Bureau of Indian Education School Board Training School Board’s Role In Oversight Bureau of Indian Education School Board Training Hello, and welcome.   The training you are about to receive covers the school board’s role in oversight, and the importance of this function. 2016-2017

Agenda Consolidated Schoolwide Budget Internal Controls Oversight Mechanisms A-133 Audits Inspector General Reports Fiscal Reviews This presentation will cover the following:   After a brief introduction and overview, we will discuss the consolidated schoolwide budget, management’s responsibility for internal controls, the feedback mechanisms utilized, which includes A-133 audits, Inspector General reports, and fiscal reviews, and finally, we will discuss the school board’s role in addressing the recommendations contained in the various reports. This will be followed by a group discussion, during which time questions will be welcomed. We will then conclude by summarizing the key points you should take away from this presentation. This training session should take approximately one hour.

“In our every deliberation, we must consider the impact of our decisions on the next seven generations.” - Iroquois Maxim (circa 1700-1800) Iroquois Maxim is credited with saying, “In our every deliberation, we must consider the impact of our decisions on the next seven generations”. This quote regarding our obligation to others, and of the lasting consequences of the decisions we make today is a great reminder to carry with you during your time on the school board.

Consolidated Schoolwide Budget Goal of Budget: Improve Education The Budget Sets the Spending Plan. The Review Process Provides Feedback. Management and the School Board Make Necessary Adjustments. The School Board has a very important role in governing and oversight. Each year, the budget is set by the school. It serves as a spending plan for the school year. At the year’s conclusion, an extensive review process should be undertaken to determine how well the spending plan was followed, and whether unbudgeted expenditures were allowable. It is then the school board’s job to review the feedback provided with management to determine what actions must be taken to improve adherence the following year. Without this step, performance and outcomes are not likely to improve.

Consolidated Schoolwide Budget Is Needs Based. Requires Justification – Explains How Funds will Improve Education. Requires Input from Stakeholders. Due between April 1 and May 1 Annually. Each year, a consolidated schoolwide budget is prepared by the Business Office with input from stakeholders. The goal of the consolidated schoolwide budget is to improve education. What is needed to achieve this? What funds does the school require? These questions must be answered and the answers must be justified. Ultimately, spending for the year must align with the consolidated schoolwide budget. This is why input from stakeholders, including teachers, administrators, parents and the community, is of critical importance. The consolidated schoolwide budget is due annually between April 1 and May 1. Once completed, it’s uploaded to Native Star, the BIE’s online repository for reporting.

Internal Controls Systematic Measures to: Conduct Business Efficiently. Safeguard Assets and Resources. Deter and Detect Errors, Fraud, and Theft. Ensure Data Accuracy and Completeness. Produce Reliable and Timely Information. Ensure Adherence to Policies and Plans. Yearly spending is monitored using internal controls. Internal controls are defined as systematic measures, such as reviews, checks and balances, methods and procedures, instituted by an organization to: Conduct its business in an orderly and efficient manner Safeguard its assets and resources Deter and detect errors, fraud, and theft Ensure accuracy and completeness of its accounting data Produce reliable and timely financial and management information, and Ensure adherence to its policies and plans The Office of Management and Budget (OMB 123) Circular A-123 (issued under the authority of the Federal Managers' Financial Integrity Act of 1982 as codified in 31 U.S.C. 3512) covers responsibility for internal controls in Federal agencies. It states that management is responsible for establishing and maintaining internal control to achieve the objectives of effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations. Management shall consistently apply the internal control standards to meet each of the internal control objectives and to assess internal control effectiveness. Source: http://www.businessdictionary.com/definition/internal-control.html#ixzz4IHdT9j6f

A-133 Audits “Single Audit” Required of Entities that Expend $750,000 plus. Audits Funds that are Pre-Selected. Attestation Issued by an Accountant. Follows U.S. Government Auditing Standards. Aimed to Gauge the School’s or Tribe’s: Financial Statement Presentation. Internal Controls over Financial Statements. Compliance (To a Limited Degree). There are many feedback mechanisms in place to report on spending. The OMB A-133 audit, also known as a “Single Audit”, is a rigorous, organization-wide audit or examination of an entity that expends $750,000 or more of Federal assistance funds received for operations. The auditor pre-selects funds to be audited according to a designated threshold amount (known as materiality), and as requested by the school. The attestation is issued by a Certified Public Accountant (known as a CPA) The A-133 audit follows U.S. Government Auditing Standards (known as GAAS) The A-133 audit’s aim is to gauge the school’s or tribe’s: 1) Financial Statement Presentation 2) Internal Controls over Financial Statements, and 3) Compliance, but only to a limited degree Sources: https://en.wikipedia.org/wiki/Single_Audit Legal Citation: 2 CFR 200 Subpart F, OMB Circular Guidance A-133

Inspector General Reports Office of the Inspector General (OIG) Part of the Department of the Interior. Oversees Investigations into Waste, Fraud and Abuse. Recommends Changes in Processes, Programs and Systems. Responds to “hotline” calls. Schools are required by law to post the OIG Hotline in a public place in the school. Another feedback mechanism is the Inspector General Report. The Office of the Inspector General (OIG) is part of the Department of the Interior and has jurisdiction for oversight and investigation of questionable actions. Inspector General reports contain recommendations or directives to make change if necessary. Every Student Succeeds Act (ESSA), Section 9203 of Part B of Title IX addresses improper use of taxpayer funds. It requires that each recipient of a grant, or a subgrant, display in a public place the hotline contact number of the Office of Inspector General.

Fiscal Reviews Conducted by BIE as required by federal law. Monitors whether Funds Are Used for Intended Purposes outlined in Federal Law and Regulations. Typically Covers: ESEA, IDEA, 21st CCLC, and SIG Program Compliance. Fundamental Financial Management. Fiscal Compliance. The last feedback mechanism we will cover today is the fiscal review. Grants and fund distributions have specific requirements and/or restrictions on spending. Funds should be used for intended purpose and must comply with federal requirements. These statutes include: The purpose of the BIE's fiscal review is to meet federal requirements of implementing a fiscal monitoring system that ensures BIE-funded schools appropriately use the program funds they receive for the intended purposes identified in statute. School Improvement Grants (SIG), if applicable The Elementary and Secondary Education Act of 1965 (ESEA). This is being replaced by the Every Student Succeeds Act (ESSA). The Individuals with Disabilities Education Act (IDEA). 21st Century Community Learning Centers (21st CCLC), and The McKinney-Vento Homeless Assistance Act (MV) - ESEA, IDEA, 21st CCLC, and SIG Program Compliance (if applicable) The reviews typically cover: - Fundamental Financial Management - Fiscal Compliance which includes - Allowable Use of Funds - Internal controls - Provision of Technical Assistance - NOTE: Technical Assistance is targeted to the LEA’s needs and includes correction of findings including exercises to identify root causes of non compliance. Fiscal Reviews are an opportunity for BIE to work collaboratively with BIE-funded Bureau-Operated and Tribally-Controlled schools with the intent of providing technical assistance to build capacity by Strengthening internal controls Executing best practices on fiscal management and on appropriate use of funds Complying with the fiscal requirements of the Indian Self-Determination Act, Tribally-Controlled School, ESEA, IDEA, and SIG The US Department of Education (ED) and the Government Accountability Office (GAO) have authority over fiscal reviews. The Government Accountability Office (GAO) issued the following: “In 2014, we found that the BIE does not adequately monitor school procedures using a risk-based approach, and as a result, there was no effective oversight when schools misspent millions.” US Department of Education (ED) issued a Corrective Action Plan. BIE DPA is addressing findings from ED SEA Monitoring as follows: IDEA: Fiscal management ESEA: Fiscal monitoring and correction of findings Title 1, Part A, Section 1003, (e)(1)(C) Page 15 ESSA PDF. State Educational Agencies awarding School Improvement Grants under Section 1003 shall include “monitoring and evaluating the use of funds by local educational agencies receiving an allotment (of such funds).” Schools’ use of funds must be monitored and evaluated The Secretary of Education is required to notify grantees that they must require subgrantees to comply with all monitoring requirements under the applicable program(s) and monitor any subgrantee under the program(s). Section 9204 on Page 337.

Fiscal Reviews Fiscal Review Recommendations: Improved processes. Strengthened Internal Controls. School Board’s Responsibility: Review Reports. Understand Findings. Ensure Management and Administration Acts Appropriately to Implement Recommendations. A-133 Audits, Inspector General, and Fiscal Review reports often contain Recommendations. Recommendations provide direction for improving processes and internal controls in the school. The School Board’s responsibility is to review A-133 Audits, Inspector General Reports, and Fiscal Reviews, understand the findings, then work with Business Manager/Administrators to ensure that recommendations are addressed.

Questions and Discussion How can school board members ensure that schools comply with Federal requirements? How can school board members make sure that expenditures are appropriate/allowable? What is the difference between a law and a regulation? What is a Circular? We will now open the floor for questions and engage in a group discussion on this topic. To begin, lets’ answer the following: How can school board members make sure that schools are in compliance with Federal requirements? How can school board members make sure that expenditures are appropriate/allowable? Other Topics: Board review and input on Schoolwide Budget Board review of A-133 audit reports and findings Board review of Fiscal Review reports and findings Meeting with Business Manager regularly Oversight of disbursements/checks Trust but Verify