An auditor told Reynolds school directors Tuesday that regular monthly reports and going after money owed to the district will help prevent another budget deficit.

Chip Mastrian of the Sharon accounting firm Black, Bashor and Porsch highlighted with school directors the main points of Reynolds Area School District's 2001-02 audit.

Mastrian said the audit showed the district got away from "good, logical basic accounting." He also said the board should keep monthly tabs on the budget and go after money owed to the district, such as grants and tuition.

Auditors from Black, Bashor and Porsch visited the district in July and completed their field work Aug. 9.

The audit, completed earlier than in previous years, followed the district's announcement in May of an approximate $2 million budget shortfall.

According to the audit, the district had revenue of $13,753,000 during 2001-02 and expenditures of $15,318,000, creating a deficit of $1,565,000. Transfers into the general fund from other funds brought the deficit to $430,000.

Mastrian suggested the board start looking every month at the budget and any variances in it.

"I think you need monthly reports the board can look at," he said. "You have to monitor it throughout the year ... you've got to control it and adjust it. The only way to monitor it is with good financial reporting."

He suggested forming an audit committee, which is a function the finance committee can perform. He said his auditing committee felt board members should be responsible for meeting with the auditors.

Mastrian also said the board should more actively follow-up on grants and suggested establishing a grant log and someone to control all grants.

"We had a situation that wasn't good, but I think there has been prudent action taken to go forward," Mastrian said. "Hopefully if you follow the plan, in a few years that will change."

The audit is on file at the district office for public inspection.