TUSD governing board accepts annual comprehensive financial report amid audit questions; vote 3-1

The Tucson Unified School District governing board on March 31 accepted the district's annual comprehensive financial report after a presentation by district finance staff and external auditors, and a public discussion about the audit's scope and procedures.

Chief Financial Officer Ricky Hernandez introduced the report and said the district had received an audit presentation from Christopher Heinfeld of Heinfeld Meach, the firm that performed the audit. Heinfeld told the board the firm would issue an unmodified (clean) opinion on the district's basic financial statements and summarized required communications to the board.

The auditors described the engagement as covering multiple standards and the single-audit components. Heinfeld said the audit disclosed no fraud and noted that capital assets are reported at historical cost. He also said the audit committee had reviewed the report on Feb. 19 and was recommending board acceptance.

Board member Sadie Shaw asked how many district employees the audit team had interviewed about fraud. Heinfeld said he would need to consult working papers for the exact number but estimated the number was "between that 5 and 10 range, probably closer to 10 though." Shaw said that number gave her "pause" given the district's size and recent, widely reported payroll issues, and asked how many hours the audit had required. Heinfeld said the firm budgeted about 750 hours for the overall engagement.

Hernandez and the auditors described the report structure and the firm's role in preparing certain nonaudited sections, such as the management's discussion and analysis. Heinfeld noted one misstatement in beginning balances for compensated absence liabilities that did not require restating prior-year financials and discussed materiality thresholds relative to the district's billion-dollar asset base.

After discussion the board voted to accept the annual comprehensive financial report. Doctor Shaw moved the item; President Ekstrom seconded. A roll-call vote recorded Miss Shaw voting no, Mister Romero yes, Doctor Bundy yes and Miss Ekstrom yes. The motion passed 3 to 1.

The board accepted the report as presented and received the auditor's communications; the auditors said they would finalize the governance letter and misstatement disclosures after the board action. The audit committee earlier had asked staff to follow up on differences between the AFR (annual financial report) and the district's accounting records; the auditors confirmed those issues remain part of the single-audit and USFR compliance work for which findings were reported to the audit committee.