June 10, 2009

Federal Auditors Say CISD's Controls Good Enough to Apply for Stimulus Funds

A CISD-prepared news release today says that Federal auditors have determined that CISD's internal controls are good enough to apply for federal stimulus money.

CISD's press release contradicts a report by the Cleburne Times-Review which said that auditors were just making sure CISD was knowledgeable about how and where to spend stimulus funds. The T-R also said Superintendent Beard said CISD was honored to be one of five school systems reviewed.

(The school sent no information to CleburnePolitics.com about the Feds' pending visit.)

Dr. Beard told Alden Nellis Monday that Federal auditors sent a list of things they wanted to see, and Chief Financial Officer David Johnson had prepared them.

Following is CISD's news release, printed verbatim.

FEDERAL AUDITORS REVIEW DISTRICT’S INTERNAL CONTROLS

            While Cleburne ISD has yet to apply for stimulus funds available to public school systems nationwide, federal auditors told administrators Wednesday that the District has the correct internal controls in place to handle such funding.

            “They left happy, with no findings and no issues,” Superintendent Dr. Ronny Beard said. “They did make one comment in suggesting that we strengthen our documentation in one area by providing more detailed written guidelines, which we are in the process of addressing.”

            Cleburne is the first of three Texas districts to receive a visit from auditors with the U.S. Department of Education’s Office of Inspector General who will be assessing the internal controls within each district. Two other state school districts will undergo similar assessments, which will be conducted by representatives with the General Accounting Office. All five audits are being conducted in anticipation of applications for funding from districts across the state through the American Reinvestment and Recovery Act of 2009.

A two-person audit team reported to Central Office Monday morning and, following an exit meeting with District administrators, left before noon Wednesday.

David Johnson, CISD chief financial officer, described the visit as a test of the District’s internal controls.

            “The purpose of internal controls is to provide reasonable assurance that no errors will occur,” Johnson said. “Their audit confirmed that. They are comfortable with our internal controls, which enable a school district to insure that resources are properly handled, properly used and are available for management’s and the board of trustees’ designation.”

            Dr. Monte Geren, a financial monitor with the Texas Education Agency who was assigned to CISD last fall, following the agency’s audit of federal funds expended by the district, described Wednesday’s audit outcome as a positive indicator.

“The response received from the U.S. Department of Education auditors was positive for the District,” Geren said. “They had scheduled to be here a whole week, but left Wednesday morning. That’s a really good sign.”

            “The D.O.E. auditors indicated they did not find any big issues and stated that the District had policies and procedures in place for managing the new federal funds that are being made available to public schools,” Geren said.

            District officials were told by the federal auditors that a report will be issued to the Texas Education Agency at the conclusion of their visits to all three school systems.

            “I know our internal controls procedures are very clean,” Beard said. “I don’t know if I have the same confidence with other districts in the state being as clean as we are. I was told by John Thomas, who is the lead auditor, that should any of the districts they visit have issues, that specific district will be identified in the report to TEA.”

            “Basically, they are auditing the state via these five school districts,” Beard said. “We are in the process of conducting a comprehensive needs assessment to determine where and how we would spend the $2.3 million in ARRA funds which are available to our district. It’s likely we will apply, but we still have some questions, and all the rules and procedures for the funds are not in place at the federal level.”

            The ARRA funds, instituted by President Barack Obama, are designed to save and create jobs within public education systems and to improve student achievement through school improvement and reform. The funds have been specifically designated for use through the federal Individuals with Disabilities Education Act and Title I Part A programs which were established to improve teaching and learning for students most at risk of failing to meet state standards and to close the achievement gap.

            “They came to look at us prior to the receipt of any of these funds,” Johnson said. “We are at step one in the process in conducting this comprehensive needs assessment. We plan to take this step by step. There are still questions as to how the money can be used, the allowable uses and the obligation of a district which receives the funds, now, and when the federal funding ends or is discontinued. We want to be sure we have the resources to comply with all these requirements.”

            The District’s internal controls appear to be up for the challenge, from the federal auditing standpoint.

            “Mr. John Thomas, the lead auditor, commented that ‘things went smoothly and quickly,’” Geren said. “Overall I was pleased to hear the auditors’ positive report regarding the U.S. Department of Education’s observations about District procedures.”

            “The auditor’s suggestion that the District continue to strengthen their processes by improving the detail of some written procedures is right on target with what the District is already doing,” Geren said. “The suggestion fits very well with Dr. Beard’s and Mr. Johnson’s efforts to develop effective administrative procedures for all areas of CISD’s financial and business operations.”