MINNEWASKA SCHOOL DISTRICT #2149

1. MINNEWASKA SCHOOL DISTRICT #2149 AUDIT HIGHLIGHTS YEAR ENDED JUNE 30, 2012

2. CURRENT YEAR SUMMARY • Audit Opinion- “Unqualified Opinion” audit report Pages 2-3

4. General Fund Revenues

6. General Fund Expenditures

8. General Fund Revenues- Budget to Actual

11. Fund Balance Classifications Fund balance is divided into five classifications: • Nonspendable Not in spendable form • Restricted Fund balance is reported as restricted when constraints externally imposed • Committed Can be used only for the specific purposes imposed by a formal action (resolution) of the School District Board of Education • Assigned Intended to be used by the School District for specific purposes • Unassigned All spendable amounts not contained in the other classifications

12. Fund Balances

13. The property tax shift is an accounting entry that takes a portion of the school district's property tax revenue and moves it forward one fiscal year, i.e., taxes that would otherwise be revenue for fiscal year 2013 are shifted into fiscal year 2012. This shift replaces state aid that will be repaid at some future date. The property tax shift requirement is in Minnesota Statutes, section 123B.75, subdivision 5.

15. POST EMPLOYMENT SEVERANCEBENEFITS Early Retirement Incentive (Severance) Plan • This is the unfunded portion that eventually needs to be covered. The District has reserved fund balance to cover this liability. Post-Employment Insurance Benefits

16. Prior Year Follow up Corrected Deficiency 2011-1 – Food Service Account Expenses Deficiency 2011-2 Financial Oversight & Monitoring Controls Deficiency 2011-4 - Fiscal Agent Responsibilities Work in Progress Deficiency 2011-3 – Period End Financial Reporting Process

17. Require separate reporting on our consideration of Internal Controls and Compliance. Control deficiency is 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 financial misstatements on a timely basis. Material Weakness Reasonable possibility that a material misstatement of the financial statements will not be prevented or detected by the District’s internal controls. Significant Deficiency 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."

18. CURRENT YEAR SUMMARY • Internal Controls Reporting Pages 65-66 MATERIAL WEAKNESSES Deficiency 2012-1 Ineligible students were being provided services by Title I teachers. Page 70 Deficiency 2012-2- Controls did not detect that ineligible students were receiving free and reduced meals & some students should have received free and reduced benefits, but didn’t. Page 71 SIGNIFICANT DEFICIENCIES Deficiency 2012-3 – Documenting Time Charged to Federal Programs Page 72 Deficiency 2012-4 – Period End Financial Reporting Page 73 STATE COMPLIANCE Page 69 No compliance exceptions noted

19. Summary (Continued) • Federal Awards Program Audit • Internal Control Deficiency Deficiency 2011-1-Food Service Account Expenses Page 70

20. 2012 Conclusions • The District needs to continue to closely monitor its revenues & expenditures related to Day Treatment & Special Ed. Once payments for prior year are finalized the budget should be reviewed. • The District needs to monitor its rising unfunded OPEB actuarial accrued liability and consider how it is going to fund this deficit. • The District needs to continue to pay down debt.

21. SAS 114 Letter • Thanks to the District Staff for cooperation during the audit.

22. Desautels Bartosiewski & Associates CPAs