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Harrisburg City School District

Audit of Financial Statements

Year Ended June 30, 2013

Finance Committee Meeting

January 13, 2014

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Areas of Discussion

• Independent Auditors’ Report

• Comments on Financial Position & Financial Results

• Discussion of Findings

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Independent Auditors’ ReportPages 6 - 8

• Management’s Responsibility for the Financial Statements

• Auditors’ Responsibility

• Opinions

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Highlights of Financial Results – Government Wide

Statement of Net Position – Assets (page 22)

GovernmentalActivities Total

CURRENT ASSETSCash and cash equivalents 27,358,849$ 8,977$ 27,367,826$ Investments 1,708,331 1,025 1,709,356 Taxes receivable, net 15,228,983 - 15,228,983 Internal balance 1,323,439 - 1,323,439 Due from other governments 6,706,424 82,988 6,789,412 Other receivables 1,091,074 87,219 1,178,293 Prepaid expenses 54,862 - 54,862 Inventories 963 48,486 49,449

Total current assets 53,472,925 228,695 53,701,620

NONCURRENT ASSETSSinking fund investments 3,896,116 - 3,896,116 Bond discounts and issue costs, net 7,382,778 - 7,382,778 Land and site improvements, net 13,700 - 13,700 Building and building improvements, net 188,659,462 - 188,659,462 Furniture and equipment, net 3,685,717 91,860 3,777,577 Construction in progress 1,578,297 - 1,578,297 Deferred outflow 23,672,566 - 23,672,566

Total noncurrent assets 228,888,636 91,860 228,980,496

Total assets 282,361,561$ 320,555$ 282,682,116$

Business-TypeActivities

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Statement of Net Position – Liabilities (page 23)


CURRENT LIABILITIESInternal balance 14,425$ 1,285,534$ 1,299,959$ Accounts payable 7,148,934 14,089 7,163,023 Accrued interest 1,606,097 - 1,606,097 Current portion of long-term debt 3,005,000 - 3,005,000 Current portion of capital leases 602,040 - 602,040 Current portion of compensated absences 200,892 22,892 223,784 Deferred subsidy revenue 491,530 17,348 508,878 Accrued salaries and benefits 5,526,400 158,883 5,685,283

Total current liabilities 18,595,318 1,498,746 20,094,064

NONCURRENT LIABILITIESLong-term debt net of current portion 266,808,000 - 266,808,000 Premium on issue of swap 2,834,589 - 2,834,589 Premium on bond issue 763,307 - 763,307 Capital leases 486,539 - 486,539 Compensated absences 1,995,249 30,497 2,025,746 Derivative instruments - swaps 24,040,135 - 24,040,135 Other post-employment benefits liability 1,739,192 127,394 1,866,586

Total noncurrent liabilities 298,667,011 157,891 298,824,902

Total liabilities 317,262,329$ 1,656,637$ 318,918,966$


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Statement of Net Position – Net Position (page 23)


NET POSITIONRestricted for debt service 5,614,283$ -$ 5,614,283$ Net investment in capital assets (68,815,863) 91,860 (68,724,003) Unrestricted 28,300,812 (1,427,942) 26,872,870

Total net position (34,900,768) (1,336,082) (36,236,850)

Total liabilities and net position 282,361,561$ 320,555$ 282,682,116$


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Statement of Activities (page 24)


Program Revenues 29,788,726$ 5,466,962$ 35,255,688$ General Revenues 103,077,976 1 103,077,977

Total Revenues 132,866,702 5,466,963 138,333,665

Expenses 124,932,627 5,442,950 130,375,577

Change in Net Position 7,934,075 24,013 7,958,088

Net Position - beginning of year (42,834,843) (1,360,095) (44,194,938)

Net Position - end of year (34,900,768)$ (1,336,082)$ (36,236,850)$


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Highlights of Financial Results – General Fund

Balance Sheet - Assets (page 25)

GeneralFund

ASSETS

Cash and cash equivalents 26,305,964$

Investments 46,255

Taxes receivable, net 15,228,983

Due from other funds 1,323,439

Due from other governments 6,706,424

Other receivables 1,091,074

Prepaid expenses 54,862

Inventories 963

Sinking fund investments -

Total assets 50,757,964$

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Balance Sheet – Liabilities (page 25)

GeneralFund

LIABILITIES

Accounts payable 7,148,064$

Due to other funds -

Accrued salaries and benefits 5,526,400

Deferred revenues 15,429,868

Total liabilities 28,104,332$

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Balance Sheet – Fund Balances (page 25)

GeneralFund

FUND BALANCESNonspendable:

Reserve for inventories 963$

Interfund receivable 1,323,439

Prepaid expenses 54,862

Committed:

Athletics and band reserve 402,381

Assigned:

Health insurance stabilization 1,500,000

PSERS increases 5,000,000

Debt service increases 3,000,000

Capital improvements 3,000,000

Information Technology improvements 1,500,000

Unassigned:

General fund 6,871,987

Total fund balances 22,653,632

Total liabilities and fund balances 50,757,964$

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Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual (pages 72-73)

Actual Variance WithFinal Budgeted (Budgetary Final Budget

Amount Basis) Positive (Negative)

REVENUESLocal revenues 50,009,683$ 52,712,730$ 2,703,047$ State program revenues 62,816,647 63,650,390 833,743 Federal program revenues 20,437,694 15,697,660 (4,740,034)

Total revenues 133,264,024$ 132,060,780$ (1,203,244)$

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Actual Variance WithFinal Budgeted (Budgetary Final Budget

Amount Basis) Positive (Negative)EXPENDITURES

Regular programs 49,541,132$ 45,002,494$ 4,538,638$ Special programs 21,576,881 20,299,184 1,277,697 Vocational programs 2,725,000 2,723,577 1,423 Other instructional programs 5,584,742 3,972,080 1,612,662 Community/Jr college programs 750,000 734,439 15,561 Pupil personnel services 4,511,544 4,131,152 380,392 Instructional staff services 5,387,222 2,608,487 2,778,735 Administrative services 6,982,218 6,379,033 603,185 Pupil health 1,177,122 1,030,016 147,106 Business services 1,438,856 1,098,798 340,058 Operation and maintenance of plant services 11,830,917 8,863,742 2,967,175 Student transportation services 2,669,649 2,519,936 149,713 Central and other support services 3,714,901 3,171,226 543,675 Other support services 2,045,000 1,751,271 293,729 Student activities 595,171 469,614 125,557 Community services 519,036 318,643 200,393 Debt service 300,000 13,174 286,826

Total expenditures 121,349,391 105,086,866 16,262,525

Excess of revenues over expenditures 11,914,633$ 26,973,914$ 15,059,281$

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Actual Variance With(Budgetary Final Budget

Final Basis) Positive (Negative)

OTHER FINANCING SOURCES (USES)Refund prior year receipts -$ (807,619)$ (807,619)$ Transfers out (16,070,650) (15,383,960) 686,690 Budgetary reserve (301,622) - 301,622

Total other financing sources (uses) (16,372,272) (16,191,579) 180,693

Net change in fund balances (4,457,639) 10,782,335 15,239,974

FUND BALANCE - BEGINNING - 11,871,297 11,871,297

FUND BALANCE - ENDING (4,457,639)$ 22,653,632$ 27,111,271$

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Discussion of Findings

Financial Audit– Material Weakness

• District’s budgeting process

– Significant Deficiencies• Technical accounting and financial reporting expertise• Spreadsheet management

Single Audit– Noncompliance and Significant Deficiency in Internal Control

• Improper documentation of time and effort• Untimely submission of required final reports• Incorrect calculations for reimbursements related to food service grants• One month was noted where all students received free breakfast and lunch

due to the inability to use the food service point of sale system• Supporting documentation for food service bids were unable to be located

and provided for testing• Reports were not obtained from the food service point of sale system for

reimbursement and all eligible students were claimed, rather than the actual amount that received meals

• Sales tax was paid and charged to a grant

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