EXE

CUTIVE LIMITATION 1.6

FISCAL MANAGEMENT AND CONTROLS

January 20, 2009

To: Board of Education

From: Superintendent

–

DCSD

Re: FY 2007

2008 Financial Data Internal Monitoring Report

–

Executive Limitation Fiscal Management and

Controls

I hereby present my monitoring report on our Fiscal Management and C

ontrols Executive Limitation 1.6 in

accordance with the monitoring schedule as set forth in board policy. I certify the information in this report is true.

Signed______________________________________________

Dat

e: January 15, 2009

Superi

ntendent

–

DCSD

EL 1.6 Fiscal Management and Controls

The Superintendent shall not cause any fiscal jeopardy or any fiscal condition that is inconsistent with

achieving the priorities established in the Board’s Ends.

Interpretation:

I interpret

“any fi

scal jeopardy or any fiscal condition”

as being identified as on financial watch by the State

Auditor’s Office based on their criteria. The State Auditor’s Office has established a set of criteria to identify school

districts that might require special ass

istance from the state if the criteria show significant change.

Data Reported

The District has not been identified as being on financial watch by the State Auditor’s Office according to the set of

criteria in the State Fiscal Health Tracking attached as

appendix A.

I report compliance.

EL 1.6.1 The Superintendent shall not:

Maintain insufficient general fund, capital reserve fund and insurance reserve fund fiscal year

end balances

of less than five percent of current fiscal year revenues.

Data Report

ed:

Audited financial statements for Fiscal Year 2007

2008 show fund balances at 5% of revenues or greater.

FY 07

08 FUND BALANCE RESERVES

FUND

ESTIMATED

REVENUE

5% REQUIREMENT

ENDING FUND

BALANCE

COMPLIANCE

General

$350.873M

$17.543M

$17.882M

Yes

Cap

ital Reserve

$120.16M

$.600M

$1.98M

Yes

Insurance Reserve

$3.307M

$.165M

$2.305M

Yes

I report compliance.

EXE

CUTIVE LIMITATION 1.6

FISCAL MANAGEMENT AND CONTROLS

EL 1.6.2 The Superintendent shall not:

Pay District obligations in an untimely manner or outside of the ordinary course of business.

Interpre

tation:

I interpret

“District obligations”

as liability requiring payment on a specific date as required by contract, law, or

District practice.

I interpret

“untimely manner”

as failure to pay District obligations when due.

Data Reported:

The District pa

ys its obligations when due. When a payment is in fact due is subject to negotiations with the various

vendors; regardless, the standard for “timeliness” is derived from the payment terms agreed to upon award and/or

the terms expressed upon an invoice. Eig

hty

two (82%) of the District’s invoices are paid when due within thirty

days. An additional 9% of obligations paid through Accounts Payable, are paid within 45 days. The balance, 9%, of

all Accounts Payable activities are processed beyond the payment term

s for reasons attributable to product and/or

billing dispute. In respect to routine obligations arising from payroll functions, 100% of the payments are processed

for receipt by the district’s employees on or before the 20

of the month. Any corresponding

liabilities tied to the

compensation of an employee (benefits, taxes)

–

are paid when due. Detailed dates and amounts are shown on the

Payroll Payables Spreadsheet as appendix B and the Accounts Payable Spreadsheet as appendix C.

I report compliance.

L 1.6.3 The Superintendent shall not:

Obligate the District without Board approval to a single purchase greater than $750,000.

Interpretation:

I interpret

“Obligate the District”

as committing taxpayer dollars in the name of Douglas County School Distric

without Board approval.

I interpret

“a single purchase”

to mean a single contract, single purchase order, or payment for a single service or

product.

Data Reported:

All single purchases processed during 2007

2008 exceeding $750,000 received Board appro

val. The list of vendors,

descriptions, and amounts and the corresponding Board approval dates are included in appendix D.

I report compliance.

EL 1.6.4 The Superintendent shall not:

Make any purchase or contract:

(a) of more than a minimal amount wher

ein normally prudent protection has not been given against conflict

of interest;

(b) of over $100,000 without having obtained competitive prices and comparative quality unless

inappropriate for the circumstances;

thod of assuring a favorable balance of long

term quality and cost.

Splitting orders is not allowed.

EXE

CUTIVE LIMITATION 1.6

FISCAL MANAGEMENT AND CONTROLS

Interpretation:

I interpret (a)

“normally prudent protection”

as executing contracts and making purchases in adherence to

Douglas County School District

administrative policies. These policies are in accordance with Colorado Revised

Statute 22.32.109 (1) (b).

I interpret (b)

“obtaining competitive prices and comparative quality”

and (c)

“stringent method of assuring a

favorable balance of long

term qu

ality and cost”

as both being accomplished through a formal competitive

process (Invitation for Bid or Request for Proposal) with evaluation and selection criteria based not solely on cost,

but to include:

♦

ability of the vendor to provide quality and timel

y products and services

♦

vendor qualifications and experience

♦

life cycle cost of the product or service

♦

warranty

I interpret (b)

“unless inappropriate for the circumstances”

as being a sole source or emergency purchase that is

exempt from competitive proce

sses and must be approved by the Purchasing and Contracting Department.

Data Reported:

Contracts are executed and purchase orders are issued through the Purchasing and Contracting Department

according to Purchasing Bid/RFP procedures. An abbreviated versi

on of these procedures is outlined in Appendix E.

Purchasing and Contracting issued one hundred twenty

seven (127) Requests for Proposals and Invitations for Bid

during 2007

2008 for purchases of goods and services exceeding $25,000. 100 percent (%) were i

n compliance with

this executive limitation.

I report compliance.

EL 1.6.5 The Superintendent shall not:

Exercise inadequate internal controls over disbursements or allow material dissipation of assets

Interpretation:

I interpret

“inadequate internal

controls”

over disbursements as not having policies and procedures that are

designed to prevent and detect fraud. Inadequate internal controls may give cause to an external auditor finding that

an entity has a “material weakness” which is commonly describe

d as more than a remote likelihood that a material

misstatement of the financial statements will not be prevented or detected.

I interpret

“material dissipation of assets”

as non

compliance with Colorado Revised Statute, which requires an

entity to proper

ly account for the assets and liabilities as ensured through the annual independent audit.

Data Reported:

In 2008, the District hired an external independent contractor to complete an inventory and appraisal of select

categories of capital assets includi

ng land improvements, buildings, machinery and equipment. An inventory of

capital assets was not performed in 2007 and was indicated as a material weakness in last years report to

governance.

This year’s annual independent audit reported an unqualified o

pinion on our financial statements which opines that

the information reported is stated fairly, in all material respects, the respective financial position changes therein and

where applicable, cash flows thereof for the year then ended in conformity with

generally accepted accounting

principles (GAAP).

Additionally, the independent auditors did not identify any deficiencies in internal control over financial reporting

that would be considered to be a material weakness in internal controls.

I report compl

iance.

EXE

CUTIVE LIMITATION 1.6

FISCAL MANAGEMENT AND CONTROLS

EL 1.6.6 The Superintendent shall not:

Compromise the independence of the Board’s audit or other external monitoring or advice.

Interpretation:

I interpret

“independence”

as free from conflicts of interest, interference in the selection process of

the independent

auditor, and intervention in the conduct of the audit process and report.

I interpret

“the Board’s audit”

as the Board’s annual independent audit conducted in accordance with Colorado

State Law.

I interpret

“other external monitoring or

advice”

as any independent third party reports that contain relevant

findings and recommendations.

Data Reported:

As required by Colorado Revised Statute, the independent audit was completed and was presented to the

oard on

December 16, 2008. No other e

xternal monitoring or advice was conducted that would compromise the

independence of the board.

I report compliance.

EL 1.6.7 The Superintendent shall not:

Accept revenues from sources that are not, in fact and appearance consistent with Ends.

Interp

retation:

I interpret

“revenue from sources”

as all economic resources received.

I interpret

“consistent with Ends”

as in support of expected behaviors/interactions as defined in the Board’s Ends.

Data Reported:

Money was received from the School Finance

Act, Mil Levy Override, and Grants Bond funds and from other

sources was spent to support the Boards Ends. In the course of the prior year, we adopted the American Beverage

Association’s School Beverage Guidelines.

I report compliance.