Ms. Kneessy questioned how RSM McGladrey audits, to ensure purchase orders that exceed the board policy threshold for the bids that need to come before the board, are not broken down into smaller bids that do not have to come before the board.
Ms. Murtha stated that RSM will be looking at the controls currently in place as part of the audit plan. She stated that RSM will look at the design. If there are good controls in place, the controls will be tested beginning in February 2012.
Ms. Murtha explained to the Board, as it related to what happened in the Maintenance Department, is that decentralization of how the quotes are gathered is where the critical control gap failed. It is where you had a director who overrode the control. Ms. Murtha stated that part of the control process that the director sign it.
After discussion about how the issues in the Maintenance Department were brought to light and whether it was something that the audit committee could have found during their audit, Ms. Murtha stated in their fraud awareness training, there are statistics that state that 52 percent of all fraud is detected through a tip. She also pointed out that audit's only detect about 7 percent of fraud statistically.
Ms. Kneessy mentioned to the audit committee that the Board had a workshop on generating revenue through advertising. She stated that the outcome of that meeting is that the Board would be approving this course of action to look for any source of revenue possible. Ms. Kneessy brought this concern forward to make sure that there is a watch system in place so as the revenues come in they are being appropriately handled and no one is circumventing the rules. Ms. Murtha stated that Ms. Kneessy is speaking of a cycle audit.
Ms. Henderson brought up concerns as it relates to inventory control. Dr. Murray stated that the Board's concerns were all valid, but they are not the type of things that would necessarily show up in an audit.
Ms. Preston asked to say a few words about RSM McGladrey. She noted that in July and August, RSM is under a separate contract with Brevard Public Schools. They are contracted to do the school internal accounts.
Ms. Preston noted that the purchasing contract management, in which there was a lot of discussion, was already in the works prior to the maintenance concerns.
Dr. Murray stated that the district has many booster clubs that may not run their funding through internal accounts and keep it to their own not-for-profit. She questioned what the authority and oversight is for these types of funds. Dr. Murray stated that she did not believe that we have any authority or oversight, yet they are using our infrastructure to make this money for the booster clubs. She asked if they are required to go through any auditing or reporting process.
Ms. Murtha stated when RSM does the internal accounts audits, the booster clubs are required to give the school a report at the end of the school year. She noted that in some cases the person in charge of the booster club gives a very detailed report and in other cases, it is one sheet of paper.
Dr. Murray questioned whether we have any authority over the quality of reporting that we receive from the booster clubs.
Ms. Clark stated since the boosters are a corporation in and of themself, they do not report under our internal account. Therefore, we do not have any authority to monitor or require anything of them as far as their financial records are concerned.
Dr. Murray questioned if we have any ability to say if they are going to be one of our booster clubs, that they will provide us with certain information once a year. Ms. Reyes stated that statutorily the district does not have that authority, but as a Board you could require it.
Mr. Ziegler noted that four to five years ago, it was required that the booster clubs start transitioning funds through the schools foundation. He stated there is auditing on that which is required by the schools foundation. Mr. Ziegler stated that the Board required the club incorporate certain policies into their by-laws. He stated that we have had oversight.
Dr. Murray stated that she was aware that there has been some oversight, but it has not been consistent.
Mr. Bistline stated that the Board has the authority to set the rules for those that will be using the school facilities or connected with the school operations. He stated what the booster clubs do with their money needs to be look at for Title IX purposes. That needs to be taken into account when you are talking about the resources that are provided in the girls and boys sports. Mr. Bistline stated that we have a lot of authority in that area but is not sure that the district is exercising it.
Dr. Murray stated that she would like to see a consistent detailed report so the district is not in a position to be vulnerable with any of the groups that they are supporting. She noted that she appreciates what all of our boosters do.
Mr. Zilaitis is concerned that the people that are running the booster clubs are already overwhelmed. He stated that if we throw an accounting nightmare into these little organizations, it a good way to make sure that the district has no volunteerism, from his perspective.
Dr. Krupp stated that with school based management, the principal ultimately decides which groups are going to be outside the venue of internal accounts.
Mr. Edwards asked if would be appropriate to take an action for the audit committee, outside of this meeting, to go and look into the external account vs. internal accounts and come back to the Board with their findings.
Dr. Murray asked for the wishes of the Board. They were all in agreement.
Mr. Edwards stated that in addition, the audit committee will also take action to follow along with the generating advertising revenue. He stated that he would let the Board know what the audit committee thinks in terms of the audit committees responsibility and how we should proceed.