Pottsgrove School District audit shows $4.4 million surplus but flags reconciliation controls

The Pottsgrove School District board accepted the 2023–24 audit on March 12 after external auditors reported an unmodified opinion on both the district’s financial statements and its tested federal program, while identifying a control weakness in year‑end reconciliations.

Auditor Chris Turtell, representing the district’s external auditors, told the board the audit returned a “clean” opinion on the financial statements and on the child nutrition cluster the team tested. "We issued unmodified opinions on both the financial statements and on the federal program," Turtell said, noting the district ended the fiscal year with a roughly $4.4 million surplus largely driven by stronger‑than‑budgeted revenues.

The surplus was driven primarily by higher local receipts, the auditor said: interim real estate taxes, increasing earned income tax receipts (about $920,000 over budget) and unexpectedly high interest income. Turtell said state basic education and special education subsidies came in above budget and federal ‘‘access’’ revenue also exceeded projections, together accounting for most of the positive variance.

Why it matters: the audit affirms the district’s reported finances while flagging a procedural weakness that the board and administration must address. Turtell said auditors found that several key balance‑sheet reconciliations, especially cash reconciliations, were not completed in a timely manner in April through June 2024. "A lot of key balance sheet transactions, especially cash reconciliations, weren't being done or completed timely," he said. The auditors characterized that lapse as an audit finding in internal control testing.

District officials told the board they had already taken steps. Superintendent Dr. John Finney and interim business staff coordinated with Montgomery County Intermediate Unit (MCIU) personnel to stabilize processes. Turtell praised the MCIU interim staff and Ron Linke, who returned to assist the district, for helping to "stop the bleeding" and bring records into reconciled condition in time to complete the audit. Dr. Finney said administration had identified the matter internally and moved quickly to correct it.

The audit presentation included other notable operational details. The district’s assigned and restricted fund balances include roughly $18 million reserved for future liabilities (compensated absences and OPEB, among other items) and a capital projects bucket of about $9.5 million as of June 30, 2024. Turtell said the unrestricted, unassigned fund balance — the district’s principal reserve — was just under $8 million at that date, well above the district policy minimum of 5% of next year’s expenditures.

On food service, the auditor reported the district’s first year operating under the Community Eligibility Provision (CEP) produced about a $214,000 surplus for food services in 2024 and a food service fund balance of about $845,000 (roughly five months of operating costs). Turtell noted that, under CEP, about 73% of meals served qualified for federal reimbursement that year.

Auditors also reported a timing issue with PSERS (the Pennsylvania public school employees’ retirement system) employer payments: a June 30 payment was not made until August/September and was later recovered by the state withholding amounts from subsidy payments. Turtell said the district appears to have caught up.

Recommendations and next steps: auditors recommended the district reassess business‑office staffing and close‑of‑period procedures to prevent recurrence of late reconciliations. They also recommended aligning the district’s local capitalization threshold with recent federal guidance — moving the equipment threshold to $10,000 so that local policy does not force more rigorous federal testing at a lower cutoff.

Board action: the board voted to accept the 2023–24 audit as presented. The motion passed with an affirmative vote.