Elwood auditors give district a clean opinion; technology risks flagged, fund balance falls $1.25 million

An external audit of the Elwood Union Free School District for the year ended June 30, 2025, returned an unmodified opinion, district officials reported at the Board of Education meeting Oct. 20. The independent review found no material weaknesses or significant deficiencies in internal control.

The district's business official reported that total fund equity decreased by about $1,250,000 from roughly $11.8 million to $10.6 million between June 2024 and June 2025. The district's unassigned general-fund balance at year end was reported as $3,100,000, which the presenter said equals 4% of the 2025–26 budget; New York State recommends a 4% maximum.

Why it matters: a clean external audit affirms the district's financial statements and accounting controls, while the decline in fund balance and use of reserves affect long-term borrowing costs and budget flexibility.

The board received details of both the external audit (financial statements) and an internal risk assessment performed by R.S. Abrams & Company that focused on the technology department. The internal audit identified several control gaps, and the district outlined corrective actions.

Key findings and planned actions: - Network patching: auditors found no consistent process for installing software patches and updates. The district is evaluating a patch-management solution for purchase and budget inclusion. - Cybersecurity training: there was no formal annual cybersecurity training requirement. The district reported it has implemented Cybernet, a phishing‑simulation and training platform, and will provide annual formal training to all employees. - Server-room access: auditors noted the server room lacked surveillance or access logging. The district said server rooms are locked, and it is exploring keycard access and user-access logs; either keycard or cameras would be considered, with both preferred if budget allows. - Workstation timeouts: timeout settings were not uniformly enforced; IT has begun rolling out user-based timeout settings and is applying them on new devices. - Backup and disaster recovery: the district will implement an annual testing plan (backup integrity tests, full recovery drills and failover/redundancy tests). Financial backups are already coordinated with BOCES, the district reported. - IT asset management: several inventory items lacked purchase dates. The district has begun using Incident IQ for asset tracking and is completing historical data updates.

The business official said the corrective action plan and the audit reports will be filed with New York State the following day if approved by the board.

Board members asked for clarification about the internal-audit selection process; trustees were told the audit committee selects one area each year for a deeper review and this year chose technology. Committee liaisons confirmed many of the findings were already on the district's radar and that IT staff had begun implementing improvements.

Financial context and reserves: presenters said the district relied on reserves and fund balance during the budget process. The report said about $3 million of unassigned fund balance was used in the 2024–25 budget and that reliance was reduced to roughly $2.5 million in the 2025–26 budget. Specific reserve draws included approximately $335,000 from the employee benefits/accrued liability reserve and roughly $900,000 from pension reserves to cover employer retirement obligations.

Officials emphasized that maintaining healthy reserves affects the district's credit rating and borrowing costs; the district cited improvements in its Moody's rating over the past decade and noted savings on bond interest because of stronger ratings.

The presentation and the corrective action plan generated board discussion about implementation timelines and follow-up audit procedures. The audit committee includes board liaisons and two community members with accounting backgrounds, the presenters said. The full external and internal audit reports and financials will be posted on the district website under Budget & Finance.