Lakeville audit: clean opinion expected as single-audit awaits federal compliance supplement; compensated-absences liability rises

CLA auditors presented preliminary results and told the Lakeville Area School Board that the district's financial statements will receive "an unmodified or a clean audit opinion," while the single audit of federal grants remains pending because the federal compliance supplement has not been finalized.

"That is the process we're going through right now," said Chris Konopek, principal with Clifton Larson, explaining that the Office of Management and Budget issues the compliance supplement auditors use to complete single audits. "We do have a draft supplement that we're working off of. But we are not able to actually issue until there's a final version out there."

Auditors said they had completed much of their work using the draft supplement and that state filing deadlines would still be met: if the federal supplement is not issued before calendar-year end, the district's financial statements would be issued first and the single-audit report issued later. "So you'll meet all your statutory deadlines for the financials," Konopek said.

The auditors called attention to two significant accounting estimates commonly reviewed in school-district audits: other post-employment benefits and incurred-but-not-reported insurance liabilities. They also warned of accounting changes under recent GASB guidance. "We adopted statement number 101 related to compensated absences," Konopek said, noting the accounting change increased the district's reported compensated-absences liability. "It went from around, like, 6,000,000 to 18,000,000." He added the change affects government-wide reporting and does not directly change cash budgeting or employer contributions.

Troy Gabler, who managed the audit engagement, summarized financial trends presented to the board: enrollment has grown by roughly 1,000 students over five years; instructional programs account for the bulk of general-fund spending; and the district's total general-fund balance improved to roughly 12.8 percent of expenditures while unassigned fund balance was about 6.8 percent. Gabler said a 20-to-25 percent fund-balance goal is a common long-term target for many districts.

Auditors reported one procurement-related issue in the child-nutrition program: one of 13 tested procurements lacked documentation supporting vendor selection. That finding was described as a potential material weakness that auditors expected might be reclassified to a significant deficiency once final review is complete. Konopek said there were no Minnesota legal-compliance findings and no material internal-control weaknesses.

District finance staff presented a fiscal-2026 preview, noting the district is one month into the fiscal year and in a strong cash position with state funds arriving early. Staff warned pupil-support costs (notably special-education transportation) are tracking higher than budgeted and will be monitored in the revised budget. The food-service fund ended FY25 with about $3.8 million (roughly 35 percent of food-service expenditures), which auditors described as a healthy balance.

What happens next: auditors will finalize the single audit when the federal compliance supplement is issued and will issue the financial statements first if necessary to meet state deadlines. Audit leaders said they will take their single-audit work completed against the draft supplement and, if the final supplement contains no material changes, issue the single-audit report without additional substantive work.

Board reaction was primarily clarifying questions about the timing and the practical effects of the accounting changes; several trustees asked for comparative context on fund-balance levels and credit-rating considerations.

Provenance: CLA presentation and board Q&A (Oct. 28, 2025).