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HomeMy WebLinkAbout95-06547 ,\ -I ., ..,' ".i. , , <' ~' : J~ 'i.~'n'>- ~~r ~. W";" <' CONTENTS PAGE FINANCIAL STATEMENTS Independent Auditor's Report Combined Balance Sheet. All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances. All Governmental Fund Types Statement of Revenues, Expenditures and Changes in Fund Balance . Budget and Actual . General Fund Statement of Revenues, Expenses and Changes in Retained Earnings/Fund Balance . Proprietary Fund Type and Non-Expendable Trust Fund Statement of Cash Flows . Proprietary Fund Type and Non.Expendable Trust Fund Notes to Financial Statements 1 2.5 6.7 8 9 10 11.22 SUPPLEMENTARY INFORMATION Independent Auditor's Report on the Supplementary Information 23 General Fund Schedule of Revenues 24.25 Schedule of Expenditures 26.30 Special Revenue Funds - Certain Funds COMbining Balance Sheet 31 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 32 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . Budget and Actual 33.34 Cafeteria Fund Schedule of Revenues 35 IBBRI ~~~II~'.~!"~~~~~ Independent Auditor's Repot't Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the accompanying general purplJse financial statements of Shippensburg Area School District, as of and for the year ended June 3D, 1995. These general purpose financial statements are the responsibility of the School District's management, Our responsibility 15 to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and "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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As explained in Note 1 to the general purpose financial statements. the School District has recorded General Fixed Assets at values as determined by an Industrial AIJJlraisal Company Report. Under generally accepted accounting principles, General Fixed Assets should be recorded at cost. In our opinion, except for the departure from generally accepted accounting principles described in the preceding paragraph, the general purpose financial statelents present fairly, in all material respects, the financial position of the Shippensburg Area School District, as of June 3D, 1995, and the results of its operations and cash flows of its proprietary fund type and non.expendable trust fund for the year then ended in conformity with generally accepted accounting principles. In accordance with "Governmental Auditing Standards., we have also issued a report dated July 13, 1995 on our consideration of Shippensburg Area School District's internal control structure and a report dated July 13. 1995, on its compliance with laws and regulations. July 13. 1995 Chambersburg, Pennsylvania ~~k 1 , SHIPPENSBURG AREA SCHOOL DISTRICT COMBINED BALANCE SHEET . ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30. 1995 ASSETS GOVERNMENTAL FUND TYPES SPECIAL REVENUE CAPITAL GENERAL ATHLETIC RESERVE Cash S 94.574 S 75.024 S 63.225 Investlll!nts 2.734.952 Receivables Taxes . net 408.528 Due frOll other funds 10.698 Federal subsid1es 48.884 State subsidies 45.775 Other 42.916 Inventories Land Build1ngs and improvements Furniture and ~uipment . net of accUlUlat depreciat10n in Enter~ise Fund AIount to ~rOVided for retirement of general ong.term debt AIount to be provided for compensated absences TOTAl ASSETS ~ 1..li.W J..&m c> \.. ,; ! 2 u \ FIDUCIARY PROPRIETARY ~mNCY ACCOUNT GROUPS - GENERAL GENERAL TOTALS EXPENDABLE FIXED LONG. TERM (MEMORANDUM TRUST ~NCY ASSETS DEBT ONLY) $ $ 417 $384,049 $ $ $ 617.289 30.000 10,000 2,774,952 408.528 1,521 9,768 21,987 2,150 51.034 246 46,021 149 43,065 26,839 26.839 51,396 51,396 35.070.450 35,070.450 168.612 5.102.769 5,271,381 4,275,000 4,275.000 474.425 474,425 WWZ m&Z WUlZ w..am ~ .w..m..m See notes to financial statements which are an integral part of this statement. 3 SHIPPENSBURG AREA SCHOOL DISTRICT COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30. 1995 LIABILITIES AND FUND EQUITY GOVE~NMENTAL~ TAl GENERAL ATHLETIC RESERVE LIABILITIES Cash overdraft Payables Due to other funds Intergovernlental Accounts Short. teMll Deferred revenues Accrued expenses Salaries and benefits Bonds payable COIpensated absences payable s s S 11.289 777 - 243.666 - 388.221 746.294 TOTAl LIABILITIES 1,389.470 777 FtJtI) EQUITY Contributed capital Investllent in general fixed assets Unreserved retained deficit Fund balances Reserved for Athletic '14.247 Capital reserve 63.225 Reading 4.965 Non-expendable trust Unreserved 1.991. 892 Total fund balances 1. 996.857 74.247 63.225 TOTAL FUND EQUITY 1.996.857 74.247 63.225 TOTAL LIABILITIES AND FUND EQUITY ~ ~ .w...m 4 () o II FIDUCIARY fUND TYPES JRUST AND AGENCY NON. EXPENDABLE tRUST f,GENCY TOTALS (MEMORANDUM ONlY) ACCOUNT GROUPS GENERAL GENERAL FIXED LONG.TERM ASSETS OE8T S 2.113 s $ S 9.921 212,279 101,585 80,032 S S 2.113 21,987 212.279 348.990 80.032 398,488 746.294 4.275.000 474.425 3.739 10,267 4.275.000 474.425. 16.119 403.817 4.749,425 6,559,608 281,401 281.401 40.224.615 (98,003) 40.224,615 (98,003) 30,417 74.247 63.225 4.965 30.417 1. 991.892 2.164.746 42.572.759 183.398 30.411 30.417 40.224.615 ~ m..m 1!U1Z ~ ~ ~ See notes to financial statements which are an integral part of this statement. 5 v SP~~rfA( l'OTALS (MEMORAHOUM ATHLETIC RESERVE ONLY) S 29.803 S 435 $10.019.235 7.446,353 358.525 730 29.803 435 17.824.843 10,948.352 4.887.986 112.794 335.706 112.794 16.172.044 (82.991) 435 1,652.799 75.410 60.173 135.583 (135.583) (750,000) (256.150) 75.410 60.173 (1.006.150) (7.581) 60.608 646.649 81.828 2.617 1.487.680 1.l!..m , 63.225 ~ See notes to financial statements which are an integral part of this statement. 7 SHIPPENSBURG AREA SCHOOL DISTRICT STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE. BUDGET AND ACTUAL. GENERAL FUND YEAR ENDED JUNE 30. 1995 VARIANCE FAVORABLE PUDGET ACTUAL ilJ"FAVORABLEl REVENUES Local sources $ 9.714,533 $ 9.988.997 $274.464 State appropriations 7.221,550 7.446.353 224.803 Federal appropriations 344,C38 358,525 14,487 Other financing sources 730 730 TOTAL REVENUES 17.2BO.121 17.794.605 514.484 EXPENDITURES Instructional 11.042.031 10.948.352 93,679 Support services 4.947.571 4.887,9B6 59.585 Operation of non. instructional services 233.233 222.912 10.321 TOTAL EXPENDITURES 16.222.835 16.059.250 163.585 EXCESS OF REVENUES OVER EXPENDITURES 1.057.2B6 1.735,355 678.069 OTHER FINANCING USES ~rating transfers out (135.583) (135.583) Debt service Principal (750.000) (750,000) Interest (256.255) (256.150) 105 OTHER FINANCING USES . NET (1.141.838) (1.141.733) 105 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING USES ~) 593.622 ~ FUND BALANCE . JULY 1. 1994 1.403.235 FUND BALANCE. JUNE 30, 1995 ~ See notes to financial statements which are an integral part of this statement. 8 SHIPPENSBURG AREA SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS/FUND BALANCE . PROPRIETARY FUND TYPE AND NON. EXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 1995 PROPRIETARY FIDUCIARY FUND TYPE FUND TYPE TOTALS ENTERPRISE NON-EXPENDABLE (MEMORANDUM CAFETERIA TRUST ONLY) OPERATING REVENUES Sales $ 492.417 $ $ 492.417 Donations 99 99 TOTAL OPERATING REVENUES 492.417 99 492.516 OPERATING EXPENSES Donated conaodities used 41.670 41,670 Food and mil k 272.778 272.778 Labor. taxes and benefits 368.072 368.072 Professional services 1,176 1.176 Supplies 13.377 13.377 Trash rellOval 2.213 2.213 Extermination fees 684 684 ~Uiplent repairs and maintenance 10.026 10.026 vertising 52 52 Travel 1.079 1,079 Utllities 20.000 20.000 IleP.reciation 28.279 28,279 Indirect costs 2.099 2.099 TOTAL OPERATING EXPENSES 759.406 2.099 76l.505 OPERATING LOSS (266.989) (2.000) (268.989) NONOPERATING REVENUES Interest 1.452 1.259 2.711 Federal and state subsidies 167,094 167,094 Value of donated commodities 41.670 41.670 Social security subsidy 10.995 10.995 TOTAL NONOPERATING REVENUES 221. 211 1.259 222.470 NET LOSS (45.778) (741) (46.519) RETAINED DEFICIT/FUND BALANCE - JULY 1, 1994 (52.225) 31.158 (21.067) RETAINED DEFICIT/FUND BALANCE - JUNE 30. 1995 1 (98.00~) llU1Z 1J67.~) See notes to financial statements which are an integral part of this statement. 9 SHIPPENSBURG AREA SCHOOL DISTRICT STATEMENT OF CASH FL~ PROPRIETARY FUND TYPE AND NON.EXPENDABLE TRUST FUND YEAR ENDED JUNE 30. 1995 PROPRIETARY FIDUCIARY FUND TYPE FUND TYPE TOTALS ENTERPRISE NON. EXPENDABLE (MEMORANDUM CAFETERIA TRUST ONLY) CASH FL~ FROM OPERATING ACTIVITIES Operating loss $(266.989) $(2.000) $(268.989) Ad~stlllents: ~eciation 28.279 28.279 U donated commodities 41.670 41.670 Changes in assets and liabilities: (Increase) decrease in: Receivables 8.141 8.141 Inventories (4.394) (4.394) (Decrease) increase in: Payables (54.709) (2.000) (56.709) Deferred revenue 10.267 10.267 Total adjustments 29.254 (2.000) 27.254 NET CASH USED IN OPERATING ACTIVITIES (237.735) (4.000) (241.735) CASH FL~ FROM NONCAPITAL FINANCING ACTIVITIES Federal and state subsidies 167.094 167.094 Social security subsidy 10.995 10.995 Cash overdraft 2.113 2.113 NET CASH FL~ FROM NONCAPITAL FINANCING ACTIVITIES 180.202 180.202 CASH FL~ FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition. construction. and improvement of capital assets (26.1B6) (26.186) CASH FL~ FROM INVESTING ACTIVITIES Interest 1.452 1.259 2.711 NET DECREASE IN CASH (82.267) (2.741) (85.008) CASH . JULY 1. 1994 82.267 3.158 85.425 CASH . JUNE 30. 1995 , L-..m L.....i1Z See notes to financial statements which are an integral part of this statement. 10 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Shippensburg Area School District conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the School District s significant accounting policies: REPORTING ENTITY The Shippensburg Area School District's financial statements include the operations of all organizations for which the School Board exercises oversight responsibility. Oversight responsibility is demonstrated by financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters. The Shippensburg Area School District is the lowest level of government which has oversight responsibility and control over all activities related to public school education in the COl1I1lOnwealth of Pennsylvania. The District receives funding from local, state and Federal Government sources and must comply with the requirements of these funding source entities. However, the District is not included in any other governmental "reporting entity" since the School Board members are elected by the public and have decision-making authority. the power to designate mana~ement, the ability to significantly influence operations and primary accountability for fiscal matters. Additionally, the District does not exercise oversight responsibility over any other entities and, consequently, no other entities have been included in the accompanying financial statements. BASIS OF PRESENTATION. FUND ACCOUNTING The accounts of the School District are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self. balancing accounts that comprise its assets, liabilities, fund equity, revenues and expendi tures or expenses. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are summarized by type in the financial statements. The following fund types and account groups are used by the School District: GOVERNMENTAL FUND TYPES Governmental Funds are those through which most governmental functions of the School District are financed. The acquisition, use and balances of the School District's expendable financial resources and the related liabilities (except those accounted for in Proprietary and Payroll Funds) are accounted for through Governmental Funds. The ~asurement focus is upon determination of changes in financial resources, rather than upon net income determination. 11 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . CONTINUED BASIS OF PRESENTATION. FUND ACCOUNTING. CONTINUED PROPRIETARY FUND TYPES Proprietary Funds are used to account for the School District's on. going activities which are similar to those often found in the private sector. The measurement focus is upon determination of net income and capital maintenance. FIDUCIARY FUND TYPES Fiduciary Funds are used to account for assets held by the School District in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. GOVERNMENTAL FUNDS General Fund The General Fund is used to account for all financial transactions not accounted for in another fund, Revenues are primarily derived from local property, per capita and occupation taxes, and state and Federal distributions, Many of the more important activities of the School District, including instruction, administration of the School District and certain non.instructional services are accounted for in this fund, Special Revenue Funds Special Revenue Funds are used to account for specific governmental revenues (other than major capital projects) that are legally restricted to expenditures for spP.cified purposes. The Athletic Fund is authorized by Section 511 of the Public School Code of 1949 to account for the revenues and expenditures of athletic activities. The Capital Reserve Fund (Section 2932 is authorized by P,L. 145, Act of April 30, 1943, known as Section 2932 School Laws of Pennsylvania) accounts for (1) monies transferred during any fiscal year from appropriations made for any particular purpose which may not be needed. and (2) surplus monies In the General Fund of the School District at the end of any fiscal year. This fund is included in the financial statements as a Special Revenue Fund. 12 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEME:fTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . CONTINUED BASIS OF PRESENTATION. FUND ACCOUNTING. CONTINUED PROPRIETARY FUND EnterDr1se Fund The Cafeteria Fund accounts for all revenues and expenses pertaining to cafeteria operations since such operations are financed and operated in a manner similar to a private business enterprise. It is the intent of the governing body that the cost of providing such goods or services to the students on a continuing basis be financed or recovered primarily through user Charges or cost reimbursement plans. Trust and Aaencv Fund~ Trust and Agency Funds are used to account for assets held by the School District in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. Agency funds are custodial in nature and do not involve measurement of results of operations. Agency funds include student activity funds and the trust fund which is a scholarship fund, and the earned income tax fund. The Activity Fund accounts for the monies authorized by Section 511 of the Public School Code of 1949 for school publications and organizations, The Activity Fund is an Agency Fund but is separated from other Agency Funds because of 1 ega 1 requi rements . ACCOUNT GROUPS General Fixed Assets Account GrouD . This account group is used to record all property, plant and equipment of the School District except that which is accounted for in the Enterprise Fund. General ~nQ- Term Debt Account Group . Thi s account group presents principal y the balance of long.term debt which is backed by the full faith and credit of the School District. Long.term debt accounted for in the Enterprise Fund is excluded. 13 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . CONTINUED BASIS OF ACCOUNTING Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. All Governmental Funds utilize the modified accrual basis of accounting. Under this method, revenues are recorded when susceptible to accrual, i.e., both measurable and available. 'Available' means collectible within the current period or soon enough thereafter to pay current liabilities. Such revenue items, which are accrued in the year to which they apply, are principally property taxes and inter.governmental revenues. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt which are recognized when due. Disbursements for inventory.type items and prepaid expenses are considered expenditures at the time of purchase. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency Funds are also accounted for USing the modified accrual basis of accounting. The Cafeteria Fund uses the Pennsylvania Department of Education-prescribed 'modified enterprise fund' method of accounting. Under this full accrual method of accounting: Furniture and equipment utilized by the Cafeteria Fund is recorded as fixed assets of that Fund (at cost), and is depreciated therein on a straight.line basis over an estimated useful life of 12 years. The fixed assets, net of accumulated depreciation, are a component of retained earnings. . Donated commodities received by the Cafeteria Fund are inventoried at estimated cost to purchase comparable products locally or at cost figures provided by the Federal government if comparable products are not locally available. Inventories are valued on a first.in, first.out basis: remainuer inventories at year.end are a component of retained earnings. The School District does not attempt to allocate 'building.wide costs' to the Cafeteria Fund. Thus, General Fund expenditures which partially benefit the Cafeteria Fund (utilities, janitorial services, Insurance, etc.) are not proportionately recognized within the Cafeteria Fund: similarly, the Cafeteria Fund does not recognize a cost for the building space it occupies (no rental.of.facilities expense). 14 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . CONTINUED BUDGETS AND BUDGETARY ACCOUNTING The School District adopts an annual budget for the General Fund. The budget is maintained on a modified accrual basis by function and object, with expenditures controlled by line item. Appropriations lapse at the end of each year and must be reappropriated. The School Board approves budget transfers between departments within School District Funds. Budgeted amounts are as originally adopted or as amended by the School Board at various times. GENERAL FIXED ASSETS General Fixed Assets are recorded at replacement values as determined by an Industrial Appraisal Company Report dated December 31, 1994, except for land, which is recorded at cost. Generally accepted accounting principles require General Fixed Assets to be recorded at cost. Original- purchase and replacement equipment are charged to the appropriate General Fund expenditure account as prescribed by the Department of Education. No depreciation has been provided on General Fixed Assets. GENERAL LONG - TERM DEBT The General Long-Term Debt Account Group consists of: 1. Sick leave and vacation payable. 2. Outstanding General Obligation Bonds. Series of 1991 issued on December 1, 1991. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly-liquid debt instruments with original maturities of three months or less. INVESTMENTS Investments are stated at cost. which approximates market. ALLOWANCES FOR ESTIMATED UNCOLLECTIBLE TAXES AND DEFERRED TAX REVENUES The allowance for estimated uncollectible taxes is based upon an historical estimate of delinquent taxes that will not be collected. Deferred tax revenues are based upon an historical estimate of delinquent taxes expected to be collected subsequent to the first sixty days of the following fiscal year. 15 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . CONTINUED TOTALS . MEMORANDUM ONLY These columns on the combined financial statements are not necessary for a fair presentation of the financial statements in conformity with generally accepted accounting principles. They are presented to facilitate financial analysis. Aggregation of this data is not comparable to a consolidation as interfund eliminations have not been made. NOTE 2 . CASH AND INVESTMENTS DEPOSITS The deposits of the School District are held in various financial institutions and are carried at cost. Carrying Amount Bank Balance Insured (FDIC) Uninsured, uncollateralized TOTAL DEPOSITS $ 240,417 $ 240,417 413.006 886.976 ~ n.ma The carrying amount of cash and investments as presented on the balance sheet includes petty cash of $225. INVESTMENTS Statutes authorize the School District to invest in the follOWing: U.S. Treasury Bills. Short.term obligations of the U.S. Government and Federal agencies. Insured savings and checking accounts and certificates of deposit in banks, savings and loan associations and credit unions. General obligation bonds of the Federal Government, the Commonwealth of Pennsylvania or any state agency, or of any Pennsylvania political subdivision. Shares of investment companies whose investments are restricted to the above categories. 16 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 7 . CAFmRIA FUND FIllED ASSETS A s~ry of changes in fixed assets for the year ended June 30, 1995, follows: June 30, 1995 J~~I, ChanCH!s Machinery and equipment Accu.ulated depreciation TOTALS $329.093 $ 22,113 (158.387) (24.207) ~ ~) $351,206 He?. 594) WLm NOTE 8 . GENERAL LONG. TERM OBLIGATIONS A s~ry of the reporting entity's long.term obligations as of June 30, 1995. and transactions during the year then ended follows: Balance Balance Jul v 1. 1994 Increase Decrease June 30. 1995 General long.term obligations: General obligation bonds . Series of 1991 $5,025.000 $ $ 750,000 $4,275,000 COIPInsated absences payable 239.255 235.170 474.425 TOTAL GENERAL LONG. TERM CIlLIGATIONS ~ J....m.W ~ ~ General Obligation Bonds. Series of 1991 . On Dect!lllber 1, 1991. the School District issUed General Obligation Bonds in the principal allOunt of $6,165.000. The bonds bear annual interest rates ranging frOM 4.25' to 5.65'. Interest is ~Ylble It ..turity, and the bonds Jll4ture ser1cllly in UIOunts ranging fro. '785,000 to $920,000 through September 1, 1999. The following is a schedule of principal and interest to service long.term bond obligations of the School District: Year Ending June 30 Principal Interest ImAl 1995.1996 $ 785,000 $210,003 $ 995,003 1996.1997 825,000 168.928 993,92B 1997-1998 870,000 123,987 993.987 1998.1999 920,000 74,968 994,968 1999.2000 875.000 24.718 899.718 TOTALS ~ ~ ~ 19 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 9 . DUE TO/FROM OTHER FUNDS Individual fund receivable and payable balances at June 30, 1995 were as follows: Receivables Pavables General fund Special revenue . athletic funds Cafeteria Payroll Earned income tax fund TOTAL $ 10,698 . 1,521 9.768 ~ $ 11,289 777 9,921 ~ NOTE 10 . COMPENSATED ABSENCES Upon retirement, employees are paid for unused sick days at rates varying with length of service and job classification subject to various maximums. These amounts are recorded as expenditures in the period taken or in the year of separation. The amount presented in the general long.term debt account group is an estimate. All teachers and administrators retiring with at least 25 years of service in the Pennsylvania Public School Employees' Retirement System (PSERS) and 15 years of service in the District, are paid by the District for 40~ of their accumulated unused sick days (to a maximum of 100 days) at the rate of $50 per day. Support staff with at least 15 years of service with the PSERS and the District will receive payment for 100~ of their accumulated unused sick days at their most recent daily pay rate. up to a maximum of $3,500. Support staff supervisors with at least 25 years of service with the PSERS and 15 years of service with the District receive payment for 100~ of their unused sick days at a rate of $50 per day up to a maximum of $5,500. For the year ended June 30. 1995, benefits attributed to employees retiring during the 1994.95 year amounted to $3,470 for four participants. NOTE 11 . POST. EMPLOYMENT BENEFITS Under the Consolidated Omnibus Reconciliation Act (COBRA), the District provides healthcare benefits to eligible former employees and their dependents. Requirements are outlined by the Federal Government for this coverage. The premium plus a 2~ administrative fee is paid in full by the eligible participant. This program is offered for a duration of up to IB months after an employee's termination date. At June 30, 1995, there were fourteen participants covered under COBRA. 20 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30. 1995 NOTE 12 . PARTICIPATION IN RISK SHARING POOL The District is a participant in a risk sharing pool to provide workers' compensation coverage. The expense for this coverage for the 1994.95 year was $57,478, comprised of a self.insured retention of $2,685 and a contribution to the Central Fund of $54,793. Actual claims during the year are first paid out of the self.insured retention. Claims that exceed the self.insured retention are satisfied by the Central Fund. The Central Fund maintains excess insurance to cover any claims that exceed $400,000 per accident. There are approximatelY 60 districts participating in the pool. If there is a deficiency in the pooled funds, each melIIber is assessed a proport i onate share. Upon wi thdrawa 1 by an individual member from the pool, the terminating member has no rights to funds in the pool. NOTE 13 . DEFINED. BENEFIT PENSION PLAN The School District participates in the state.wide Public School Employees' Retirement System (the System). The School District's payroll for the year ended June 30, 1995, for covered employees was $9,736,303: the District's total payroll was $10,184,497. All full.time District employees are eligible to participate in the System. Elployees are entitled to monthly retirement benefits upon reaching (a) age 62: (b) age 60 with 30 or more years of service or (c) after 35 or more years of service regardless of age. The Pennsylvania School Employee's Retirement ('the Code'), currently permits District employees with at least 30 years of credited service to retire without a reduction in benefits. This law does not require a minimum age in conjunction with length of service to be eligible for full benefits. Such benefits are generally equal to 2 percent of the employee's final average salary multiplied by the number of years of credited service. After completion of 10 years of service, an employee's right to the defined benefits is vested, and early retirement benefits may be elected. The System also provides for death benefits and disability retirement benefits. 21 SHIPPENSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 NOTE 13 . DEFINED. BENEFIT PENSION PLAN . CONTINUED The contribution policy is set by Act 96, dated October 2, 1975, and requires contributions by active employees, districts and the Commonwealth. The rate of contribution for most active employees is set by law at 5.25 percent of the employee's compensation. For employees joining the System on or after July 22, 1983, the rate of contribution is 6.25 percent. The contributions required of districts and the Commor~alth are based u~n an actuarial valuation computed as a percentage of the total compensation of all active districts during the period for which the amount is determined. The combined amount required from the districts and the Commonwealth was 11.06 percent of covered payroll for all active districts for the year ended June 30, 1995. The districts and the Commonwealth share such cost equally. The contribution requirement for the year ended June 30, 1995. was $1,625,675, which consisted of $53B,418 from the District and matched by the Commonwealth and $548,839 from the employees. These contributions represented 5.53 percent and 5.64 percent of covered payroll, respectively. The pension benefit obligation is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a result of employees' service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess the System's funding status on a going.concern basis, assess progrt!ss made in accumulating sufficient assets to pay benefits when due, and make comparisons among PSERS and districts. The system.wide pension benefit obligation at June 30, 1993, the date of the latest actuarial valuation, was $23.8 billion. The System's net assets available for benefits on that date (valued at cost) were $21.7 billion, leaving an unfunded pension benefit obligation of $2.1 billion. The System held no securities of the District or other related parties during the year or as of the close of the fiscal year. The District's contribution represented less than 1 percent of total contributions required of all participating entities. Ten. year historical trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's June 30. 1994, comprehensive annual financial report. 22 SUPPLEMENTARY INFORMATION I> ,~, ~;~',~,~.~~,~~ Independent Auditor's Report on the Supplementary Information Board of School Directors Sh1ppensburg Area School District Sh1ppensburg. Pennsylvania OUr audit was made for the purpose of forming an opinion on the general purpllse financial statellll!nts of Sh1ppensburg Area School District taken as a whole. The accQlPany1ng schedules and statements are presented for purposes of additional analysis and are not a required part O)f the general purpose financial statetlllnts of the Shippensburg Area School District. Such infonnat1on has been subjected to the audit proceClures applied in the audit of the general purJlC?se financial statelents and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statelllents taken as a whale, r~4v July 13, 1995 Shippensburg, Pennsylvania -,.:;d..~,--=.,.... ~ 23 c REVENUES . CONTINUED Federal appropriations Federally.ilPacted areas ESEA ChaJlter 1 Drug.free schools Vocational education Other federal programs and grants Total Federal appropriations Other TOTAL REVENUES 21,246 296,657 21,251 7,760 11.611 358,525 730 ~ 25 SHIPPENSBURG AREA SCHOOL DISTRICT GENERAL FUND SCHEDULE OF EXPENDITURES YEAR ENDED JUNE 30, 1995 EXPENDITURES Instructional Regular programs Salaries Elployee benefits Purchased services Professional and technical Property Other Supplies Property Other objects Total regular programs S~ial programs Salaries Eiployee benefits Purchased services Professional and technical Property Other Supplies Property Total special programs Vocational education programs Salaries Elployee benefits Purchased services Professional and technical Property Other Supplies Property Total vocational education programs Other instructional programs Salaries Employee benefits Purchased services Professional and technical Property Other $ 5,755,492 1,401,352 18,941 56,503 97,536 171,895 77,500 1.548 7,580,767 860,362 252,177 756,150 721 29,084 12,922 10.223 1,921,639 368,036 90,413 2,971 464,064 7,525 2.788 935,797 330,386 94,515 337 70 7,156 26 SHIPPENSBURG AREA SCHOOL DISTRICT SPECIAL REVENUE FUNDS . CERTAIN FUNDS COMBINING BALANCE SHEET JUNE 30, 1995 ASSETS ClSh JUNIOR HIGH ATHLETIC FUND ~ SENIOR HIGH ATHLETIC Fl,INQ ~ mr&. u.a LIABILITIES AND FUND BALANCES Interfund payables $ 777 $ $ 777 Fund balances 15.767 58.480 74.24~ TOTAL LIABILITIES AND FUND BALANCES ~ ~ u.a 31 SHIPPENSBURG AREA SCHOOL DISTRICT SPECIAL REVENUE FUNDS . CERTAIN FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 1995 JUNIOR HIGH SENIOR HIGH ATHLETIC FUND ATHLETIC FUND m:r&. REVENUES Local sources S 3.946 $ 25,857 $ 29,803 EXPEII>ITURES Operation of non. instructional services 21. 960 90.834 112.794 DEFICIENCY OF REVENUES OVER EXPEII>ITURES (18,014) (64,977) (82,991) OTHER FINANCING SOURCES Operating transfers in 20.660 54.750 75.410 EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES 2,646 (10,227) (7,581) FINl BALANCE . JULY 1, 1994 13.121 68.707 81.82& FUND BALANCE . JUNE 30, 1995 ~ ~ J.Z!.m 32 SHIPPENSBURG AREA SCHOOL DISTRICT SPECIAL REVENUE FUNDS . CERTAIN FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 1995 JUNIOR HIGH ATHLETIC FUND VARIANCE FAVORABLE BUDGET ACTUAL (uNFAVORABLE) REVENUES Local sources $ 3,274 S 3,946 $ 672 EXPENDITURES Operation of non. instructional 22.468 21. 960 508 services EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (19,194) (18,014) 1,180 OTHER FINANCING SOURCES Operating transfers in 20.660 20.660 EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES ~ 2,646 w..w FUND BALANCE . JULY 1, 1994 13. 121 FUND BALANCE . JUNE 30, 1995 !..Ji...m c~ ; '- 33 '-.I S~NIOR HIGH ATHLETIij FUND TOTAL VARIA'IfE ARIANCE FAVORABLE FAVORABLE mP'fT gTUAL llINFAVORABLE) eUDGET ACTUAL lllNFAVMABLE) $ 26,850 $ 25,857 $ (993) $ 30,124 $ 29,803 $ (321) 101.426 90.834 10.592 123.B94 -1l2.794 11.100 (74,576) (64,977) 9,599 (93,770) (82,991) 10,779 74.576 54.750 (19.826) 95.236 75.410 (19.826) ~ (7,581) UU!Z) 81.e2B 1lU!Z v 34 . SHIPPENSBURG AREA SCHOOL DISTRICT AGENCY FUNDS COMBINING BALANCE SHEET JUNE 30, 1995 ASSETS STUDENT PAYROLL EARNED INCOME ACTIVITY FUNDS FUND TAX FUND :mIAL Cash $ 70,032 $ 111,506 $ 202,511 $ 384,049 Investlll!nts 10,000 10,000 Due from other funds 9.768 9.768 TOTAL ASSETS ug,s ~ U1UZ2 ~ LIABILITIES Payroll withholdings $ $ 101,585 $ $ 101,585 Due to other funds 9,921 9,921 Due to student groups 80,032 80,032 Due to other governments 212.279 212.279 TOTAL LIABILITIES ug,s ~ U1UZ2 ~ 36 IBflI ~~~~,,~. ~!-,~:'~l\~~ Independent Auditor's Report on Internal Control Structure i ! i Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the general purpose financial statements of Shippensburg Area School District for the year ended June 30, 1995, and have issued our report thereon dated July 13, 1995. In our report, our opinion was qualified because general fixed assets were recorded at appraised values rather than cost. We conducted our audit in accordance with generally accepted auditing standards and '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 general purpose financial statements are free of material misstatement. The management of Shippensburg Area School District is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by mana9ement are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the freparation of general purpose financial statements in accordance with genera ly accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the general purpose financial statements of Shippensburg Area School District, as of and for the year ended June 30, 1995, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and Ilrocedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. 39 We noted a certain matter involving the internal control structure and its operation that we consider to be a reportable condition under standards established by the American Institute of Certified Public Accountants which is described in the attached Schedule of Internal Control Structure Conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the deSign or operation of the internal control structure that, in our judgment, could adversely affect the School District's ability to record, process, summarize, and report, financial data consistent with the assertions of management in the general purpose financial statements. A material weakness 'Is a reportable condition in which the design or operation of one or more of the speci fic internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in allOunts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we noted the following matter involving the internal control structure and its operation that we consider to be material weaknesses as defined above. The condition which is identified in the attached Schedule of Internal Control Structure Conditions was considered in determining the nature, timing, and extent of the procedures to be performed in our audit of the general purpose financial statements of Shippensburg Area School District for the year ended June 30, 1995. This report is intended for the information of the Board of School Directors and management of Shippensburg Area School District, and the Commonwealth of Pennsylvania, Office of the Budget. However, this report is a matter of public record, and its distribution is not limited. r~h July 13, 1995 Chambersburg, Pennsylvania 40 SHIPPENSBURG AREA SCHOOL DISTRICT SCHEDULE OF INTERNAL CONTROL STRUCTURE CONDITIONS YEAR ENDED JUNE 30, 1995 Mater1~1 weakness in the internal control structure Cash receipts: During our audit, we noted that the assistant business manager deposits cash receipts, records transactions and reconciles the bank statement for the earned incOlll! tax office, We recommend that either another individual in the tax office be trained to prepare the bank reconciliations or that the business ~nager review the preparation of the bank reconciliations. This will strengthen controls over cash receipts. As of July 1, 1995, the School District installed a computerized reconciliation progrlll. The duty of using the reconciliation program has been reassigned to the TaxlTransportation Office Secretary. 41 IBflI ~~~II~,~~~!~~I,~ Independent Auditor's Report on Compli8nce Based on an Audit of the General Purpose Financial Statements Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania " We have audited the general purpose financial statements of Shippensburg Area School District, as of and for the year en~ad June 30, 1995, and have issued our report thereon dated July, 13 1995. In our report, our opinion was qualified beCause general fixed assets were recorded at appraised values rather than cost. We conducted our audit in accordance with generally accepted auditing standards and '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 of I4terial misstatement. COMpliance with laws, regulations, contracts, and grants ap~licable to Shippensburg Area School District, is the responsibility of the SchOOl District's Nnagl!llent. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement. we performed tests of Shippensburg Area School District's compliance with certainfrovisions of laws, regulations, contracts, and grants. However, the objective 0 our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards. This report is intended for the information of the Board of School Directors and I4nagelllent of Shippensburg Area School District, and the Commonwealth of Pennsylvania, Office of the Budget. However. this report is a matter of public record, and its distribution is not limited. ..-<fL4u July 13, 1995 Chambersburg, Pennsylvania 42 lJ:3t!f{1 BovEH & RrrTEH <:r"IIIIUI P'-Itlll ,.\. 1111'1,\'1" Independent Auditor's Report on Schedule of Federal Financial Assistance Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the general purpose financial statements of Shippensburg Area School District as of and for the year ended June 30, 1995, and have issued our report thereon dated July 13, 1995. In our report, our opinion was qualified because general fixed assets were recorded at appraised values rather than cost, These general purpose financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and 'Government Auditing Standards', issued by the Comptroller General of the United States. Those standards require that we plan andrrform the audit to obtain reasonable assurance about whether the genera purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. OUr audit was made for the purpose of forming an opinion 011 the general purPQse financial statements of Shippensburg Area School District, taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the generalJurpose financial statements. The information in that schedule has been subject to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. ..-~w July 13, 1995 Chambersburg, Pennsylvania 43 SHIPPENSBURG AREA SCHOOL DISTRICT SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE YEAR ENDED JUNE 30, 1995 PASS GRANTOR FEDERAL THROUGH PROGRAM SOURCE CFDA GRANTOR'S GRANT TITLE CODE NUMBER NUMBER PERIOO I. U.S. Department of Education A. Impact Aid D 84.041 N/A 88/89 Impact Aid D 84.041 N/A 89/90 Impact Aid D 84.041 N/A 94/95 B, Passed through the Pennsylvania De~artment of Education: hapter 1 Low Income I 84.010 13.4387 93/94 Chapter 1 Low Income I 84.010 13-5387 94/95 ECIA Chapter 2 I 84.151 11.4387 93/94 ECIA Chapter 2 I 84.151 11.5387 94/95 Consumer and Home Economics Educational Program Improvement I 84.049 383-4033 93/94 Eisenhower Math and Science Basic Education I 84.164 20.4387 93/94 Eisenhower Math and Science Basic Education I 84.164 20.5387 94/95 Goals 2000 I 84.276 40-5387 94/95 C. Passed through the Lincoln Intermediate Unit Consortium Drug.Free Schools I 84 .186 100-4812 93/94 Drug.Free Schools I 84 .186 100.5812 94/95 D. Passed through the Montgomery County Intermediate Unit Chapter 1 I 84.012A 109748 93/94 Chapter 1 I 84.012A 194174 94/95 E. Passed through the Midwestern Intermediate Unit IV Chapter 1 I 84.012A 109808 94/94 I. TOTAL U.S. DEPARTMENT OF EDUCATION 44 PROGRAM TOTAL ACCRUED ACCRUED OR RECEIVED (DEFERRED) (DEFERRED) ANNUAL (REFUNDED) IN REVENUE AT REVENUE REVENUE AT AWARD FISCAL YEAR 7.1.94 RECOGNIZED EXPENDITURES 6.30.95 $ 1,128 $ 1,128 $ $ 1,128 $ 1,128 $ 190 190 190 190 19,928 19,928 19,928 19,92B 265,089 297,969 14,538 11,920 66,272 223,477 1,435 10,728 33,451 32,821 263,836 32,821 263,B36 40,359 1,435 11,611 11,611 883 23,193 8,629 8,629 7,977 472 472 7,760 6,984 7,760 7,760 776 10,000 3,750 (3,750) 21,410 14,660 9,734 11,294 3,143 6,591 14,660 6,591 14,660 3,366 6,000 14,000 (2,747) 2,747 14,000 2,747 14,000 3.500 10,500 500 (9) 9 44,374 375.281 9 375,281 45,134 374,521 45 SHIPPENSBURG AREA SCHOOL DISTRICT SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE YEAR ENDED JUNE 30, 1995 GRANTOR PROORAM TITLE II. SOURCE CODE FEDERAL CFDA NUMBER PASS THROUGH GRANTOR'S NUMBER GRANT PERIOD Pass t roug t Pennsy vania De~artment of Education: ational School Lunch Program I (F) 10.555 N/A 93/94 National School Lunch Program I (S) N/A N/A 93/94 National School Lunch Program I (F) 10.555 N/A 94/95 National School Lunch Program I (S) N/A N/A 94/95 Special Milk I (F) 10.556 N/A 93/94 Special Milk I(F) 10.556 N/A 94/95 Passed through the Pennsylvania De~artment of Agriculture: ODd Distribution (a) I (F) 10.550 N/A 94/95 II. TOTAL U.S. DEPARTMENT OF AGRICULTURE TOTAL FEDERAL PROGRAMS Source Codes: D . Direct Funding I . Indirect Funding (F) - Federal Share (S) . State Share Legends: (a) Donated commodities valued at local market values. (b) Total alllOunt of cOlllllOdities received from Department of Agriculture. (c) Inventories at July 1, 1994. (d) Total amount of commodities used. (e) Inventories at June 30, 1995. 46 " PROGRAM OR ANNUAL ~ TOTAL RECEIVED (REFUNDED) IN FISCAL YEAR ACCRUED (DEFERRED) REVENUE AT REVENUE 7.1.94 RECOGNIZED ~XPENDITURES ACCRUED (DEFERRED) REVENUE AT 6.30.95 N/A 7,636 7,636 M/A 939 939 N/A 144,317 146,431 146,431 2,114 N/A 16,766 17,012 17,012 246 N/A 147 147 N/A 3,615 3,651 3,651 36 N/A (b) 43.242 (c) (8.695) 41.670 (d) 41. 670 (e) (10.267) 216.662 27 208.764 208.764 (7.871) ~ 1J!..W ~ ~ ULm Test of 50t Rule: Total Expenditures Less State Expenditures Total Federal Expenditures Program selected for testing Chapter 1 Low Income $584.045 (17.012) ~ m2.W/~. ~t 47 IB8R1 ~~~~II~1 ~~'l~:'!~l\:l,~ Independent Auditor's Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the general purpose financial statements of Shippensburg Area School District, as of and for the year ended June 30, 1995, and have issued our report thereon dated July 13, 1995. In our report, our opinion was qualified because general fixed assets were recorded at appraised values rather than cost. We conducted our audit in accordance with generally accepted auditing standards: 'Government Auditing Standards', issued by the Comptroller General of the United States: and Office of Management and Budget (OMB) Circular A.128, 'Audits of State and Local Governments'. Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit for the year ended June 30, 1995. we considered the School District's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the School District's general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A.128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements allplicable to Federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated July 13, 1995. The management of Shippensburg Area School District is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded proll8rly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. and that Federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent 1 imitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. 48 For the purpose of this report, we have classified the significant internal control structure policies and f1rocedures used in administering Federal financial assistance progrus in the following categories: Controls Used in AdMinisterinQ Federal PrOQrams General Reaui retlll!nts Political activity Davis.Bacon Act Civil rights Cash I18nagellent Relocation assistance and real property acquisition Federal financial reports Allowable costs/cost principles Drug.Free Workplace Adlinistrative requirements Soecific R~irelllents Chapter 1 Program Selection of attendance areas Annual.needs assesSlent Selection of f1articipants Maintenance of effort COIIIparabl1 i ty Nonsupplanting Participation of private schools Consultation with parents School.wide projects Evaluation Prograll illlProvement Availability and carry. over of funds Record retention Other grant requirelllents and cost principles ClaiMS for Advances and ~,i~rsements Mounts Clailled or Used for Matchina For all of the internal control structure categories listed above. we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended June 30, 1995, Shippensburg Area School District had no Major Federal financial assistance programs and expended 52.32t of its total Fe<leral financial assistance under the following nonmajor Federal financial assistance program: Chapter 1 Basic 49 IBRI ~~~,~,~!"~:'[,1~1,~ Independent Auditor's Report on Compliance With the General Requirements Applicable to Federal Financial Assistance Programs Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the general purpose financial statements of Shippensburg Area School District, as of and for the year ended June 30, 1995, and have issued our report thereon dated July 13, 1995. In our report, our opinion was qualified because general fixed assets were recorded at appraised values rather than cost. We have applied procedures to test Shippensburg Area School District's compliance with the"following requirements applicable to its Federal financial assistance prograMS. which are identified in the Schedule of Federal Financial Assistance, for the year ended June 30. 1995: General Reauirements Political activity Davis-Bacon Act Civil rights Cash lanagelent Relocation assistance and real property acquisition , Federal financial reports Allowable costs/cost principles Drug.Free Workplace AdMinistrative requirements OUr procedures were limited to the applicable procedures described in the Office of Managelll!nt and Budget's 'Compliance Supplement for Single Audits of State and Local Governments'. OUr procedures were substantially less in scope than an audit, the objective of which is 'the expression of an opinion on the School District's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested. nothing came to our attention that caused us to believe that Shippensburg Area School District had not complied, in all material respects, with those requirements. 51 IBRf ~~~II~..~~~~!~I\:I,~ Independent Auditor's Report on Compliance Requirements Applicable to Nonmajor Federal Financia1 Assistance Programs Board of School Directors Shippensburg Area School District Shippensburg, Pennsylvania We have audited the general purpose financial statements of Shippensburg Area School District, as of and for the year ended June 30, 1995, and have issued our report thereon dated July 13, 1995. In our report, our. opinion was qualified because general fixed assets were recorded at appraised values rather than cost. In connection with our audit of the general purpose financial statements of Shippensburg Area School District, and with our consideration of the School District's control structure used to administer Federal financial assistance programs, as required by Office of Management and Budget Circular A.128, 'Audits of State and Local Governments', we selected certain transactions applicable to certain noMlajor Federal financial assistance programs for the year ended June 30, 1995. As required by OMS Circular A.128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed and eligibility of the program expenditures, and any specific provisions that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the School District's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Shippensburg Area School District had not complied, in all material respects. with those requirements. This report is intended for the information of the Board of School Directors and management of Shippensburg Area School District, and the Commonwealth of Pennsylvania, Office of the Budget. However, this report is a matter of publiC record, and its distribution is not limited. ~~w July 13, 1995 Chambersburg, Pennsylvania 53 . . II fi en ... ~~ ..~ "'... -:0: .....r. =i:"J u-.,.Oz i::'~O.... ~, .~~ o~...",:>- . C'''''tf) &.:J~..."% Wf.I.."z -JIJ,JUI '~r.rl~ 1- ~. :> :;(.) 1l7.00pd ~\~I\.>'ou.''l:.Q",,, '~I~ llA...-l. c.l.L cl 3o;,)',lJ p.;r! 3, l?B'O . ,.. C> = . . . . .