RSM auditors presented the Iowa City Community School District's fiscal year 2023 audited financial statements on Sept. 9, and the firm reported a material weakness in financial reporting along with other significant deficiencies and a late single-audit filing. The board discussed why the full audit (including the compliance sections) was not posted to board documents in advance and asked staff for clearer posting and follow-up procedures.

The auditor's report matters because the finding affects the district's internal control assertions, federal compliance timelines, and public transparency about how district funds are recorded and reported.

Kristen Hughes, an RSM auditor, told the board that the audit team identified "untimely financial reporting" and related adjustment and cutoff issues during testing. She said auditors also found cash-reconciliation items and "incompatible responsibilities" that pointed to inadequate segregation of duties. Aaron, the audit manager, said the increase in capital outlay and debt-service activity in 2023 produced complex entries the audit had to review.

Board members pressed for detail after a director said she discovered the board packet posted online did not include the compliance and single-audit sections. Kristen Hughes explained two versions of the district's annual financial report exist: one that includes the compliance/single-audit section (the version submitted to federal filing systems) and one that omits it for some uses. The board member said the version that includes compliance should be the one shared with the board going forward.

CFO Kurth and Alan Moran (district finance leadership) acknowledged the audit findings and described steps already under way. Kurth said staff have implemented additional review steps and segregation controls, including that some staff no longer have posting authority, and that the office is increasing documented procedures to reduce reliance on single individuals. Alan Moran said the office lacked capacity and documented procedures after turnover and has been focusing for two years on building capacity and improving transition planning.

Auditors also reported a late filing of the single-audit package required under federal Uniform Guidance and noted two major federal programs were tested and received unmodified (clean) opinions. Kristen Hughes said a lack of secondary review of some federal-reporting packages contributed to a material weakness related to those grant reports.

Board discussion focused on two follow-ups: (1) who chose which audit version was posted to the board packet and how to prevent that oversight, and (2) a request by a director that staff provide quarterly corrective-action updates tied to the audit findings. The director asked whether the district could provide quarterly progress reports alongside quarterly financials; district staff agreed to provide additional updates and consider formal checkpoints until the corrective-action timeline is met.

The auditors and staff recommended improved segregation of duties, documented posting and review procedures, and a disciplined timeline to file the single-audit package. The audit letter contained details of audit adjustments and "cutoff" issues auditors identified during testing. RSM's oral summary to the board repeated that the financial statements received an unmodified opinion and that management had already begun corrective steps.

The board did not take formal action on the audit beyond questions and direction to staff to return with progress updates. The auditors remain available to answer follow-ups and the district agreed to ensure the complete audit (including compliance) is provided to the board in future postings.

Looking ahead, board members asked staff to bring quarterly status updates on corrective actions and controls improvements until auditors close the deficiencies.