External auditors told the Charles County Board of Education on Nov. 4 that they issued an unmodified, or "clean," audit opinion on the school system’s financial statements, but delivered a cautionary message about budget sustainability and federal reporting timelines.

Karen Acton, the district’s chief financial officer, introduced a presentation by auditors from CLA. The auditors said new Governmental Accounting Standards Board guidance and delayed federal compliance materials have made the year’s audit more complex. "We issued an unmodified audit opinion," the CLA presenter said, noting the firm also issued a management-letter comment about payroll accruals.

The audit highlights included the district’s use of fund balance to cover current-year costs. The auditor noted the district planned to use roughly 22.7 (units described in the financial statements) of fund balance for the following year and that food service used “a little over $2.5 million” to cover expenses. Board members and auditors discussed numbers the presentation cited for unassigned fund balance — a board member read the current unassigned fund-balance roughly as $16,000,000 and said it represented a decline from prior-year levels (discussed as about $38,000,000 last year).

Auditors also explained a prior-year calculation error related to accrued payroll. "When we did that entry for GASB 34 last year, it was under by that $7.7 million," the auditor said, describing the issue as a calculation error tied to first-year use of a new financial system. The firm characterized the matter as a management-letter comment rather than a material weakness in the financial statements.

Board members asked whether the ongoing federal government shutdown and the delayed OMB compliance supplement might require rework. The auditor said the firm is proceeding with the draft compliance supplement and noted that if the final supplement changes substantially, audits nationwide could need additional testing or revisions. "We will not issue a single-audit report until that OMB compliance supplement is final," the auditor told the board, which could mean MSDE deadlines will be missed and resubmissions required.

Why it matters: The audit provides independent assurance the financial statements fairly present the district’s finances, but the board and administration face a near-term policy choice about how to replenish or conserve fund balance. Auditors warned repeated reliance on fund balance to meet recurring expenses is not sustainable.

What’s next: Finance staff will respond to the management-letter items for MSDE and the board asked staff and auditors to return with any follow-up required once the federal compliance guidance is finalized.