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This report presents the results of the audit initiated by The Office of the Public Auditor (OPA) of Southern High School’s Non-Appropriated Funds (NAF) from July 1, 1999 to June 30, 2001.

Although the non-appropriated funds are not derived from government appropriations, they are considered by the Department of Education to be public funds subject to oversight by the agency.

Southern High is one of four public high schools among the 37 public schools that manage non-appropriated funds.  For school years 1999-2000 and 2000-2001, there were $327,140.61 and $378,375.56 in receipts, respectively, and $304,756.83 and $338,803.30 in check disbursements, respectively, from the various Southern High student organizations. Taken as a whole, non-appropriated fund activity within the Department of Education is substantial. 

The objective of our audit was to determine if the non-appropriated funds of Southern High were managed in compliance with governing laws and the Department of Education (DOE) and Southern High School (SHS) Non-Appropriated Student Activity Fund Handbooks.

Our audit findings indicate that Southern High School did not consistently comply with the Department of Education and the Southern High School Non-Appropriated Student Activity Fund Handbooks for the two-year period. The handbooks serve as a means of internal control by outlining the policies and procedures designed for organizations to achieve their various goals.  However, the handbooks lack sufficient internal control measures with regard to inventory, cash disbursements, and monitoring.

As required by law, each student activities fund shall be audited annually by the Bureau of Budget and Management Research (BBMR).  The BBMR issued their last report on the student funds of FB Leon Guerrero Middle School in April 1999.  The last audit report issued on all student funds was in February 2000 by this Office covering the period April 1998 to January 1999.

During our audit, we noted several questionable activities among student organization advisors and the questionable use of student funds:

·         Student activity funds were loaned to a student advisor, then subsequently repaid.

·         Student and government funds amounting to $3,876.00 financed the cost of a class trip for an advisor’s spouse, who is not a DOE employee.

·         A requested accountability report of the Girls Basketball Team for school year 1999-2000 has not been prepared or provided to the requesting parents group.

·         Amounts due from students and others related to their share of trip costs remain uncollected.

·         The SHS treasurer is not bonded as required by law.

·         No inventory listing of items purchased with non-appropriated funds could be located.

·         89% of checks made payable to “cash” and 84% of checks made payable to individuals did not substantially comply with the DOE NAF Handbook.

·         90% of receipts reviewed were not deposited by the next banking day as required by law.

·         56% of the disbursements tested lacked the required approval and over $102,000 of disbursements lacked the necessary supporting documentation.

·         No segregation of duties exists among those individuals that handle non-appropriated funds.

·         Competitive food sales are not monitored and may compromise reimbursement from the National School Lunch Program.

There have been two prior audit reports issued regarding non-appropriated funds and in the course of our audit, we found that previously reported conditions have not been substantially resolved.

Our recommendations detailed in this report include:

• The DOE, as required by law, should coordinate with the BBMR to ensure that the annual audits are performed of all student activities funds at all schools.
• SHS should conform to the DOE off-island field trip policy that permits the student activities fund to subsidize the travel expenses only of DOE employees who accompany the students.
• The SHS and/or DOE should take immediate action to recover the amount of student funds used for non-student purposes and collect the amounts due from alumnae and others.
• DOE should amend its policies and procedures to explicitly prohibit persons from borrowing money from a student fund for any purpose.
• DOE should require club treasurers and advisors of organizations to produce accountability reports following any fundraising activity within 30 days.
• The accountability report of the Girls Basketball Team for the school year 1999-2000, requested by the parents should be prepared and submitted to them immediately. Organizations should produce appropriate documentation when requested to do so.
• DOE should adopt a policy in the NAF Handbook to prohibit disbursements made payable to “cash” and state that payees be directly responsible for the submission of appropriate documentation for expenditures.

In a letter dated February 26, 2002, the Superintendent of Education concurred with the response of the Administration of Southern High School to the draft audit report.

Southern High School has generally concurred with the findings and recommendations of the OPA.

The BBMR also concurred with the finding and recommendation to coordinate with DOE to ensure that all student activity funds at all schools are annually audited.

This report was prepared in accordance with the Government Auditing Standards.

The Southern High School Principal, staff, teachers, students and alumnae, BBMR and DOE NAF personnel contributed information that materially assisted the OPA in completing its work.  The cooperation of these individuals and agencies is gratefully acknowledged.

Doris Flores Brooks, CPA

Public Auditor