, Gloucester, MA

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June 11, 2013

Report shows deficits in ME activity funds

MANCHESTER —Manchester Essex Regional School officials are taking a look and adjusting policies after a report by an accounting firm found the district’s student activity accounts thousands of dollars in the red — and some funds unaccounted for.

The report by Powers and Sullivan LLC, based in Wakefield, was sought to check the district’s compliance with a state law regarding how student activity accounts are handled, spent and accounted for, according to the accounting consultants..

Student activity accounts are funded by user fees from sports, fundraising and other means not included as revenues within the school budget.

The firm tested transactions to see if receipts were being processed in line with district procedures, recorded accurately and handled in accordance with state law.

Yet the Manchester Memorial School has three student activity accounts with a total deficit of $5,049, while the middle-high school has student activity accounts with a deficit of $1,472.

In its review of 28 transactions, the firm could not tell where two Manchester Essex Regional High School student activity expenditures totaling $2,951 came from. Scholarships are also considered a student activity, which help offset the costs associated with the participation of at-need students, according to the report.

In the 28 transaction sample, two merit based scholarships were paid from Essex Elementary School and the Manchester Essex Middle High School to student activity funds.

But the accounting firm indicated that scholarships would be considered as gifts for educational purposes under state law. Powers and Sullivan recommended the district record educational scholarships in a separate account, as state law requires for gifts and grants.

Powers and Sullivan also noted that the amounts spent and the actual money leaving the accounts from both elementary schools are not turned over to the director of finance and operations or the district’s treasurer in a timely or consistent manner.

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