Audit: Washington County Public Schools posts clean opinion; $71 million restatement due to new GASB rule

Washington County Public Schools received an unmodified ("clean") audit opinion on its financial statements for the fiscal year ended June 30, 2025, the district's external auditor reported at the Board of Education work session.

The audit firm CliftonLarsonAllen issued the opinion and noted a restatement of about $71 million to the 2024 comparative amounts required by the new Governmental Accounting Standards Board standard on compensated absences (GASB Statement 101). "We issued an unmodified opinion this year, a clean opinion," auditor Sherry Amos told the board.

The audit team told the board the district’s budgetary‑basis general fund surplus was $4,840,000 (about 1.4 percent of the budget). The auditors said federal revenue represented roughly 7 percent of current expense fund revenue and state revenue about 65 percent. The audit report shows that while fund‑level balances were positive, entity‑wide adjustments for pension and other post‑employment benefits (OPEB) reduce that net position when long‑term liabilities are included.

Auditors described the restatement as a consequence of implementing GASB 101 — not an error in prior years — and said many governments faced similar restatements this reporting cycle. Amos explained the new guidance affects how compensated absence liabilities are measured, noting it requires consideration of whether leave is "more likely than not" to be used or paid out and therefore introduces additional subjectivity.

The auditors identified several estimate areas they reviewed, including OPEB and incurred but not reported self‑insurance claims; they said those actuarial estimates were reasonable and consistent with prior years. The audit included one immaterial correction: a lease that had the related asset and liability overstated by $1.9 million; management corrected that item during the audit and auditors recommended tightened lease‑review procedures going forward. A small grant allocation reclassification and inconsistent completion of fixed‑asset disposal forms were also noted as management letter observations; auditors said there was no net revenue effect from those items.

The audit firm reported no material weaknesses or significant control deficiencies and said the audit met the Maryland State Department of Education filing deadline. "We did not have any such items to note in the report," Amos said when summarizing the internal control report.

Auditors told the board the federal single audit — the compliance audit of federal grant expenditures — remains in draft because the U.S. Department of Education's annual compliance supplement (the auditors’ road map for single‑audit procedures) had not been finalized. The single audit is due to MSDE by Dec. 31 and to the federal government by March 31; auditors said they will not finalize that report until the federal guidance is released and that extensions at the state level have not been granted so far.

Board members asked about sampling and internal controls. Amos and audit committee chair Al Martin emphasized auditors apply professional materiality and sampling standards and that strong internal controls and separation of duties provide ongoing assurance about transaction accuracy.

Next steps identified at the meeting included a year‑end budget adjustment to match the audited schedule that finance staff will present at the next board meeting and completion of the single audit after the federal compliance supplement is released.

The audit presentation and accompanying management letter will be posted with the audited financial statements for public review. The board and staff thanked the auditors and finance team for completing the work on schedule.