1. SCOTT T. SUMMERS, ESQ. DIRECTOR OF SCHOOL LAWS MISSOURI SCHOOL BOARDS’ ASSOCIATION SUMMERS@MSBANET.ORG 1.800.221.6722 USING MSBA POLICIES TO SURVIVE AN AUDIT

2. YOU WILL BE AUDITED Just a matter of time Number of audits of public school districts is increasing every year Won’t know in advance – no “schedule” Be prepared and have records in order

3. THIS JUST IN... State Auditor just announced it will audit districts for STUDENT DATA PRIVACY Not a “gotcha” – but an attempt to see where districts are in this process Policy, Policy, Policy Perhaps district “volunteers”? MSBA Policies – EHB, JHDA, JO/JO-AP

4. STATE LAW § 29.205, RSMo. Notwithstanding any provision of law to the contrary, the state auditor shall have the power to audit any school district or charter school within the state in the same manner as the auditor may audit any agency of the state. – Evaluate the district's internal controls over significant management and financial functions. – Evaluate the district's compliance with certain legal provisions. – Evaluate the economy and efficiency of certain management practices and operations, including certain financial transactions.

5. MSBA POLICY DIE Independent auditor to report to the board Recommend doing this correctly – not just a “yes” man/woman to tell you what you want to hear Do this right and it will save you time and money in the long run Don’t forget it’s required to be competitively bid every 3 years by state statute!!

6. FROM THE AUDITOR RECOMMENDATIONS IF YOU ARE AUDITED Cooperate Respect Public Assets Follow Personnel Policies Plan/Monitor large projects Use good procurement practices Develop/Execute budgets Sunshine Law!! Strict Receipt/Disbursement Preserve Information (Records!!) Watch out for criminals

7. COMMON FINDINGS Bidding/RFP’s Bond Financing Attendance Contracts Construction Management/Change Orders Vehicle Allowances Mileage logs Lack of segregation of duties or supervisory review Conflict of interest

8. FROM THE AUDITOR RED FLAGS!! Living beyond means Financial difficulties Unusually close associations with vendors/customers Excessive control issues Not taking vacations…

9. SUNSHINE LAW

10. FINDINGS The district does not always comply with the SSL and held numerous improper closed meetings The board did not always make public the final disposition of legal matters discussed in closed meetings District does not have a formal policy regarding public access to district records and does not maintain a log of public requests District does not identify a Custodian of Records

11. SUNSHINE LAW MSBA POLICIES BDA Public notice of all meetings shall be given in accordance with law BDC Public notice of closed meetings shall be given in accordance with law

12. SUNSHINE LAW SECTION 610.020 Notice of date, time, place of meeting Tentative agenda in manner reasonably calculated to advise public of matters to be discussed Post on bulletin board or other prominent place where meeting is normally conducted Notice of at least 24 hours in advance Unless emergency

13. SUNSHINE LAW SECTION 610.022 No meeting or vote may be closed without an affirmative public vote of the majority of the quorum of the board Each member – roll call vote Give time, date and place of meeting Reason for holding closed meeting by specific reference to exception in 610.021 Public governmental body shall not discuss any business in a closed meeting which does not directly relate to the specific reason announced to justify the closed meeting

14. SUNSHINE LAW SECTION 610.023 Each public governmental body is to appoint a custodian who is to be responsible for the maintenance of that body’s records. The identity and location shall be made available upon request.

15. SUNSHINE LAW MSBA POLICY – BCE The custodian of records shall maintain a list of all committees MSBA POLICY – BDDL Policy governing the custodian of records Also governs the public access to records

16. SUNSHINE LAW PUBLIC DISCLOSURE OF FINAL OUTCOMES §610.021 states that any minutes, votes, or settlement agreement relating to legal actions... shall be made available to the public upon final disposition or the matter voted upon or upon the signing by the parties of the settlement agreement Made Available to the Public – not defined in statute BUT auditor reads this as an affirmative requirement on the part of the district MSBA does not read it as so – only upon public request

17. SUNSHINE LAW You decide Auditor is best practice MSBA is our interpretation (as well as most attorneys) of the law Regardless – ensure that you have your policies in place and are following them!!!

18. “P” CARDS

19. P CARDS FINDINGS District needs to improve control over Purchasing Cards District needs to provide proper documentation for “P” Card expenditures District needs to ensure which staff needs “P” Cards Master list of “P” Card holders is not accurate No proper documentation of expenditures and requests

20. P CARDS MSBA POLICY DJF – “Credit and Purchasing Cards” Sets out the guidelines on who receives cards and how they are to be used Superintendent reviews list of who receives cards Board may receive as well DJF-AP2 Procedure for receiving and using Also consequences for misuse Document Document Document!!!

21. PURCHASES/BIDDING

22. PURCHASING/BIDDING FINDINGS Did not always solicit bids or proposals for purchases District sold general obligation bonds through a negotiated rather than a competitive sale and did not select the bond underwriter competitively District used the same provider to serve as both financial advisor and bond underwriter for all bond and lease participation certificates Frequently obtains professional services without competitive selection process Used same law firm/audit firm for 10 years Bids for vendor fuel cards in 10 years

23. PURCHASING/BIDDING MSBA POLICY DJF/DJF-AP1/2 – PURCHASING 2 versions – one for urban/metropolitan; one not Some highlights (Procedure is key) No contract entered into or bill paid without prior documentation and affirmative vote of majority of whole board > 25K = prior board approval Competitive bidding Over $3K Sealed bids for >$15K Get it in writing!! Not a contract unless in writing!!

24. PURCHASING/BIDDING Purchase orders Prior approval - note additional approval for some items Attribute to budget code Competitive purchasing when possible Note special requirements for construction!! Single source providers/Approved providers/Cooperative purchasing Real Estate!! Lease/Lease Purchase

25. PURCHASING/BIDDING BONDS/NEGOTIATED SALE/COMPETITIVE BID There is NO state law on this – all auditor findings are “best practice” - but NO basis in law!!! Difference of opinion on sale/bid Complex issue but there is some evidence to show that competitive bidding is as effective as negotiated sale Financial Advisor/Underwriter Fast Rule – Underwriter may give financial advice but cannot be the Financial Advisor. Financial Advisor cannot be underwriter – period.

26. OTHER STUFF…

27. OTHER STUFF The student run book store/coffee shop collection procedures – inventory to sales purchases District handling of meal, student activity, athletic event, and concession receipts Cash advances for meal purchases without tracking/receipts Receipts do not always support amounts deposited Allowing staff to access petty cash for lunch money – “IOU”

28. OTHER STUFF MSBA POLICIES DJF/DJF-AP1/2 DGA - Authorized Signatures DI - Accounting/Reporting System The superintendent shall be responsible for receiving and properly accounting for all funds of the district and implementing the accounting system DJB – Petty Cash Authorizes a petty cash fund Superintendent shall develop administrative procedures on reporting, documentation, safekeeping, and appropriate expenditure of funds

29. QUESTIONS?

30. SCOTT T. SUMMERS DIRECTOR, SCHOOL LAWS MISSOURI SCHOOL BOARDS’ ASSOCIATION SUMMERS@MSBANET.ORG1.800.221.6722