District auditor presents draft financials; federal audit guidance delay may require supplemental testing

Brenda, external auditor, told the Laramie County School District #2 Board of Trustees on Nov. 5 that she had prepared draft financial statements but could not finalize the federal portion of the Single Audit because the Office of Management and Budget (OMB) and Department of Education supplement that defines required testing had not been issued in final form.

The auditor said the federal supplement, normally released in summer, arrived only as a draft in August and that a federal shutdown threatened further delay. "I could issue a report and date it and do a finalized thing report. But then if something changes, I'd have to come back and do those tests and reissue the report," she told trustees.

That uncertainty affects which federal programs the auditor must test. The district's schedule of federal awards for the year was down roughly $1 million from the prior year, largely because some COVID-era or one-time grant funds wound down. For planning purposes the Wyoming Department of Education will accept the district's draft submissions, the auditor said, but she recommends holding final issuance if and until OMB publishes its final guidance and the federal supplement is confirmed.

Why it matters: the supplement identifies the federal programs that must be treated as "major" for Single Audit purposes; if the final supplement adds procedures for programs already examined, additional testing and reissuance of the compliance report could be required. The district's federal major programs selected this year were the Child Nutrition cluster and the Special Education cluster.

The auditor also reviewed financial-statement movements and disclosures. A recent accounting pronouncement changed how compensated absences (accumulated vacation and sick leave) are measured: rather than measuring at payout value, they are now valued at "earned" current pay rates. The auditor reported the compensated-absences liability increased from about $590,000 to roughly $1.5 million because of that change. She described the increase as a reporting change rather than an immediate cash pressure on district operations.

The auditor discussed pension-related deferred inflows and outflows tied to the Wyoming Retirement System and noted the district's net pension liability decreased in the most recent reporting year due to stronger investment returns. She also explained how property taxes collected in advance of a levy can affect fund balances and reduce state foundation payments until the funds are reconciled.

The board did not take action on the audit at the meeting; the auditor said she and Thomas, the district's business manager, would monitor federal guidance and return with a final report or any follow-up testing as needed.

"We'll just keep abreast of everything, and I'll communicate with Thomas," the auditor said, adding she could provide virtual follow-up work if required.

Trustees asked clarifying questions about the bus purchase that was financed before the vehicle's delivery, presentation formats in the PDF of the audit packet, and the timing of state deadlines versus the auditor's 45-day window after OMB issues final guidance. Thomas provided staff context; no motions or votes were taken.

Ending: The auditor advised the board that the state will accept draft numbers for planning but that final audit issuance remains contingent on federal guidance. She recommended the board delay formal acceptance until any supplemental federal requirements are resolved.