External auditor briefs FACT on single-audit timing, GASB change for compensated absences and PERA liabilities

John Paul LeChervalli of CliftonLarsonAllen (CLA), the external auditor, presented the audit kickoff for Adams 12 Five Star Schools’ fiscal 2025 annual comprehensive financial report and single audit, describing scope, timing risks and several accounting changes the committee should expect.

The nut graf: CLA told the Finance and Audit Committee the single audit covers federal awards (including the nutrition cluster and the Refugee and Entrant Assistance Program this year), that a delayed Office of Management and Budget (OMB) compliance supplement could delay issuance of the single audit, and that a new GASB standard will change how compensated absences are reported on the long-term financial statements.

LeChervalli said the audit includes the audited financial statements and the single audit over federal awards; the single audit typically rotates significant programs and for fiscal 2025 includes the National School Lunch Program (nutrition cluster) and the Refugee and Entrant Assistance Program (newly significant this year). He explained the auditor’s role: the district is the author of the financial statements and the auditor provides independent review and reasonable — not absolute — assurance; auditors review internal controls but do not issue an opinion on internal control effectiveness.

LeChervalli described two items of note for fiscal 2025: a new Governmental Accounting Standards Board (GASB) standard on compensated absences (effective fiscal 2025) that extends accruals to include some unpaid time expected to be taken as paid leave in future periods, and a debt issuance this fiscal year of roughly $186 million including premium. He said the GASB change will affect the long-term liability presentation but not cash pay practices or budget comparisons; the auditor estimated the calculation is straightforward mathematically but that selecting the percentage assumption for future paid time off is challenging.

On pension and OPEB liabilities tied to Colorado PERA, LeChervalli summarized expected movement for fiscal 2025: a net pension liability estimated at about $730 million (down from $809 million the prior reference year) with approximately $5 million expected to flow to the income statement on the full-accrual basis; net OPEB liability estimated near $13 million. He emphasized these are actuarial-driven figures that can swing year to year and are presented on the full-accrual statements, not in the budget comparisons.

LeChervalli and staff flagged a significant timing risk: the OMB compliance supplement — an annual guidance document auditors use to test federal programs — was not finalized as of the kickoff and historically has been issued in May; for 2025 it was still pending in September. CLA said the single audit cannot be issued until the supplement is final and that, to avoid delaying the district’s financial statements, the district could elect to issue the basic financial statements first and publish the single audit separately once the OMB supplement is available.

Fieldwork status and next steps: CLA completed interim procedures over the summer, started final fieldwork a few weeks earlier, and targeted issuance of audited financials in October with an audit-committee presentation in November. LeChervalli invited committee members to raise any concerns and noted CLA will include findings and recommendations in the final single-audit section if any issues arise.

No formal committee actions were recorded during the public portion of the meeting; questions from committee members addressed the GASB liability estimate and the recurring OMB timing delays.