Obion County Board of Education
September 8, 2009

Background Information:

For years, a timing issue has occurred as to when Federal funds are spent and when the System receives reimbursement from the State of Tennessee. When the time lapse is of any length of time, it is possible that a cash deficit could occur in the School Federal Projects Fund, which can result in an audit finding if there is a cash overdraft at June 30th. Generally Accepted Accounting Principles (GAAP) consider a cash deficit in any fund to be a significant deficiency in internal control. To prevent such an occurrence, the Department of Education and the Comptroller’s Office have agreed that transfers between the General Purpose School Fund and the School Federal Projects Fund can be made upon adoption of the attached resolution. The transfers, if any, are solely for the purpose of providing operating funds until federal reimbursement of grant expenditures are received.

Staff Recommendation:

To prevent the possibility of the School Federal Projects Fund operating with a cash deficit, I recommend approval of this resolution.