Auditors report clean opinion with restatement as St. Louis Public Schools prepares FY25 audit plan

St. Louis Public Schools' independent auditors told the district's Audit Committee on a June closed‑session call that they expect to issue a clean audit opinion for the fiscal year ended June 30, 2024, while noting an emphasis of matter for a restatement to correct grants‑fund balances.

The auditors said they are "on path to finalize and close down this fiscal year 24 audit later this week," and recommended beginning field work on the fiscal year 2025 audit in June to meet year‑end timelines. The committee and district staff described an audit plan that relies on weekly, biweekly and monthly check‑ins, continued use of outside consultants and Missouri School Boards' Association (MSBA) support, and additional hires in the finance office.

Renita Duncan, audit partner at Reuben Brown, opened the presentation by describing the engagement scope: a financial statement audit, a single audit of federal program expenditures and an examination of attendance and transportation. She said the engagement ran more than 800 hours this year and that the firm started field work in October. Duncan told the committee there were delays related to transitions in district staff but that Reuben Brown has been meeting with the district repeatedly in recent weeks to close open items.

Alicia Barnum, audit manager at Reuben Brown, summarized fiscal 2024 results and drivers: "Operating revenues and operating expenses both increased this year, which created an overall positive effect on fund balance this year as well." Barnum attributed local revenue increases to miscellaneous items including tax and investment interest, and noted a decline in federal revenue tied to the winding down of COVID ESSER funds. She said expenditures shifted as ESSER‑funded purchases in prior years did not recur in 2024 and that salary and benefit inflation and transportation costs increased.

Duncan and Barnum told the committee the auditors will issue a clean opinion, but it will include an emphasis of matter for a restatement that corrected double‑booked accrued expenses in the grants fund. "You will note that that emphasis of matter is in the financial statements, but our opinion is still clean," Duncan said. The restatement involved writing off accrued accounts payable that had been recorded in error and reclassifying the correction as a beginning‑balance restatement.

Auditors identified certain estimates that required attention each year — notably net pension and other postemployment benefit (OPEB) liabilities and self‑insurance claim estimates — which are based on actuarial assumptions and audit testing. They also described recurring reconciliation and fixed‑asset control issues: auditors recommended a full cross‑reference of the recent physical inventory to the fixed‑asset ledgers because out‑of‑date records had created unreconciled balances, particularly for capital assets that may be fully or nearly fully depreciated.

Committee members pressed for specifics on fund balances and the reconciliation between the district's audited statements and the ASBR (Annual Secretary of the Board Report) submitted to DESE. Dr. Melissa Borishadeh, superintendent for St. Louis Public Schools, asked: "When we looked at our fund balance, it has always been projected to be at 54%. Can you tell us what your numbers are?" The district controller and CFO explained the audited general fund balance at June 30, 2024, is about $203,000,000; total fund balance across all funds is about $405,000,000; the Prop S (capital) fund balance is about $130,000,000; and the grants fund balance is about $13,000,000. The ASBR figure cited by staff, $231,125,824, reflects a different calculation and translated to approximately 52 percent under ASBR rules. Staff said they will provide a crosswalk showing how the ASBR percentages map to the audited statements.

On process and staffing, Kimberly Johnson, chief financial officer for SLPS, said the district will use a defined audit plan with achievable milestones and maintain weekly meetings with the audit team and consultants, biweekly senior leadership reviews and monthly updates to the superintendent. "What we're going into the new audit is with a solid audit plan with achievable tasks and milestones that we will be meeting," Johnson said. She added the mayor had extended the audit contract and that the district plans to continue with outside consultants and MSBA support while hiring additional accountants and financial analysts.

Committee members and auditors set a timeline and deliverables: auditors requested a June start for FY25 field work, a target of providing all documents by July 3 for the FY25 audit, and a board approval timeline that would allow final submission by November and completion by early December. District staff said they finished a physical inventory in February and will cross‑reference that inventory with financial records as part of the cleanup.

The Audit Committee accepted the auditors' report in committee and agreed to present the audited financial statements and related communications to the Board of Education. The meeting opened and closed in a closed session invoked under Missouri statute 610.021, subsection 17, to discuss communications with external auditors, and later adjourned by motion.

The auditors and district staff emphasized that while the FY24 opinion will be clean, significant work remains to reconcile fixed assets, maintain monthly reconciliations and execute the FY25 audit plan to return the audit schedule to normal cadence.