Auditor flags activity-fund controls, sales-tax and budget issues in USD 261 audit

Independent auditors for the Lloyd Group told the Haysville USD 261 Board of Education on the evening of the district meeting that the firm found multiple internal-control and statutory compliance issues in the 2023–24 audit.

Auditor John Regier said the district received an unmodified opinion on the district’s regulatory basis of accounting but noted an adverse opinion would be required under US generally accepted accounting principles because the district uses the Kansas regulatory reporting framework rather than GAAP. "We do give a clean opinion on a regulatory basis of accounting," Regier said.

The auditors highlighted several recurring issues in both building-level activity funds and district-level controls: - Monthly activity fund reconciliations at Haysville Middle School and Campus High School lacked review by a second person, which auditors recommended as a basic check-and-balance. - Multiple activity-fund accounts showed cash-basis violations (negative balances) during the audit period; auditors said each club or fund should have a positive balance at month-end. - Several outstanding checks older than two years were identified; Kansas law requires action to reissue or remit unclaimed funds to the state. - Certain activity funds that auditors called “disallowed” under statute (examples cited: PTA or slush-type funds) were being held under the district EIN rather than in separate nonprofit accounts. - Auditors identified instances where sales tax had been paid on purchases even though the district is tax exempt and recommended refund or nonreimbursement of tax on reimbursements. - A budget violation was recorded for the bond and interest fund due to timing of payments; auditors said the district had adequate cash and worked with staff to correct the budget authority for 2025.

Regier said the auditors also examined federal awards spending and reported the district expended about $5,500,000 in federal awards during fiscal 2023–24; that work informed single-audit testing, including review of special education and Title funding compliance.

Board and administration response Assistant superintendent/finance staff and the auditors said training and process changes are already planned. District Treasurer Ryan (given name used in meeting) told the board he had scheduled meetings with building secretaries and principals to address activity-fund processes and that the business office will run training sessions with the Lloyd Group to implement recommended reviews and reconciliation procedures.

The auditors recommended that activity funds with little or no current-year activity either distribute balances to graduating classes, roll funds into allowable district accounts, or transfer funds to appropriate 501(c)(3) organizations where the boosters or PTAs prefer that structure.

Regier also offered to provide follow-up meetings and in-service training for secretaries, principals, booster clubs and PTOs; the administration indicated the district would cover the cost to extend similar audits or reviews to booster and PTO accounts to strengthen oversight.

Why it matters The auditors’ findings focus on internal controls and statutory compliance that affect accountability for student-related fundraisers, club money and federally funded programs. Weaknesses in activity-fund oversight can lead to reporting errors and increase risk of loss; sales-tax errors and budget overspends are statutory compliance issues required to be reported in the audit.

Next steps The district said it will implement reviewer signoffs for journal entries and bank reconciliations, pursue refunds for erroneous sales-tax payments, and pursue board-level reporting for reconciled activity funds. The Lloyd Group will provide further training for secretaries and staff and work with building-level administrators to reconcile and reclassify activity funds as necessary.