External auditors give Newburgh district a clean opinion but record $54.6 million in adjustments

The Newburgh City School District received an unmodified (clean) audit opinion for the year ended June 30, 2024, but external auditors reported 28 adjusting journal entries totaling about $54,551,000 and several control findings at the Board of Education meeting on March 11.

Doug Zonen, partner with the EFPR group, and Dave Gable, the firm’s director, presented the findings. “The total of the 28 adjustments was $54,551,000,” Zonen said during the presentation. The auditors said they would issue five separate reports connected to the audit, including a basic financial‑statement opinion, a single audit under federal uniform guidance and a management letter.

The nut of the audit: after the adjustments the auditors concluded the district’s financial statements conform to generally accepted accounting principles for governmental entities and issued an unmodified opinion dated Dec. 20, 2024. But the auditors identified a material weakness in internal control related to accounting records and significant audit adjustments and recorded a long list of reclassifications and corrections.

Among the larger changes the auditors described were corrections to taxes receivable and related deferred tax entries of about $2.9 million; the recording of a prior‑year receivable and deferral from New York State of about $7.9 million; reversal of accounts payable related to bond anticipation note activity of roughly $5 million with related interest of about $600,000; and reclassification of roughly $8 million in judgments and additional $7.3 million recorded as accounts payable for related items. Capital‑fund activity required about $15 million in adjustments for bond proceeds that had been recorded as revenue instead of receivable.

Audit leaders also told the board the district’s extra‑classroom activity fund review was near final and that the federal single‑audit of the Education Stabilization Fund — which aggregates several COVID‑related grants including ESSER and ARP sub‑grants — resulted in an unmodified compliance opinion. The auditors reported the district received roughly $23,200,000 in Education Stabilization Fund monies.

Board member questions focused on scale and timing. When asked how long the audit took and when fieldwork began, auditors said planning began in July with fieldwork in September and final completion in December after the district provided additional reconciliations and supporting documents. On whether the findings reflected malfeasance, the auditors said no: the issues were attributable to poorly maintained accounting records rather than detected misappropriation. “At no time did we detect anything that would rise to the level of misappropriated funds,” Zonen said.

The auditors also reported a late filing of the financial statements to the New York State Education Department (the Oct. 15 statutory deadline was missed and the statements were filed in late December) and identified the district’s unassigned general‑fund balance at 5.03 percent of the prior year’s tax levy, exceeding the 4 percent limit in New York State property tax law by roughly $4.6 million. The auditors pointed board members to the detail and the tax‑cap calculation in the audit report.

Board members did not take formal action on the audit presentation at the meeting; auditors answered questions and provided the board with the final reports and a management letter for follow up. The administration and audit committee will receive the written reports and consider the management‑letter recommendations for internal controls and timing.

The audit presentation and the auditors’ slides reviewed internal control testing steps taken (cash receipts, disbursements, payroll, bank reconciliations, grant reconciliations and other routine areas) and noted the district followed applicable federal and state auditing standards during the review.

Ending: The auditors said they would issue final written reports consistent with their oral presentation; the district will need to address control weaknesses and the late filing in its follow‑up to the audit committee and in internal remediation plans.