Lexington 1 audit: independent firm issues clean opinion as board hears fund-balance trends

An independent audit firm on Tuesday issued an unmodified, or "clean," opinion on Lexington County School District 1's financial statements for the fiscal year ended June 30, 2024, and told the school board it found no material weaknesses, significant deficiencies or reportable instances of noncompliance.

"Unmodified is a fancy accounting auditing term, for a clean opinion," Tim Lyons, engagement partner for Malden and Jenkins, told the board during a presentation of the district's annual comprehensive financial report. Lyons said the audit included the district's federal major-program testing and the single audit; he said the child-nutrition cluster and ESSER (education-stabilization funds) were the two major federal programs examined.

The presentation also reviewed the district's fund-balance position. Lyons reported an ending general-fund balance of about $114,500,000 at June 30, 2024 and said that equaled roughly 30–32% of current-year expenditures and transfers out — well above the state's statutory minimum (about 8.33 percent) and above common GFOA guidance. He noted the district's fund balance rose by about $9.7 million from the prior year.

CFO Jennifer Miller told trustees that the fund-balance figure is seasonal: the audited June 30 amount is higher than amounts reported during the year and that the district's monthly reporting shows fluctuations as tax receipts are collected. Miller said the district's November 30 estimate of total fund balance was lower than June but still substantial; she reported an estimated total (assigned and unassigned) of about $80,000,000 at that later point and explained the difference reflects normal timing of local revenues.

Trustees asked for additional detail about assigned versus unassigned portions of fund balance and whether trustees should expect regular monthly fund-balance snapshots. Lyons and Miller explained the difference between cash- and accrual-based reporting and suggested a budget-monitoring approach tied to monthly budget-to-actual reporting and to any planned appropriations of fund balance.

No formal board action was required stemming from the executive-session legal update the board received earlier in the evening, Lyons said. The audit firm also noted a past audit adjustment related to compensated absences that was not material and that new GASB standards will change the accounting for compensated absences in upcoming years.

The board did not take any policy votes tied directly to the audit presentation; trustees thanked the finance department and the audit team for their work and asked follow-up questions about trends that will inform future budget planning.