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Auditors report unmodified opinions and material weaknesses; District cites staffing turnover and capital projects
Summary
Auditors told the Rapid City Area School District 51-4 board they issued unmodified opinions for fiscal years 2022 and 2023 but identified material weaknesses in internal controls and late filings with the Federal Audit Clearinghouse; auditors also highlighted large capital inflows tied to the South Middle School project.
Devin Pfaff, a partner at KC Peterson and Associates, told the Rapid City Area School District 51-4 board on Thursday that auditors issued unmodified opinions on the district's 2022 and 2023 financial statements but reported material weaknesses in internal controls and late filings with the Federal Audit Clearinghouse for 2022 and 2023.
'The 2022 financial statement audit, we issued unmodified opinions,' Pfaff said, adding that the audit team proposed 25 adjustments and reported two material weaknesses related to account reconciliations and drafting of financial statements. For 2023, auditors again issued unmodified opinions but recorded 24 adjustments and similar internal-control weaknesses.
Why it matters: An unmodified opinion indicates auditors found the financial statements presented fairly in accordance with accounting standards. The material weaknesses signal that the district needs stronger controls over reconciliations and financial-statement preparation; auditors and staff said the weaknesses were tied in part to turnover in the business office during 2021'2022.
Pfaff told trustees the district's 2022 revenues were about $161,000,000 with $152,000,000 in expenses; 2023 revenues rose to approximately $180,000,000 while reported expenses were roughly $139,000,000, a shift Pfaff attributed largely to capital activity for the South Middle School project being recorded as fixed assets rather than current-year expenses.
'We audited federal programs for 2022 and 2023 ' including Title I, the special education cluster and ESSER funds ' and those major programs received unmodified opinions,' Pfaff said, noting the 2023 single-audit covered about $31,900,000 (mostly ESSER) and 2022 covered $15,500,000.
The audit presentation included fund-balance figures: unassigned general-fund balances of $14.5 million in 2022 and $17 million in 2023, and cash balances reported for general, special education and capital funds. Board members asked clarifying questions about the student nutrition fund after auditors said the nutrition fund operated near 100% self-sufficiency following COVID-era waivers.
Staff and trustees pointed to business-office turnover between September 2021 and December 2022 as the primary reason audits were delayed and for some of the adjustments. Trustee remarks that followed thanked business-office staff and KC Peterson for work to get the district back on schedule.
Next steps: Auditors said the district has nine months from year end to file the Federal Audit Clearinghouse data-collection form and is already starting the FY24 audit work to file timely. Trustees asked staff to provide the audit presentation materials and follow up on corrective actions for the material weaknesses.
