Recommendation – The accounting system and internal controls could be improved by (a) use of prenumbered receipts with reconciliation of the numerical sequence, (b) reconciliation of merchandise purchased to items sold and items remaining at the end of the fundraiser, and (c) calculation of expected sales compared to cash receipts or various other procedures determined by management.

## CORRECTIVE ACTION PLAN (CAP):

## Explanation of Disagreement with Audit Finding: There is no disagreement with the audit

finding.

Actions Planned in Response to Finding: Planned in Response to Finding: The District records student activity revenues on the cash basis and does not have an accounting system and internal controls in place to ensure student activity revenues and receipts have been properly recorded. In consideration of the guiding principles under which the student activity funds were established, the District provides opportunities for substantial student involvement in the selection, direction, and management of fundraisers. This student involvement, although of great value to those students, is an inherent internal control weakness. The District has determined the costs of implementing controls over fundraising activities, in light of the multiple locations and times of these activities, outweigh the benefits; therefore, the District will continue to rely on activity fund advisors for appropriate oversight and supervision, but will not, at this time, implement procedures and policies to provide for detail internal control processes at each fund raising location and activity.

Official Responsible for Ensuring CAP: Responsible for Ensuring CAP: The District’s Director of Business Affairs is the school official responsible for carrying out the corrective action plan.

Planned Completion Date for CAP: Completion Date for CAP: The CAP will be carried out as part of each annual audit, therefore, the CAP is ongoing.

Plan to Monitor Completion of CAP: to Monitor Completion of CAP: The corrective action plan will be monitored each year by the District financial staff and School Board as a part of the process of developing the annual audit report.

## Year: 2014-2015 Date of Report: September 28, 2015 Auditor: Clifton Larson Allen

## Finding 2015-001 – Internal Control over Financial Reporting

### Material Weakness – FINANCIAL REPORTING UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

Criteria: The District should have controls in place to prevent or detect the omission of a material disclosure in the financial statements.

## Condition:

The District relied upon the audit firm to prepare the financial statements and related disclosures.

Effect: The potential exists that a material disclosure could be omitted from the financial statements and not be prevented or detected by the District’s internal controls.

Cause: The District does not have the expertise to draft the notes to the financial statements; however, they have reviewed and approved the annual financial statements prepared by the audit firm.

Recommendation: We recommend the District continue to evaluate their financial reporting process to determine if an internal control policy over the annual financial statements is beneficial.

## CORRECTIVE ACTION PLAN (CAP):