Sheboygan audit: clean opinion but repeat compliance findings, fund transfers noted

At a Committee of the Whole meeting, auditors from CliftonLarsonAllen reported an unmodified (clean) opinion on the Sheboygan Area School District—inancial statements for the year ended June 30, 2024, while identifying repeat findings in internal controls and compliance and noting recent budget and staffing moves that affected capital reserves.

The audit presentation was delivered by Brian, an auditor with CliftonLarsonAllen, who told the board the firm issued an "unmodified opinion" on the district's basic financial statements. He said the auditors issued two additional reports required by the audit process: a report on internal control that disclosed findings and a report on compliance related to federal and state aid testing.

Why it matters: the opinion indicates the financial statements are presented fairly under applicable standards, but the repeat findings and the district's use of fund balance affect how the board plans for capital projects and compliance monitoring.

Auditors described three disclosed findings. The first, listed in the financial statements as 2024-1, concerned the preparation of the financial statements and was characterized as a repeat condition. The second finding (2024-2) related to pupil-transportation records: auditors reported they could not verify nine students on bus records in their testing; district staff said they adjusted the Department of Public Instruction report and removed those nine students, and the district is testing a card-swipe system to improve recordkeeping. The third finding (2024-3) concerned suspension and debarment checks for vendors: auditors said when federal funds are spent over $25,000 the district must verify vendors are not suspended or debarred and that the finding largely reflects timing of testing relative to contract issuance.

"When we become aware of conditions, we refer to those as findings," Brian said, and he described the suspension/debarment issue as "really more just a matter of timing" while assuring the board that auditors do check vendor status on federal lists.

Board members and staff discussed fund balances and reserves. Auditors reported the district—und balance (sum of categories on the slide) rose to about $57.1 million at the end of 2023 and declined to about $55.0 million at the end of fiscal 2024 after using roughly $2.2 million of fund balance. Brian said part of that use stemmed from a $4.5 million transfer from the general fund into capital projects (fund 46), which increased the long-term capital projects balance from about $7.6 million to $12.3 million.

Auditors highlighted the unassigned general fund balance and policy benchmarks: the district's unassigned fund balance ended the year just over $28.0 million, which auditors calculated as 18.8% (they noted the board policy target is 15%–20%). Brian explained the district measures unassigned fund balance differently for planning (as a percent of next year—xpenditures) than the auditor's slide (which compared year-end unassigned balance to that same year's expenditures).

Long-term debt and post-employment liabilities were also reviewed. The district ebt outstanding declined from about $27.5 million at June 30, 2023, to about $21.0 million at June 30, 2024, after a principal repayment of about $6.5 million. Auditors said the most recent actuarial valuation showed an other-post-employment-benefit (OPEB) liability of about $1.9 million; the district had approximately $2.0 million in assets set aside in fund 73 to cover those benefits. The presentation also referenced HRA-related assets noted in the slide; the precise figure in the transcript was not clearly stated.

On student transportation, the audit team described ongoing work to improve documentation. The district is piloting bus card-swipe technology to create electronic on/off records; Christopher Faust, the district transportation supervisor, was cited as having led the program but later accepted a position in Illinois, which delayed rollout and prompted additional testing with drivers this summer.

The auditors reviewed the regulatory environment and recent accounting standards. Brian referenced Governmental Accounting Standards Board statements implemented in recent audits (including GASB 96 and GASB 100) and noted the district will need to implement GASB 101 for the 06/30/2025 audit; he also referenced recent Statements on Auditing Standards (SAS) updates concerning accounting estimates.

The meeting concluded with routine board business. The board approved the meeting agenda by voice vote earlier in the session. At the end of the meeting, trustees voted to adjourn to closed session to discuss superintendent contract and related personnel and bargaining matters under Wisconsin Statute 19.85(1)(c) and (e); the roll call recorded only "aye" votes among members present and noted that Board President Santino Laster was absent.

No formal board action on the audit report itself was recorded in the transcript.