SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS FINANCIAL STATEMENTS June 30, 2013
TABLE OF CONTENTS
Page INDEPENDENT AUDITOR’S REPORT
1
FINANCIAL STATEMENTS Balance Sheet – Governmental Funds
4
Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds
11
Notes to Financial Statements
18
SUPPLEMENTAL INFORMATION Schedule of Expenditures of Federal Awards
22
Notes to Schedule of Expenditures of Federal Awards
23
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
24
SCHEDULE OF FINDINGS AND RECOMMENDATIONS
26
INDEPENDENT AUDITOR’S REPORT
To the Superintendent and Board Members Shelby County Board of Education Memphis, Tennessee Report on the Financial Statements We have audited the accompanying financial statements of each governmental fund of the school nutrition funds of Shelby County Schools, which comprise the balance sheet – governmental funds as of June 30, 2013, and the related statement of revenues, expenditures, and changes in fund balances – governmental funds for the year then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the school nutrition funds of Shelby County Schools at June 30, 2013, and the changes in their fund balances for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matters Financial Reporting Entity As discussed in Note 1, the financial statements present only the school nutrition funds of Shelby County Schools and do not purport to, and do not, present fairly the financial position of the Shelby County Board of Education as of June 30, 2013, and the changes in its fund balances for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Supplemental Information Our audit was conducted for the purpose of forming an opinion on the financial statements of the school nutrition funds of Shelby County Schools as a whole. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Management’s Discussion and Analysis Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
2
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 20, 2013 on our consideration of the school nutrition funds of Shelby County Schools’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the school nutrition funds of Shelby County Schools’ internal control over financial reporting and compliance.
Memphis, Tennessee November 20, 2013
3
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS June 30, 2013
Altruria Elementary
Appling Middle
Arlington Elementary
Arlington High
Arlington Middle
Bailey Station Elementary
Barret's Chapel Elementary
Bartlett Elementary
$
$
$
Assets
Cash
$
Inventory
73,480
$
3,701
Total assets
35,408
$
6,861
5,734
$
6,611
486,080
$
10,030
322,072 2,454
44,268 6,613
7,534 7,134
191,893 6,962
$
77,181
$
42,269
$
12,345
$
496,110
$
324,526
$
50,881
$
14,668
$
198,855
$
5,403
$
2,780
$
7,204
$
8,478
$
5,735
$
9,254
$
2,158
$
5,034
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
71,778 $
77,181
39,489 $
42,269
5,141 $
12,345
487,632 $
The accompanying notes are an integral part of the financial statements. 4
496,110
318,791 $
324,526
41,627 $
50,881
12,510 $
14,668
193,821 $
198,855
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Bartlett High
Bolton High
Bon Lin Elementary
$
$
$
Bon Lin Middle
Collierville Elementary
Collierville High
Collierville Middle
Crosswind Elementary
Assets
Cash Inventory
334,576 7,596
Total assets
335,028 11,068
31,934
$
6,117
20,970
$
3,272
119,420
$
9,398
134,143
$
10,923
99,219
$
3,396
18,336 9,590
$
342,172
$
346,096
$
38,051
$
24,242
$
128,818
$
145,066
$
102,615
$
27,926
$
2,802
$
3,222
$
5,831
$
2,693
$
4,987
$
8,483
$
4,448
$
7,569
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
339,370 $
342,172
342,874 $
346,096
32,220 $
38,051
21,549 $
The accompanying notes are an integral part of the financial statements. 5
24,242
123,831 $
128,818
136,583 $
145,066
98,167 $
102,615
20,357 $
27,926
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Dexter Elementary
Dexter Middle
Dogwood Elementary
Donelson Elementary
E.A. Harrold Elementary
E.E. Jeter Elementary
Ellendale Elementary
Elmore Park Middle
$
$
$
$
$
$
Assets
Cash
$
Inventory
8,145
$
4,959
Total assets
8,530 9,618
22,537 3,529
14,540 8,264
126,717 3,617
1,695 5,162
9,021 2,460
43,909 6,489
$
13,104
$
18,148
$
26,066
$
22,804
$
130,334
$
6,857
$
11,481
$
50,398
$
2,625
$
811
$
7,309
$
3,369
$
1,300
$
981
$
2,783
$
1,838
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
10,479 $
13,104
17,337 $
18,148
18,757 $
26,066
19,435 $
The accompanying notes are an integral part of the financial statements. 6
22,804
129,034 $
130,334
5,876 $
6,857
8,698 $
11,481
48,560 $
50,398
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Farmington Elementary
Germantown Elementary
Germantown High
Germantown Middle
Highland Oaks Elementary
Highland Oaks Middle
$
$
$
$
$
$
Houston High
Houston Middle
Assets
Cash Inventory
20,684 12,732
Total assets
28,247 3,371
187,279 13,338
103,945 3,345
265,514 5,477
294,624
$
6,537
38,331
$
15,174
12,084 7,265
$
33,416
$
31,618
$
200,617
$
107,290
$
270,991
$
301,161
$
53,505
$
19,349
$
8,606
$
6,138
$
4,861
$
2,281
$
4,001
$
1,085
$
8,802
$
6,149
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
24,810 $
33,416
25,480 $
31,618
195,756 $
200,617
The accompanying notes are an integral part of the financial statements. 7
105,009 $
107,290
266,990 $
270,991
300,076 $
301,161
44,703 $
53,505
13,200 $
19,349
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Lakeland Elementary
Lowrance Elementary
Lucy Elementary
Macon-Hall Elementary
Millington Elementary
$
$
$
$
$
Millington High
Millington Middle
Mt. Pisgah Middle
Assets
Cash Inventory
1,660 4,862
Total assets
99,564 16,011
318,538 8,317
344,000 9,634
121,131
$
2,345
71,688
$
4,801
8,259
$
6,662
100,174 4,229
$
6,522
$
115,575
$
326,855
$
353,634
$
123,476
$
76,489
$
14,921
$
104,403
$
6,305
$
2,621
$
3,794
$
6,596
$
2,640
$
1,211
$
1,672
$
1,315
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
217 $
6,522
112,954 $
115,575
323,061 $
326,855
347,038 $
The accompanying notes are an integral part of the financial statements. 8
353,634
120,836 $
123,476
75,278 $
76,489
13,249 $
14,921
103,088 $
104,403
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Northaven Elementary
Oak Elementary
Rivercrest Elementary
Riverdale Elementary
$
$
$
$
Schilling Farms Middle
Shadowlawn Middle
Southwind Elementary
$
$
Southwind High
Assets
Cash Inventory
86,899 7,241
Total assets
17,543 2,841
189,092 6,832
33,001
$
12,715
60,153 8,821
392,883 7,164
253,382
$
10,129
301,830 10,377
$
94,140
$
20,384
$
195,924
$
45,716
$
68,974
$
400,047
$
263,511
$
312,207
$
1,239
$
3,950
$
3,904
$
8,365
$
7,991
$
1,649
$
2,288
$
877
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
92,901 $
94,140
16,434 $
20,384
192,020 $
195,924
37,351 $
The accompanying notes are an integral part of the financial statements. 9
45,716
60,983 $
68,974
398,398 $
400,047
261,223 $
263,511
311,330 $
312,207
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Sycamore Elementary
Tara Oaks Elementary
Woodstock Middle
Total
Assets
Cash
$
Inventory
117,824
$
5,224
Total assets
4,844
$
7,368
10,430
$
4,645
5,978,792 363,281
$
123,048
$
12,212
$
15,075
$
6,342,073
$
8,036
$
5,430
$
944
$
219,847
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
115,012 $
123,048
6,782 $
12,212
14,131 $
15,075
The accompanying notes are an integral part of the financial statements. 10
6,122,226 $
6,342,073
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2013 Altruria Elementary
Arlington Elementary
Arlington Middle
44,138
$ 405,896
$ 297,926
Bailey Station Elementary
$
21,994
$ 121,752
152,476 2,095 96,228 251 251,050
95,321 9,819 145,938 243 251,321
44,435 1,826 154,987 257 1,219 202,724
139,793 167,831 275,108 2,149 2,567 135 1,016 588,599
97,680 4,902 255,960 1,639 170 1,577 5,325 367,253
84,419 9,721 173,379 52 472 87 268,130
59,710 2,663 50,411 14 314 15,000 128,112
295,264 8,883 103,118 536 2,533 551 410,885
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
87,934 124,262 1,202 8,718 4,355 226,471
95,447 153,728 284 9,540 5,354 264,353
88,228 137,354 2,257 7,814 7,817 243,470
223,553 257,852 3,103 15,380 8,627 508,515
149,661 174,637 2,577 10,786 8,280 345,941
105,954 138,583 2,326 14,418 6,229 267,510
41,216 85,652 1,797 5,204 4,052 137,921
139,480 180,376 3,274 11,984 5,371 340,485
24,579
(13,032)
(40,746)
80,084
21,312
620
1,749
1,652
(38,997)
81,736
20,865
$ 487,632
$ 318,791
3,114
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
27,693 $
71,778
915
(12,117) $ 39,489
$
5,141
The accompanying notes are an integral part of the financial statements. 11
(447)
39,987
Bartlett Elementary
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
Other financing sources/(uses) Change in reserve for inventory
$
Barret's Chapel Elementary
$ 51,606
Excess revenues over/(under) expenditures
$
Arlington High
44,085
Fund balances - June 30, 2012
$
Appling Middle
(9,809)
1,020
325
1,640 $
41,627
(9,484) $
12,510
70,400 1,669
72,069 $ 193,821
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) For the Year Ended June 30, 2013
Bartlett High
Bolton High
Bon Lin Elementary
$ 243,090
$ 259,854
$
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
313,653 179,710 176,949 1,184 3,621 244 675,361
363,252 131,226 246,663 1,279 4,030 875 747,325
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
282,554 261,956 2,980 22,360 10,661 580,511
Fund balances - June 30, 2012
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
Collierville Elementary
Collierville High
Collierville Middle
Crosswind Elementary
10,495
$ 124,402
$ 192,969
$ 110,192
$
94,597 4,513 118,165 207 104 1,709 219,295
69,869 7,672 111,396 147 392 422 25,000 214,898
92,425 3,505 118,863 68 415 211 215,487
78,879 70,535 250,143 109 2,138 3,424 405,228
86,928 8,321 163,665 68 746 150 259,878
35,528 3,365 132,196 15 37 48,000 219,141
329,639 299,606 4,825 24,257 10,057 668,384
88,399 133,606 1,920 6,935 5,918 236,778
75,321 119,141 446 5,794 4,026 204,728
76,296 129,717 2,259 10,302 4,822 223,396
186,307 246,843 2,167 19,330 10,219 464,866
96,097 163,635 639 9,200 4,759 274,330
61,404 124,240 17,939 7,034 5,873 216,490
94,850
78,941
(17,483)
10,170
(7,909)
(59,638)
(14,452)
2,651
1,430
4,079
2,027
7,338
3,252
2,427
4,306
96,280
83,020
(15,456)
(56,386)
(12,025)
6,957
$ 339,370
$ 342,874
$
47,676
32,220
The accompanying notes are an integral part of the financial statements. 12
Bon Lin Middle $
884
11,054 $
21,549
(571) $ 123,831
$ 136,583
$
98,167
$
13,400
20,357
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Dexter Elementary Fund balances - June 30, 2012
$
38,140
Dexter Middle $
19,129
Dogwood Elementary
Donelson Elementary
E.A. Harrold Elementary
E.E. Jeter Elementary
Ellendale Elementary
Elmore Park Middle
$
$
12,937
$ 125,490
$
$
$
412
15,246
14,289
83,955
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
159,326 3,074 59,814 134 354 222,702
135,728 7,996 37,561 124 162 15,000 196,571
19,992 2,367 136,638 60 680 38,000 197,737
82,988 4,044 112,798 135 631 440 201,036
190,735 2,756 33,847 122 1,965 229,425
59,498 4,678 28,407 20 30,000 122,603
90,587 6,843 104,888 258 20,000 222,576
105,789 6,712 82,052 290 409 195,252
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
87,084 148,118 1,738 7,570 5,653 250,163
70,138 123,837 1,485 5,340 4,188 204,988
57,339 107,860 822 6,481 3,083 175,585
74,889 113,770 262 6,706 4,332 199,959
82,285 132,341 1,096 8,043 4,659 228,424
38,440 86,782 1,580 4,210 2,976 133,988
87,735 125,137 3,220 7,801 4,087 227,980
72,683 141,283 527 5,954 3,762 224,209
Excess revenues over/(under) expenditures
(27,461)
(8,417)
22,152
1,077
1,001
(11,385)
6,625
(3,807)
5,421
2,543
2,015
(1,792)
18,345
6,498
3,544
(9,370)
19,435
$ 129,034
Other financing sources/(uses) Change in reserve for inventory
(200)
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
(27,661) $
10,479
$
17,337
$
18,757
The accompanying notes are an integral part of the financial statements. 13
$
$
5,876
$
(5,404)
(28,957)
(187)
(6,438)
(5,591)
(35,395)
8,698
$
48,560
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Farmington Elementary Fund balances - June 30, 2012
$
6,197
Germantown Germantown Germantown Elementary High Middle $
21,351
$ 171,990
$
93,354
Highland Oaks Elementary $
302,472
Highland Oaks Middle $
Houston High
Houston Middle
256,450
$ 36,814
$ 17,483
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
43,409 5,288 154,267 42 479 35,000 238,485
127,046 1,350 107,796 141 503 446 237,282
182,093 138,256 77,833 103 5,007 378 403,670
138,262 7,261 139,646 433 285,602
389,325 9,918 78,062 66 467 4,088 481,926
329,967 24,072 73,496 174 2,298 430,007
70,032 67,074 209,556 16 4,170 1,235 352,083
19,552 7,902 110,329 6 32,000 5,282 175,071
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
84,900 127,777 921 7,924 3,983 225,505
85,166 128,398 5,223 10,724 4,764 234,275
156,740 204,996 7,517 10,051 11,376 390,680
121,025 136,984 1,973 8,213 5,524 273,719
183,040 208,283 3,174 100,000 15,029 7,238 516,764
149,144 211,449 3,948 17,138 6,126 387,805
135,155 188,613 8,781 11,298 8,287 352,134
54,809 108,182 718 5,349 4,150 173,208
12,980
3,007
12,990
11,883
(34,838)
42,202
5,633
1,122
10,776
(644)
1,424
7,940
(6,146)
18,613
4,129
23,766
11,655
(35,482)
43,626
7,889
(4,283)
25,480
$ 195,756
$ 105,009
300,076
$ 44,703
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
24,810
$
The accompanying notes are an integral part of the financial statements. 14
(228)
$
266,990
$
(51)
1,863
$ 13,200
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Lakeland Elementary
Lowrance Elementary
Lucy Elementary
Macon-Hall Elementary
Millington Elementary
$
6,482
$ 192,485
$ 314,070
$ 268,469
$ 127,616
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
42,635 2,260 131,178 145 20,000 196,218
374,745 19,239 62,578 118 897 1,704 459,281
378,435 2,840 60,026 338 1,294 17,747 460,680
292,785 7,471 184,528 1,232 117 501 486,634
266,356 7,298 65,123 60 1,085 4,257 344,179
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
63,007 128,725 1,515 5,470 5,691 204,408
200,105 213,103 5,422 100,000 19,357 10,425 548,412
151,759 182,625 3,629 100,000 11,986 6,217 456,216
182,847 205,493 4,737 13,306 8,633 415,016
143,165 191,459 1,343 10,927 4,990 351,884
Fund balances - June 30, 2012
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
(8,190)
(89,131)
4,464
71,618
1,925
9,600
4,527
6,951
(6,265)
(79,531)
8,991
78,569
$ 323,061
$ 347,038
217
$ 112,954
The accompanying notes are an integral part of the financial statements. 15
Millington High $
(7,705)
$
$ 147,828
413,028 106,697 65,898 44 219 823 586,709
168,969 10,442 63,774 37 193 3,577 246,992
131,184 16,685 105,170 599 330 253,968
286,723 267,829 1,182 23,597 12,295 591,626
107,922 130,309 1,208 12,001 4,629 256,069
107,979 172,882 2,244 11,195 5,960 300,260
779
(6,780)
(4,138) $
Mt. Pisgah Middle
18,485
(4,917)
925
$ 120,836
79,416
Millington Middle
75,278
$
(9,077)
(46,292)
3,841
1,552
(5,236)
(44,740)
13,249
$ 103,088
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013
Fund balances - June 30, 2012
Northaven Elementary
Oak Elementary
Rivercrest Elementary
Riverdale Elementary
Schilling Farms Middle
Shadowlawn Middle
Southwind Elementary
Southwind High
$
$
14,120
$ 196,401
$
$
$
324,638
$ 226,514
$ 229,923
97,094
22,066
76,794
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
293,963 1,780 13,030 263 806 22,840 332,682
117,693 4,522 122,511 123 1,708 246,557
232,078 5,532 83,618 780 2,056 1,995 326,059
102,964 8,439 183,218 200 185 295,006
65,418 8,241 198,248 54 310 272,271
285,324 11,899 133,997 1,482 386 433,088
345,160 7,624 82,899 46 196 2,299 438,224
445,271 141,695 61,956 1,095 70 650,087
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
146,769 163,330 1,342 12,987 5,979 330,407
89,980 140,100 186 9,753 4,263 244,282
135,941 175,098 2,273 11,493 8,553 333,358
114,310 153,895 4,252 9,616 5,305 287,378
123,801 150,897 751 10,047 8,057 293,553
146,749 189,060 2,126 16,195 7,960 362,090
187,290 197,118 2,184 17,419 5,944 409,955
290,702 257,174 1,808 19,163 6,237 575,084
2,275
2,275
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
(6,468)
39
(4,193)
2,314
92,901
$
16,434
(7,299)
7,628
(21,282)
70,998
28,269
75,003
2,918
7,657
5,471
2,762
6,440
6,404
(4,381)
15,285
(15,811)
73,760
34,709
81,407
398,398
$ 261,223
$ 311,330
$ 192,020
The accompanying notes are an integral part of the financial statements. 16
$
37,351
$
60,983
$
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013
Fund balances - June 30, 2012
Sycamore Elementary
Tara Oaks Elementary
Woodstock Middle
$
$
$
120,135
15,612
21,653
Total $
5,744,972
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
94,655 4,408 143,074 71 443 242,651
46,569 2,207 144,042 16 524 86 193,444
221,523 9,740 43,190 40 1,280 275,773
8,567,313 1,295,197 6,068,217 17,085 22,507 34,492 278,000 74,407 16,357,218
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
102,982 128,294 981 9,434 6,469 248,160
64,931 124,603 700 5,563 5,648 201,445
109,488 158,041 3,776 10,362 5,360 287,027
6,424,512 8,355,033 134,639 300,000 566,758 319,223 16,100,165
Excess revenues over/(under) expenditures
(5,509)
Other financing sources/(uses) Change in reserve for inventory
386
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
(8,001) (829)
(5,123) $
115,012
(8,830) $
6,782
$
The accompanying notes are an integral part of the financial statements.
17
(11,254)
257,053
3,732
120,201
(7,522)
377,254
14,131
$
6,122,226
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity This report includes only the noncentralized school nutrition funds of Shelby County Schools, which are included in the special revenue funds of the Shelby County Board of Education (the “Board”). Financial Statement Presentation The accounting and financial reporting requirements for school nutrition funds are illustrated in the Tennessee Internal School Uniform Accounting Policy (TISUAPM), issued by the Tennessee Department of Education. The financial statements for the school nutrition funds are prepared in accordance with the reporting standards established by the Governmental Accounting Standards Board. The financial statements presented are fund financial statements for governmental funds. Fund Structure The school nutrition fund of each individual school is considered to be a separate fiscal and accounting entity. The operations of each fund are accounted for by providing a separate selfbalancing set of accounts recording cash and other financial resources, together with all related liabilities and residual balances, and changes therein. The TISUAPM requires that each school cafeteria be accounted for and reported in a separate special revenue fund. Accordingly, each individual school presented in a separate column in the financial statements represents Shelby County School’s separate individual funds for the school nutrition program. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. The school nutrition funds are reported using the financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become measurable and available. Management defines available as collectible within sixty days after the fiscal year end. Expenditures are generally recognized when the related fund liability is incurred, if measurable. Fund Balances Fund balances are reported as restricted due to externally imposed restrictions placed upon the resources accounted for in the funds. In accordance with federal regulations, all revenue generated by the school food service must be used to operate and improve its food services.
18
When both restricted and unrestricted resources are available for use, it is the school system’s policy to use restricted resources first, then unrestricted resources as they are needed. The school system did not report any unrestricted resources for the period. Deferred Revenue Deferred revenue represents balances remaining on student and teacher accounts that can be used to purchase meals during the next school year. Inventory As authorized by the USDA, the school system maintains a single inventory for purchased and donated food supplies. All inventories are valued at lower of cost or market using the first-in/firstout (FIFO) method. The purchases method is used to account for inventories. Under the purchases method, inventories are reported as an expenditure when purchased (or when received for donated commodities) rather than being capitalized as an asset. However, significant amounts of inventory, if any, on hand at year-end are reported as an asset in the financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates. Subsequent Events The Board evaluated its June 30, 2013, financial statements for subsequent events through November 20, 2013, the date the financial statements were available to be issued. As of July 1, 2013, the Memphis City School System charter became inactive, and as a result the Shelby County School System consolidated with the former Memphis City School System. The consolidation resulted in a conversion of the cafeteria funds from a decentralized system to a centralized system.
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Legally appropriated budgets have not been adopted for the noncentralized school nutrition funds.
19
NOTE 3 - DEPOSITS Legal Provisions All deposits with financial institutions in excess of FDIC limits are required to be secured by one of two methods. Excess funds can be deposited with financial institutions that participate in the State of Tennessee Bank Collateral Pool administered by the state treasurer. For deposits with financial institutions that do not participate in the bank collateral pool, state statutes require that all deposits be collateralized with collateral whose market value is equal to 105 percent of the uninsured amount of the deposits. Cash Deposits Cash in bank represents funds on deposit in various depositories. Custodial Credit Risk Custodial risk is the risk that in the event of a bank failure, the school’s deposits may not be returned to it. None of the schools’ deposits were exposed to custodial credit risk because all balances were insured either entirely by the FDIC, through the Bank Collateral Pool with the State of Tennessee, or collateralized with securities held by the Shelby County Board of Education’s agent in the name of the Shelby County Board of Education.
NOTE 4 - CAPITAL ASSETS AND LONG-TERM DEBT Because fund financial statements are presented on the current financial resources measurement focus and the modified accrual basis of accounting, capital assets and long-term debt are not reflected in the accompanying financial statements. This financial activity is reported in separately issued financial statements of Shelby County Board of Education.
NOTE 5 - RETIREMENT PLAN AND OTHER POSTEMPLOYMENT BENEFITS Certain employees of the local school nutrition program have elected to participate in the Tennessee Consolidated Retirement System (TCRS) via a plan administered through Shelby County, Tennessee. Information related to this plan as well as any other postemployment benefits can be found in the audit report of the Shelby County Board of Education.
NOTE 6 - FIDELITY BOND COVERAGE The Board of Education has honesty blanket position bond coverage with Fidelity and Deposit Company of Maryland in the amount of $5,000 for every Shelby County School employee.
20
NOTE 7 - SALARY SUPPLEMENTS No salary supplements were paid from school nutrition funds for the year ended June 30, 2013.
NOTE 8 - RISK MANAGEMENT The school nutrition funds are exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which Shelby County, Tennessee carries commercial insurance.
21
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2013
CFDA
Contract Number
U.S. Department of Agriculture (National School Breakfast Program)
10.553
N/A
U.S. Department of Agriculture (National School Lunch Program)
10.555
U.S. Department of Agriculture/ TN Department of Agriculture (Fresh Fruit and Vegetable Program)
Federal Grantor/Pass-Through Grantor
Beginning (Accrued) Deferred
Ending (Accrued) Deferred
Receipts
Expenditures
-
$ 1,963,497
$ 1,963,497
N/A
-
6,584,866
6,584,866
-
10.582
N/A
-
18,950
18,950
-
10.555
N/A
124,574
799,942
881,673
42,843
$ 124,574
$ 9,367,255
$ 9,448,986
$
$
-
Noncash Assistance: U.S. Department of Agriculture/ TN Department of Agriculture (Commodity Assistance) Total federal awards
See accompanying notes to schedule. 22
$
42,843
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2013 NOTE A - BASIS OF PRESENTATION The schedule of expenditures of federal awards includes the federal grant activity of the Shelby County Schools School Nutrition Funds and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the State of Tennessee Audit Manual. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue is recognized when earned by the organization using the accrual method of accounting. Expenditures for direct costs are recognized as incurred using the accrual method of accounting and the cost accounting principles contained in the U.S. Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments. Under those costs principles, certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE C - FOOD DISTRIBUTION Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed.
NOTE D – OMB A-133 REPORTING REQUIREMENTS The Shelby County Board of Education does not report federal expenditures separate from Shelby County, Tennessee. Accordingly, all reporting requirements of OMB Circular A-133 are not included in this report. See the Shelby County, Tennessee CAFR for all Single Audit requirements.
NOTE E – USDA COMMODITY REPORTING USDA commodity assistance is accounted for in the financial statements of the Shelby County Board of Education.
23
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Board Members Shelby County Board of Education Memphis, Tennessee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the school nutrition funds of Shelby County Schools, which comprise the balance sheet – governmental funds as of June 30, 2013, and the related statement of revenues, expenditures, and changes in fund balances – governmental funds for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 20, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the school nutrition funds of Shelby County Schools’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control. Accordingly, we do not express an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
24
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify certain deficiencies in internal control, listed in the accompanying schedule of findings and recommendations as items 2013-1 through 2013-5, that we consider to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether the school nutrition funds of Shelby County Schools’ financial statements are free from material misstatement, we performed tests of their compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, the results of our tests disclosed immaterial instances of noncompliance that are described in the accompanying schedule of findings and recommendations as items 2013-1 through 2013-5. Shelby County Schools’ Responses to Findings Shelby County Schools’ responses to the findings identified in our audit are described in the accompanying schedule of findings and recommendations. Shelby County Schools’ responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the school nutrition funds of Shelby County Schools’ internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Memphis, Tennessee November 20, 2013
25
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2013 Prior Year Findings Prior year findings and comments have been resolved. Current Year Findings 2013-1 Receipt not deposited within three business days Appling Middle Condition – Money was turned into the office and deposited more than three days after it was collected. Criteria - Tennessee Internal School Accounting Policy ManuaI Section 5, Title 2, Revenues/Receipts, p. 5-2 and 5-3 states, “Prior to authorizing or requiring any collections, the principal must evaluate the ability of school personnel to provide the required accountability. The use of teacher assistants and other support staff could be considered, as well as schedules designating the time of day for collecting and remitting the collections to the central office. This schedule should be developed with the understanding that all money must be deposited within three days of the initial collection.” Cause – School personnel did not follow the prescribed policy. Effect – The risk of loss of cash increases when money is not deposited timely. Recommendation – We recommend the principal designate certain times when money may be turned into the office and assign an appropriate person with adequate time to count and receipt the money. Management’s Response – The individual responsible for this function was out, and the individual responsible in their absence failed to remember to take the deposit to the bank. All funds were kept locked in the safe until deposited.
2013-2 Purchase/payment made before purchase requisition was approved Bartlett Elementary Dexter Elementary Dexter Middle Farmington Elementary Millington Elementary Shadowlawn Middle Condition – Purchase requisition was completed subsequent to date on invoice. 26
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS (cont.) June 30, 2013 Criteria – Tennessee Internal School Accounting Policy ManuaI Section 5, Title 3, Purchasing, p. 5-11 and 5-12 states, “To initiate a purchase which does not require advertised bids, including purchases from other school accounts, a prenumbered purchase requisition should be completed…After the prenumbered purchase requisition form is signed by the principal, it becomes a purchase authorization. This form can also be used as a purchase order, if one is needed for the purchase.” Cause – School personnel made purchases prior to completing a purchase requisition. Effect – Unauthorized or inappropriate disbursements of school funds could be made. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – Personnel are trained on proper procedures for purchases. This will not be a problem next year under the new centralized payment system.
2013-3 Check issued without two authorized signatures Collierville Elementary Highland Oaks Middle Condition – The principal inadvertently skipped a check when signing a group of checks, or the check was not signed at all. Criteria - Tennessee Internal School Accounting Policy ManuaI Section 6, Title 3, Checks, p. 6-3 states, “Two signatures are required for all checks.” Cause – The principal did not follow the prescribed policy. Effect – Inappropriate or unauthorized use of school funds could occur. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – Dual signatures are required for all checks. Due to the multiple checks being presented for approval/signature at once; it is likely a check was overlooked. This will not be a problem next year under the new centralized payment system.
2013-4 Purchase requisition is incomplete Southwind Elementary Condition – Purchase requisition was not properly authorized. 27
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS (cont.) June 30, 2013 Criteria - Tennessee Internal School Accounting Policy ManuaI Section 5, Title 3, Purchasing, p. 511 states, “The purchase requisition should include the date of request, the name of the individual requesting the purchase, the fund/account to be charged, the items/services to be purchased and the amount of each item/service.” Cause – School personnel did not follow the prescribed policy. Effect – Unauthorized purchases could be made. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – The missing information was overlooked by the manager and principal. This will not be an issue in the next school year under the new centralized ordering system.
2013-5 Money not turned into office timely Lucy Elementary Criteria – Tennessee Internal School Uniform Accounting Policy TISUAPM Section 5, Title 2, Revenues/Receipts, p. 5-4 states, “All collections should be turned in to the cashier daily or more frequently if the teacher/other feels it necessary for safeguarding of money.” Condition: Collections were not turned into the office the same day they were collected according to the dates recorded. Cause: The money collector did not remit funds in accordance with the prescribed policy. In certain situations, the money was turned in after the day’s deposit had been made. There was no documentation as to the safekeeping of funds. Effect: The risk of loss increases when cash is not stored in a secure manner. Recommendation: We recommend school personnel follow the prescribed policy. Management’s Response – Cafeteria and school personnel are trained on proper procedures for turning in monies collected. This will be explained again in training going forward.
28
TABLE OF CONTENTS
Page INDEPENDENT AUDITOR’S REPORT
1
FINANCIAL STATEMENTS Balance Sheet – Governmental Funds
4
Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds
11
Notes to Financial Statements
18
SUPPLEMENTAL INFORMATION Schedule of Expenditures of Federal Awards
22
Notes to Schedule of Expenditures of Federal Awards
23
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
24
SCHEDULE OF FINDINGS AND RECOMMENDATIONS
26
INDEPENDENT AUDITOR’S REPORT
To the Superintendent and Board Members Shelby County Board of Education Memphis, Tennessee Report on the Financial Statements We have audited the accompanying financial statements of each governmental fund of the school nutrition funds of Shelby County Schools, which comprise the balance sheet – governmental funds as of June 30, 2013, and the related statement of revenues, expenditures, and changes in fund balances – governmental funds for the year then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the school nutrition funds of Shelby County Schools at June 30, 2013, and the changes in their fund balances for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matters Financial Reporting Entity As discussed in Note 1, the financial statements present only the school nutrition funds of Shelby County Schools and do not purport to, and do not, present fairly the financial position of the Shelby County Board of Education as of June 30, 2013, and the changes in its fund balances for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Supplemental Information Our audit was conducted for the purpose of forming an opinion on the financial statements of the school nutrition funds of Shelby County Schools as a whole. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Management’s Discussion and Analysis Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
2
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 20, 2013 on our consideration of the school nutrition funds of Shelby County Schools’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the school nutrition funds of Shelby County Schools’ internal control over financial reporting and compliance.
Memphis, Tennessee November 20, 2013
3
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS June 30, 2013
Altruria Elementary
Appling Middle
Arlington Elementary
Arlington High
Arlington Middle
Bailey Station Elementary
Barret's Chapel Elementary
Bartlett Elementary
$
$
$
Assets
Cash
$
Inventory
73,480
$
3,701
Total assets
35,408
$
6,861
5,734
$
6,611
486,080
$
10,030
322,072 2,454
44,268 6,613
7,534 7,134
191,893 6,962
$
77,181
$
42,269
$
12,345
$
496,110
$
324,526
$
50,881
$
14,668
$
198,855
$
5,403
$
2,780
$
7,204
$
8,478
$
5,735
$
9,254
$
2,158
$
5,034
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
71,778 $
77,181
39,489 $
42,269
5,141 $
12,345
487,632 $
The accompanying notes are an integral part of the financial statements. 4
496,110
318,791 $
324,526
41,627 $
50,881
12,510 $
14,668
193,821 $
198,855
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Bartlett High
Bolton High
Bon Lin Elementary
$
$
$
Bon Lin Middle
Collierville Elementary
Collierville High
Collierville Middle
Crosswind Elementary
Assets
Cash Inventory
334,576 7,596
Total assets
335,028 11,068
31,934
$
6,117
20,970
$
3,272
119,420
$
9,398
134,143
$
10,923
99,219
$
3,396
18,336 9,590
$
342,172
$
346,096
$
38,051
$
24,242
$
128,818
$
145,066
$
102,615
$
27,926
$
2,802
$
3,222
$
5,831
$
2,693
$
4,987
$
8,483
$
4,448
$
7,569
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
339,370 $
342,172
342,874 $
346,096
32,220 $
38,051
21,549 $
The accompanying notes are an integral part of the financial statements. 5
24,242
123,831 $
128,818
136,583 $
145,066
98,167 $
102,615
20,357 $
27,926
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Dexter Elementary
Dexter Middle
Dogwood Elementary
Donelson Elementary
E.A. Harrold Elementary
E.E. Jeter Elementary
Ellendale Elementary
Elmore Park Middle
$
$
$
$
$
$
Assets
Cash
$
Inventory
8,145
$
4,959
Total assets
8,530 9,618
22,537 3,529
14,540 8,264
126,717 3,617
1,695 5,162
9,021 2,460
43,909 6,489
$
13,104
$
18,148
$
26,066
$
22,804
$
130,334
$
6,857
$
11,481
$
50,398
$
2,625
$
811
$
7,309
$
3,369
$
1,300
$
981
$
2,783
$
1,838
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
10,479 $
13,104
17,337 $
18,148
18,757 $
26,066
19,435 $
The accompanying notes are an integral part of the financial statements. 6
22,804
129,034 $
130,334
5,876 $
6,857
8,698 $
11,481
48,560 $
50,398
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Farmington Elementary
Germantown Elementary
Germantown High
Germantown Middle
Highland Oaks Elementary
Highland Oaks Middle
$
$
$
$
$
$
Houston High
Houston Middle
Assets
Cash Inventory
20,684 12,732
Total assets
28,247 3,371
187,279 13,338
103,945 3,345
265,514 5,477
294,624
$
6,537
38,331
$
15,174
12,084 7,265
$
33,416
$
31,618
$
200,617
$
107,290
$
270,991
$
301,161
$
53,505
$
19,349
$
8,606
$
6,138
$
4,861
$
2,281
$
4,001
$
1,085
$
8,802
$
6,149
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
24,810 $
33,416
25,480 $
31,618
195,756 $
200,617
The accompanying notes are an integral part of the financial statements. 7
105,009 $
107,290
266,990 $
270,991
300,076 $
301,161
44,703 $
53,505
13,200 $
19,349
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Lakeland Elementary
Lowrance Elementary
Lucy Elementary
Macon-Hall Elementary
Millington Elementary
$
$
$
$
$
Millington High
Millington Middle
Mt. Pisgah Middle
Assets
Cash Inventory
1,660 4,862
Total assets
99,564 16,011
318,538 8,317
344,000 9,634
121,131
$
2,345
71,688
$
4,801
8,259
$
6,662
100,174 4,229
$
6,522
$
115,575
$
326,855
$
353,634
$
123,476
$
76,489
$
14,921
$
104,403
$
6,305
$
2,621
$
3,794
$
6,596
$
2,640
$
1,211
$
1,672
$
1,315
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
217 $
6,522
112,954 $
115,575
323,061 $
326,855
347,038 $
The accompanying notes are an integral part of the financial statements. 8
353,634
120,836 $
123,476
75,278 $
76,489
13,249 $
14,921
103,088 $
104,403
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Northaven Elementary
Oak Elementary
Rivercrest Elementary
Riverdale Elementary
$
$
$
$
Schilling Farms Middle
Shadowlawn Middle
Southwind Elementary
$
$
Southwind High
Assets
Cash Inventory
86,899 7,241
Total assets
17,543 2,841
189,092 6,832
33,001
$
12,715
60,153 8,821
392,883 7,164
253,382
$
10,129
301,830 10,377
$
94,140
$
20,384
$
195,924
$
45,716
$
68,974
$
400,047
$
263,511
$
312,207
$
1,239
$
3,950
$
3,904
$
8,365
$
7,991
$
1,649
$
2,288
$
877
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
92,901 $
94,140
16,434 $
20,384
192,020 $
195,924
37,351 $
The accompanying notes are an integral part of the financial statements. 9
45,716
60,983 $
68,974
398,398 $
400,047
261,223 $
263,511
311,330 $
312,207
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS BALANCE SHEET – GOVERNMENTAL FUNDS (cont.) June 30, 2013
Sycamore Elementary
Tara Oaks Elementary
Woodstock Middle
Total
Assets
Cash
$
Inventory
117,824
$
5,224
Total assets
4,844
$
7,368
10,430
$
4,645
5,978,792 363,281
$
123,048
$
12,212
$
15,075
$
6,342,073
$
8,036
$
5,430
$
944
$
219,847
Liabilities Deferred revenue Fund Balances Fund balances - restricted Total liabilities and fund balances
115,012 $
123,048
6,782 $
12,212
14,131 $
15,075
The accompanying notes are an integral part of the financial statements. 10
6,122,226 $
6,342,073
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2013 Altruria Elementary
Arlington Elementary
Arlington Middle
44,138
$ 405,896
$ 297,926
Bailey Station Elementary
$
21,994
$ 121,752
152,476 2,095 96,228 251 251,050
95,321 9,819 145,938 243 251,321
44,435 1,826 154,987 257 1,219 202,724
139,793 167,831 275,108 2,149 2,567 135 1,016 588,599
97,680 4,902 255,960 1,639 170 1,577 5,325 367,253
84,419 9,721 173,379 52 472 87 268,130
59,710 2,663 50,411 14 314 15,000 128,112
295,264 8,883 103,118 536 2,533 551 410,885
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
87,934 124,262 1,202 8,718 4,355 226,471
95,447 153,728 284 9,540 5,354 264,353
88,228 137,354 2,257 7,814 7,817 243,470
223,553 257,852 3,103 15,380 8,627 508,515
149,661 174,637 2,577 10,786 8,280 345,941
105,954 138,583 2,326 14,418 6,229 267,510
41,216 85,652 1,797 5,204 4,052 137,921
139,480 180,376 3,274 11,984 5,371 340,485
24,579
(13,032)
(40,746)
80,084
21,312
620
1,749
1,652
(38,997)
81,736
20,865
$ 487,632
$ 318,791
3,114
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
27,693 $
71,778
915
(12,117) $ 39,489
$
5,141
The accompanying notes are an integral part of the financial statements. 11
(447)
39,987
Bartlett Elementary
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
Other financing sources/(uses) Change in reserve for inventory
$
Barret's Chapel Elementary
$ 51,606
Excess revenues over/(under) expenditures
$
Arlington High
44,085
Fund balances - June 30, 2012
$
Appling Middle
(9,809)
1,020
325
1,640 $
41,627
(9,484) $
12,510
70,400 1,669
72,069 $ 193,821
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) For the Year Ended June 30, 2013
Bartlett High
Bolton High
Bon Lin Elementary
$ 243,090
$ 259,854
$
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
313,653 179,710 176,949 1,184 3,621 244 675,361
363,252 131,226 246,663 1,279 4,030 875 747,325
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
282,554 261,956 2,980 22,360 10,661 580,511
Fund balances - June 30, 2012
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
Collierville Elementary
Collierville High
Collierville Middle
Crosswind Elementary
10,495
$ 124,402
$ 192,969
$ 110,192
$
94,597 4,513 118,165 207 104 1,709 219,295
69,869 7,672 111,396 147 392 422 25,000 214,898
92,425 3,505 118,863 68 415 211 215,487
78,879 70,535 250,143 109 2,138 3,424 405,228
86,928 8,321 163,665 68 746 150 259,878
35,528 3,365 132,196 15 37 48,000 219,141
329,639 299,606 4,825 24,257 10,057 668,384
88,399 133,606 1,920 6,935 5,918 236,778
75,321 119,141 446 5,794 4,026 204,728
76,296 129,717 2,259 10,302 4,822 223,396
186,307 246,843 2,167 19,330 10,219 464,866
96,097 163,635 639 9,200 4,759 274,330
61,404 124,240 17,939 7,034 5,873 216,490
94,850
78,941
(17,483)
10,170
(7,909)
(59,638)
(14,452)
2,651
1,430
4,079
2,027
7,338
3,252
2,427
4,306
96,280
83,020
(15,456)
(56,386)
(12,025)
6,957
$ 339,370
$ 342,874
$
47,676
32,220
The accompanying notes are an integral part of the financial statements. 12
Bon Lin Middle $
884
11,054 $
21,549
(571) $ 123,831
$ 136,583
$
98,167
$
13,400
20,357
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Dexter Elementary Fund balances - June 30, 2012
$
38,140
Dexter Middle $
19,129
Dogwood Elementary
Donelson Elementary
E.A. Harrold Elementary
E.E. Jeter Elementary
Ellendale Elementary
Elmore Park Middle
$
$
12,937
$ 125,490
$
$
$
412
15,246
14,289
83,955
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
159,326 3,074 59,814 134 354 222,702
135,728 7,996 37,561 124 162 15,000 196,571
19,992 2,367 136,638 60 680 38,000 197,737
82,988 4,044 112,798 135 631 440 201,036
190,735 2,756 33,847 122 1,965 229,425
59,498 4,678 28,407 20 30,000 122,603
90,587 6,843 104,888 258 20,000 222,576
105,789 6,712 82,052 290 409 195,252
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
87,084 148,118 1,738 7,570 5,653 250,163
70,138 123,837 1,485 5,340 4,188 204,988
57,339 107,860 822 6,481 3,083 175,585
74,889 113,770 262 6,706 4,332 199,959
82,285 132,341 1,096 8,043 4,659 228,424
38,440 86,782 1,580 4,210 2,976 133,988
87,735 125,137 3,220 7,801 4,087 227,980
72,683 141,283 527 5,954 3,762 224,209
Excess revenues over/(under) expenditures
(27,461)
(8,417)
22,152
1,077
1,001
(11,385)
6,625
(3,807)
5,421
2,543
2,015
(1,792)
18,345
6,498
3,544
(9,370)
19,435
$ 129,034
Other financing sources/(uses) Change in reserve for inventory
(200)
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
(27,661) $
10,479
$
17,337
$
18,757
The accompanying notes are an integral part of the financial statements. 13
$
$
5,876
$
(5,404)
(28,957)
(187)
(6,438)
(5,591)
(35,395)
8,698
$
48,560
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Farmington Elementary Fund balances - June 30, 2012
$
6,197
Germantown Germantown Germantown Elementary High Middle $
21,351
$ 171,990
$
93,354
Highland Oaks Elementary $
302,472
Highland Oaks Middle $
Houston High
Houston Middle
256,450
$ 36,814
$ 17,483
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
43,409 5,288 154,267 42 479 35,000 238,485
127,046 1,350 107,796 141 503 446 237,282
182,093 138,256 77,833 103 5,007 378 403,670
138,262 7,261 139,646 433 285,602
389,325 9,918 78,062 66 467 4,088 481,926
329,967 24,072 73,496 174 2,298 430,007
70,032 67,074 209,556 16 4,170 1,235 352,083
19,552 7,902 110,329 6 32,000 5,282 175,071
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
84,900 127,777 921 7,924 3,983 225,505
85,166 128,398 5,223 10,724 4,764 234,275
156,740 204,996 7,517 10,051 11,376 390,680
121,025 136,984 1,973 8,213 5,524 273,719
183,040 208,283 3,174 100,000 15,029 7,238 516,764
149,144 211,449 3,948 17,138 6,126 387,805
135,155 188,613 8,781 11,298 8,287 352,134
54,809 108,182 718 5,349 4,150 173,208
12,980
3,007
12,990
11,883
(34,838)
42,202
5,633
1,122
10,776
(644)
1,424
7,940
(6,146)
18,613
4,129
23,766
11,655
(35,482)
43,626
7,889
(4,283)
25,480
$ 195,756
$ 105,009
300,076
$ 44,703
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
24,810
$
The accompanying notes are an integral part of the financial statements. 14
(228)
$
266,990
$
(51)
1,863
$ 13,200
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013 Lakeland Elementary
Lowrance Elementary
Lucy Elementary
Macon-Hall Elementary
Millington Elementary
$
6,482
$ 192,485
$ 314,070
$ 268,469
$ 127,616
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
42,635 2,260 131,178 145 20,000 196,218
374,745 19,239 62,578 118 897 1,704 459,281
378,435 2,840 60,026 338 1,294 17,747 460,680
292,785 7,471 184,528 1,232 117 501 486,634
266,356 7,298 65,123 60 1,085 4,257 344,179
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
63,007 128,725 1,515 5,470 5,691 204,408
200,105 213,103 5,422 100,000 19,357 10,425 548,412
151,759 182,625 3,629 100,000 11,986 6,217 456,216
182,847 205,493 4,737 13,306 8,633 415,016
143,165 191,459 1,343 10,927 4,990 351,884
Fund balances - June 30, 2012
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
(8,190)
(89,131)
4,464
71,618
1,925
9,600
4,527
6,951
(6,265)
(79,531)
8,991
78,569
$ 323,061
$ 347,038
217
$ 112,954
The accompanying notes are an integral part of the financial statements. 15
Millington High $
(7,705)
$
$ 147,828
413,028 106,697 65,898 44 219 823 586,709
168,969 10,442 63,774 37 193 3,577 246,992
131,184 16,685 105,170 599 330 253,968
286,723 267,829 1,182 23,597 12,295 591,626
107,922 130,309 1,208 12,001 4,629 256,069
107,979 172,882 2,244 11,195 5,960 300,260
779
(6,780)
(4,138) $
Mt. Pisgah Middle
18,485
(4,917)
925
$ 120,836
79,416
Millington Middle
75,278
$
(9,077)
(46,292)
3,841
1,552
(5,236)
(44,740)
13,249
$ 103,088
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013
Fund balances - June 30, 2012
Northaven Elementary
Oak Elementary
Rivercrest Elementary
Riverdale Elementary
Schilling Farms Middle
Shadowlawn Middle
Southwind Elementary
Southwind High
$
$
14,120
$ 196,401
$
$
$
324,638
$ 226,514
$ 229,923
97,094
22,066
76,794
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
293,963 1,780 13,030 263 806 22,840 332,682
117,693 4,522 122,511 123 1,708 246,557
232,078 5,532 83,618 780 2,056 1,995 326,059
102,964 8,439 183,218 200 185 295,006
65,418 8,241 198,248 54 310 272,271
285,324 11,899 133,997 1,482 386 433,088
345,160 7,624 82,899 46 196 2,299 438,224
445,271 141,695 61,956 1,095 70 650,087
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
146,769 163,330 1,342 12,987 5,979 330,407
89,980 140,100 186 9,753 4,263 244,282
135,941 175,098 2,273 11,493 8,553 333,358
114,310 153,895 4,252 9,616 5,305 287,378
123,801 150,897 751 10,047 8,057 293,553
146,749 189,060 2,126 16,195 7,960 362,090
187,290 197,118 2,184 17,419 5,944 409,955
290,702 257,174 1,808 19,163 6,237 575,084
2,275
2,275
Excess revenues over/(under) expenditures Other financing sources/(uses) Change in reserve for inventory Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
$
(6,468)
39
(4,193)
2,314
92,901
$
16,434
(7,299)
7,628
(21,282)
70,998
28,269
75,003
2,918
7,657
5,471
2,762
6,440
6,404
(4,381)
15,285
(15,811)
73,760
34,709
81,407
398,398
$ 261,223
$ 311,330
$ 192,020
The accompanying notes are an integral part of the financial statements. 16
$
37,351
$
60,983
$
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (cont.) June 30, 2013
Fund balances - June 30, 2012
Sycamore Elementary
Tara Oaks Elementary
Woodstock Middle
$
$
$
120,135
15,612
21,653
Total $
5,744,972
Revenues Federal disbursements Sales Account deposits Interest income Commissions Catering Board allocations Miscellaneous Total revenues
94,655 4,408 143,074 71 443 242,651
46,569 2,207 144,042 16 524 86 193,444
221,523 9,740 43,190 40 1,280 275,773
8,567,313 1,295,197 6,068,217 17,085 22,507 34,492 278,000 74,407 16,357,218
Expenditures Food Labor Equipment Remittances to Board Non-food supplies Services Total expenditures
102,982 128,294 981 9,434 6,469 248,160
64,931 124,603 700 5,563 5,648 201,445
109,488 158,041 3,776 10,362 5,360 287,027
6,424,512 8,355,033 134,639 300,000 566,758 319,223 16,100,165
Excess revenues over/(under) expenditures
(5,509)
Other financing sources/(uses) Change in reserve for inventory
386
Excess revenues and other financing sources over/(under) expenditures and other financing uses Fund balances - June 30, 2013
(8,001) (829)
(5,123) $
115,012
(8,830) $
6,782
$
The accompanying notes are an integral part of the financial statements.
17
(11,254)
257,053
3,732
120,201
(7,522)
377,254
14,131
$
6,122,226
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity This report includes only the noncentralized school nutrition funds of Shelby County Schools, which are included in the special revenue funds of the Shelby County Board of Education (the “Board”). Financial Statement Presentation The accounting and financial reporting requirements for school nutrition funds are illustrated in the Tennessee Internal School Uniform Accounting Policy (TISUAPM), issued by the Tennessee Department of Education. The financial statements for the school nutrition funds are prepared in accordance with the reporting standards established by the Governmental Accounting Standards Board. The financial statements presented are fund financial statements for governmental funds. Fund Structure The school nutrition fund of each individual school is considered to be a separate fiscal and accounting entity. The operations of each fund are accounted for by providing a separate selfbalancing set of accounts recording cash and other financial resources, together with all related liabilities and residual balances, and changes therein. The TISUAPM requires that each school cafeteria be accounted for and reported in a separate special revenue fund. Accordingly, each individual school presented in a separate column in the financial statements represents Shelby County School’s separate individual funds for the school nutrition program. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. The school nutrition funds are reported using the financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become measurable and available. Management defines available as collectible within sixty days after the fiscal year end. Expenditures are generally recognized when the related fund liability is incurred, if measurable. Fund Balances Fund balances are reported as restricted due to externally imposed restrictions placed upon the resources accounted for in the funds. In accordance with federal regulations, all revenue generated by the school food service must be used to operate and improve its food services.
18
When both restricted and unrestricted resources are available for use, it is the school system’s policy to use restricted resources first, then unrestricted resources as they are needed. The school system did not report any unrestricted resources for the period. Deferred Revenue Deferred revenue represents balances remaining on student and teacher accounts that can be used to purchase meals during the next school year. Inventory As authorized by the USDA, the school system maintains a single inventory for purchased and donated food supplies. All inventories are valued at lower of cost or market using the first-in/firstout (FIFO) method. The purchases method is used to account for inventories. Under the purchases method, inventories are reported as an expenditure when purchased (or when received for donated commodities) rather than being capitalized as an asset. However, significant amounts of inventory, if any, on hand at year-end are reported as an asset in the financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates. Subsequent Events The Board evaluated its June 30, 2013, financial statements for subsequent events through November 20, 2013, the date the financial statements were available to be issued. As of July 1, 2013, the Memphis City School System charter became inactive, and as a result the Shelby County School System consolidated with the former Memphis City School System. The consolidation resulted in a conversion of the cafeteria funds from a decentralized system to a centralized system.
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Legally appropriated budgets have not been adopted for the noncentralized school nutrition funds.
19
NOTE 3 - DEPOSITS Legal Provisions All deposits with financial institutions in excess of FDIC limits are required to be secured by one of two methods. Excess funds can be deposited with financial institutions that participate in the State of Tennessee Bank Collateral Pool administered by the state treasurer. For deposits with financial institutions that do not participate in the bank collateral pool, state statutes require that all deposits be collateralized with collateral whose market value is equal to 105 percent of the uninsured amount of the deposits. Cash Deposits Cash in bank represents funds on deposit in various depositories. Custodial Credit Risk Custodial risk is the risk that in the event of a bank failure, the school’s deposits may not be returned to it. None of the schools’ deposits were exposed to custodial credit risk because all balances were insured either entirely by the FDIC, through the Bank Collateral Pool with the State of Tennessee, or collateralized with securities held by the Shelby County Board of Education’s agent in the name of the Shelby County Board of Education.
NOTE 4 - CAPITAL ASSETS AND LONG-TERM DEBT Because fund financial statements are presented on the current financial resources measurement focus and the modified accrual basis of accounting, capital assets and long-term debt are not reflected in the accompanying financial statements. This financial activity is reported in separately issued financial statements of Shelby County Board of Education.
NOTE 5 - RETIREMENT PLAN AND OTHER POSTEMPLOYMENT BENEFITS Certain employees of the local school nutrition program have elected to participate in the Tennessee Consolidated Retirement System (TCRS) via a plan administered through Shelby County, Tennessee. Information related to this plan as well as any other postemployment benefits can be found in the audit report of the Shelby County Board of Education.
NOTE 6 - FIDELITY BOND COVERAGE The Board of Education has honesty blanket position bond coverage with Fidelity and Deposit Company of Maryland in the amount of $5,000 for every Shelby County School employee.
20
NOTE 7 - SALARY SUPPLEMENTS No salary supplements were paid from school nutrition funds for the year ended June 30, 2013.
NOTE 8 - RISK MANAGEMENT The school nutrition funds are exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which Shelby County, Tennessee carries commercial insurance.
21
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2013
CFDA
Contract Number
U.S. Department of Agriculture (National School Breakfast Program)
10.553
N/A
U.S. Department of Agriculture (National School Lunch Program)
10.555
U.S. Department of Agriculture/ TN Department of Agriculture (Fresh Fruit and Vegetable Program)
Federal Grantor/Pass-Through Grantor
Beginning (Accrued) Deferred
Ending (Accrued) Deferred
Receipts
Expenditures
-
$ 1,963,497
$ 1,963,497
N/A
-
6,584,866
6,584,866
-
10.582
N/A
-
18,950
18,950
-
10.555
N/A
124,574
799,942
881,673
42,843
$ 124,574
$ 9,367,255
$ 9,448,986
$
$
-
Noncash Assistance: U.S. Department of Agriculture/ TN Department of Agriculture (Commodity Assistance) Total federal awards
See accompanying notes to schedule. 22
$
42,843
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2013 NOTE A - BASIS OF PRESENTATION The schedule of expenditures of federal awards includes the federal grant activity of the Shelby County Schools School Nutrition Funds and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the State of Tennessee Audit Manual. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue is recognized when earned by the organization using the accrual method of accounting. Expenditures for direct costs are recognized as incurred using the accrual method of accounting and the cost accounting principles contained in the U.S. Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments. Under those costs principles, certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE C - FOOD DISTRIBUTION Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed.
NOTE D – OMB A-133 REPORTING REQUIREMENTS The Shelby County Board of Education does not report federal expenditures separate from Shelby County, Tennessee. Accordingly, all reporting requirements of OMB Circular A-133 are not included in this report. See the Shelby County, Tennessee CAFR for all Single Audit requirements.
NOTE E – USDA COMMODITY REPORTING USDA commodity assistance is accounted for in the financial statements of the Shelby County Board of Education.
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Board Members Shelby County Board of Education Memphis, Tennessee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the school nutrition funds of Shelby County Schools, which comprise the balance sheet – governmental funds as of June 30, 2013, and the related statement of revenues, expenditures, and changes in fund balances – governmental funds for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 20, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the school nutrition funds of Shelby County Schools’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control. Accordingly, we do not express an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
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Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify certain deficiencies in internal control, listed in the accompanying schedule of findings and recommendations as items 2013-1 through 2013-5, that we consider to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether the school nutrition funds of Shelby County Schools’ financial statements are free from material misstatement, we performed tests of their compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, the results of our tests disclosed immaterial instances of noncompliance that are described in the accompanying schedule of findings and recommendations as items 2013-1 through 2013-5. Shelby County Schools’ Responses to Findings Shelby County Schools’ responses to the findings identified in our audit are described in the accompanying schedule of findings and recommendations. Shelby County Schools’ responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the school nutrition funds of Shelby County Schools’ internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the school nutrition funds of Shelby County Schools’ internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Memphis, Tennessee November 20, 2013
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SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2013 Prior Year Findings Prior year findings and comments have been resolved. Current Year Findings 2013-1 Receipt not deposited within three business days Appling Middle Condition – Money was turned into the office and deposited more than three days after it was collected. Criteria - Tennessee Internal School Accounting Policy ManuaI Section 5, Title 2, Revenues/Receipts, p. 5-2 and 5-3 states, “Prior to authorizing or requiring any collections, the principal must evaluate the ability of school personnel to provide the required accountability. The use of teacher assistants and other support staff could be considered, as well as schedules designating the time of day for collecting and remitting the collections to the central office. This schedule should be developed with the understanding that all money must be deposited within three days of the initial collection.” Cause – School personnel did not follow the prescribed policy. Effect – The risk of loss of cash increases when money is not deposited timely. Recommendation – We recommend the principal designate certain times when money may be turned into the office and assign an appropriate person with adequate time to count and receipt the money. Management’s Response – The individual responsible for this function was out, and the individual responsible in their absence failed to remember to take the deposit to the bank. All funds were kept locked in the safe until deposited.
2013-2 Purchase/payment made before purchase requisition was approved Bartlett Elementary Dexter Elementary Dexter Middle Farmington Elementary Millington Elementary Shadowlawn Middle Condition – Purchase requisition was completed subsequent to date on invoice. 26
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS (cont.) June 30, 2013 Criteria – Tennessee Internal School Accounting Policy ManuaI Section 5, Title 3, Purchasing, p. 5-11 and 5-12 states, “To initiate a purchase which does not require advertised bids, including purchases from other school accounts, a prenumbered purchase requisition should be completed…After the prenumbered purchase requisition form is signed by the principal, it becomes a purchase authorization. This form can also be used as a purchase order, if one is needed for the purchase.” Cause – School personnel made purchases prior to completing a purchase requisition. Effect – Unauthorized or inappropriate disbursements of school funds could be made. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – Personnel are trained on proper procedures for purchases. This will not be a problem next year under the new centralized payment system.
2013-3 Check issued without two authorized signatures Collierville Elementary Highland Oaks Middle Condition – The principal inadvertently skipped a check when signing a group of checks, or the check was not signed at all. Criteria - Tennessee Internal School Accounting Policy ManuaI Section 6, Title 3, Checks, p. 6-3 states, “Two signatures are required for all checks.” Cause – The principal did not follow the prescribed policy. Effect – Inappropriate or unauthorized use of school funds could occur. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – Dual signatures are required for all checks. Due to the multiple checks being presented for approval/signature at once; it is likely a check was overlooked. This will not be a problem next year under the new centralized payment system.
2013-4 Purchase requisition is incomplete Southwind Elementary Condition – Purchase requisition was not properly authorized. 27
SHELBY COUNTY SCHOOLS SCHOOL NUTRITION FUNDS SCHEDULE OF FINDINGS AND RECOMMENDATIONS (cont.) June 30, 2013 Criteria - Tennessee Internal School Accounting Policy ManuaI Section 5, Title 3, Purchasing, p. 511 states, “The purchase requisition should include the date of request, the name of the individual requesting the purchase, the fund/account to be charged, the items/services to be purchased and the amount of each item/service.” Cause – School personnel did not follow the prescribed policy. Effect – Unauthorized purchases could be made. Recommendation – We recommend school personnel follow the prescribed policy. Management’s Response – The missing information was overlooked by the manager and principal. This will not be an issue in the next school year under the new centralized ordering system.
2013-5 Money not turned into office timely Lucy Elementary Criteria – Tennessee Internal School Uniform Accounting Policy TISUAPM Section 5, Title 2, Revenues/Receipts, p. 5-4 states, “All collections should be turned in to the cashier daily or more frequently if the teacher/other feels it necessary for safeguarding of money.” Condition: Collections were not turned into the office the same day they were collected according to the dates recorded. Cause: The money collector did not remit funds in accordance with the prescribed policy. In certain situations, the money was turned in after the day’s deposit had been made. There was no documentation as to the safekeeping of funds. Effect: The risk of loss increases when cash is not stored in a secure manner. Recommendation: We recommend school personnel follow the prescribed policy. Management’s Response – Cafeteria and school personnel are trained on proper procedures for turning in monies collected. This will be explained again in training going forward.
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