Pima County Community College District report on internal control and compliance

              Report on Internal Control and Compliance
A REPORT
TO THE
ARIZONA LEGISLATURE
Pima County
Community College
District
Year Ended June 30, 2007
Financial Audit Division
Debra K. Davenport
Auditor General
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
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Pima County Community College District
Report on Internal Control and Compliance
Year Ended June 30, 2007
Table of Contents Page
Comprehensive Annual Financial Report
Issued Separately
Report on Internal Control over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Basic Financial Statements Performed in
Accordance with Government Auditing Standards
1
Schedule of Findings and Recommendations 3
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Basic Financial
Statements Performed in Accordance with Government Auditing Standards
Members of the Arizona State Legislature
The Governing Board of
Pima County Community College District
We have audited the financial statements of the business-type activities and discretely presented
component unit of Pima County Community College District as of and for the year ended June 30, 2007,
which collectively comprise the District’s basic financial statements, and have issued our report thereon
dated December 3, 2007. Our report was modified to include a reference to our reliance on other auditors.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Other auditors audited the financial statements of the Pima Community
College Foundation, Inc., the discretely presented component unit, as described in our report on the
District’s financial statements. The financial statements of the Pima Community College Foundation, Inc.
were not audited by the other auditors in accordance with Government Auditing Standards. This report
includes our consideration of the results of the other auditors’ testing of internal control over financial
reporting that are reported on separately by those other auditors. However, this report, insofar as it relates
to the results of the other auditors, is based solely on the report of the other auditors.
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 basic
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 would not necessarily identify all deficiencies in internal control over financial
reporting that might be significant deficiencies or material weaknesses. However, as discussed below, the
other auditors identified certain deficiencies in internal control over financial reporting that we consider to
be significant deficiencies.
2
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control
deficiencies, that adversely affects the District’s ability to initiate, authorize, record, process, or report
financial data reliably in accordance with generally accepted accounting principles such that there is more
than a remote likelihood that a misstatement of the District’s basic financial statements that is more than
inconsequential will not be prevented or detected by the District’s internal control. We consider items 07-
01 through 07-03 described in the accompanying Schedule of Findings and Recommendations to be
significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by the District’s internal control.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies and, accordingly, would not necessarily disclose all significant
deficiencies that are also considered to be material weaknesses. However, we believe that none of the
significant deficiencies described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s basic 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.
This report is intended solely for the information and use of the members of the Arizona State Legislature
and the Governing Board and is not intended to be and should not be used by anyone other than these
specified parties. However, this report is a matter of public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
December 3, 2007
Pima County Community College District
Schedule of Findings and Recommendations
Year Ended June 30, 2007
3
Component Unit Findings
The other auditors that audited the Pima Community College Foundation, Inc. reported the following
significant deficiencies for that component unit:
07-01
Pima Community College Foundation, Inc.
Reconciliation of donor database
Contributions recorded in the donor database and the accounting software are not reconciled.
Additionally, contributions are not consistently recorded in the donor database and the database is not
updated for changes to previously recorded information. We strongly recommend reconciling these two
systems on a monthly basis to ensure both systems agree and have the correct information reported at all
times.
Management response: None reported.
07-02
Pima Community College Foundation, Inc.
Access to cash receipts
Cash receipts are stored in a locked cabinet within the accountant’s office prior to being deposited at the
bank with all Foundation staff having access. Limiting the access of these receipts to only those requiring
access will minimize the risk of potential misappropriation and increase the segregation of duties within
the Foundation. We recommend reviewing this policy and revising it accordingly.
Management response: None reported.
07-03
Pima Community College Foundation, Inc.
Audit adjustments
For the year audited, multiple audit adjustments were required for the financial statements to be materially
correct at year-end. Although auditors are permitted to draft an organization’s financial statements, it is a
strong indicator of a control deficiency if an organization has ineffective controls over the preparation of
the underlying general ledger which is used to prepare the financial statements, including the footnotes.
The unadjusted general ledger was not materially correct under generally accepted accounting principles.
We recommend that the Foundation have appropriate processes in place to properly reconcile the general
ledger throughout the year and especially at year-end, prior to audit fieldwork, as part of the year-end
closing process.
Management response: None reported.