Audit Report

Washington State Auditor'S Office

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Washington State Auditor’s Office Accountability Audit Report Walla Walla School District No. 140 Walla Walla County Report Date April 22, 2010 Report No. 1003570 Issue Date May 17, 2010 Washington State Auditor Brian Sonntag May 17, 2010 Board of Directors Walla Walla School District No. 140 Walla Walla, Washington Report on Accountability We appreciate the opportunity to work in cooperation with your District to promote accountability, integrity and openness in government. The State Auditor’s Office takes seriously our role to advocate for government accountability and transparency and to promote positive change. Please find attached our report on Walla Walla School District No. 140’s accountability and compliance with state laws and regulations and its own policies and procedures. Thank you for working with us to ensure the efficient and effective use of public resources. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  [phone]  TDD Relay [phone] FAX [phone]  http://www.sao.wa.gov Table of Contents Walla Walla School District No. 140 Walla Walla County April 22, 2010 Audit Summary .......................................................................................................................... 1 Related Reports ............ ...

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Washington State Auditor’s Office Accountability Audit Report Walla Walla School District No. 140 Walla Walla County Report Date April 22, 2010 Report No. 1003570

Issue Date May 17, 2010

Washington State Auditor Brian Sonntag May 17, 2010 Board of Directors Walla Walla School District No. 140 Walla Walla, Washington Report on Accountability We appreciate the opportunity to work in cooperation with your District to promote accountability, integrity and openness in government. The State Auditor’s Office takes seriously our role to advocate for government accountability and transparency and to promote positive change. Please find attached our report onWalla Walla School District No. 140’s accountability and compliance with state laws and regulations and its own policies and procedures. Thank you for working with us to ensure the efficient and effective use of public resources. Sincerel ,

BRIAN SONNTAG, CGFM STATE AUDITOR

Insurance Building, P.O. Box 40021Olympia, Washington 985040021(360) 9020370TDD Relay (800) 8336388 FAX (360) 7530646http://www.sao.wa.gov

Table of Contents Walla Walla School District No. 140 Walla Walla County April 22, 2010 Audit Summary .......................................................................................................................... 1

Related Reports ......................................................................................................................... 2

Description of the District ........................................................................................................... 3

Schedule of Audit Findings and Responses ............................................................................... 5

Audit Summary Walla Walla School District No. 140 Walla Walla County April 22, 2010 ABOUT THE AUDIT This report contains the results of our independent accountability audit of Walla Walla School District No. 140 for the period from September 1, 2008, through August 31, 2009. We evaluated internal controls and performed audit procedures on the activities of the District. We also determined whether the District complied with state laws and regulations and its own policies and procedures. In keeping with general auditing practices, we do not examine every transaction, activity or area. Instead, the areas examined were those representing the highest risk of noncompliance, misappropriation or misuse. The following areas were examined during this audit period:  Safety Net awards Associated Student Body  Staff mix reporting fundraising profits  Procurement card program Athletic Department general fund expenditures from Associated  Bid law compliance Student Body  Transportation RESULTS In most areas, the District complied with state laws and regulations and its own policies and procedures. However, we identified a condition significant enough to report as a finding: The District’s internal controls were inadequate to ensure it received the correct amount of Safety Net funding.

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Related Reports Walla Walla School District No. 140 Walla Walla County April 22, 2010 FINANCIAL Our opinion on the District’s financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the District’s financial statements. FEDERAL GRANT PROGRAMS We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for theDistrict’smajor federal programs, which are listed in the Federal Summary section of the financial statement and single audit report.

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Description of the District Walla Walla School District No. 140 Walla Walla County April 22, 2010 ABOUT THE DISTRICT Walla Walla School District No. 140 provides a full range of school programs and services including elementary, middle school, high school, vocational education, bilingual education, special education, pupil transportation and food services. The District operates 10 schools and serves over 6,000 students in Walla Walla County. An elected, fivemember Board of Directors governs the District. Board Members serve staggered, fouryear terms. The Board appoints a Superintendent who is responsible for daytoday operations and oversees its staff of approximately 400 certificated and 360 classified employees. For the 20082009 fiscal year, the District had a general fund appropriation of $58.9 million. ELECTED OFFICIALS These officials served during the audit period: Board of Directors: Mary Jo Geidl Jim Lehmann Anne Golden Cindy Meyer Max Carrera APPOINTED OFFICIALS Superintendent Richard Carter Chief Financial Officer Patricia Johnston DISTRICT CONTACT INFORMATION Address: Walla Walla School District No. 140 364 S. Park Street Walla Walla, WA 99362 Phone: (509) 5273000 Web site: www.wwps.org

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AUDIT HISTORY We audit the District on an annual basis. The past five audits have reported one finding related to internal controls and documentation of Associated Student Body activities.

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1.

Schedule of Audit Findings and Responses Walla Walla School District No. 140 Walla Walla County April 22, 2010

The District’s internal controls were inadequate to ensure it received the correct amount of Safety Net funding. Background School districts may apply for Safety Net awards through the state Office of Superintendent of Public Instruction’s (OSPI) Special Education Safety Net Committee to assist in paying special education costs when the cost of educating a special needs student exceeds available resources. These awards are made up of state and federal funding. Districts apply for these awards midyear, based on projections of expenditures and resources. During fiscal year 2009, the District received $230,574 in Safety Net awards, made up of $205,578 of state funds and $14,996 in federal funds. Description of Condition Our audit found the District overstated its demonstrated need for Safety Net money by $69,816 at the time it applied for the award. Cause of Condition The District based its application on budgeted expenditure and enrollment numbers. It did not adjust information when it received actual, yearend numbers. Effect of Condition The District received $69,816 in state Safety Net funds not due to it. Recommendation We recommend the District:  Improve internal controls over Safety Net funding by reviewing future awards to determine if financial information presented at the time of its application is still correct at year’s end.  Contact OSPI to determine the amount of funds that should be recovered, if any.

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District’s Response Walla Walla Public Schools does not agree with this finding. Safety Net Awards are made to assist districts who have high needs special education students. Safety Net applications require a great deal of detailed work and documentation to be submitted to the Safety Net Oversight Committee in either late November or early December. The Safety Net Committee meets to determine the recipients of the grant awards. District s usually find out whether they have received an award in February and have the opportunity to resubmit if their documentation was incomplete.

We received notification on August 7, 2009 that the Safety Net Oversight Committee had awarded Walla Walla Public Schools $393,957 in Safety Net funds, contingent upon verification of capacity for funding on Worksheet A. The award was made on documentation submitted to the Committee on April 1, 2009. The numbers in that documentation included adjusted enrollment and projected needs. Your Audit Finding indicates that the cause of the condition was the District did not adjust information when it received actual, yearend numbers. How could we have adjusted expenditure and enrollment numbers when we did not have actual, yearend numbers until October 2009? In the past five to six years of Safety Net funding, our district has never been asked to furnish adjusted numbers. Districts understand that their F196 furnishes/meets any such requirement. Auditor’s Remarks The Safety Net Oversight Committee asked our Office to review the Walla Walla School District’s Safety Net funding in August 2009. The results of that review reduced Walla Walla’s award from $393,957 to $188,605. Because we used projected financial data during the August 2009 review, we communicated to the District that we would audit its Safety Net funding during the regular audit. Our regular audit began in December 2009 and we anticipate it will be done April 2010. In addition, the District certifies in its Safety Net application that it understands that awards are subject to adjustment and recovery. We reaffirm our finding and thank District officials for their assistance during the audit. Applicable Laws and Regulations WAC 392140630 Special education safety net— Special education program audit team— Purpose, procedures. Special education program audits by staff of the state auditor's office may be requested to assist the special education safety net committee. When reviewing a school district's special education program, the auditors may review and verify any certifications and supporting information provided by the district in a safety net application. The auditors may provide the results of the review to the state oversight committee. The results of the auditor's review may be considered by the oversight committee in determining, adjusting, or recovering safety net awards.

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WAC 392140675 Special education safety net— Adjustments to special education safety net allocations . Safety net allocations may be adjusted as follows: (2) Special education safety net allocations for a school district may be adjusted to reflect changes in factors for which additional or revised information becomes available after the awarding of the initial safety net allocation. This means: (a) High need awards and/or community impact awards may be reduced or nullified when the school district's actual revenues and expenditures for the school year differ significantly from the estimates on which the initial safety net award was based. (b) A school district's safety net award may be adjusted by the safety net oversight committee based on the results of the review conducted by the special education program audit team pursuant to WAC 392140630. WAC 392140685 Special education safety net—of state and/or federal Recovery allocations to school districts. High need student state and/or federal special education safety net allocations and state community impact awards: (1) Shall be recovered or awards reduced for the following reasons: (2) (a) The application contains a falsification or deliberate misrepresentation, including omission of a material fact. (3) (b) The allocation is unexpended for the purpose allocated including but not limited to situations where the student leaves the district or has a change in services. For students who transfer to another Washington public school district, expenditures for specialized equipment purchased with these funds shall not be recovered provided the district transfers the equipment to the other school district. (c) The IEP is determined at a later date, through state audit or child count verification, to be inappropriate or improperly prepared and appropriate and proper preparation would materially affect the justification or amount of need for safety net funding. (2) May be recovered or awards reduced for the following reasons:

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(a) The school district has carryover of state and/or federal flowthrough special education funding from the school year for which the award was made. (b) The district's actual revenues are significantly higher than estimated revenues on which the award was based or the district's actual expenditures are significantly lower than the estimated expenditures on which the award was based. (c) The state oversight committee finds grounds for adjustment in the special education program audit team's review pursuant to WAC 392140630. Recovery adjustments not made in the current school year shall be added to the amount calculated pursuant to WAC 392140616 (2)(c) for the following school year. Such amounts reduce state and/or federal safety net awards in the following year.

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