Slide 1 – Title Page; Financial Reporting and Fiscal Accountability
Notes: This is the reporting and accountability module of this training. It covers the district’s responsibility for maintaining accurate data for both financial accounts and student records; submitting reports to the Florida Department of Education; the types of evaluations performed by either the Auditor General or an independent certified public accountant (CPA); and how the district school board, superintendent, and employees are accountable and transparent for records required to be maintained by the school district.

Slide 2 – Financial Reporting 
Sections 1010.01 and 1010.20, F.S., and Rule 6A-1.001, F.A.C.
Language: 
•	School districts are required to keep uniform financial accounts and reports.
•	Uniform account codes are prescribed in the most recent publication titled Financial and Program Cost Accounting and Reporting for Florida Schools (Red Book).
•	School districts must maintain cost accounting records and report on a school-by-school and on an aggregate district basis for each program funded through the Florida Education Finance Program (FEFP) and for workforce education programs.
Notes: The district school board must adopt policies and procedures relating to all functions of the school district, including finance, records, and reports. Financial reporting is uniform for all school districts for consistency of reporting and analysis, and because data is reported to the National Center for Education Statistics (NCES) and other governmental information services. In order to provide agencies uniform data that is comparable between school districts and between states, the Florida Department of Education has developed the Financial and Program Cost Accounting and Reporting for Florida Schools, otherwise known as the Red Book. The Red Book is based upon guidance provided by the NCES in the publication Financial Accounting for Local and State School Systems. 
The school district must also maintain its accounting records on an aggregate and school-by-school basis for each FEFP program. The system of cost accounting may involve various departments within a school district, like grants, exceptional student education, and information technology. The school district must report direct instructional costs, school indirect costs, and district indirect costs for each education program. For more information on program cost reporting, please go to the department’s Office of Funding and Financial Reporting webpage for training presentations.

Slide 3 – Guidelines for General Funds
Sections 1011.051 and 218.503, F.S.
Language:
•	The district school board must maintain sufficient funds in the general fund to address normal contingencies.
•	The superintendent must provide written notification to the district school board and the Commissioner of Education if the projected assigned and unassigned fund balance in the general fund falls below 3 percent of the projected revenues in the general fund.
•	The superintendent must also submit a fiscal recovery plan if the percentage falls below 2 percent.
•	The fiscal recovery plan must show that the district can avoid a financial emergency.
Notes: Fund balances can determine the school district’s ability to cover unforeseen expenses. At a minimum, the school district should maintain a sufficient level of fund balance to cover current financial obligations. Although neither Florida Statutes nor the State Board of Education Rules requires the school district to maintain a set level of fund balance, the statutes provide guidelines on fund balance in the school district’s operating fund.
While preparing the annual budget, the fund balance in the general fund that is not committed, restricted, or nonspendable – or the assigned and unassigned fund balance – should be above 3 percent. Circumstances change where the district must amend its budget, so fund balance must be monitored frequently. If at any time during the year, including the initial adoption of the budget, the district’s projected assigned and unassigned fund balance in the general fund falls below 3 percent of the projected general fund revenues, the superintendent must notify the district school board in a public meeting and the Commissioner of Education in writing. 
If the projected assigned and unassigned fund balance in the general fund falls below 2 percent, the superintendent must notify commissioner, and must also submit a board approved fiscal recovery plan. The plan must show that the school district can reasonably avoid a financial emergency.

Slide 4 – Required Financial Reports
Sections 1011 (Part A) and 1010.20, F.S., and Rules 6A-1.006 and 6A-1.008, F.A.C.
Language:
•	The superintendent must submit financial statements at least monthly to the district school board.
•	The school district must prepare and adopt a budget. Expenditures may not be greater than budgeted amounts, including budget amendments.
•	The annual financial report (AFR) includes various parts:
o	Detailed fund financial statements.
o	Superintendent’s annual financial report.
o	Program cost report (PCR).
Notes:   PULL IN SCREENSHOTS OF FORMS MENTIONED
In the interest of transparency, there are various reports that the school district prepares. Not all are submitted to the Department of Education, but all are required by rule and statute. The first report a finance officer will prepare is a monthly financial statement. The rules require that the superintendent present financial statements to the district school board at least monthly. The school board prescribes the format and due date of the monthly financial statements.
Reports that are required to be transmitted to the Department of Education are prescribed by statute and include the annual budget and the annual financial report (AFR). The AFR is a combination of fund accounting, cost accounting, and financial reporting. The department determines the format and method of transmitting the financial reports.
Both the school district budget and AFR are prepared in Excel spreadsheets. The budget is reported on Form ESE 139. The AFR uses three forms. Form ESE 348 is the basic fund financial statements detailed by fund, revenue account, expenditure by object, functional expenditure, financing sources and uses, and fund balance. This form reports both governmental and proprietary fund financial data. Certain miscellaneous data is also collected that must be extracted at a subobject level. This data is entered on data collection pages after the fund financial data is reported. An example is fuel and electricity costs. The forms are available on the FDOE website. 
The detailed fund financial statement data is linked to another form called the Entry Spreadsheet. The financial data is condensed for financial reporting that conforms with generally accepted accounting principles and the Governmental Accounting Standards Board (known as GASB). The entry spreadsheet allows the district finance officer to enter balance sheet data and financial information for fiduciary funds and component units. All data entered in the entry spreadsheet links to Form ESE 145. This is the Superintendent’s Annual Financial Report and is the basis for the district’s audited financial statements.
Although incorporated into the district’s accounting system, financial reporting and cost accounting are very different. The program cost report is transmitted using the district’s accounting software and uploaded to the finance database.

Slide 5 – Fiscal Reporting Dates
Section 200.065, F.S., and Rule 6A-1.0071, F.A.C.
Language: 
•	The final school district budget is to be submitted to the Florida Department of Education (FDOE) no later than the third business day following the day the school board adopted the budget. The due date for the budget is part of a process for fixing millages prescribed by statute, detailed in the Truth-In-Millage (TRIM) segment. 
•	The AFR and PCR must be submitted to FDOE no later than September 11 of each year.
Notes: All financial reporting have due dates prescribed by rule. The due date of the budget is not a date certain and is part of the process of fixing millages (TRIM) prescribed by section 200.065 of the Florida Statutes. The school district must submit its budget no later than the third business day after the district school board adopts the final budget. The required public hearings are within a date range – for example, within 15 days, but no later than 30 days. The due date may be different for school districts based on the scheduling of required public hearings. For more information, please see the Florida Department of Revenue’s TRIM instructions and the TRIM module that is a part of this training.
Conversely, the due date for the AFR and cost report is a date certain set forth in State Board rules (Florida Administrative Code). The AFR and all its parts, including the detailed fund financial statements reported on Form ESE 348, the cost report, and financial statements containing the minimum reporting requirements, are due no later than September 11 of each year.
Although the rules provide for an extension of the reporting date for the AFR and cost report, the request must be due to an emergency or an unusual circumstance. If a regularly scheduled board meeting does not incur in time to meet the September 11 deadline, the district is encouraged to amend the meeting date or schedule another special meeting. A board meeting scheduled on or after the due date does not meet the criteria of being an emergency or an unusual circumstance. There is no extension for the budget except for a declared emergency.

Slide 6 – Accountability over Financial Reporting
Sections 1001.42(13)(b), 1011.051, 1011.10 and 218.503, F.S.
Language:
•	The commissioner will appoint a financial emergency board to school districts unable to avoid a financial emergency.
•	Failure to transmit required reports may result in the district school board withholding the salary of the school district superintendent or other employee.
•	Salary may be withheld until reports are prepared and transmitted.
•	Violations of budget and expenditure requirements are considered acts of malfeasance and misfeasance subject to removal by the Governor.
•	The superintendent and members of the district school board who approve or pay any illegal charge or indebtedness are personally liable for the amount.
Notes: The district school board and superintendent are responsible for and accountable for all aspects of school district operations. School district employees including school principals are responsible for implementing the policies for public school education.
If the superintendent is required to submit a fiscal recovery plan, the plan should show that the district can reasonably avoid a financial emergency, such as the inability to meet short-term debt when due and failure to pay current obligations like payroll, withholding taxes, and retirement benefits. If the commissioner determines that the school district cannot reasonably avoid a financial emergency, the commissioner will appoint a financial emergency board to the district within 14 days after receiving the notification and fiscal recovery plan.
The superintendent is responsible for preparing various reports for the school board to approve, such as the budget, AFR, and cost report. If these financial reports, or any other report required to be transmitted to DOE, are not filed with the department, the district school board may withhold the superintendent’s salary. This salary, or the salary of any other district school employee responsible for reporting, may be withheld until all reports are prepared and submitted to the department.

Slide 7 – Attendance and Enrollment Reporting
Section 216.136(4)(a), F.S., and Rules 6A-1.044, 6A-1.0451 6A-1.04513, F.A.C.
Language: 
•	The school district superintendent forecasts enrollment estimations that are used for the Education Estimating Conference.
•	The principal is responsible for maintaining accurate reporting of attendance and certifies the completeness and accuracy of the records at the end of the school year.
•	Full-time equivalent (FTE) student and transported student records must be reported to FDOE during specified membership surveys throughout the school year.
•	The State Board of Education rules under the Florida Administrative Code require FTE student records to be maintained in auditable condition.
Notes:  Although student attendance reporting is not financial in nature, it is a critical part of the school district’s fiscal accountability. The state’s primary funding allocation formula, the Florida Education Finance Program, or FEFP, is a student enrollment-driven fund formula and the accurate reporting of full-time equivalent students (described in detail in the FEFP module and the District Budgeting module) is the basic building block of the formula. Each year, prior to legislative session, the superintendent is responsible for the enrollment projections for the district used by various state consensus estimating conferences and other agencies.
Reporting actual FTE is different from projections, because the actual FTE determines the allocations to school districts and individual schools. Each school principal is responsible for maintaining FTE and student records and must certify the completeness and accuracy of the records at the end of the school year. Reporting FTE is done at various times throughout the year during membership surveys, as prescribed by rule. The FTE reported during these surveys affects funding through the school year and beyond. All FTE student records must be maintained so that they may be readily audited. The school district and schools must maintain and retain student records for at least three years or until an audit is performed of the FTE student data, if that occurs later.

Slide 8 – Enrollment Estimates
Section 216.136(4)(a), F.S.
Language: 
•	FTE student data is a basic driver for the allocation of operating and fixed capital outlay funds for school districts.
•	The Education Estimating Conference uses the estimated enrollment for the annual legislative appropriations. 
•	The Education Estimating Conference is one of a number of consensus estimating conferences specified in law.
•	Before each legislative session, the Education Estimating Conference consults with school districts, who participate in the estimating process for determining FTE for the FEFP operating funds and for estimating capital outlay FTE (COFTE) for fixed capital outlay funding.
Notes: At the state macro level education funding competes with other programs for funding, such as health and human services, transportation and highway safety, environmental protection, and criminal justice. It is important to have accurate enrollment estimates, because this data is a fundamental factor in determining education funding. The Education Estimating Conference adopts the enrollment estimates in determining education funding for operating purposes and capital outlay projects. The Education Estimating Conference is just one of several state consensus conferences specified in law. The results of these conferences is critical to the preparation of the General Appropriations Act, which is the annual state budget with appropriations for all state services.

Slide 9 – Maximum Class Size
Section 1, Article IX of the Florida State Constitution and Section 1003.03, F.S.
Language:
•	The Florida State Constitution provides that the number of students assigned to a teacher does not exceed certain limits.
•	The district school board is responsible for satisfying the requirements for achieving the class size maximums in law. 
•	Class size funding and compliance is based on the October student membership survey.
Notes: FTE reporting is not only used for funding. It is used to develop and monitor education programs that serve the student population and ensure that laws relating to students in the classroom are implemented. One such law and a provision of the Florida State Constitution relates to maximum class sizes. To provide students a quality education, the law establishes limits on the number of students who are assigned to each teacher in core-curricula courses. The maximum students in core-curricula courses per grades served provided in law are:
Prekindergarten through grade 3: 18 students.
Grades 4 through 8: 22 students.
Grades 9 through 12: 25 students.
The district school board is responsible for complying with the requirements for achieving the class sizes provided in law. There are exceptions outlined within statute to maximum class size standards. Compliance with the law, as well as funding for class size reduction, is based annually on the October student membership survey.

Slide 10 – FEFP and Transportation Audits
Section 1010.305, F.S., and Rule 6A-1.0453, F.A.C.
Language: 
•	The Auditor General (AG) periodically examines student records to determine compliance with laws and rules relating to classification, assignment and verification of FTE student enrollment and student transportation reported for FEFP funding.
•	Based on the findings in the auditor’s report, adjustments may be made to subsequent allocations of state funds.
•	The school district may request a hearing to appeal the findings.
Notes: As indicated earlier, all FTE student records must be maintained so that they may be readily audited. The school district and schools must maintain and retain student records for at least three years or until an audit is performed of FTE student data, if that occurs later. The Auditor General examines student records to determine compliance with laws and rules, including student classification and program assignment. The Auditor General AG also verifies FTE student enrollment and FTE student ridership reported for FEFP and student transportation funding.
If the AG reports findings about the FTE records maintained at the school and school district level, DOE will incorporate the FTE difference - either positive or negative - into the following year’s FEFP funding calculation as a prior year adjustment. The school district may request a hearing to appeal the findings if the district believes that mitigating circumstances resulted in reporting discrepancies in the audit finding.

Slide 11 – Accountability over Student Reporting
Sections 1003.03 and 1010.305, F.S.,  Rule 6A-1.044, F.A.C.
Language:
•	Attendance records containing material inaccuracies due to willful or intentional falsification is subject to penalties by law.
•	Failure to comply with the class size law can result in a reduction of class size operating categorical funding. A portion of these funds are reallocated to districts that are in compliance.
•	The district school board is required to submit a plan describing specific actions the school district will take to comply with class size requirements. A portion of the reduction is restored if the plan is submitted to DOE by February 1.
Notes: An attendance record containing material inaccuracies, resulting from willful or intentional falsification of data by or for the principal is considered a false report for which the principal is accountable. The principal may be subject to penalties.
FTE reporting errors found in an audit in any program of the school district are subject to adjustments. 
If the reported FTE student data from the October survey indicates noncompliance with class size policy, the school district is subject to a reduction of its class size allocation. A portion of this reduction is reallocated to other school districts that have fully met the class size requirements. If the school district has not complied with class size requirements, the district school board must submit a plan to DOE that describes specific actions that the school district will carry out in order to fully comply with class size requirements. If the plan is submitted by the February 1 deadline, a portion of the reduction in funding will be restored.

Slide 12 – Required Audits
Sections 218.39(1)(d), 218.391 and 1010.30, F.S.
Language:
•	The Florida Statutes require district school boards to have an annual financial audit.
•	Each district school board must form an audit committee.
•	Financial statement presentation is usually in the form of either general-purpose financial statements or a comprehensive annual financial report (CAFR).
Notes: After all required reporting has been completed, the district school board is required to have an annual financial audit. The audit committee for each school district oversees the audit and reports to the district school board.
Financial statements must be presented in accordance with Generally Accepted Accounting Principles (GAAP) and Government Accounting Standards Board (GASB) guidance. The district school board may prepare general-purpose financial statements or a comprehensive annual financial report for audit (CAFR). Reporting requirements for financial statement presentations are outlined in the GASB codification. The requirements for the general-purpose financial statements and the components of the basic financial statements are outlined in chapter 1 of the Red Book.

Slide 13 – Auditor General and Auditor Selection
Sections 11.45(2)(d), (e) and (f) and 218.391, F.S.
Language:
•	The Auditor General conducts the annual financial audit of school districts in counties with populations of fewer than 150,000.
•	The Auditor General conducts the financial audit once every 3 years for school districts in counties with populations of 150,000 or more.
•	During years when the Auditor General does not conduct the financial audit, the school district must select and pay for an independent public accountant within specific guidelines.
•	The Auditor General conducts operational audits for all school districts at least every three years.
Notes: The auditor general (AG) performs many of the audits for governmental entities, including school districts. For school districts in counties with populations less than 150,000 – a little over half of all Florida school districts – the AG will perform the financial audit of the district school board annually. The AG will audit all other school districts in counties with populations of 150,000 or greater every three years. During the interim two years, these school districts must select and pay for their own independent accountant or independent accounting firm for their annual audit.
Although there are distinctions between financial and operational audits, the two combined create a better understanding of the fiscal efficiency of school district operations and stewardship of the school district as a whole. An operational audit may be performed independently of the financial audit; however, financial audits performed by the Auditor General annually also include an operational audit.
Slide 14 – Dates for Audits
Section 218.39, F.S.
Language:
All financial audit reports must be filed with the Auditor General.
•	The audit must be completed no later than 9 months after the end of the fiscal year.
•	The audit report shall be filed with the Auditor General within 45 days after the report is delivered to the district school board.
Notes: If the district has its financial audit performed by an independent accountant other than the Auditor General, the final audit report must be filed with the AG. The audit must be completed within 9 months after the end of the fiscal year. The complete audit report must be filed with the AG within 45 days after the audit report is delivered to the district school board. If the completed audit occurs near the end of the 9 month filing requirement, the board may have less than 45 days to file with the AG.

Slide 15 – Accountability over the Audit
Section 1011.10(2), F.S.
Language: 
The Auditor General or other independent public accountant in charge of auditing the school district accounts must report illegal expenditures or expenditures in excess of appropriations in the budget as officially amended.
•	Applies to all district school board members, the school district superintendent and all district employees.
•	Violations of expenditure provisions and illegal acts may cause personal liability for reimbursement or payment of debt and removal by the Governor.
•	Illegal acts may result in prosecution of district school board members or school district superintendent.
Notes: This information was covered on slide 6 but it’s repeated here because of its importance. The superintendent is responsible for preparing various reports for the school board to approve, such as the budget, AFR, and cost report. If these financial reports, or any other report required to be transmitted to DOE, are not filed with the department, the district school board may withhold the superintendent’s salary. This salary, or the salary of any other district school employee responsible for reporting, may be withheld until all reports are prepared and submitted to the department.

Slide 16 – Audit Findings

Language:
•	A deficiency in internal control exists when the design or operation of a control does not allow management, in the normal course of work, to prevent or detect and correct misstatements on a timely basis.
•	A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis.
•	A significant deficiency is a deficiency or combination of deficiencies in internal control that is less severe than a material weakness, yet important to merit attention.
Notes: Tests over internal control and compliance are designed to disclose instances of noncompliance or other matters that are required to be reported under Governmental Auditing Standards issued by the Comptroller General of the United States. Recurring audit findings can result in loss of federal or state funding and will result in greater district scrutiny by various entities including DOE, the legislature and the local press.

Slide 17 – Audit Findings
Sections 218.39(6) and 1010.30, F.S.
Language:
•	The district school board or its appointed officer must provide a written statement of explanation or rebuttal concerning the auditor’s findings, including corrective action to be taken, within 30 days after the delivery of the auditor’s findings.
•	If an audit contains a significant deficiency, the district school board shall conduct an audit overview during a public meeting.
•	Best practice would have both Auditor General and independent auditor reports presented to the school board in a public meeting.
Notes: Written explanations for audit findings, known as management response, must describe how the district will correct the finding. The Department of Education follows up with all school districts to determine the status of corrective action. Additionally, auditors conducting the next consecutive year audit also determine if appropriate corrective action actually occurred. If auditors determine appropriate corrective did not occur, the finding will be repeated in the audit report and identified as a prior year finding.

Slide 18 – Audit Findings
Section 1003.621, F.S.
Language: 
•	An academically high-performing school district will lose its designation if the annual financial audit notes a material weakness or instance of material noncompliance.
Notes: Section 1003.621, F.S. defines the criteria for the designation of an academically high-performing school district. A district with material weakness or material noncompliance will lose this designation. This designation is not only a prestigious achievement, it also affords exemptions to selected laws.

Slide 19 – Correction of Audit Findings
Sections 218.39(8) and 11.40(2)(a), F.S.
Language:
•	Any finding reported in three consecutive audit reports that have not been corrected are reported to the Joint Legislative Auditing Committee. The Auditor General reported 43 school districts to the committee on findings for the year ended June 30, 2013. This applies to other matters and deficiencies, as well as significant deficiencies and material weaknesses.
•	Joint Legislative Auditing Committee may request written explanations or district school board may have to appear before the committee to explain audit findings and corrective action plan.
•	The district school board is subject to withholding of state revenue if the corrective action plan is not sufficient to correct or avoid another finding.
Notes: Any finding reported in three consecutive audit reports that have not been corrected are reported to the Joint Legislative Auditing Committee. The Auditor General reported 43 school districts to the committee on findings for the year ended June 30, 2013. This applies to other matters and deficiencies, as well as significant deficiencies and material weaknesses.

Slide 20 – Correction of Audit Findings
Section 1011.71(2), (5) and (6), F.S.
Language:
•	Local Capital Improvement ad valorem tax revenue may only be used for certain allowable expenditures.
•	Violations of the expenditure provisions will result in an equal dollar reduction in FEFP funding the year following the audit finding if questioned costs are not restored to the program during the year of the audit citation.
•	If corrective action is not made within the stated time frame, the FEFP penalty will remain in effect and questioned costs must be paid by the district.
Notes: It is important for finance officers to communicate with managers throughout the district about allowable school expenditures. It is especially important for managers of capital and federal projects funded from capital and federal specific revenues to be conversant on the perimeters allowed for such expenditures. If these expenditures in an audit are determined to be inappropriate, the general fund is required to reimburse those funds for the disputed amount. This takes dollars out of direct or indirect class room support and is a drain on the operating budget.

Slide 21 – Resources
Language: 
The Auditor General website, located at www.myflorida.com/audgen/, provides guidance to both independent accountants and audited entities. 
-	Rules and Guidelines
-	Financial Emergency Guidelines
-	District School Board Significant Findings and Financial Trends
-	Audit Report Review Guidelines
-	Auditor Selection Guidelines
-	Compliance Supplement
-	Sample Management Letters
The Department of Education’s Office of Funding and Financial Reporting website, located at www.fldoe.org/finance/fl-edu-finance-program-fefp, also provides resources.
-	FEFP Calculations
-	FTE Instructions
-	Financial and Program Cost Accounting and Reporting for Florida Schools (Red Book)
Notes: It is important for finance officers to become familiar with the types of data on the DOE website. The public often uses this information to question the district directly or in publications such as the newspaper. Additionally bargaining units access this data and use it when negotiating with the district. It is important for the finance officer to be able to proactive in these situations as opposed to reactive.