EFPR Group presents clean extra-classroom audit; single audit finds material weakness and late filing

An EFPR Group auditor presented two audit reports to the Audit and Finance Committee of the Newburgh City School District at a committee meeting, saying the extra-classroom activity fund statements for the year ended June 30, 2024, received an unmodified (clean) opinion while the district—s single audit identified a material weakness in internal control and two compliance issues.

The extra-classroom report covered cash basis statements of cash receipts and disbursements for activity funds and showed cash balances by school. The auditor said, "we are issuing an unmodified opinion or a clean opinion on those extra classroom activity funds for the year ended 06/30/2024." The auditor added the work was performed in accordance with auditing standards generally accepted in the United States and that management is responsible for the presentation of the cash-basis statements.

The auditor walked committee members through the cash balances reported at June 30, 2024: Newburgh Free Academy about $75,000; Heritage Middle School about $38,000; South Middle School about $14,000; grades K–8 pooled accounts about $23,000; elementary (K–5) pooled accounts about $62,000; and a reported grand total of roughly $964,000 in extra-classroom cash on hand. The auditor emphasized the statements are presented on a cash basis and do not constitute a full set of GAAP financial statements.

Committee members asked whether the extra-classroom reports showed any irregularities. An EFPR Group auditor responded, "It took a while for us to get the information from management with regards to the reconciliation in various accounts. But once we finally received everything, everything, you know, tied out to our satisfaction." A committee member also asked explicitly whether there were "no red flags," and the auditor confirmed the extra-classroom activity fund audit showed no red flags.

On the district—s single audit for the fiscal year ended June 30, 2024, the auditor said the engagement follows the Uniform Guidance (the single-audit framework) and that the firm tested the Education Stabilization Fund as the major program. The auditor reported the Education Stabilization Fund (federal CFDA 84.425, described in the report) accounted for about $23,222,000 of expenditures in the year and that total federal awards reported for the district were just over $42,000,000. The auditor said the major-program testing showed no compliance exceptions for the Education Stabilization Fund, but the single audit report included a material weakness in internal control (finding 24-0001) and two compliance findings already discussed in the district—s financial-statement audit.

The auditor summarized the two compliance items noted previously: an untimely filing of the district—s audited financial statements with the State Education Department (the audited financial statements were required to be filed by Oct. 15) and a real-property-law threshold issue described in the report, where a 4% limit was exceeded (the report shows 5.3% compared with the 4% limit; the report compares about $18,000,000 to the 4% threshold of about $14,100,000). The auditor said the single audit report was completed and that a federal filing (the form described in the presentation) was prepared the same day and will be certified by management and filed with the federal government by the required deadline (the auditor noted a March 31 filing deadline for the federal single-audit submission).

Committee members asked about the corrective action plan (CAP) items tied to the single-audit findings. A district staff member told the committee, "We have been working on those items and we are optimistic that we will meet the June 30 deadline," referring to the CAP's anticipated completion date of June 30, 2025. Committee discussion confirmed the district's audited financial statements had been filed with the State Education Department after the board accepted the audit in late December and that management submitted the final document and then filed it with SED.

The committee made and seconded a motion to move into executive session to discuss the employment history of a particular individual; the motion was moved, seconded and the committee proceeded into executive session.

The presentation provided committee members with (1) an unmodified opinion on extra-classroom activity funds; (2) the single audit—s identification of a material weakness in internal control (finding 24-0001); and (3) two compliance matters described in the report (the untimely SED filing and the real-property threshold exceedance). The auditor identified the Education Stabilization Fund as the major federal program tested and enumerated the federal award totals used in the single-audit calculations.

Committee members requested continued work on the corrective action plan and confirmation of timely filings; district staff reported the district filed the audited financial statements with SED after board acceptance and that the single-audit filing documentation was prepared for federal submission and management certification.