Mercedes ISD trustees approve FY2024 audit after auditor reports no tested control findings

The Mercedes Independent School District Board of Trustees voted to approve the district's audit report for the fiscal year ending Aug. 31, 2024, following a presentation from external auditors and questions from trustees about federal COVID-era grants, property-value changes and cash reserves.

Alfred Vera, managing CPA with Gascos and Associates, presented the audit and answered trustees' questions. Vera said the firm's testing did not produce reportable findings on internal controls: "We didn't, have any any findings based on what we have, have tested." He added the firm could provide only limited assurance because it does not test all transactions, but said, "from what we have pulled and what we have reviewed, everything is it we're we're able to provide that."

The audit discussion centered on three budget issues trustees raised: the winding down of ESSER (Elementary and Secondary School Emergency Relief) grant funding, the effect of rising property values combined with adjustments to the homestead exemption (described in the meeting as an increase "from 40 to a100 thousand"), and district liquidity. Board members asked whether the district would see additional tax revenue as property values rose; auditors and staff explained that tax-rate compression and the larger homestead exemption limit how much additional revenue reaches the district. Auditors also warned that districts must account for the decline in ESSER funds in upcoming budgets.

On district liquidity, Vera said the board's general fund had about 83 days of operations on hand and noted the firm's guidance: "We normally recommend between 60 [and] 90, and I believe the target here is 90 days." Trustees asked whether the current cash position would cover operations and debt; auditors said it did for the near term but that planning was needed as one-time federal support phases out.

Trustees also discussed process changes to improve review of the audit. Auditors offered to provide a draft report in advance and suggested an audit-committee model so trustees could review the audit before full-board action. Several trustees said that earlier access to audit schedules would help their oversight and that the board would consider creating an audit committee.

After discussion, the board approved the motion to accept the audit report. The motion was made by Board Member Hernandez and seconded (name not specified in the record). The meeting record shows roll-call votes of Trevino: "Aye," Hennessa: "Aye," and Vallejo: "Aye," and the audit report was approved.