2011 Single Audit Report

WAYZATA PUBLIC SCHOOLS

INDEPENDENT SCHOOL DISTRICT NO. 284

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND REPORTS OF INDEPENDENT

AUDITORS AND OTHER REQUIRED REPORTS

JUNE 30, 2011

WAYZATA PUBLIC SCHOOLS INDEPENDENT SCHOOL DISTRICT NO. 284

TABLE OF CONTENTS JUNE 30, 2011

SINGLE AUDIT AND OTHER REQUIRED REPORTS

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 1

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 3

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 6

REPORT ON MINNESOTA LEGAL COMPLIANCE 7

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 8

SUMMARY SCHEDULE OF PRIOR YEAR SINGLE AUDIT FINDINGS AND QUESTIONED COSTS 15

EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS

INDEPENDENT AUDITORS’ REPORT ON EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS 16

STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS 17

NOTES TO EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS 21

EXTRACURRICULAR STUDENT ACTIVITY FUNDS SAS 115 LETTER 22

REPORT ON COMPLIANCE WITH UNIFORM FINANCIAL ACCOUNTING AND REPORTING STANDARDS APPLICABLE TO EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS 23

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 24

SINGLE AUDIT AND OTHER REQUIRED REPORTS

(1) An independent member of Nexia International

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND

ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS School Board Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 284 as of and for the year ended June 30, 2011, which collectively comprise the District’s basic financial statements and have issued our report thereon dated December 9, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting

In planning and performing our audit, we considered the District’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2011-1 to be a material weakness.

School Board Independent School District No. 284 Wayzata Public Schools

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Internal Control Over Financial Reporting (Continued)

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2011-2 to be a significant deficiency. Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The District’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the District’s responses and, accordingly, we express no opinion on them. We noted one other matter involving internal control and its operation that we have reported to management of Wayzata Independent School District No. 284 in a separate letter dated December 9, 2011. This report is intended solely for the information and use of the School Board, management of the District, the Minnesota Department of Education, and state and federal awarding entities and is not intended to be and should not be used by anyone other than these specified parties.

LarsonAllen LLP

Minneapolis, Minnesota December 9, 2011


INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON

EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

School Board Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota Compliance

We have audited the compliance of the Independent School District No. 284 with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. The District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the District's management. Our responsibility is to express an opinion on the District's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District's compliance with those requirements.

In our opinion, the District complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 2011-3, 2011-4 and 2011-5.


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Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the District's internal control over compliance with requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and another deficiency that we consider to be a significant deficiency. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2011-3 and 2011-4 to be material weaknesses. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2011-5 to be a significant deficiency. The District’s written responses to the findings identified in our audit are described in the accompanying Schedule of Findings. We did not audit the District’s responses and, accordingly, we express no opinion on them.


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Schedule of Expenditures of Federal Awards

We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 284, Wayzata, Minnesota, as of and for the year ended June 30, 2011, and have issued our report thereon dated December 9, 2011. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the School Board, management of the District, the Minnesota Department of Education, and state and federal awarding entities and is not intended to be and should not be used by anyone other than these specified parties.

LarsonAllen LLP



SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2011

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FederalCFDA Federal

Number ExpendituresU.S. DEPARTMENT OF AGRICULTURE

Passed Through Minnesota Department of Education:National School Lunch Program - Non-Cash Assistance (Commodities) {a} 10.555 213,620$ School Breakfast Program - Cash Assistance {a} 10.553 89,184 National School Lunch Program - Cash Assistance {a} 10.555 740,857

Total U. S. Department of Agriculture 1,043,661

U.S. DEPARTMENT OF EDUCATIONPassed Through Minnesota Department of Education:

Title I Grants for Local Educational Agencies 84.010 291,451 Title II Part A Improving Teacher Quality State Grants 84.367 208,537 Title III LEP 84.365 7,539 Title III Part A Immigrant Grant 84.365 33,250 Special Education Grants to States {b} 84.027 1,617,601 Special Education Preschool Grants {b} 84.173 65,549 Safe and Drug Free School and Communities State Grants 84.186 4,894 ARRA - Special Education Grants to States {b} 84.391 1,257,301 ARRA - Special Education Preschool Grants {b} 84.392 42,600 ARRA - Part C Infants and Toddlers Program {c} 84.393 27,523 ARRA - Education Jobs Fund 84.410 693,354

Total U. S. Department of Education 4,249,598

Passed Through Intermediate School District No. 287:Vocation Education - Basic Grants to States 84.048 511,926 Special Education Infants and Families (Part H) {c} 84.181 305,838 Voluntary Public School Choice 84.361 39,407

Total Passed Through Intermediate School District No. 287 857,170

Total Federal Awards 6,150,430$

Notes to Schedule of Expenditures of Federal Awards:

{a} = Child Nutrition Cluster{b} = Special Education Cluster{c} = Early Intervention Services Cluster

Note 1:

Note 2:

Note 3:

Note 4:

Nonmonetary assistance is reported in this schedule at the fair market value of commodities received and disbursed for the National School Lunch Program (CFDA #10.555).

The pass-through entity identifying number is unknown.

Federal Agency/Pass-ThroughGrantor/Program Title

The Schedule of Expenditures of Federal Awards presents the activity of federal award programs expended by Independent School District No. 284.

The expenditures on this schedule are on the modified accrual basis of accounting, which is described in Note 1 to thebasic financial statements of the District.


REPORT ON MINNESOTA LEGAL COMPLIANCE

School Board Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 284 as of and for the year ended June 30, 2011, which collectively comprise the District’s basic financial statements and have issued our report thereon dated December 9, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minn. Stat. Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers seven main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, uniform financial accounting and reporting standards for school districts, and other miscellaneous provisions. Our study included all of the listed categories. The results of our tests indicate that, with respect to the items tested, the District complied, in all material respects, with the provisions referred to in the preceding paragraph, except as described in the accompanying schedule of findings and questioned costs as item 2011-6. Independent School District No. 284’s response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. We did not audit Independent School District No. 284’s response and, accordingly, we express no opinion on the response. This report is intended solely for the information and use of the School Board, management of the District, the Minnesota Department of Education, and the Office of the Minnesota State Auditor and is not intended to be and should not be used by anyone other than these specified parties.

LarsonAllen LLP



SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011

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A. SUMMARY OF AUDITOR’S RESULTS

1. The auditors’ report expresses an unqualified opinion on the financial statements of Independent School District No. 284.

2. Two significant deficiencies in internal control over financial reporting were disclosed during the audit of the financial statements of Independent School District No. 284, one of which was considered a material weakness.

3. No instances of material noncompliance were disclosed during the audit of the financial statements of Independent School District No. 284.

4. Three significant deficiencies in internal control over major programs were disclosed related to the audit of the major federal award programs for Independent School District No. 284, two of which were considered to be material weaknesses.

5. The auditors’ report on compliance for the major federal award programs for Independent School District No. 284 expresses an unqualified opinion.

6. Audit findings relative to the major federal award programs for Independent School District No. 284 are reported in Part C of this schedule.

7. One instance of noncompliance related to MN Legal Compliance was disclosed during the audit of the financial statements of Independent School District No. 284 and is reported in Part C of this schedule

8. The programs tested as major programs included:

U.S. Department of Education – Special Education Cluster:

Special Education Grants to States CFDA #84.027 Special Education Preschool Grants CFDA #84.173 ARRA-Special Education Grants to States CFDA #84.391 ARRA-Special Education Preschool Grants CFDA #84.392

U.S. Department of Agriculture – Nutrition Cluster:

National School Lunch Program CFDA #10.555 School Breakfast Program CFDA #10.553

US Department of Education – Early Intervention Services Cluster:

Special Education Infants and Families (Part H) CFDA #84.181 ARRA – Part C Infants and Toddlers Program CFDA #84.393

ARRA – Education Jobs Fund CFDA #84.410

9. The threshold for distinguishing Types A and B programs was $300,000.

10. Independent School District No. 284 was not determined to be a low-risk auditee.


SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2011

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B. FINDINGS – INTERNAL CONTROL OVER FINANCIAL REPORTING

Finding: 2011-1

Material Weakness – Lack of Segregation of Duties

Criteria: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction.

Condition: A limited number of people have the primary responsibility for many accounting and financial duties. A lack of segregation occurs when there is any combination of incompatible functions assigned to a single person between: custody, recording, and approval. At times out of necessity, all responsibilities of a transaction cycle at the District can be performed by a single individual. Examples of this are that there is no review of cash, investment, and capital assets reconciliations. Additionally, one person prepares the self-insurance and severance reconciliations and records journal entries without another person’s review. We noted lack of segregation of duties, to various degrees, in the following areas:

o Cash and investments o Capital assets o Self-insurance o Severance o Journal entries

Effect: Reconciliations and journal entries for the areas noted above were prepared without another person’s review.

Cause: The District has informed us that the small size of its business office precludes proper segregation of duties at this time, but a review process is in place to improve segregation of duties and potentially re-assign certain duties between individuals for proper segregation.

Recommendation: We recommend that the District continue to segregate duties as best it can within the limits of what the District considers to be cost beneficial and to review current procedures as staffing levels change.

CORRECTIVE ACTION PLAN (CAP):

Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding.

Actions Planned in Response to Finding: The District will implement a more comprehensive review of reconciliations and journal entries in the areas of Cash and Investments, Capital Assets, Self Insurance, and Severance.

Official Responsible for Ensuring CAP: The Executive Director of Finance and Business is the official responsible for ensuring corrective action of the deficiency.

Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately.

Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.



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B. FINDINGS – INTERNAL CONTROL OVER FINANCIAL REPORTING (CONTINUED)

Finding: 2011-2 Significant Deficiency – Payroll Process Criteria: The District should have a properly designed payroll process that ensures all employees are being paid at correct rates. Condition: We tested 40 payroll disbursements for our internal control testing and noted one employee who was paid the incorrect rate of pay. Effect: Payroll expenditures charged to the federal programs were not adequately supported by time reporting documentation. Cause: The employee’s pay-rate change did not get updated in the payroll system. The District’s current policies and procedures did not catch this error. Recommendation: We recommend the District review its policies and procedures to ensure that all employees are paid at correct rates.

CORRECTIVE ACTION PLAN (CAP): Explanation of Disagreement with Audit Findings: The District disagrees that finding 2011-02 is in fact a significant deficiency, but more of an issue of on isolated clerical error. Actions Planned in Response to Finding: The District maintains internal controls that are both preventative and detective for material and significant items. These processes are intended to prevent, detect and correct items of material value to the financial statements. The item selected was a payment error (paid at a lower rate of $.22 per hour for a total of 4.75 hours) on one individual who normally does not work during the summer and the manual process to import the new pay rate early was over looked.

Both Payroll and Human Resources have collaborated on this issue and have devised a process to deal with these exceptional issues and implemented that process in FY12. Official Responsible for Ensuring CAP: The Executive Director of Finance and Business is the official responsible for ensuring corrective action of the deficiency. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.



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C. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT

Finding: 2011-3

Material Weakness – ARRA – MN Education Jobs Fund (CFDA 84.410); Grant Period – Year Ended June 30, 2011; Passed Through Agency – Minnesota Department of Education

Criteria: OMB Circular A-87, Attachment B, Section 11h, requires semi-annual payroll certifications to be prepared for employees who work solely on a single Federal award, signed either by the employee or the employee’s direct supervisor. When employees work on multiple programs, the employee’s time must be supported by approved time studies or time sheets prepared at least on a monthly basis.

Condition: During our testing it was noted that time and effort documentation (Time Certifications and Personnel Activity Reports) were not prepared for any of the employees coded to the Education Jobs Fund program.

Cause: The Education Jobs Fund is a new program this year and the District was relying on initial guidance released from the Minnesota Department of Education that indicated the time reporting documentation was not necessary.

Effect: Payroll expenditures charged to the federal programs were not adequately supported by time reporting documentation.

Recommendation: We recommend that the District implement a control process to ensure that the District is in compliance with all federal time reporting requirements.



Actions Planned in Response to Finding: The District will ensure that all federal time reporting requirements are met.

Official Responsible for Ensuring CAP: The Executive Director of Finance and Business is the official responsible for ensuring corrective action of the deficiency.

Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately.

Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.



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(CONTINUED)

Finding: 2011-4

Material Weakness – ARRA – Early Intervention Services Cluster (CFDA 84.181, 84.393); Grant Period – Year Ended June 30, 2011; Passed Through Agencies – Minnesota Department of Education and Intermediate School District No. 287

Criteria: According to OMB Circular A-133, the pass-through entity is responsible for monitoring the subrecipient’s use of Federal awards through reporting, site visits, regular contact, or other means to provide reasonable assurance that the subrecipient administers Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements and to ensure performance goals are achieved. Condition: During our testing, we noted no formal procedures for monitoring subrecipient’s use of federal awards. Cause: The District was unaware of the pass-through entity’s responsibility according to OMB Circular A-133. Effect: The District was not in compliance with OMB Circular A-133. Recommendation: We recommend that the District implement a process of monitoring documentation submitted by subrecipients and develop a monitoring plan appropriate for the federal program.



Actions Planned in Response to Finding: The District is no longer serving as a pass-through entity for this program. No corrective action is required for fiscal year 2011-12.

Official Responsible for Ensuring CAP: Not Applicable

Planned Completion Date for CAP: Not Applicable

Plan to Monitor Completion of CAP: Not Applicable



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(CONTINUED)

Finding: 2011-5

Significant Deficiency – Child Nutrition Cluster (CFDA 10.555, 10.553); Grant Period – Year Ended June 30, 2011; Passed Through Agencies – Minnesota Department of Education Criteria: All capital expenditures made in the Food Service Fund over $500 or over the District threshold for capital equipment require approval from the Minnesota Department of Education prior to purchase. Condition: During our testing, we noted that the District did not obtain prior approval from the Minnesota Department of Education for two capital purchases tested over the threshold in the Food Service Fund. Cause: Approval was not obtained prior to purchase of capital expenditures over the threshold amount. Effect: The District was not in compliance with MN Statutes. Recommendation: We recommend the District obtain approval from the Minnesota Department of Education prior to purchasing capital items over $500.


Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: The District will monitor all purchases of capital items within the Food Service Fund to ascertain that prior approval has been obtained if required. Official Responsible for Ensuring CAP: The Executive Director of Finance and Business is the official responsible for ensuring corrective action of the deficiency. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.



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D. FINDINGS AND QUESTIONED COSTS – MINNESOTA LEGAL COMPLIANCE

Finding: 2011-6 Legal Compliance Declaration- Section 471.425 Finding: Minnesota statute requires that school districts must pay each vendor obligation according to the terms of the contract or, if no contract terms apply, within the standard payment period. For school districts with governing boards that have regular meetings at least once a month the standard payment period is within 35 days of the date of receipt. During our testing of disbursements, we noted 1 of the 40 disbursements tested were not paid within the required payment period.


Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: The District’s current processes do ensure that almost all payments are made within the terms of the invoice or within the 35-day period if no terms are included on the invoice. The District also acknowledges that there may be circumstances that could delay the payment since the invoice sometimes is routed to multiple people to meet required approval prior to payment. Official Responsible for Ensuring CAP: The Executive Director of Finance and Business is the official responsible for ensuring corrective action of the deficiency. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.


SUMMARY SCHEDULE OF PRIOR YEAR SINGLE AUDIT FINDINGS AND QUESTIONED COSTS

YEAR ENDED JUNE 30, 2011

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MAJOR FEDERAL AWARD PROGRAMS AUDIT Finding: 2010-2

Material Weakness – ARRA – Special Education Cluster (CFDA 84.027, 84.173, 84.391, 84.392); Grant Period – Year Ended June 30, 2011; Passed Through Agencies – Minnesota Department of Education

Condition: We tested 40 special education cluster expenditures. Of these 40 expenditures, we noted 2 employees whose personnel activity reports accounted only for the portion of the employees’ activity related to the federal program, not the total activity for which they were being compensated. We also noted 1 instance where there was no documentation of an employee or supervisor signature for the employee’s hours worked for that specific period tested. Recommendation: We recommend the District reviews its controls and procedures related to personal activity reports and ensure they are being followed. Current Status: During testing in current year, we noted all personal activity reports tested included total activity for which employees were being compensated. We also noted all employees tested who worked on special education had documentation of an employee or supervisor signature for their hours worked. Finding: 2010-3

Significant Deficiency – Child Nutrition Cluster (CFDA 10.555, 10.553); Grant Period – Year Ended June 30, 2011; Passed Through Agencies – Minnesota Department of Education

Condition: The District did not obtain approval from the Minnesota Department of Education for two capital purchases made over the threshold in the Food Service Fund. Recommendation: We recommend the District obtain approval from the Minnesota Department of Education prior to purchasing capital items over $500. Current Status: The finding is reported in the current year as 2011-5.

EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS


INDEPENDENT AUDITORS’ REPORT

ON EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS School Board Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota We have audited the accompanying statement of cash receipts and disbursements of the extracurricular student activity funds of Independent School District No. 284 as of and for the year ended June 30, 2011. This financial statement is the responsibility of the District's extracurricular student activity accounts management. Our responsibility is to express an opinion on this financial statement based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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. The District has not established procedures to provide assurance that all cash collections are recorded in the accounting records. Accordingly, it was not practicable for us to extend our audit of such cash collections beyond the amounts recorded. As described in Note 1, this financial statement has been prepared on the cash basis of accounting, as prescribed by the Minnesota Department of Education, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. In our opinion, except for such adjustments, if any, as might have been determined to be necessary had the cash collections referred to above been susceptible to satisfactory audit tests, the financial statement referred to above presents fairly, in all material respects, the cash transactions of the District’s extracurricular student activity accounts for the year ended June 30, 2011, and the cash balances at that date on the basis of accounting as described in Note 1.

LarsonAllen LLP



EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS


See accompanying Notes to Extracurricular Student Activity Accounts.

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Receipts Disbursements

Balance and and BalanceJuly 1, 2010 Transfers In Transfers Out June 30, 2011

Miscellaneous:AD Building 1,580$ 1,773$ 1,024$ 2,329$ Interest/Bank Charges - 4,904 - 4,904

Total Miscellaneous 1,580 6,677 1,024 7,233

Wayzata High School:Drama (6,217) 38,245 46,708 (14,680) Wayako 67,976 162,431 237,999 (7,592) Ceramics 394 8,290 8,531 153 Cheerleaders 2,953 7,555 5,959 4,549 Choir 22,064 91,066 114,694 (1,564) Danceline 17,756 32,514 34,639 15,631 Activity Support 57,100 57,024 55,625 58,499 DECA 19,925 28,113 32,739 15,299 French (209) 3,070 2,326 535 German (770) 24,536 18,086 5,680 Letterman 40,549 27,306 26,267 41,588 Fine Arts (5,047) 10,403 6,585 (1,229) Lock Deposit 17,372 19 16,156 1,235 Band 23,286 71,238 112,450 (17,926) Smoking Fines 568 126 - 694 National Honor 10,286 18,930 16,645 12,571 Student Services 6,524 - 2,104 4,420 Orchestra 9,455 6,401 5,572 10,284 Student Council 5,091 77,351 71,388 11,054 Spanish 2,169 - 889 1,280 RARE 1,019 1,000 - 2,019 Scholarships 367 3,571 5,805 (1,867) Theatre Arts 5,275 6,046 11,191 130 Business Profess (BPA) 4,529 34,618 30,718 8,429 Skills USA 801 3,640 5,186 (745) Art Club 271 383 151 503 Link 4 14,991 50 12,473 2,568 High Mileage Team 848 3,000 2,375 1,473 Y.E.S. 413 6,000 4,026 2,387 Creative Writing (1,123) 1,667 845 (301) DECA - Spiritware 24,278 23,056 24,206 23,128 V21 - Activity Support 7,572 3,100 3,783 6,889 Robotics Team 4,364 13,694 19,085 (1,027) Show Stoppers 1,601 11,662 12,001 1,262 Chinese Club 528 384 573 339


EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS (CONTINUED)



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Wayzata High School (Continued):Laker's Bkst Nook 754$ 1,619$ 947$ 1,426$ Festival of Nations 1,966 3,177 2,233 2,910 Freshman Retreat 58 12,449 11,819 688 DCD Service Learning 448 - 300 148

Total Wayzata High School 360,185 793,734 963,079 190,840

Wayzata High School Athletics:Baseball (2,199) 7,384 8,921 (3,736) Basketball - Boys 4,184 6,471 9,285 1,370 Basketball - Girls 3,509 12,156 13,072 2,593 Cross Country - Boys 5,523 6,900 11,811 612 Cross Country - Girls 6,644 2,302 4,824 4,122 Football 43,413 35,257 53,783 24,887 Gymnastics 2,125 4,082 3,635 2,572 Golf - Boys 1,995 9,596 11,502 89 Golf - Girls 1,610 4,058 3,724 1,944 Hockey - Boys 6,352 18,475 21,426 3,401 Hockey - Girls 8,341 5,285 11,016 2,610 Skiing - Alpine 5,488 13,013 12,319 6,182 Skiing - Nordic 10,192 25,455 29,266 6,381 Softball 1,853 7,123 8,139 837 Swimming/Diving - Boys 5,135 7,311 10,793 1,653 Swimming/Diving - Girls 11,736 14,495 13,911 12,320 Soccer - Boys 6,058 13,032 15,133 3,957 Soccer - Girls 4,204 6,286 5,609 4,881 Synchronized Swimming 4,924 15,479 15,950 4,453 Tennis - Boys 4,257 4,284 7,528 1,013 Tennis - Girls 2,669 12,993 17,719 (2,057) Track/Field - Boys 5,133 1,239 4,284 2,088 Track/Field - Girls 1,380 2,160 3,798 (258) Volleyball 3,026 15,083 15,615 2,494 Wrestling 2,551 2,470 2,042 2,979 Adaptive Athletics 2,136 907 321 2,722 Boys Lacrosse 5,484 10,638 17,137 (1,015) Girls Lacrosse 4,554 3,002 7,829 (273)

Total Wayzata High School Athletics 162,277 266,936 340,392 88,821

Central Middle School:Musical 18,455 18,676 22,680 14,451 Valley Fair 3,123 20,527 20,655 2,995 Student Council 2,050 15,842 15,302 2,590 Band 135 5,541 4,885 791





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Central Middle School (Continued):Yearbooks 6,347$ 12,559$ 10,605$ 8,301$ Student Services 19,506 5,607 13,454 11,659 Total Central Middle School 49,616 78,752 87,581 40,787

West Middle School:Band 250 - - 250 Choir 240 15 - 255 Student Services 5,026 2,724 6,057 1,693 Student Council (381) 4,507 3,466 660 Yearbook (3,647) 9,137 4,169 1,321 Theater 24,752 10,875 14,999 20,628 Boys Night Out 649 - - 649 Day One 546 - 338 208

Total West Middle School 27,435 27,258 29,029 25,664

East Middle School:Student Services 13,542 29,248 27,356 15,434 Band 1,188 2,755 1,185 2,758 Student Council 1,623 7,973 2,378 7,218 Variety Fund 5,361 9,031 6,904 7,488

Total East Middle School 21,714 49,007 37,823 32,898

Birchview:Student Serv - K 674 - - 674 Student Serv - GR1 149 531 530 150 Student Serv - GR2 220 791 935 76 Student Serv - GR3 (21) 1,089 877 191 Student Serv - GR4 72 1,899 1,519 452 Student Serv - GR5 1,038 995 1,234 799 Student Council 1,387 196 34 1,549 Student Serv - General 703 995 - 1,698 Media 1,030 178 - 1,208

Total Birchview 5,252 6,674 5,129 6,797

Greenwood:Kindergarten 733 1,083 1,157 659 Media 654 114 176 592 Student Services 4,145 1,783 3,054 2,874

Total Greenwood 5,532 2,980 4,387 4,125

Oakwood:Student Council 1,146 1,428 1,649 925 Student Serv - General 7,654 4,237 4,253 7,638 Chess Club 792 282 290 784

Total Oakwood 9,592 5,947 6,192 9,347





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Sunset Hill:Student Services 4,112$ 42,721$ 38,581$ 8,252$ Pencil/Machine/Store 1,480 2,252 2,172 1,560

Total Sunset Hill 5,592 44,973 40,753 9,812

Plymouth Creek:Student Services 22,702 5,961 6,690 21,973

Gleason Lake:Student Services 4,492 - 1,902 2,590 Student Council 880 - - 880

Total Gleason Lake 5,372 - 1,902 3,470

Kimberly Lane:Student Council 2,065 1,605 2,010 1,660 Gjestvang 300 490 297 493 Carlson 506 420 241 685 Spraque 447 635 260 822 Marvin/Fricke 486 - - 486 Student Serv - GR5 401 - - 401 Media 633 192 - 825 Student Services 10,728 11,743 796 21,675

Total Kimberly Lane 15,566 15,085 3,604 27,047

Total District 692,415$ 1,303,984$ 1,527,585$ 468,814$


NOTES TO EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS JUNE 30, 2011

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NOTE 1 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Student activity account transactions are defined as extracurricular programs conducted for the motivation and enjoyment of students. These programs and activities are not offered for school credits nor required for graduation. Activities are generally conducted outside of school hours. The content of the activities is determined primarily by the student, under the guidance of a staff member or other adult. Student activities are to be self-sustaining with all expenses paid by dues, admissions, or other student fundraising events. These funds are not included in the combined financial statements of Independent School District No. 284, and are restricted for the student activity uses, as established. The accounts of the student activity funds are maintained, and the accompanying financial statement has been prepared, on the cash basis of accounting which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Consequently, receipts are recognized when received rather than when earned, and disbursements are recognized when paid rather than when the obligations are incurred.

NOTE 2 DEPOSITS AND INVESTMENTS

All cash and investments of the student activity accounts are held in demand accounts. Custodial credit risk is the risk that in the event of a bank failure, the School's deposits may not be returned to it. The School does not have a deposit policy for custodial credit risk and follows Minnesota Statutes for deposits. Minnesota Statutes require that all District deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance. Authorized collateral includes certain state or local government obligations, obligations of the U.S. Treasury and U.S. agencies, irrevocable standby letter of credit issued by the Federal Home Loan Bank accompanied by written evidence that the Federal Home Loan Bank’s public debt is rated “AA” or better by Moody’s or Standard & Poor’s Corporation, and certificates of deposit insured by the FDIC. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the District Treasurer or in a financial institution (as agent for the District) other than that furnishing the collateral. All student activity bank deposits are covered by deposit insurance or are collateralized by securities held by the District or its agent in the District’s name.


School Board Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota In planning and performing our audit of the statement of cash receipts and disbursements of the extracurricular student activity funds of Independent School District No. 284 as of and for the year ended June 30, 2011, in accordance with auditing standards generally accepted in the United States of America, we considered Independent School District No. 284’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the extracurricular student activity funds financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Independent School District No. 284’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Independent School District No. 284’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all such deficiencies have been identified. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency listed below to be a material weakness. Student Activity Receipts

The District has not established procedures to provide assurance that all cash collections are recorded in the accounting records. This communication is intended solely for the information and use of the School Board, management, and others within the Organization, and is not intended to be and should not be used by anyone other than these specified parties.

LarsonAllen LLP



REPORT ON COMPLIANCE WITH UNIFORM FINANCIAL

ACCOUNTING AND REPORTING STANDARDS APPLICABLE TO EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS

School Board, Advisers, and Students Independent School District No. 284 Wayzata Public Schools Wayzata, Minnesota We have audited the statement of cash receipts and disbursements of the student activity funds of Independent School District No. 284 for the year ended June 30, 2011, and have issued our report thereon dated December 9, 2011. In our report, our opinion was qualified because the District has not established procedures to provide assurance that all cash collections are recorded in the accounting records. Further, the financial statement has been prepared on the cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Manual of Activity Fund Accounting, issued by the Minnesota Department of Education, pursuant to Minnesota Statutes Section 123.38.

The Manual of Activity Fund Accounting provides uniform financial accounting and reporting standards for student activities. Compliance with student activity laws and regulations is the responsibility of the District's management. We have performed auditing procedures to test compliance with the provisions of this manual. However, our objective 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 indicate that, with respect to the items tested, the District's extracurricular student activity accounts complied with the material terms and conditions of applicable legal provisions except as described on the Schedule of Findings and Questioned Costs for Extracurricular Student Activity Accounts.

Independent School District No. 284’s response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. We did not audit Independent School District No. 284’s responses and, accordingly, we express no opinion on the responses.

This report is intended solely for the information and use of the School Board, management, and students of Independent School District No. 284 and the Minnesota Department of Education and is not intended to be and should not be used by anyone other than these specified parties.

LarsonAllen LLP



EXTRACURRICULAR STUDENT ACTIVITY ACCOUNTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS


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MINNESOTA LEGAL COMPLIANCE FINDINGS FOR STUDENT ACTIVITY ACCOUNTS

Finding: 2011-1

Improper Student Activity Accounts

Finding: During fiscal 2010-11, the District maintained a number of accounts as part of its student activity fund which did not meet the state’s guideline for inclusion as a student activity account in accordance with the Manual of Activity Fund Accounting (MAFA).


Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: The District will review all Activity Fund Accounts and determine whether or not they should be discontinued. The District is aware that certain ‘convenience’ accounts do exist and have been allowed to the extent that they reduce or eliminate the need for building staff to handle and safeguard cash. Official Responsible for Ensuring CAP: The Accountant Senior is the official responsible for ensuring corrective action of the finding. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.




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MINNESOTA LEGAL COMPLIANCE FINDINGS FOR STUDENT ACTIVITY ACCOUNTS (CONTINUED)

Finding: 2011-2

Inactive Accounts

Finding: We noted that certain activity accounts have remained inactive during the year ended June 30, 2011. According to MAFA, inactive accounts should be removed and funds transferred to another appropriate account as determined by the student group.


Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: The District will close all accounts that were inactive for all of fiscal year 2010-11 and have remained inactive through December 31, 2011. Any remaining balance will be transferred to another District account at the direction of the Activity Fund Advisor. The District will also continue to monitor activity throughout the year to avoid having any inactive accounts as of fiscal year-end. Official Responsible for Ensuring CAP: The Accountant Senior is the official responsible for ensuring corrective action of the finding. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.




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MINNESOTA LEGAL COMPLIANCE FINDINGS FOR STUDENT ACTIVITY ACCOUNTS (CONTINUED)

Finding: 2011-3

Deficit Account Balances

Finding: We noted that certain activity accounts had deficit balances at June 30, 2011 and the account was not funded within a reasonable amount of time after year-end. According to MAFA, commitments cannot be made from an account without sufficient revenue to cover the commitment.


Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: The District will monitor all Activity Fund Accounts throughout the year and request a written explanation as to why an account has a deficit balance and what steps will be taken to eliminate the deficit. Deficits may be allowed if they are due to a ‘timing’ issue, meaning that revenue will be collected in the immediate future. For those accounts where no plan is in place to eliminate that deficit, the District will require that the deficit be covered by some other source. Official Responsible for Ensuring CAP: The Accountant Senior is the official responsible for ensuring corrective action of the finding. Planned Completion Date for CAP: The District will implement the corrective action plan outlined above effective immediately. Plan to Monitor Completion of CAP: The School Board and Business Office will be monitoring this corrective action plan.

Documents

2011 Single Audit Report