F1S off Fiscal Watch
School district receives a low risk assessment rating from the S.C. Dept. of Education.
State Superintendent of Education Molly Spearman recently notified Florence 1 Schools that the district is no longer under a fiscal watch. The district had been placed under the fiscal watch last year based on the Fiscal Year 2018-2019 audit.
The letter from the superintendent notifying the district that it had been released from the watch stated, “The Fiscal Year 2019-20 annual audit indicates the District had no audit findings. The South Carolina Department of Education recognizes the District’s efforts and steps taken to implement the items identified in your approved recovery plan. Please take this notice as the District’s official release from ‘fiscal watch’ designation under Section 59-20-90.”
Florence 1 also recently received the district’s Fiscal Year 2019-2020 subrecipient risk assessment score from the SCDE Office of Auditing Services.
According to the SCDE, the assessment is used to “evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.”
The score is based on ten criteria, including Fiscal Compliance, Financial Stability, Timeliness of Annual Fiscal Audit Submission and Required Reporting. Any score below 18 is considered a low risk; Florence 1 received an overall score of 12.
Chief Financial Officer Laura Showe came on board with Florence 1 on June 1, 2020. She said that she immediately sought to correct the problems identified by the SCDE.
“There were three audit findings and they were repeat findings, which means it went on for years,” Showe said. “The district was actually really lucky to only be placed under the watch level and not at the caution level. When an auditor tells you you’re not doing something properly, you should immediately rectify or at least have a corrective action plan in place that if it can’t be corrected in one year, it is corrected in two years. When you have a corrective plan in place, they don’t note it as a repeat finding because you are working on correcting it. Those corrective action plans were never put forth; these things could have been immediately addressed and they weren’t.”
Florence 1 Superintendent Richard O’Malley said that the district has worked hard to correct past practices that led to the fiscal watch.
“It has been a long road to place this district back on solid fiscal practices,” said O’Malley. “I’m grateful to the Board of Trustees for their persistence and willingness to work with the administration to fix many of the past fiscal performances and protocols in the district. It has not been easy and I’m grateful for their support. I am so fortunate to have our new CFO, Laure Showe, on board at F1S. She has been simply amazing and Florence is fortunate to have her.”
Showe said that the three audit findings had to do with reconciling the district’s bank statements, the drawing down of federal funding, and material audit adjustments by the district’s CPA firm.
“The district had never hard-closed a month, which means they would back-date transactions to prior months,” said Showe. “They were not drawing down federal funds properly and they were also overdrawing. We are drawing down federal funds monthly now that tie specifically to the expenses that occurred that month and, because we are doing a hard close, nothing is getting charged back. Our CPA firm would always book certain entries for the district such as debt service, PEBA. ”
Showe said that while some new procedures have been put in place, the district is also just working within the parameters it should have been all along.
“There wasn’t anything miraculous that we’ve done, it is just doing what we should be doing,” said Showe. “Doing the hard close is something that had a huge impact but as far as the audit adjustments, the problem was just that things weren’t done in a timely manner.”