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LiSI of repon dimibulion TRANSl\lIITAL LETTER INDEPENDENT AUDITOR'S REPORT ON THE GENERAL I'URPOSE FINANCIAL STATEMENTS GENERAL PURPOSE FINANCIAL STATEMENTS: Combined balance sheel . all fund types and account groups Combined stalement 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 Combined statement of revenues, expenses and changes in relained earnings. proprielary fund type. enterprise. cafeleria Combined Slalement of cash flows. increase (decrease) in cash. proprietary fund type. enterprise. cafeteria Notes to financial statements INDEPENDENT AUDITOR'S REPORT ON ADDmONAL INFORMATION ACCOMPANYING FINANCIAL INFORMATION Combining balance sheet. agency funds Schedule of revenues. budget and actual. general fund Schedule of expenditures and other financing uses. budget and actual. general fund INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Schedule of federal financial assistance Notes to schedule of federal financial assistance INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE BASED ON AN AUDIT OF GENERAL pURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS" INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECmC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH TIlE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS PUKe 2 3 4 5 6and7 8 9 10.18 19 20 2t and 22 23.28 29 30.32 33 34 35 36 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECmC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS 37 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS" INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS SCHEDULE OF FlNDIINGS AND QUESTIONED COSTS STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS MANAGEMENT LEITER 38 and 39 40.42 43 44 45.47 . 8Er&o ,",[mlh Uk. It ~~~. lln... ;,<; 1 >n:f I':. , ..... , . 1 i ' ~ . . ' t' '. .. INDEPENDENT AUDITOR'S REPORT Board of Directors Carlisle Area School District Carlisle, Pennsylvania We have audited the accompanying general purpose financial statements of the Carlisle Area School District as of June 30, t995, and for the year then ended. These general purpose financial statements are the responsibility of the Carlisle Area School District's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A.128, "Audits of State and Local Governments". Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supponing 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 general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note t to the financial statements, general fixed assets consisting of propeny and equipment are recorded predominantly at replacement cost as detennined by an appraisal company. This is not in accordance with generally accepted accounting principles, which specify that these assets be recorded at cost. In our opinion, except for the effects of not recording general fixed assets at cost, as discussed in the preceding paragraph, the general purpose financiat statements referred to above present fairly, in all material respects, the financial position of the Carlisle Area School District as of June 30, 1995, and the results of its operations and cash flows of its proprietary and similar trust fund types for the year then ended in confonnity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a repon dated October t8, t995 on our consideration of Carlisle Area School District's internal control structure and a repon dated October 18, 1995 on its compliance with laws and regulations, ~ ~t( ~~ .; Cnr7 Carlisle, Pennsylvania October 18. 1995 .3- CARUSLE AREA SCHOOL DISTRICT COMBINED BALANCE SHEET. ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1995 ... ............ .GOVERNMENTAL FUND-............ TYPES SPECIAL CAPITAL CAPITAL GENERAL REVENUE RESERVE PROJECTS ASSETS FUND FUNDS FUND FUND Cash and equivalents $ 2.631,916 $ 3t,519 $ 123,829 $ t4,600 InvOJlments, at cost 2,069,832 0 600,470 362,200 Receivables: Taxes. (net of allowance for uncollectible laxOJ of$ 792,415) 2,539,015 0 0 0 Due from other funds 204,775 0 1,300,000 0 Subsidies: Federal 242,962 0 0 0 State 116,841 0 0 0 Other 27,895 0 13,770 0 Inventory 0 0 0 0 Vocational project 178,388 0 0 0 Land and improvements 0 0 0 0 Buildings 0 0 0 0 Furniture and equipment. Net of accumulated depreciation in Cafeteria Fund of S 522,292 0 0 0 0 Amounts to be provided for retirement of general long-term debt 0 0 0 0 Amount to be provided for accumulated compensated absences 0 0 0 0 Total assets S 8.011.624 $ 31.519 S 2,038.069 S 376.800 LIABILITIES AND FUND EQUITY Accounts payable S 454,531 S 0 S 53,144 S 7t.699 Deferred revenue 1.747,669 0 0 0 Due to olher funds 1,300,000 21.583 13t.838 3,267 Accrued salaries and benefils 1,333,500 0 0 0 Payrollt3Xes and withholdings 0 0 0 0 Due to student groups 0 0 0 0 General obligation bonds and notOJ payable 0 0 0 0 Accumulated compensated absences 0 0 0 0 Total liabilities 4.835.700 21.S83 184.982 74,966 FUND EQUITY Investment in general fixed assets 0 0 0 0 Retained earnings 0 0 0 0 Fund balances: Reserved 0 9,936 1,853,087 301.834 Unreserved. Undesignated 3.175.924 0 0 0 Total fund equity 3.175.924 9.936 1.853,087 301.834 Total liabilities and fund equil)' S 8,011.624 S 31.S19 S 2.038,069 S 376,800 The Notes to Financial Statements are an Integral part of this statement. .4- .. PROPRIETARY FIDUCIARY . - - - -ACCOUJ'lo'T GROUPS- -. - - FUND TYPE FUND TYPE GENERAL GENERAL TOTALS FIXED LONG-TERM (MEMORANDUM ENTERPRISE AGENCY ASSETS DEBT ONLY) S 46,t35 S 59,770 S 0 S 0 S 2,907,769 0 0 0 0 3,032,S02 0 0 0 0 2,539,OtS 0 0 0 0 t,504,775 5,081 0 0 0 248,043 558 0 0 0 tt7,399 75 0 0 0 4\,740 35,033 0 0 0 35,033 0 0 0 0 178,388 0 0 1,23 \,608 0 I ,23 t ,608 0 0 6O,634,5t2 0 60,634,512 33,334 0 13,528.607 0 13,561,941 0 0 0 tt ,020,000 tt ,020,000 0 0 0 1.236,029 1.236.029 S 120.216 S 59.770 S 75.394,727 S 12.256.029 S 98.288.754 S 0 S 2,022 S 0 S 0 S 581,396 0 0 0 0 t,747,669 46,558 1,529 0 0 1,504,775 0 0 0 0 1,333,500 0 670 0 0 670 0 55,549 0 0 55,549 0 0 0 1 t ,020,000 tt,020,ooo 0 0 0 1.236.029 1.236.029 46.558 59,770 0 12.256.029 17.479,588 0 0 75.394.727 0 75,394,727 73,658 0 0 0 73,658 0 0 0 0 2,164,857 0 0 0 0 3.175.924 73.6S8 0 75.394.727 0 80.809.166 S 120.216 S 59.770 S 75,394,727 S t 2.256.029 ~ 98.288,754 . CARLISLE AREA SCHOOL DISTRICT COMBINED STA TEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES. ALL GOVERNMENTAL FUND TYPES Year Ended June 30, 1995 ............. GOVERNMENTAL FUND TYPES. -........... TOTALS SPECIAL CAPITAL CAPITAL (MEMORANDU~ GENERAL REVENUE RESERVE PROJECTS ONLY) REVENUES Local sources S 18.688,15 t S 34,354 S 40,292 S 26,221 S 18,789,018 State sources It ,795,892 0 0 0 11,795,892 Federal sources 840,172 0 0 0 840,172 OTIIER FINANCING SOURCES Transfers from other funds 35,703 0 1.300,000 0 1,335,703 Refunds of prior years' expenditures 29.677 --!! 0 --!! 29.677 Total revenues and other financing sources 31.389,595 34.354 1.340.292 26,221 32,790,462 EXPENDITURES Instructional t8,266,838 0 0 0 18,266,838 Suppon services 8,745,813 0 0 0 8,745,813 Operation of noninstnIctional services 603.634 36,789 0 0 640,423 Capital projects 0 0 387,205 209,582 596,787 Debt service 2,258,391 0 0 0 2.258,391 OTIIER FINANCING USES Oper:lling transfers 1.411.163 --!! 0 35.703 1.446,866 Total expenditures and other financing uses 31.285.839 36.789 387 ,205 245,285 31.955.118 Excess of revenues and other financing sources over (under) expenditures and other financing uses 103,756 2,435) 953,087 ( 2t9,064) 835,344 Fund balances. July t, 1994 3.072.168 12.371 900 .000 520.898 4.505.437 Fund balances. June 30, 1995 S 3.175.924 S 9.936 S 1.853.087 S 301.834 S 5.340.781 The Notes to Financial Statements are an integral part of this statement, .5- CARLISLE AREA SCHOOL DISTRICT STA TEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE. BUDGET AND ACTUAL. GENERAL FUND Year Ended June 30, 1995 . REVENUE Local sources State sources Federal sources Other financing sources: Interfund transfers Refunds of prior year expendilures Total revenues and olher financing sources EXPENDITURES [nsuuclion Regular programs Special programs Vocational education programs Other inslructional programs Adult education programs Community/junior college education programs TOlal instruction SUPPO" Services Pupil personnel [nstructional staff Adminislration Pupil health Business Plant operalion and maintenance Transpo"ation Central Other SUpPO" services Total SUpPO" services V ARJANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) S 18,321.646 S 18,688, IS I S 366,505 11.58 t .887 [ 1,795,892 2 [4,005 931,396 840.172 9t,224) 0 35,703 35,703 0 29.677 29.677 30.834.929 31.389,595 554.666 13.306,968 12,829,425 477.543 3.110.837 3,252,245 ( 141,408) 1.328.679 1,322.622 6.057 5t9.120 474,868 44.252 48.887 43,549 5,338 392,196 344.129 48,067 18.706.687 18.266.838 439.849 1.047,918 1.002,723 45.195 978,737 t.013.153 ( 34,4(6) 2.219.633 2,304,083 ( 84,450) 289,4t6 293.897 ( 4.481) 392,789 327,051 65.738 2.598,3t8 2.475,091 123,227 1.259,707 1.238.90 I 20.806 61,345 28.174 33.171 65.876 62,740 3,136 8.913.739 8,745.813 167.926 The Notes to Financial Statements are an integral part of this statement, .6. . CARLISLE AREA SCHOOL DISTRICT STA TEMENT OF REVENUES. EXPENSES AND CHANGES IN RETAINED EARNINGS - PROPRIETARY FUND TYPE - ENTERPRISE. CAFETERIA Yu, Ended June 30, 1995 OPERATING REVENUES Sales S 653.767 Other 6.650 Total operating revenues 660.4t7 OPERATING EXPENSES Food and milk 384.320 Salaries 479.699 Employee benefits 131.5g3 Supplies 26,005 Delivery and storage 2.774 Depreciation 11.967 Repairs and mainlenance 8,883 Professional services 1.610 Miscellaneous 3.287 Total operating expenses 1.050.128 Operating (loss) ( 389.7.1.1) NONOPERATING REVENUES Interest 794 Federal and state subsidies 319,797 Transfer from gencrat fund t t 1.162 Total nonoperating revenues 431. 753 Net income 42.042 Retained earnings - July t. 1994 31.616 Retained earnings - June 30. 1995 S 73.658 The Notes to Financial Statements are an integral part of this statement. .8. . CARLISLE AREA SCHOOL DISTRICT STATEMENT OF CASH FLOWS . INCREASE (DECREASE) IN CASH PROPRIETARY FUND TYPE. ENTERPRISE. CAFETERIA Yel' Ended June 30, 1995 Cash Dows from operating lIctlvltles: Operating (loss) (S 389,71 \) Adjustments to reconcile operating loss to net cash used in operating activities Depreciation t1,967 Changes in assets and liabilities Inventories ( 3,641) Receivables 1.437 Liabilities ( t3,283) Total adjustments ( 3.520) Net cash used in operating activities 393,23 \) Cash Dows provided by capilli! finandng lIctlvltles: Purchase of furniture and equipment ( 17,673) Transfer from general fund t7,673 Net cash provided by capital financing activities 0 Cash Dows from nODcapilll! finandng lIctlvltles: Federal and state subsidies 281,623 State subsidies 50,463 Transfer from general fund 93,489 Net cash provided by noncapital financing activities 425.575 Cash Dows from investing lIctlvltles: Investment income 794 Net increase in cash 33,138 Beginning cash - July I. 1994 t2.997 Ending cash - June 30, 1995 S 46,135 The Notes to Financial Statements are an integral part of this statement, -9. NOTES TO FINANCIAL STATEMENTS Note 1. Swnmary of Significant Accounting Policies The accounting policies of the School Dimict conform to generaliy accepted accounting principles applicable to governmental units. The foliowing is a summary of the more significant policies: Bll5ls Of Presentation - Fund Accounting The accounts of the School District are organized on the basis of funds or 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 balance/retained earnings, revenues, and expenditures/expenses. The various funds are sununarized by type in the financial statements. The foliowing 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 Schoot District are financed. The acquisition, use and balances of the School District's expendable financiat resources and the related liabilities (except those accounted for in the proprietary funds) are accounted for through governmental funds, The measurement focus is based upon determination of changes in financial resources, rather than upon net income determination, General Fund. The General Fund is the general operating fund of the School District. This fund is used to account for all financial transactions except those required to be accounted for in another fund. Special Revenue Fund. These funds are used to account f<lr proceeds of specific revenues (other than major capital projects) that are legaliy restricted to expenditures for specific purposes or used to finance specific activities as required by administrative regulation. Capital Reserve Fund. This fund was created under Anicle XI. Municipal Law Code Section t431, for the purpose of funding capital improvements to facilities and purchase capital educational equipment needs. Debt Service Fund - This fund is used to account for the issuance of general obligation bonds and notes which are supponed by the fuli faith and credit of the School District. Capital Proiects Fund. This fund is used to account for financiat resources to be used for the acquisition or construction of major capital facilities, Proprietary Fund Types Proprietary funds are used to account for the School District's ongoing activities which are similar to those often found in the private sector, Enterorise Fund. The Cafeteria Fund accounts for ali revenues and expenses penaining to the 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, .10. Note I. Sununary of Significant Accounting Policies (Continued) Fiduciary Fund Types Fiduciary Funds are used 10 account for assets held by the School District in a trustee capacilY or as an agent for individuals. privale organizations. other governmental unils and/or olher funds, These funds are held by Ihe School District which acts in an agency capacity with respecI to Ihe payroll withholdings and the Student AClivity Funds, Account Groups General Fixed Assets Account Grout> - This account group is used 10 record all propeny and equipment of Ihe School District. exceplthat which is accounted for in the Enterprise Fund, General Fixed Assets consist of propeny and equipment and are recorded predominantly at reproduction cost as detennined from Industrial Appraisal Company repon dated June 22. 1995, To be in accordance with generally accepted accounting principles, generat fixed assets should be recorded at cost, All costs for original purchase and replacement equipment are charged 10 the appropriate General Fund expenditure accounts. These purchases amounted to S 510.520 for the year ended June 30, 1995. There were no significant general fixed asset deletions during the year. General Lon!!- Term Debt Account Group - This account group presents the balance of long- tenn debt which is backed by the full faith and credit of the School District, Principal and interest on long-tenn debt is expensed on the date such debt service requirements are paid to the trustee. Accumulated sick pay has also been added to this account group in 1993-94 as described below, Governmental And Fiduciary Fund Types All governmental and fiduciary funds are accounted for using the modified accrual basis of accounting. Revenues are recorded as received in cash except for revenues susceptible to the accrual and material revenues that are not received at nonnaltimes. Delinquent taxes receivable are reponed on the balance sheet, net of an allowance for uncollectible taxes. Expenditures are recorded on the accrual basis except for prepaid expenses, which are not recorded, and except for principal and interest on long-tenn debt. which are expenditures when due, Fixed assets and materials and supplies are charged to operations when purchased. Proprietary Fund Type The Cafeteria Fund uses the accrual melhod of accounting, under which: . Furniture and equipment utilized by the Cafeteria Fund is recorded as fixed assets of that Fund (at cosU , and is depreciated therein on a straight-line basis over an estimated useful life of 12 years, . Donated commodities received by Ihe Cafeteria Fund arc inventoried at cost tigures provided by the Federal Government. . Food and supplies inventories are valued at cost on a tirst-in, tirst-out basis, -11- Note 1. Swrunary of Significant Accounting Policies (Continued) The School District does not atlempt to allocate "building-wide costS" 10 the Cafeteria Fund. Thus. General Fund expendilures which panially benefit the Cafeteria Fund (utililies. janitorial services, insurance, etc.) are not proponion3tely recognized within the Cafeteria Fund; similarly, the Cafeteria Fund does nOl recognize a cost for the building space it occupies (no rental-of.facililies expense), Budgets And Budgetary Data The School District adopted a budget for the General Fund on a basis consistent with generally accepted accounting principles by function and object; expendilures are controlled by line item. Appropriations lapse at the end of each year and must be reapproprialed. Budget transfers between depanments are approved within the General Fund. No budgets are utilized for other funds. Accumulated Sick and Vacation Leave Vacation leave only applies to twelve month employees; only five days of vacation leave is allowed to be carried over at year end, but must be used by August t 5 or is lost. Vacation leave earned in 1994- 95 is credited to the employees on July I. 1994, and is expensed as paid. Sick leave is granted as appropriate, and medical evidence may be required. Provision is made annually in the budget for the cost of substitute personnel. There is limited payment for unused sick leave atlhe time of retirement. the amount of which is reflected in the generallong-tenn debt account group using the vesting method under GASB Statement No. 16. lnvesttnents All investments are stated at cost. See additional infonnation in Note 2, Principles Used in Determining the Reporting Entity The Carlisle Area School District is the lowest level of government which has oversight rcsponsibility and controt over all activitics related 10 public school education. The District receives funding from local, state and federal government sources and must comply with the requirements of these funding source entities. All operalions of the School District are included in the reponing entity. The School District is affiliated with Harrisburg Area Corrununity College (HACC). along with numerous other member school districlS in a joint venrure arrangement. The member school districts panicipate in providing oversight responsibility to this entity through the following: . Appointing of Board members who are also Board members of the panicipating schools . Approval and funding of operating budget . Long-tenn agreement to pro.,jde funding for capilal expenditures The District has an ongoing financial responsibility to fund its proponionate share of the operating budgets of this entity, but has no equity interest in it. Separate financial statements are prepared for and available from HAeC, See additional infonnation regarding payments to the above affiliated organization at NOle 7. -12- Nole 1. Swnmary of Signil1Clll1t Accounting Policies (Cuntinued) Cash And Cash Equivalents For purposes of the stalement of cash flows presented for the Proprietary Fund Type, the School District considers time deposits, cenificates of deposit and all highly.liquid debt instruments with original maturity of three months or less to be cash equivalents, Total Cotwnns On Combined Statements Total cotumns on the combined financial statements are not necessary for a fair presentation of the financial statements in confonnity with generally accepted accounting principles, They are presented to facilitale financial analysis, The aggregation of this data is not comparable 10 a consolidation as inter.fund eliminations have not been made. Note 2. Cash And Investments Cash and cash equivalent deposits are held at various financial institutions and are carried at cost. The carrying amount of deposits is displayed on the combined balance sheet as pan of cash and equivalents. They include cash deposits, cenificates of deposit, pooled cash in the Permsylvania Local Govenunent Investment Trust (PLGlT), and PNC Shon-Tenn Investment Trust (PNC), money market accounts, and a seven day repurchase agreement, The agreement is tilled in the District's name, but is not insured; the underlying securities are titled in the name of the financial institution and held in safekeeping by the bank or its agents. Petty cash Pooled cash Cash in bank Repurchase agreement Carrying Amount S 645 2,059,680 5,674 841. 770 S 2.907 .769 Bank Balance S 645 t,759.680 4t1.752 841.770 S 3,013.847 Since the PLGIT and PNC accounts described above consist of pooled investments with characteristics of a mutual fund. they are not categorized by risk category in accordance with GASB Statement No.3. These investments are properly collateralized. Investments consist of the following at June 30. t995: Cost Market FNMA Remic Trust CMO's FNMA Remic Pass Through Cenificate U,S. Treasury Obligations - Federated Fund FNMA Notes S 1.684,9t4 384,918 362,200 600.470 S 3.032.502 S 1.544,275 316,953 362,200 600.470 S 2.823.898 All investments are held in safekeeping by outside agents and backed by the U.S. Government and its agencies. The CMO's and Pass Through Cenificate pay filted interest rates ranging from 4-6% and were utilized as investments several years ago to m:uimize investment return. These investments are subject to interest rate risk primarily in times of rising rates. since these investments were purchased in 1993 when rates were generally low. There is no long-tenn risk to principal. however, if the investments are held to maturity. which varies from 2018 to 2023, Bank deposits and investments are categorized as either (1) insured or registered or for which the securities are held by the government or its agent in the government's name. (2) uninsured and unregistered for which the securities are held by the broker's or dealer's trust depanment or agent in the government's name or (3) uninsured and unregistered for which the securities are held by the broker or dealer. or by ils trust depanment or agent but not in the govenunent's name. -13- :-.Iote 2, Cash And Investments (Continued) The Schoel's cash (bank balances) and investments are categorized as follows under GASB Statement No, 3: Category I Category 2 Category 3 Total Cash in bank 5 200,000 5 0 5 211.752 5 411.752 Repurchase agreements 0 0 841.770 841.770 Investments 3.032.502 ~ 0 3.032.502 53.232.502 U 5 1.053.522 ~ 4.286.024 Statutes authorize the School District to invest in the following: . U.S. Treasury Bills. . Shon-tenn obligations of the U.S. Government and Federal agencies. . Insured savings and checking accounts and cenificates of deposit in banks, savings and loan associations and credit unions. . General obligation bonds of the Federal Government, the Commonwealth of PelUlSylvania or any state agency, or of any PelUlSylvania political subdivision. . Shares of investment companies whose investments are restricted to the above categories. Note 3. Taxes Receivable And Allowance For Uncollectible Taxes Taxes receivable and allowance for uncollectible taxes consisted of the following at June 30, t995: Real estate transfer Earned income Occupational privilege Real estate Occupational, resident and per capita 5 22,585 680,391 t6.051 1,027,572 1.584.831 3.331.430 792.415 52.539,015 Less: allowance for uncollectibles Taxes receivable Propeny taxes are levied on August t. Taxes are collected at a 2 % discount if paid before October t and at 10% penalty if paid after the due date of November 30. Taxes are recorded as revenues by the School District when received from the tax collector. and proper accruals are recorded at year-end. The allowance for uncollectible taxes is based upon management's estimates of taxes that are not expected to be collected. The taxes not received within 60 days of year-end are recorded as deferred revenues. Note 4. Cafeteria Fund Inventories Cafeteria Fund inventories consist of the following at June 30, t 995: Donated commodities Supplies Food S 12,932 8,253 t3.84R S 35.033 -14- :-late 6. Retirement Plan (Continued) The contribution policy is set by the Code. 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% of the employee's compensation. For employees joining the system on or after July 22. 1983, the rate of contribution is 6,25%, The contributions required ofdimicts and the Commonwealth are based upon 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 13,170% of covered payroll for all active districts for the year ended June 30,1995, The districts and the Commonweatth share such cost equally, The contribution requirement for the year ended June 30, 1995, was S t,929.467, which consisted of S 954,029 from the District and matched by the Commonwealth and S 975.438 from the employees. These contributions represented 5.53 % and 5.65% 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 and any step-rate benefits. estimated to be payable in the future as a result of employee 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 progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among PERS and districts, The system-wide pension benefit obligation at June 30, 1994, the date of the latest actuarial valuation. was S 26.3 billion. The System's net assets available for benefits on that date (valued at cost) were S 23,5 billion. leaving an unfunded pension benefit obligation of S 2.8 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% 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. Note 7, Affiliates As explained in Note t. the Carlisle Area School District is affiliated with the Harrisburg Area Community College (HACC), Total payments to this organization during the year ended June 30, 1995 were S 344.129. Note 8. Commitments The School District is currently committed to S 870,285 in future facilities and capital equipment upgrades to be jointly funded between the Capital Projects Fund and Capital Reserve Fund. Note 9. Contingencies The School District is appealing a decision of the Special Education Appeals Panel. which directed changes to an education program and placement for a handicapped child residing within the School District. Discovery concluded in October 1993 and went to a one day trial before a judge in January 1994. The judge upheld the School District's position, which was appealed to the Third Circuit Court, which also upheld the District's position on August 8, t995, The child's parents have until January 1996 to file a Writ of Certiorari to the United States Supreme COUrt. The ultimate outcome of this case is undeterminable at this time, The range of potential loss to the District is between S 100,000 and S 200.000. some part of which is expected to be recovered by insurance. -17- CARLISLE AREA SCHOOL DISTRICT COMBINmGBALANCESHEET-AGENCYFUNDS Year Ended June 30, 1996 PAYROLL STUDENT FUND ACTIVITY TOTAL ASSETS Cash U1Q $ 59.100 S 59.770 Total asselS $ 670 ~ 59.19l? $ 59.770 LIABILITIES AccounlS payable $ 0 $ 2,022 S 2,022 Due to other funds 0 1,529 1,529 Payrolltaxcs and withholdings 670 0 670 Due to srudent groups -..!2 55.549 55.549 Totalliabilitics W $ 59.100 S 59.770 -20- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF REVENUES. BUDGET AND ACTUAL GENERAL FUND Year Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) REVENUES FROM LOCAL SOURCES Rcvcnuc From Taxation Real cstatc $ 12,157,878 S 12,059,607 ($ 98,271) Pcr capita 90,000 86.037 ( 3,963) Residcnt 91,000 86,227 ( 4.773) Earncd incomc 2,020,165 2.019,092 ( 1,073) Rcal cstatc transfcrs 245.000 248,074 3,074 Occupation 2,591.603 2.477.647 ( 113,956) PaymcnlS in Iicu of taxcs 9.000 10,570 1,570 Dclinqucnt 445.000 606,472 161.472 Occupation privilcgc 105,000 104.083 ( 917) Public utility tax 225.000 219,143 ( 5,857) Tuition and othcr paymcnlS from patrons 40,000 25,382 ( 14,618) Earnings from investrncnlS 210.000 472.793 262.793 Rcntals 30.000 30.179 179 Contributions from privatc sources 25.000 22.610 ( 2,390) Athlctics rcvcnuc 25.000 32.170 7.170 Vocational projcct rcvcnuc 0 9.782 9,782 Misccllancous rcvcnuc 12.000 178.283 166.283 Total rcvcnuc from local sources 18.321.646 18.688.151 366.505 REVENUE FROM STATE SOURCES Basic instruction subsidy 8,091,452 8,115,519 24,067 DER grant 0 5.681 5,681 Homcbound instruction 750 686 ( 64) Spccial education 1,409.658 1,421.116 11 ,458 Transponation 547.806 492.743 55,063) Vocational cducation 68,235 82.057 13,822 Rcntals and sinking fund paymcnts 690,128 800,161 110,033 Drivcr cducation 9.000 9,830 830 Mcdical and dcntal scrviccs 0 10,755 10,755 Nurscs scrvices 95.000 86,377 8.623) Social sccurity 654,858 741.804 86,946 Suppon tcam subsidy 0 29,000 29,000 Tuition - Section 1305 and 1306 15.000 163 14.837) Total revcnuc from statc sourccs 11.581.887 11.795.892 214.005 .21- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF REVENUES. BUDGET AND ACTUAL GENERAL FUND (CDNTINUED) Year Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) REVENUES FROM FEDERAL SOURCES Impact aid $ 302,000 $ 265.783 (S 36,217) EC1A Chaptcr 1 435,782 434,681 ( 1,101) ESEA Chaptcr II 30,200 18,996 ( 11,204) Othcr fedcral grants 163.414 120.712 ( 42.702) Total rcvcnuc from fcdcral sourccs 931.396 840.172 ( 91.224) OTIlER FINANCING SOURCES Intcrfund transfcrs 0 35.703 35,703 Rcfunds of prior ycar's cxpcnscs 0 29.677 29.677 Total othcr financing sourccs 0 65.380 65.380 Total rcvcnucs and othcr financing sourccs $ 30.834.929 P1.389.595 S 554.666 -22- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND Year Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) EXPENDITURES INSTRUCTIONAL Rcgular Programs Salarics S 10.157,323 $ 9,776,595 $ 380,728 Employcc bcncfits 2.632,305 2.543,252 89.053 Purchascd scrviccs: Profcssional and tcchnical 14,724 16,028 ( 1.304) Propcny 14.000 10,528 3,472 Othcr 22,840 62,852 ( 40.012) Supplics 337,103 313,977 23,126 Propcny 128.673 106.193 22.480 Total rcgular programs 13.306.968 12.829.425 477 .543 Special Programs Salarics 1.753.738 1,821.989 ( 68,251) Employee bcncfilS 491.936 504.764 ( 12,828) Purchased scrvices: Professional and tcchnica1 728,413 757.972 ( 29,559) Propcrty 0 4.508 ( 4,508) Othcr 40.000 92.325 ( 52.325) Supplics 69,950 52,460 17,490 Propcrty 26.800 18.227 8.573 Total spccial programs 3.110.837 3.252.245 141.408) Vocational Education Programs Salarics 848.121 904,977 ( 56.856) Employcc bcncfilS 250.301 264,817 ( 14.516) Purchascd scrviccs: Profcssional and tcchnical 0 300 ( 300) Propcrty 11.600 4.879 6,721 Othcr 12.800 5.478 7,322 Supplics 106,057 105,702 355 Property 99.800 36.469 63.331 Total vocational education programs 1.328.679 1.322.622 6.057 -23. CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND (CONTINUED) Year Ended June 30, 1995 . VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) EXPENDITURES INSTRUCTIONAL. CONTINUED Other Instructional Programs Salarics S 285.924 S 357,621 (S 71,697) Employcc bcncfits 83,744 83,529 215 Purchascd scrviccs: Professional and tcchnical 3,869 3,869 0 Othcr 172 IS 157 Supplics 38,719 29,834 8,885 Othcr ObjcclS 106.692 0 106.692 Total othcr instructional programs 519.120 474.868 44.252 Adult Education Programs Salarics 38.431 35,869 2,562 Employcc bcncfilS 7.523 5,072 2,451 Othcr purchascd services 790 697 93 Supplics 2.143 1.911 232 Total adult cducation programs 48.887 43.549 5.338 Community College Education Programs 392.196 344.129 48.067 Total instructional programs 18.706.687 18.266.838 439.849 SUPPORT SERVICES Pupil Personnel Salarics 799,499 760,201 39,298 Employcc bcncfits 202.359 213.706 ( 11.347) Purchascd scrviccs: Profcssional and tcchnical 21.850 5.270 16.580 Supplies 10,955 12.626 ( 1.671) Propcrty 1,000 0 1,000 Othcr objccts 12.255 10.920 1.335 Total pupil pcrsonncl 1.047.918 1.002.723 45.195 -24- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND (CONTINUED) Year Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) EXPENDITURES SUPPORT SERVICES - CONTINUED instructional Staff Salarics S 525.599 S 605,546 ($ 79,947) Employcc bcncfits 155.643 149,224 6,419 Purchascd scrviccs: Profcssional and tcchnical 31,750 15,189 16.561 Propcny 2.900 243 2,657 Othcr 65.881 58,879 7,002 Supplics 93.559 76.413 17,146 Propcny 92.405 107.659 ( 15.254) Othcr objcclS 11.000 0 11.000 Total instructional staff 978.737 1.013.153 34.416) Administration Salarics 1.429.198 1.469,437 ( 40.239) Employcc bcncfits 410,455 425,059 ( 14,604) Purchascd scrviccs: Profcssional and tcchnical 190,260 192.059 ( 1,799) Propcny 44.669 58,942 ( 14.273) Othcr 48.850 61,742 ( 12,892) Supplics 31,113 31,224 ( 111) Propcny 34,988 40.718 ( 5.730) Othcr objcclS 30.100 24.902 5.198 Total administration 2.219.633 2.304.083 ( 84.450) Pupil Health Salarics 213.348 218,422 ( 5.074) Employcc bcncfilS 58,818 62.959 ( 4.141) Purchased scrviccs: Profcssional and tcchnical 9.200 4.523 4,677 Propcny 500 0 500 Othcr 550 188 362 Supplics ~,ooo 6.776 1,776) Propcrty 2.000 1.029 971 Total pupil hcalth 289.416 293.897 4.481) .25- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND (CONTINUED) Year Ended June 30, 1995 EXPENDITURES SUPPORT SERVICES - CONTINUED Business Salarics Employcc bcncfits Purchased scrvices: Profcssional and tcchnical Othcr Supplics Propcrty Total business Operation and Maintenance of Plant Services Salaries Employcc bcncfits Purchascd scrvices: Propcny Othcr Supplies Propcrty Total opcration and maintcnancc of plant scrvices Transportation Services Othcr purchascd scrviccs Supplics Total transportation scrvices Central Salarics Employcc bcncfits Purchascd scrviccs: Propcny Othcr Supplics Total ccntral BUDGET ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) S 229,327 S 174,678 S 54,649 46,855 43,986 2.869 68,856 66,844 2,012 2,500 989 1.511 11,000 4.881 6,119 34.251 35.673 ( 1.422) 392.789 327.051 65.738 858,447 809,292 49,155 228,331 204,434 23,897 425,085 401,365 23,720 121,400 132,222 ( 10,822) 910.655 876,130 34,525 54.400 51.648 2.752 2.598.318 2.475.091 123.227 1.259,707 1,238,070 21.637 0 831 8m 1.259.707 1.238.901 20.806 46,618 19.537 27,081 12,088 7.259 4,829 800 0 800 1.601 53 1.548 238 1.325 1.087) 61.345 28.174 33.171 -26- CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND (CONTINUED) Yea, Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) EXPENDITURES SUPPORT SERVICES - CONTINUED Other Support Services Salarics S 0 S 47 ($ 47) Employcc bcncfits 0 1,295 ( 1,295) Purchascd scrvices: Profcssional and technical 44,076 42.903 1,173 Othcr 21.500 17,431 4,069 Supplies 300 I. 064 764) Total othcr support serviccs 65.876 62.740 3.136 Total support scrviccs 8.913.739 8.745.813 167.926 OPERATION OF NON INSTRUCTIONAL SERVICES Student Activities Salaries 263,490 271,377 ( 7,887) Employcc bcncfits 78.443 71.495 6.948 Purchascd scrviccs: Profcssional and tcchnical 56.797 57,417 620) Propcrty 4.900 3,347 1.553 Othcr 62,750 59,418 3,332 Supplies 6,750 6.567 183 Propcny 63.900 112.902 ( 49.002) Othcr objcclS 30.210 19.877 10.333 Total srudcnt activitics 567 .240 602.400 ( 35.160l Community Services Purchascd scrviccs: Profcssional and tcchnical 375 670 295) Othcr 4,845 0 4.845 Supplies 978 564 414 Total cummunity scrviccs 6.198 1.234 4.964 Total opcration of noninstructional scrviccs 573.438 603.634 30.196) -27. CARLISLE AREA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES. BUDGET AND ACTUAL. GENERAL FUND (CONTINUED) Year Ended June 30, 1995 VARIANCE FAVORABLE BUDGET ACTUAL <UNFAVORABLE) EXPENDITURES DEBT SERVICE Intcrest $ 474,589 $ 508.102 (S 33.513) Principal 1.555.000 1.720,000 ( 165,000) Rcfunds of prior ycar rccciplS 0 30.289 ( 30.289) Total dcbt scrvicc 2.029.589 2.258.391 ( 228.802) OTHER FINANCING USES Fund Transfcrs 0 1.411,163 ( 1.411,163) Budgctary Rescrvc 611.476 0 611.476 Total othcr financing uses 611.476 1.411.163 ( 799.687> Total cxpcndirures and othcr financing uses ~ 39.834.929 S 31.285,~32 ($ 450.910) -28- on 15--8: '0 :t _ l ~ ~ .. " " '" " 0 ::> ~ ..!: Q ~ ::> oo ::> 0 .... oo ::> '" on _ ~ II g a- .. ., on .... u . u _ " .,; <-:II:... M N ... E ... on N on '" 0 a- 0 M 0 a- ~ ." ., oo .. ., i=: .. oo S; 0 on .\ " N ~ "\ ." i ,.: .i ,,; R. M ~ :!: N M .:l ... ~'ll ... on N on '" 0 a- 0 M 0 a- II .. 00 00 ~l i=: ., 00 S; q on N 00 00. N :g ,.: i. 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M 8 ... l;: u 8 8 ~ ~ 8 6 N N ;:; ~_... ~ ~ !5~ on -r -r on -r -r ~ z M '" ~ - .;, '" ,.:. ... 0 M '" M M 0 0 0 0 0 0 0 - < .. 0 ~ 00 N N N N M S!2.ll C!! ~ ~ ~ $ 8 $ $ N "! "! "! 'llu5 Olj Olj Olj Olj ... ... Olj or; ... Olj Olj ... Z 00 00 00 t " 0 ..." ~a ~ c c < .il il ~ 0- C u ;; ;; .. u .il 2 = = u u .ll a . . 5 - ~ ~ ~ Co ~ ~ ." ." I:! j .c: ~ u u u - u lj C "' '" ,., Eo Eo as E. Co .. U .;1 ..' .~ .~ ~ ~ gill ~ .2 .2 .2 .2 ;; .. .. < .c: c ~ ~ lj ll-! u u u i! u u !l ~ ~~ '" '" ;:; e 1 c!l a u 5 .. <: < <: !!." <: <: i:il ~ f il"" Li Li C:f '" '" .. .. ffi 0 .'3 .. . .. ~! on t:l .. ." ." '" :42 .. "!~ '" "' "' "' ." <: <: c.:; .., ~~ .. ;;> ~ <: a ~ "" -30- 8EK@b ,>,[:lll h U:, ." r. I: ':~ :', ., ~ ," INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS Board of Dircctors Carlislc Arca School District Carlislc. Pcnnsylvania Wc havc auditcd the financial statcments of the Carlisle Arca School District as of and for the year endcd Junc 30. 1995, and havc issucd our rcport thcrcon datcd Octobcr 18. 1995. In our rcport. our opinion was qualified duc to gcncral fixcd asscts not bcing rccorded at cost. Wc havc also auditcd the Carlisle Area School District's compliancc with thc rcquircments govcrning typcs of scrvices allowcd or unallowcd; eligibility; matching. Icvcl of cffort, or earmarking; rcponing; spccial rcquircmcnlS as appropriatc; claims for advanccs and rcimburscmcnts; and amounts claimcd or uscd for matching that arc applicablc to cach of ilS major fedcral financial assistance programs, which arc idcntificd in thc accompanying Schcdulc of Fedcral Financial Assistancc. for thc year endcd Junc 30, 1995. Thc managcmcnt of thc Carlislc Arca School District is rcsponsiblc for thc District's compliancc with thosc rcquircmcnts. Our responsibility is to cxprcss an opinion on compliancc with thosc requircmcnts bascd on our audit. Wc conductcd our audit of compliancc with those rcquircmcnlS in accordancc with gcncrally acccptcd auditing standards. Governmem Audiring Srandards. issucd by thc Comptrollcr Gcncral of thc Unitcd Statcs, and OMB Circular A-128. "Audits of Statc and Local Govcrnmcnts." Thosc standards and OMB Circular A-128 rcquirc that wc plan and pcrform thc audit to obtain rcasonablc assurancc about whcthcr matcrial noncompliancc with thc rcquircmcnts rcfcrred to abovc occurrcd. An audit includcs cxamining, on a tcst basis, evidcncc aboutthc School District's compliance with thosc rcquircments. We bclievc that our audit provides a rcasonablc basis for our opinion. Thc rcsults of our audit proccdures disclosed immatcrial instances of noncompliance with the rcquircmcnlS rcfcrrcd to abovc, which arc described in the accompanying Schcdulc of Findings and Questioned Costs. Wc considcrcd thcsc instanccs of noncompliancc in forming our opinion on compliance, which is exprcssed in thc following paragraph. In our opinion. thc Carlislc Arca School District complicd, in all material respccts, with the rcquiremcnts govcrning typcs of scrvices allowcd or unallowed; eligibility; matching, lcvcl of effon, or earmarking; rcponing; special rcquircmcnts as appropriate; claims for advances and reimburscments; and amounts claimed or uscd for matching that are applicable to its major fcderal financial assistance program for the year cndcd Junc 30. 1995. This rcport is intcnded for the information of the Board of Dircctors. management. the U. S. Departmcnt of Education. and othcr fcderal and state audit agencies. However. this report is a matter of public record and its distribution is not limitcd. ~ ~i'~ i~ Carlisle. Pcnnsylvania October 18. 1995 -35- 0E~ ,~nllti; t.llkll t,;':: '." ,',1 I . I~;t' Iii,' ... "1" . INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS Board of Dircctors Carlislc Arca School District Carlislc, Pcnnsylvania Wc havc audited thc gcncral purposc financial statcmcnlS of Carlislc Arca School District, as of and for thc ycar cndcd Junc 30, 1995, and havc issucd our rcport thcrcon datcd Octobcr 18, 1995. In our rcport. our opinion was qualificd duc to gcncral fixcd assclS not bcing recorded at cost. In conncction with our audit of thc gcncral purposc financial statcmcnts of Carlislc Arca School District, and with our considcration of Carlisle Arca School District's control structurc uscd to administcr fcdcral financial assistancc programs, as rcquircd by Officc of Managcmcnt and Budgct (OMB) Circular A-128. "Audits of Statc and Local GovcrnmcnlS", wc sclectcd ccrtain transactions applicablc to ccnain nonmajor fcdcral financial assistancc programs for thc ycar cndcd Junc 30. 1995. As rcquircd by OMB Circular A-128. wc havc pcrformcd auditing proccdurcs to tcst compliancc with thc rcquircmcnts govcrning types of scrvices allowcd or unallowcd; cligibility; and spccialteslS and provisions that arc applicable to thosc transactions. Our procedurcs wcrc substantially Icss in scopc than an audit. thc objcctivc of which is thc cxprcssion of an opinion on Carlislc Arca School District's compliancc with thesc rcquircments. Accordingly, wc do not cxpress such an opinion. With rcspcctto thc itcms tcstcd, thc rcsults of thosc proccdures discloscd no matcrial instanccs of noncompliancc with thc rcquircmcnlS Iistcd in thc prcccding paragraph. With rcspcctto itcms nottcstcd, nothing camc to our attcntion that caused us to bclicvc that Carlislc Arca School District had not complicd. in all matcrial respeclS, with thosc rcquircmcnlS. Howcvcr, the results of our procedurcs discloscd immatcrial instances of noncompliancc with thosc rcquircmcnlS, which arc dcscribcd in thc accompanying Schcdulc of Findings and Questioncd COSlS. This rcport is intcndcd for the information of thc Board of Dircctors. managcmcnt. thc U. S. Dcpartmcnt of Education and othcr fedcral and statc audit agcncics. Howcvcr. this rcport is a mallcr of public rccord and ilS distribution is not limitcd. ~~r~iay7 Carlislc, Pcnnsylvania Octobcr 18. 1995 -37- 8E~ ,~l!:I'~i f.:i. " ~.' \~:.,' ~ " ",. r,'. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STA TEMENTS PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS" Board of Dircctors Carlislc Arca School District Carlislc, Pcnnsylvania Wc havc auditcd thc gcncral purposc financial statcments of thc Carlislc Arca School District as of and for thc ycar cndcd Junc 30, 1995. and havc issucd our rcport thcrcon datcd October 18, 1995. In our rcport, our opinion was qualificd duc to gcncral fixcd assets not bcing rccordcd at cost. Wc conductcd our audit in accordancc with gcncrally acccptcd auditing standards. Government Auditing Standards. issucd by thc Comptrollcr Gencral of thc Unitcd Statcs. and thc provisions of Officc of Managcmcnt and Budgct Circular A.128. "Audits of Statc and Local Govcrnmcnts". Thosc standards and OMB Circular A-128 rcquirc that wc plan and pcrform the audit to obtain rcasonablc assurancc about whcthcr thc gcncral purposc financial statcments arc frcc of matcrial misstatcmcnt. Thc managcmcnt of thc Carlislc Arca School District is rcsponsiblc for cstablishing and maintaining an intcrnal control structurc. In fulfilling this rcsponsibility, cstimatcs and judgmcnts by managemcnt arc requircd to assess thc expcctcd bcncfits and rclated costs of intcrnal control strucrurc policics and proccdurcs. Thc objcctives of an intcrnal control structurc arc to providc managemcnt with rcasonablc, but not absolutc, assurancc that asscts arc safcguardcd against loss from unauthorizcd usc or disposition, and that transactions arc cxccutcd in accordancc with managemcnt's authorization and rccordcd propcrly to pcrmit thc prcparation of financial statcmcnts in accordance with gencrally accept cd accounting principlcs. Bccausc of inhcrcnt limitations in any intcrnal control structurc. crrors or irregularities may ncvcrtheless occur and not be dctccted. Also, projection of any cvaluation of thc structure to future periods is subject to thc risk that proccdurcs may bccomc inadcquatc bccause of changcs in conditions or that the effcctiveness of the design and opcration of policies and proccdurcs may dctcrioratc. In planning and pcrforming our audit of thc gencral purpose financial statemcnts of Carlislc Arca School District. for thc ycar endcd Junc 30, 1995. wc obtaincd an undcrstanding of thc intcrnal control structurc. With rcspcct to thc intcrnal control structure. we obtained an undcrstanding of thc dcsign of rclcvant policics and procedurcs and whcthcr thcy havc bccn placed in operation, and wc asscsscd control risk in order to dctcrminc our auditing proccdurcs for the purpose of cxpressing our opinion on thc gcncral purposc financial statcments and not to providc an opinion on thc intcrnal control structure. Accordingly, wc do not express such an opinion. We notcd cenain matters involving the internal control structure and its opcration that we considcr to be rcportablc conditions under standards established by the American Institutc of Cenified Public Accountants. Rcponablc conditions involvc mallcrs coming to our allention rclating to significant dcficicncics in thc dcsign or opcration of thc intcrnal control structurc that, in our judgment, could advcrscly affcctthe cntity's ability [0 rccord. proccss. summarizc, and report financial data consistcnt with thc asscnions of managcmcnt in thc gcncral purposc financial statcmcnts. -38- ~Er&b _"ml' h 1:1 :" t", lit:" " \ ';',~ l' . ".'. . INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS Board of Dircctors Carli sic Arca School District Carlislc. Pcnnsylvania We havc auditcd thc gcncral purposc financial statcmcnlS of [hc Carlislc Arca School District for thc ycar cndcd Junc 30, 1995. and havc issucd our rcport thcrcon datcd Octobcr IS. 1995. In our rcpon. our opinion was qualificd duc to gcncral fixcd asscts not bcing rccordcd at cost. Wc havc also auditcd thc compliancc of Carlislc Arca School District with rcquircmcnts applicablc to major fcdcral financial assistancc programs and havc issucd our rcpon thcrcon datcd Octobcr IS. 1995. Wc conductcd our audits in accordancc with gcncrally acccptcd auditing standards; Government Auditing Standards, issucd by thc Comptrollcr Gcncral of thc Unitcd States; and Officc of Managcmcnt and Budgct (OMB) Circular A-12S, "Audits of Statc and Local Govcrnmcnts'. Thosc standards and OMB Circular A-12S rcquirc that wc plan and pcrfonn thc audit to obtain rcasonablc assurancc about whcthcr thc gcncral purposc financial statcmcnts arc frcc of matcrial misstatcmcnt and about whcthcr Carlislc Arca School District complied with laws and rcgulations, noncompliancc with which would bc matcrialto a major fcdcral financial assistancc program. In planning and pcrfonning our audilS for thc ycar cnded Junc 30, 1995, wc considcrcd thc intcrnal control strucrurc of Carlislc Arca School District in ordcr to dctcnninc our auditing procedurcs for thc purposc of cxpressing our opinions on thc gcncral purposc financial statcmcnts of Carlisle Arca School District and on thc compliancc of Carlislc Arca School District with rcquircmcnlS applicablc to major programs and rcport on thc intcrnal control structurc in accordancc with OMB Circular A-12S. This rcport addrcsscs our considcration of intcrnal control structurc policics and proccdurcs rclcvant to compliancc with rcquircmcnlS applicablc to fcdcral financial assistancc programs. Wc havc addrcsscd policies and procedurcs rclcvant to our audit of thc gcncral purposc financial statcmcnts in a scparatc rcport datcd Octobcr IS. 1995. Thc managemcnt of Carlislc Arca School District, is rcsponsiblc for cstablishing and maintaining an intcrnal control structurc. In fulfilling this rcsponsibility. cstimatcs and judgmcnts by managcmcnt arc rcquircd to asscss thc cxpcctcd bcncfits and rclatcd costs of intcrnal control strucrurc policics and proccdures. Thc objectivcs of an intcrnal control structurc are to providc management with rcasonablc. but not absolutc. assurance that asscts are safcguarded against loss from unauthorizcd usc or disposition. that transactions arc exccutcd in accordance with managcment's authorization and rccorded properly to pennit thc prcparation of gcncral purpose financial statcmcnts in accordance with gcnerally acccptcd accounting principlcs. and that fcdcral financial assistance programs arc managcd in compliancc with applicablc laws and rcgulations. Bccause of inhcrcnt limitations in any intcrnal control strucrure. crrors, irrcgularitics. or instanccs of noncompliancc may ncvcnhclcss occur and not bc dctcctcd. Also. projcction of any cvaluation of thc structurc to futurc pcriods is subjcctto thc risk that proccdurcs may bccomc inadequatc bccausc of changcs in conditions or that the effcctivcncss of thc dcsign and opcration of policics and procedurcs may dctcrioratc. -40- Board of Dircctors Carlislc Arca School District For thc purposc of this rcport, wc havc c1assificd thc significant intcrnal control structurc policics and proccdurcs uscd in administcring fcdcral financial assistancc programs in thc following catcgorics: A. General requlrements 1. Political activity 2. Civil rights 3. Cash managcmcnt 4. Fedcral financial rcports 5. AlIowablc costs/cost principlcs 6. Drug Frcc Workplacc 7. Administrativc rcquircmcnts B. Specific RequlremenlS 1. Types of scrviccs allowcd 2. Eligibility 3. Matching, Icvcl of cffon, or carmarking 4. Rcporting 5. Claims for advanccs and rcimburscmcnlS 6. Special rcquircmcnlS, as appropriatc C. Follow-up on prior audit findings For all of thc intcrnal control structurc catcgorics listed abovc. wc obtaincd an undcrstanding of thc design of rclcvant policics and proccdurcs and dctcrmincd whcthcr thcy havc bccn placcd in opcration, and wc assessed control risk. During thc ycar cnded Junc 30. 1995, Carlislc Arca School District cxpcndcd 59.8% of its total fcdcral financial assistancc under a major fcdcral financial assistancc program and thc following nonrnajor fcdcral financial assistancc program: Impact Aid. Wc pcrformcd tcslS of controls. as rcquircd by OMB Circular A-128, to cvaluatc thc cffectivcncss of thc design and opcration of intcrnal control strucrurc policies and proccdurcs that wc considcred rclcvantto prcvcnting or dctccting matcria1 noncompliancc with spccific rcquircmcnlS. gcncral requircmcnlS, and rcquircmcnlS govcrning claims for advanccs and rcimburscmcnlS and amounlS claimcd or used for matching that arc applicablc to Carlislc Arca School District's major fcdcral financial assistancc program. which is idcntificd in thc accompanying Schcdulc of Fcdcral Financial Assistancc, and thc aforcmcntioned nonrnajor program. Our proccdurcs wcrc lcss in scopc than would bc ncccssary to rcndcr an opinion on thcsc intcrnal control structurc policics and proccdurcs. Accordingly, wc do not cxprcss such an opinion. Our considcration of thc internal control structurc would not nccessarily disclosc all mattcrs in thc intcrnal control structurc that might bc matcrial wcakncsses undcr standards establishcd by thc Amcrican Institutc of Certificd Public Accountants. A matcrial wcakncss is a rcportablc condition in which thc dcsign or opcration of onc or morc of thc internal control strucrurc clcmcnts docs not rcducc to a rclativcly low Icvclthc risk that noncompliancc with laws and rcgulations that would bc matcrialto a fcdcral financial assistancc program may occur and not bc dctcctcd within a timcly pcriod by cmployccs in thc normal coursc of pcrforming thcir assigncd functions. Wc notcd no mailers involving thc intcrnal control structurc and its opcration that wc considcr to bc matcrial weakncsses as defincd abovc. -41- ~ ~ 0 .~ 3 - ., " ". oJ 'j (j 'J '-) -1 ~ -j c C .-:: ..."'\ - . Q- ~ IJ> ~~ ,}<.:. ~ (J en ~ ('"{ -~ ~. L\-' ., x: ,. ," ,j ""; r<'\ a.... ~~ :..~ - '" ..... 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