps, the Board and the Superintendent agreed that performance of the Finance Department specifically including state reporting and accounting would be one of the five performance goals for the Superintendent with specific dates for performance benchmarks. The intended end result is expected to be greater transparency and confidence in the work of the Business Services office to include the completion of the 2009-2010 audit; timely filing of state reports; and steps to improve the overall processes within the Business Services Offices, including the hiring and retention of a Certified Public Accountant to serve as the Director of Business Services. The status of the benchmarks delineated in this goal shows that many of the items have already been completed so we are well on our way toward the intended goal.

Among the changes that we have already made in the practices used by the Business Services Offices were the upgrade in the software program that helps to generate timely reports for review of expenditures and budget implications; the implementation of new timesheets which show the grant fund from which employees are paid; and the reduction of the use of journal entries as a means of accounting for expenditures. A past business manager instituted the use of T accounts to facilitate accounting transfers between the general account and the grant accounts.  These T accounts inexplicably caused a problem with our accounting software which could not be easily rectified.  Ultimately the decision was made simply to reverse the T account entries.  The original T account entries, the reversal of the entries, and then the journal entry accomplishing each transfer caused there to be an excessive number of journal entries.

In the 2009-2010 school year the district made 258 journal entries, in 2010-2011, the district made 58 journal entries, and to date in the 2011-2012 year no journal entries have been made. Hence, you will note a drastic change in practices within our Business Services office indicating that our accounting practices and procedures have changed.  We anticipate a further reduction in journal entries as expenditures are allocated directly to grant funds rather than being paid out of the general account and then subsequently reallocated.

In this Corrective Action Plan, you will see a variety of details related to each of the auditor’s findings. We look forward to your review and would appreciate any feedback you may provide to make our existing and new practices stronger and our fiscal stewardship the pride of the town and an exemplar for the state.

We look forward to your review and await any recommendations you may want to share to make our newer, revised practices stronger.

Thank you for this opportunity.

Sincerely,

Thomas M. Danehy, Ed.D.                                                       Nadine V. Savage, C.P.A.

Superintendent of Schools                                                         Director of Business Services

2009-2010 AUDIT

CORRECTIVE ACTION PLAN

2009-1             Reporting Title I, Part A, Cluster, ARRA (CFDA #84.010/84.389) Special

Education Cluster, ARRA (CFDA #84.027/84.391/84.392)

1. Pertinent information on detailed action taken or planned to correct the finding:

The ED 141 was completed prior to all the journal entries being made for the fiscal year end. The CPA will be reviewing the ED 141 to insure its accuracy and reconciling accounts prior to year and prior to the filing of the ED 141.

1. Actions taken to date to correct audit finding: 

Review of the 2010-2011 ED 141 and prepare ED 141S

Assigned responsibility for initial draft of ED141 to finance analyst .  Director of Business Services reviews ED141 against general ledger and certifies to Superintendent accuracy of state report.

1. Significant corrective actions that remain to be completed in order to fully resolve the audit finding:

Final review of the form at year end.  The ED 141 is filed annually.  The CPA will insure its accuracy at the next filing deadline and be sure that the amounts on the ED 141 reconcile with the General Ledger.  The Director of Business Services will certify to the Superintendent the accuracy of the ED141 report and will confirm that the report is consistent with the general ledger.

1. Nadine V. Savage, CPA, Director of Business Services will be responsible for completing this corrective action.  Email: nadine.savage@winchesterschools.org  Phone: 860.379.0706 ext 165
2.  

2010-1             Board of Education Year End Closing Process

1. 1.                         Pertinent information on detailed action taken or planned to correct the finding:  

A CPA was hired and started on November 28, 2011.  She is reviewing the process of monthly transactions and reviewing the closing process to ensure the year end closing procedures will include more formalized functions taken by grant administrators, special education administrators, and the support staff in the business office. See Appendix A.

1. Actions taken to date to correct audit finding:

Transactions without proper documentation are not approved.  They are returned to the originator and proper and adequate documentation is requested before the purchase order is approved. 

As contracts come up for renewal, the Director of Business Services reviews them for accuracy and fiscal soundness prior to their approval.

1. Significant corrective actions that remain to be completed in order to fully resolve the audit finding:

The 2011-2012 FYE will include significant changes.  It is anticipated that instituting new procedures may take up to three months. 

A process to re-align duties of staff, implement new forms for journal entries, payroll petty cash and other items has begun. 

In addition, beginning with January 2012, accounts will be reconciled, where necessary, on a monthly basis thereby insuring their accuracy, minimizing errors, and minimizing the amount of time needed to close the books at the fiscal year end.

Nadine V. Savage, CPA, Director of Business Services will be responsible for completing this corrective action.  Email: nadine.savage@winchesterschools.org  Phone: 860.379.0706 ext 165

2010-2 Board of Education Ledger

1. 1.                         Pertinent information on detailed action taken or planned to correct the finding:   

We have instituted the use of forms that require multiple levels of signatures required before journal entries can be made. See Appendix B.

We are also instituting the use of new or revised employee timesheets for the correct accounting of time served under grant funded positions and signature of provider and approving administrator. See Appendix C.

We have implemented new forms for documentation of Special Education Tuition including facility, purchase order number and amount, number of school days, tuition cost, other cost and signature of provider and approving administrator. Appendix D

We have implemented the use of a Special Education Transportation Worksheet which delineates student served, bus  company, purchase order number, amount, month of service, number of transport days, transportation cost and other cost.. See Appendix E

Revised invoices for occupational therapists, physical therapists, psychologists, BCBAs, and other outside contractors are being mandated to include SASID or name of student served, hours and days of services, and signature of provider and approving administrator. See Appendix F

Purchase orders have been denied when they lack proper supporting information or if they are improperly coded with the wrong general ledger account, all of which minimizes the number of correcting journal entries.

1. Actions taken to date to correct audit finding: 

We have started implementing the use of the new forms and have informed contractors of the new billing procedures.  See Appendix F.

1. Significant corrective actions that remain to be completed in order to fully resolve the audit finding:

The administration will provide professional development to the business office support staff, special education administrators and support staff, and building administrators on the correct use and completion of purchase orders, staff requests and assignments, grant funded positions and expenses and procedures for the accounting of all of these expenditures.

The final drafting of additional forms and implementation of their use still remains.  We anticipate that the forms will be in use by January 2012.

Nadine V. Savage, CPA, Director of Business Services will be responsible for completing this corrective action.  Email: nadine.savage@winchesterschools.org  Phone: 860.379.0706 ext 165

2010-4             Reporting School Readiness (11000-SDE64000-12113)

1. Pertinent information on detailed action taken or planned to correct the finding:

The CPA will be reviewing the ED 141 to insure its accuracy. The amounts reported on the ED141 will reconcile with the total grant allocation.

1. Actions taken to date to correct audit finding: 

Review of the 2010-2011 ED 141 and prepare ED 141S. The ED141S has been filed so that all expenditures are accounted for.

1. Significant corrective actions that remain to be completed in order to fully resolve the audit finding:

Final review of the form at year end.  The ED 141 is filed annually.  The CPA will insure its accuracy at the next filing deadline and be sure that the amounts on the ED 141 reconcile with the General Ledger.

Nadine V. Savage, CPA, Director of Business Services will be responsible for completing this corrective action.  Email: nadine.savage@winchesterschools.org  Phone: 860.379.0706 ext 165

2010-5             Types of Services and Costs Allowed or Disallowed School Readiness (11000-SDE64000-12113)

1. Pertinent information on detailed action taken or planned to correct the finding: 

The CPA/Director of Business Services is implementing Journal entry forms and reviewing all Purchase Orders prior to their posting in the system to insure accuracy and proper classification.

1. Actions taken to date to correct audit finding: 

All purchase orders are now being reviewed by the CPA/Director of Business Services. Those without adequate back-up or properly assigned account are being rejected until the proper documentation of proof of account is received and attached to invoice/PO. Review of items disallowed by auditor please see Appendix G.

1. Significant corrective actions that remain to be completed in order to fully resolve the audit finding:

Final implementation of journal entry sheet.  Anticipated implementation is January 2012.

2010-8             Activities Allowed or Unallowed Title I, Part A Cluster, ARRA (CFDA #84.010/84.389) Special Education Cluster, ARRA (CFDA #84.027/84.173/84.392)

1.        Pertinent information on detailed action taken or planned to correct the finding: Expenses were disallowed because the large volume of journal entries made it difficult to ascertain the true amount of grant related expenses.  The journal entries are a reclassification of monies expended.  In the future, grant related expense will be paid directly through the grant accounts rather than through the general fund, necessitating journal entries.
2. Actions taken to date to correct audit finding:  We have instituted a new form for Journal entries and have set up a Grant committee to verify which personnel are to be paid through grants.  We are including the information necessary to verify the grant expenses for the 2009-2010 for were denied.
3. Significant corrective actions that remain to be completed in order to fully resolve the audit finding  See attached verification of expenses.

TIMELINE FOR IMPLEMENTATION OF

REVISED BUSINESS PRACTICES