External auditors give Livonia Public Schools a clean draft opinion; single-audit pending federal compliance supplement

Lisa Vargo, partner at Plant Moran, told the Livonia Public Schools Board of Education at its Oct. 13 Committee of the Whole meeting that the external audit yielded an unmodified opinion on the district’s financial statements.

“This is what we are hired to do … I’m happy to report that we are able to provide an unmodified opinion,” Vargo said during the finance committee presentation.

The auditors also reviewed internal controls, tested federal programs and prepared a draft single-audit package. Vargo said the district will not be able to finalize the federal single audit until the federal government issues the annual compliance supplement; Plant Moran has tested to a draft of that document and expects no changes but cannot sign the single-audit opinion until the supplement is final. Vargo said the Office of Management and Budget and Michigan Department of Education are aware and allowing a temporary filing deferral.

Why it matters: an unmodified ("clean") opinion is the highest level of assurance auditors provide that financial statements are free of material misstatement. A completed single audit is required for federal grant compliance reporting; the timing of the federal compliance supplement has delayed a formal sign-off but not the auditors’ work.

What auditors and staff reported

- Opinion: Plant Moran said the district’s financial statements will receive an unmodified opinion. “So that is also referred to as a clean opinion,” Vargo said. - Single audit: auditors tested two major federal programs in the district (IDEA and Title I). Plant Moran reported no findings, no material weaknesses, and noted the district qualifies as a low-risk auditee based on its recent history. - New accounting standard: auditors and district staff discussed implementation of GASB 101 on compensated absences, which uses a probability approach and affected government‑wide reporting. Vargo characterized the effect on the district’s governmental fund statements as minimal because of the district’s accrual practices. - Key balances and movements: the auditors’ highlights cited roughly a $5.2 million increase in combined cash/restricted assets; gross capital assets increased about $40 million; OPEB (post-employment health care) reported as a $46 million asset at the government-wide level; the district’s net pension liability declined about $83 million year over year; a new bond of about $36.1 million is included in the liabilities disclosed. - General fund: auditor slides reported about $79.6 million in general‑fund assets and a $31.1 million total fund balance (about $28.8 million unassigned), with a planned use of roughly $1.9 million incorporated into the 2025–26 budget. The auditors noted actual vs. budget variances were very small (expenditures of about $185 million with a favorable variance of roughly $467,000, under 1%). - Grants timing: district staff explained reimbursement timing affected recognition of federal grant revenue (a cybersecurity grant and a Filter First grant were received after the fiscal year-end and were recorded after August 30); auditors confirmed testing and that the amounts were recognized when cash was received.

Board reaction and next steps

Board members and staff praised finance staff for precise budgeting and a healthy fund balance. Board President Bradford, committee members and finance staff discussed state pension and OPEB changes and the district’s budgeting for employer costs that shifted as the state adjusted retiree health contributions. The auditors and finance director said they will present the finalized financial statements at the next regular meeting and will finalize the single audit after the federal compliance supplement is released.

Ending

Plant Moran said timing—not the outcome—was the remaining issue. District staff will bring the finalized financial statements to the board when the federal guidance is issued and recommended follow-up materials (presentation slides and the full audit packet) are available at the next meeting.