GUILDERLAND — The school district earned a B+ on its audit this year, according to Alan Walther who presented the independent audit to the school board on Oct. 6

“There’s always room for improvement,” Walther said.

“These are number guys, not letter guys,” quipped Neil Sanders, the school district’s assistant superintendent for business.

No material weaknesses were identified in the 54-page report compiled by The Bonadio Group. Walther called the report for the fiscal year ending on June 30, 2009 “a snapshot of the school’s financial condition.”

The reason the grade wasn’t higher is because of two findings, said Walther. First, the district has more in its fund balance than the 4 percent of the upcoming budget that is allowed by law. The maximum allowed is $3.4 million, said Walther. Guilderland has $97,160 more than that in its rainy-day account, according to Sanders.

“Last year, we were $1 million,” said board President Richard Weisz.

“So you’re getting better,” said Walther.

“It’s a technical violation,” Weisz, a lawyer, said last year. The school board then decided to break the law to prepare the district for dire financial times. “We’re not aware of any liability except we’re saving too much for a rainy day,” said Weisz.

Sanders said this week that, due to a mid-year cut in aid proposed by the governor to close the state’s budget gap, Guilderland could be facing a loss of $811,000 in revenues. The figures for the “gap elimination adjustment” were released by the state on Friday, and the timing and amount will depend on the legislature, said Sanders. Guilderland voters passed an $85 million budget last May with an estimated $23 million in sate aid.

Sanders stressed that the school board has not yet made a decision on the “fund-balance’ issue for this year.

Secondly, the audit found that the district “does not have well-defined, written recovery procedures” for its records.

“The time to make contingency plans is before disaster strikes, so that personnel will be aware of their responsibilities in the event of an emergency situation that precludes the use of the existing facilities,” wrote The Bonadio Group.

Board member Colleen O’Connell, who chairs the audit committee, asked if Walther kn

ew of any districts that had a well-defined written disaster recovery plan.

“Most of your peers have a similar comment,” responded Walther.

“We do have a written disaster recovery [plan] and we do have off-site backup,” said O’Connell.

Sanders concurred, “We do have a well-documented procedure.” He said that the Board of Cooperative Educational Services is used for records backup.

Sanders also said there is “still no guidance at the state level, no template” to follow for what is required.

Problems solved

In a Sept. 29 letter to the school board, The Bonadio Group listed five matters to be corrected as well as three from the previous year that had been dealt with.

Last year, the auditor noted four instances where payment requisition forms for clubs were missing a signature from either a student treasurer or faculty advisor.  Sanders said last year that training sessions would be held to correct this.  The auditor this year noted no problems.

Also last year, the auditor said that the district did not have a procedures checklist for the internal claims auditor to follow; this year, she had one.

Finally, and most significantly, the school district adopted new reporting requirements as set by the Government Accounting Standards Board (GASB) for post-employment benefits.

“It’s a private-sector accounting method, creeping into the public sector,” Sanders had explained earlier, adding that businesses in the private sector have to set aside money to pay for the benefits, but school districts do not.

“Our credit rating is unchanged,” noted Weisz at the Oct. 6 meeting.

“It’s an actuarial reported liability,” agreed Walther. “The district will continue to budget it as a pay-as-you-go system.”

Challenges ahead

The letter to the school board also listed problems, which Sanders was willing to comment on this week. However, he stressed that they will ultimately be dealt with through a “management response,” explaining that the board’s audit committee will discuss them and then the full board will sign off on the solutions.

The Bonadio Group commented on these five issues:

— Passwords: During testing of information technology, the auditor found that passwords are changed on an annual basis at Guilderland and recommended changing them every 90 days instead “to enhance security over data files.”

“We’ve done that already at the district office,” said Sanders. Elsewhere in the district, it  is being worked on, he said, but explained, “Technology limitations make it difficult to do on a automated basis.”

— Computer-usage policy: The auditor noted that now acknowledgement is received from employees who have gotten a copy of the district’s computer usage policy. He recommended that the district put in a place a procedure where workers verify that they have received and understand the computer policy.

“We agree with the comment and think it’s a good idea to have employees sign,” said Sanders. “The question is how to do it.”  The district is discussing whether it should have separate forms, said Sanders or have it as part of signing for the handbook.

— Capital asset additions: The auditor noted that the actual cost of an asset did not match what was on the listing and said that, to ensure that capital assets are carried on the books at the correct value, all invoices should be matched to what is recorded on the capital asset spreadsheet.

The district will also work to correct this, said Sanders. “We capture the asset when we order something,” he explained. “That situation arises when there is an adjustment — for example, for shipping costs — and we have to adjust the final price.”

— Extra-classroom receipts: The auditor noted five receipts that did not have the statement of profit and loss completed and suggested using pre-numbered tickets to be reconciled against sales; keeping an inventory of times for sale to be reconciled with receipts; and listing all money collected for advanced sales, to be submitted with receipts.

Guilderland has about 50 different clubs with ever-changing advisors, said Sanders. “They’re not normally handling finances,” he said. “We have to do more follow-up with fund-raisers,” he said, stressing, “This is not an issue of risk. Nothing is being mishandled; it’s just not being recorded properly.”

— Cash disbursements: The auditor said that checks other than school lunch and general fund checks were not included in a warrant that goes through the claims audit procedure and recommended that the warrants for all funds be prepared and approved by the claims auditor.

“We’re going to enact that recommendation,” said Sanders.

Guilderland has about 50 different clubs with ever-changing advisors, said Sanders. “They’re not normally handling finances,” he said. “We have to do more follow-up with fund-raisers,” he said, stressing, “This is not an issue of risk. Nothing is being mishandled; it’s just not being recorded properly.”

After Walther’s presentation, the school board members voted unanimously to accept the audit. Sanders then thanked his staff for their diligent work. He singled out Joy Pierle for praise, as she sat in the gallery, noting it was her last audit.

Pierle said after the meeting that she was looking forward to the birth of her first grandchild.