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Newberg SD 29J audit returns clean opinion; auditors identify two prior-year material weaknesses
Summary
District finance staff told the finance committee the independent audit issued an unmodified opinion on the 2023–24 financial statements, but auditors reported two material weaknesses tied to prior-year capital asset and fund-reconciliation errors that the district has corrected and will monitor going forward.
At a Newberg School District 29J finance committee meeting, district finance staff reported that independent auditors issued an unmodified (clean) opinion on the district's 2023–24 financial statements, while noting two material weaknesses that dated to fiscal year 2022–23.
The audit letter delivered to the board and reviewed with the committee said the auditors "encountered no difficulties in dealing with management" and issued the unmodified opinion after reviewing basic financial statements, compliance with the Oregon Municipal Audit Law and federal-award requirements. Gail (staff member presenting finance reports) told the committee the clean opinion meant the auditors found the financial statements to be fairly presented.
The audit report includes two material-weakness findings (labelled FS 2024-1 and FS 2024-2) that the auditors said originated in the 2022–23 year and were discovered during subsequent reconciliations. FS 2024-1 relates to the capital asset register: assets that the district still owned had been removed (written off) and construction-in-progress balances were not reconciled to the capital asset register and footnote. FS 2024-2 involves a prior-year debt-service payment that was posted to the bond fund instead of the debt-service fund, producing a cross-fund error that required a prior-period adjustment.
Gail told the committee the district proposed and recorded corrective journal entries and agreed with the auditors on the adjustments. The district will reconcile the capital asset register annually going forward and strengthen end-of-year fund reconciliations. The presentation noted that the identified issues had limited material impact on the district's overall financial position but, under current GASB guidance, required formal findings.
The auditors also noted one instance of noncompliance in federal-award testing (summarized on page 66 of the audit packet) and several best-practice suggestions, including (1) fidelity-insurance limits that are constrained by market availability, (2) segregation-of-duties limits tied to the district's small staff and compensating controls, (3) stale-dated check procedures to be completed annually, and (4) third-party service agreements where the auditors recommended the governing body review provider assurances and insurance naming the district where appropriate.
Committee members commended the business-office staff for the work to prepare for the audit, and Gail and others named specific staff (including Nancy Petsman and Andre/Andrea Shell as audit contacts) in their thanks. The chair asked staff to pass the committee's appreciation to the business office.
The committee discussed a question raised by a member about why the 2022–23 issues were not flagged earlier; Gail said the issues came to light during the district's reconciliation work and that the auditors and staff agreed on the corrective steps. The findings were reported to the Secretary of State as required.
The committee did not take any formal vote tied to the audit report at this meeting; the discussion concluded with staff outlining next steps to implement annual reconciliations and to pursue contract-level assurances for certain third-party service providers.
