External auditor reports no material misstatements but flags extracurricular fund; single-audit guidance delayed

Chris Healy, audit partner with MMB, told the Kingston City School District Board at its Nov. 5 meeting that the firm’s audit of the district’s financial statements and its Extra Classroom Activities Fund “fairly presents” the district’s financial position in all material respects, but that auditors issued a modified opinion on the Extra Classroom Activities Fund because the completeness of cash receipts is difficult to substantiate. Healy said the audit reports were finalized Oct. 14 and filed on time.

Healy said the audit considered standard significant risks—management override of controls, revenue recognition and estimates tied to compensated absences, retiree health and pension liabilities—and that auditors found no material corrected or uncorrected misstatements and no disagreements with management. “We did modify our opinion related to the Extra Classroom Activities Fund,” he said, describing that modification as a common finding when cash collection completeness is difficult to prove.

Healy also warned the board that final single-audit conclusions remain subject to federal guidance from the Office of Management and Budget (OMB). Because OMB had not finalized the compliance-supplement guidance at the time of the presentation, the district’s single-audit report will be issued as a separate package once that guidance is available; Healy said districts may need waivers or extensions if the guidance is not issued in time.

On federal-award exposure, Healy gave a high-level figure: the Special Education cluster is roughly $2,400,000 of approximately $11,500,000 of federal dollars managed by the district. He said auditors have not seen significant difficulties performing the audit and credited the management team for cooperation in providing requested documents.

The presentation drew questions from trustees about next steps and deadlines. Healy said the practical deadline for completing the compliance-supplement work would be March 31 if the guidance is issued and reiterated that the single-audit package will be completed once OMB guidance is finalized. The board received the presentation and raised no formal challenge to the auditor's statements. The auditor’s reports will be included in the district’s financial reporting package once the single-audit work is completed.

What happens next: auditors will issue the separate single-audit package when OMB finalizes the compliance supplement; the board and administration will monitor any required follow-up from that package.