Waynesboro Area School District June 30, 2017 Audit Presentation • Presentation by Smith Elliott Kearns & Company, LLC – Kevin B. Stouffer, CPA www.sek.com 1
Waynesboro School District June 30, 2017 Audit Presentation • Please refer to reports for complete details: • Annual Financial Report • Including Independent Auditor’s Report • Management Letter • Communications with Those Charged with Governance 2
Waynesboro School District June 30, 2017 Audit Presentation • Summary ‐ Unmodified audit opinion. ‐ General Fund had a positive change in fund balance. ‐ No findings. 3
Waynesboro School District June 30, 2017 Audit Presentation • Independent Auditor’s Report: ‐ Unmodified Opinion ‐ What does this mean? ‐ The financial statements are fairly presented in all material respects. ‐ What it isn’t: ‐ This is not an opinion on internal controls. ‐ This is not an opinion on or results of a fraud investigation. • Management’s Discussion and Analysis: − Unaudited information prepared by the District with comparative analysis. 4
Governmental Activities – Full Accrual (Summary excerpt from financial statements) June 30, 2016 June 30, 2017 Current Assets $ 22,383,220 $ 18,164,463 Noncurrent Assets 63,741,333 68,314,309 Deferred Outflows of Resources 7,434,496 17,609,042 Total Assets and Deferred Outflows of Resources 93,559,049 104,087,814 Current Liabilities 10,839,537 11,900,971 Noncurrent Liabilities 120,127,372 130,449,484 Deferred Inflows of Resources 987,296 1,171,060 Total Liabilities and Deferred Inflows of Resources 131,954,205 143,521,515 Net Position ($ 38,395,156) ($ 39,433,701) 5
Governmental Activities – Full Accrual • Government‐Wide Highlights: – Capital Assets increased due to the middle school project. – Deferred Outflow of Resources increased due to the activity related to the net pension obligation. – Noncurrent Liabilities increased due to the net pension obligation. • However, regular debt payments were made during the year. 6
General Fund Analysis (Summary excerpt from financial statements) 2015‐2016 2016‐2017 2016‐2017 Variance with Final Budget Final Budget Local Revenues $ 28,516,115 $ 30,136,596 $ 29,251,237 $ 885,359 State Revenues 23,109,875 24,271,009 22,864,722 1,406,287 Federal Revenues 990,184 1,194,850 1,186,273 8,577 Total Revenues 52,616,174 55,602,455 53,302,232 2,300,223 Instruction 34,846,988 35,819,559 35,251,974 (567,585) Support Services 13,254,606 13,962,162 13,046,519 (915,643) Operation of Noninstructional Services 927,420 942,422 925,654 (16,768) Facilities Acquisition, Construction and Improvements 556,851 136,935 70,000 (66,935) Debt Service 3,942,445 3,764,710 3,912,731 148,021 Total Expenditures 53,528,310 54,625,788 53,206,878 (1,418,910) Fund Transfers & Other 917,466 566,412 500 565,912 Budgetary Reserve 0 0 (95,854) 95,854 Total Other Financing Uses 917,466 556,412 (95,354) 661,766 Change in Fund Balance $ 5,330 $ 1,543,079 $ 0 $ 1,543,079 7
General Fund Analysis • Revenues had the following fluctuations: – Local Revenue was more than budget due to additional collections of delinquent taxes. – State Revenue was more than budget due to the uncertainty of the state funding due to the state budget impasse. • Expenditures had the following fluctuations: – Actual expenditures exceeded the budget by $ 1.4 million due to offsetting revenues noted above. – Retirement expenditures increased approximately $ 1.1 million due to the increased PSERS rate. 8
Food Service Fund (Summary excerpt from financial statements) 2015‐2016 2016‐2017 Operating Revenues $ 922,718 $ 806,023 Non‐operating Revenues 1,436,065 1,474,192 Transfers In(Out) 0 0 Revenues and Transfers 2,358,783 2,280,215 Food and Milk Purchases 933,839 910,193 Salaries and Benefits 1,056,913 1,189,657 Other Expenses 183,448 226,088 Total Expenses 2,174,200 2,325,938 Change in Net Position $ 184,583 $ (45,723) 9
Food Service Fund Analysis • Operating revenues decreased despite raising the meal prices. • Subsidies (federal and state reimbursements) increased due to more free and reduced meals. • Expenses increased due to: – Benefits (increase in PSERS rate and recording of the increase in the net pension obligation). • Also, during the 2016‐2017 fiscal year, the Food Service Fund partially repaid the General Fund for Middle School kitchen equipment as part of the renovations. The remaining amounts will be paid back in future years. 10
Medical Insurance Fund Analysis (Summary excerpt from financial statements) 2015‐2016 2016‐2017 Operating Revenues $ 5,533,436 $ 6,319,442 Non‐operating Revenues 2,228 2,469 Total Revenues 5,535,664 6,321,911 Medical Insurance Claims 5,651,265 4,336,204 Stop Loss Premiums 478,810 414,536 Administrative Fee 376,599 371,665 Total Expenses 6,506,674 5,122,405 Change in Net Position ($ 971,010) $ 1,199,506 11
Graphical Analysis Governmental Activities Assets, Liabilities, Net Position 160,000,000 Total Assets 140,000,000 and Deferred 120,000,000 Outflows of 100,000,000 Resources 80,000,000 Total Liabilities 60,000,000 and Deferred 40,000,000 Inflows of 20,000,000 Resources 0 (20,000,000) Net Position (40,000,000) (60,000,000) 2015 2016 2017 12
Graphical Analysis General Fund Revenue Breakdown 30,000,000 25,000,000 2013 20,000,000 2014 2015 15,000,000 2016 10,000,000 2017 5,000,000 0 Taxes Investment Local Revenue State Sources Federal Income Sources 13
Graphical Analysis Revenue Breakdown ‐ WASD Revenue Breakdown ‐ LIU Schools (2015‐ 2016) (2015‐ 2016) 1% 2% 1% 2% 43% 48% 35% 60% Taxes 2% Other Local Revenue Breakdown ‐ Schools with State Sources $51 ‐ $75 Million of Revenue (2015 ‐ 2016) Federal Sources 3% 2% Other 33% 6% 60% 2% 14
Graphical Analysis General Fund Expenditure Breakdown 40,000,000 35,000,000 30,000,000 2013 25,000,000 2014 20,000,000 2015 15,000,000 2016 10,000,000 2017 5,000,000 0 Instruction Support Operation of Facilities, Debt service services noninstruction acquisition and and transfers services improvements 15
Graphical Analysis General Fund Expenditure Object Breakdown 25,000,000 2013 20,000,000 2014 15,000,000 2015 2016 10,000,000 2017 5,000,000 0 Salaries Employee Purchased Purchased Other Supplies Property Debt Other Benefits Property Property Purchased Service Objects and Services Services Technical Services 16
Graphical Analysis Expenditure Breakdown ‐ WASD Expenditure Breakdown ‐ LIU Schools (2015‐ 2016) (2015‐ 2016) 7% 3% Salaries 1% 5% 41% 3% Benefits 4% 1% 40% 12% Purchased Professional 3% and Technical Services Purchased Property 2% Services 15% Other Purchased 7% 24% Services Supplies Expenditure Breakdown by Object ‐ Schools with Property $51 ‐ $75 Million of Expenditures 9% (2015 ‐ 2016) 3% Debt Interest, Other 3% 1% Debt Principal, Transfers 3% 6% 10% 42% 2% 23% 6% 17 24%
Graphical Analysis Fund Balance and Net Position Comparison 10,000,000 8,000,000 2013 2014 6,000,000 2015 4,000,000 2016 2017 2,000,000 ‐ (2,000,000) General Capital Projects Capital Reserve Food Service Medical Fund Fund Fund Fund Insurance Fund 18
Graphical Analysis Expenditures per Average Daily Membership (2015‐2016) $16,000 $14,000 $14,631 $14,349 $12,000 $11,637 $10,000 $8,000 $6,000 $4,000 $2,000 $‐ Waynesboro Area School LIU Schools All PA School districts District 19
Graphical Analysis Unassigned Fund Balance as a Percentage of Expenditures (2015‐2016) 9.00% 8.00% 7.75% 7.00% 6.71% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.76% 0.00% Waynesboro Area School LIU Schools All PA School Districts District 20
Schedule of Expenditures of Federal Awards • Notes to Schedule of Expenditures of Federal Awards. – Total Federal Expenditures $ 3,057,391. – Program tested under Single Audit was the Child Nutrition Cluster. 21
Schedule of Findings and Questioned Costs • Findings – Financial Statement Audit – None • Findings and Questioned Costs – Major Federal Award Programs Audit – None 22
Management Letter • Purpose of Letter – Recommendations and best practice ideas. • Proper Reconciliation of Food Service Revenues. • Proper Recording of Federal Revenue. • Proper Reporting of Audit Adjustments. • IT Access – Administrative Rights to Accounting Software. – Summary of new standards that will affect the District. • Recently Released GASB’s. • Uniform Grant Guidance – Procurement. • Auditor Involvement with Exempt Offerings. – Graphical Analysis. 23
Communication with Those Charged with Governance • Required communications related to the audit. – Includes the qualitative aspects of accounting practices, a description of any difficulties encountered during the audit, a description of any disagreements with management. – Attached to the letter are the adjustments made for the audit, some prepared by management, others for the conversion to full accrual for financial statement presentation. – Also, addresses management representations, management consultations with other independent auditors, and other audit findings or issues. 24
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