FinaNcial LEAdership LISD February 21, 2019

Financial Services Who we are and what we do Guiding Documents Annual Financial Audit Financial Reporting

Financial Services Department Accounting – Business Operating Guidelines Treasury Management Cash Flow Investments Federal Funds Online store Campus and Student Activity Funds Timekeeping Revenue Projection & State Aid Financial reporting (federal, state, and local) Annual external audit

Financial Services Department Payroll process bi-weekly and monthly payrolls for approx. 5,000 District employees Accounts Payable process vendor invoices employee reimbursements student travel requests various refunds

Financial Services Who we are and what we do Guiding Documents Annual Financial Audit Financial Reporting

Guiding Documents In general, there are several law or rule documents that specifically apply to Texas school districts. These are: • The Texas Education Code • Title 19, Texas Administrative Code, Education • Texas Education Agency Financial Accountability System Resource Guide

TEA Financial Accountability System Resource Guide

TEA Financial Accountability System Resource Guide

Financial Services Who we are and what we do Guiding Documents Annual Financial Audit Financial Reporting

TEA Requirements Sec. 44.008. ANNUAL AUDIT; REPORT The board of school trustees of each school district shall have its school district fiscal accounts audited following the close of each fiscal year at district expense by a certified or public accountant holding a permit from the Texas State Board of Public Accountancy. The independent audit must meet at least the minimum requirements prescribed by the State Board of Education, subject to review and comment by the state auditor and include an audit of the accuracy of the fiscal information provided by the district through the Public Education Information Management System (PEIMS).

TEA Requirements Sec. 44.008. ANNUAL AUDIT; REPORT Each treasurer receiving or having control of any school fund of any school district shall keep a full and separate itemized account with each of the different classes of its school funds coming into the treasurer's hands. The treasurer's records of the district's itemized accounts and records shall be made available to audit. A copy of the annual audit report, approved by the board of trustees, shall be filed by the district with the agency not later than the 150th day after the end of the fiscal year. November 27 for June 30 fiscal year January 28 for August 31 fiscal year If the board of trustees declines or refuses to approve its auditor's report, it shall nevertheless file with the agency a copy of the audit report with its statement detailing reasons for failure to approve the report.

TEA Requirements Sec. 44.008. ANNUAL AUDIT; REPORT Texas Education Agency (TEA) is charged with review of the independent audit of the local education agencies, and the commissioner shall notify the board of trustees of objections, violations of sound accounting practices or law and regulation requirements, or of recommendations concerning the audit reports that the commissioner wants to make. If the audit report reflects that penal laws have been violated, the commissioner shall notify the appropriate county or district attorney and the attorney general. The commissioner shall have access to all vouchers, receipts, district fiscal and financial records, and other school records as the commissioner considers necessary and appropriate for the review, analysis, and passing on audit reports.

District Timeline Fiscal year: September 1 – August 31 February March District issues Request for Proposal (RFP) for audit services OR Board approves contract for renewal of audit services for current fiscal year March If RFP year, Board approves contract for audit services for current fiscal year May/June Planning meeting between LISD staff and audit firm to outline audit schedule July/August - Audit firm staff is onsite for preliminary testing Internal controls testing Payroll Sampling Accounts Payable sampling Determination of Federal Fund programs to be tested for Single Audit

District Timeline October December January Audit firm is onsite for approx. 3 weeks to complete testing through end of fiscal year December Preliminary draft of Comprehensive Annual Financial report (CAFR) issued to LISD to review January Board workshop meeting- CAFR presented to Board of Trustees for review and discussion Board Regular meeting – CAFR approved to meet TEA filing deadline Submission of CAFR /GASB Data Feed to TEA Submission of PEIMS mid-year data aligning with CAFR Submission of GFOA/ASBO applications Submission of municipal filings for S&P, TX MAC,

Purpose of the Audit – The Opinion on the Report Unmodified Opinion - The financial statements are fairly stated in all material respects. Modified Opinion - The financial statements are fairly stated in all material respects, except for… Disclaimer – The auditor cannot express an opinion on the financial statements.

Purpose of the Audit – The Opinion on the Report Substantive Procedures Test of Controls Identification of Key Controls Planning and Risk Assessment

Objectives of Financial Reporting GASB Concept Statement No. 1 Framework for accounting and reporting standards for both fund and government-wide financials Stresses the following three objectives of financial reporting Accountability Evaluating Operating Results Assessing Level of Services and Ability to Meet Obligations

Objectives of Financial Reporting 1) Accountability: Paramount objective of financial reporting by state and local governments Determine whether current-year revenues were sufficient to pay for current-year services Demonstrate whether resources were obtained and used in accordance with the entity’s legally adopted budget and/or and compliance with other finance related legal or contractual requirements. Enables users in assessing the service efforts, costs, and accomplishments of the governmental entity along with information from other sources, helps users assess the economy, efficiency, and effectiveness of government and may help form a basis for voting or funding decisions.

Users of School District Financial Statements The primary users include: Citizens of the school district (taxpayers/voters/service recipients, media, advocate groups, and public finance researchers) Direct representatives of the citizens such as legislatures and oversight bodies (state legislatures, school boards) Investors and creditors (individual and institutional investors, bond rating agencies, intergovernmental grantors)

Objectives of Financial Reporting 2) Assist users in evaluating operating results for the year: Information about sources and uses of financial resources account for outflows by function and purpose account for inflows by source and type extent to which inflows met outflows. identify material nonrecurring financial transactions. Information on how the governmental entity financed its activities and met its cash requirements Whether the entity’s financial position improved or deteriorated as a result of the year’s operations

Objectives of Financial Reporting 3) Assessing Level of Services and Ability to Meet Obligations Financial reporting should assist users in assessing the level of services that can be provided by the governmental entity and its ability to meet its obligations as they become due information about the financial position and condition of a governmental entity. Financial reporting should provide information about resources and obligations, both actual and contingent, current and noncurrent. The major financial resources of most governmental entities are derived from the ability to tax and issue debt. As a result, financial reporting should provide information about tax sources, tax limitation, tax burdens and debt limitations. provide information about physical and other nonfinancial resources having useful lives that extend beyond the current year, including information that can be used to assess the service potential of those resources to assess long- and short-term capital needs. Disclose legal or contractual restrictions on resources and risks of potential loss of resources.

Types of School District Audit Reports Reports required to be submitted to TEA: Annual Financial and Compliance Report, or modified CAFR Report to management from the school district’s independent auditor issued during the annual financial audit Public Education Information Management System (PEIMS) and other reports as required by individual TEA divisions GASB Data Feed

Types of School District Audit Reports Annual Financial Report (AFR) Minimum required report for TEA Comprehensive Annual Financial Report (CAFR) Added level of transparency – statistical tables Submitted for as to accuracy and completeness Government Finance Officers Association (GFOA) Association of School Business Officials (ASBO)

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