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External audit finds material weaknesses in NPS financial reporting and reconciliations; issues attributed to turnover
Summary
CliftonLarsonAllen reported a clean (unmodified) opinion on Norfolk Public Schools' FY24 financial statements but identified three material‑weakness findings related to capital assets accounting, financial reporting controls and account reconciliations, citing staffing turnover and delayed close procedures.
CliftonLarsonAllen presented the Norfolk Public Schools fiscal‑year 2024 audit results to the board on June 18, issuing an unmodified (clean) audit opinion but reporting three material weaknesses in internal control.
Sherry Amos, the lead auditor, told trustees the firm issued a clean opinion that the financial statements were not materially misstated. She noted, however, that auditors identified one material corrected misstatement (related to revenue recognized for a grant that had no eligible expenditures in FY24 and therefore should have been recorded as unearned revenue) and a restatement tied to capital‑asset accounting.
“The financial statements for fiscal year 2024 are prepared by management… I am pleased to indicate that we issued an unmodified audit opinion this year, which is a clean audit opinion,” Amos said. She explained auditors tested actuarial estimates for post‑employment benefits and incurred but not reported insurance claims and had no issues with those calculations.
Auditors reported three material‑weakness findings: (1) capital assets accounting problems that caused a restatement (approximately $12.4 million related to prior‑year capital projects improperly excluded from the school system’s capital asset rolls); (2) material weaknesses in financial reporting tied to delayed and inconsistent preparation and review of the draft financial statements; and (3) untimely reconciliations of bank and general‑ledger accounts (for example, June 2024 bank reconciliations were not provided until January 2025). Amos attributed many of the operational control lapses to “significant turnover in the finance department,” which also delayed issuance of the audit until March 11, 2025 (the city and typical timeline aim for December reporting).
Auditors recommended improved tracking of capital projects and funding sources, policies and procedures to ensure timely and accurate financial reporting, and consistent monthly reconciliations. The auditors also recommended that the school system comply with the Commonwealth’s procedures for confirming bank balances with the state treasurer; the division did not complete that confirmation process for FY24.
Board members on the audit committee asked for follow‑up on corrective action plans. Amos said corrective measures and management oversight are the responsibility of the district and the board, and CliftonLarsonAllen will review implementation progress in the next audit cycle.
