Draft audit shows clean opinion; auditor flags capital-outlay budget violations and one funding misallocation

Transylvania County Schools' draft audited financial statements for the year ended June 30, 2025, received a clean opinion and showed modest additions to multiple fund balances, the district's auditor told the Board of Education on Nov. 17.

Shannon Dennison presented the draft statements and explained the auditor expects only to change the issuance date once required federal documents are signed nationally. She said the general fund added almost $70,000 and ended the year "a little under $3,400,000 or $3,500,000" in total; the capital outlay fund added about $98,000 to end at $696,000; and other special-revenue funds added about $444,000 to end at approximately $3.6 million.

Dennison said the audit identified no material misstatements and no disagreements with management. However, auditors reported two significant deficiencies in internal control: a repeat finding of budget violations in the capital outlay fund and a separate finding that a media specialist had been temporarily charged to the classroom teacher allotment, a use not allowed by the allotment policy manual. She said the district corrected the media-specialist funding before year-end by moving the position to an allowable allotment, and therefore there is no cost to the district.

On capital outlay overages, Dennison said some project expenses were paid directly by the county rather than by the district, and those payments need to be included in the district's project budgets and, when necessary, addressed with budget amendments so the capital outlay fund does not appear over budget.

"If the district wouldn't have moved [the media specialist] prior to year-end, that salary paid out of unallowable funds would have to be paid back to DPI," Dennison said, noting the district acted to correct the classification.

Board members asked how to avoid future capital-outlay overages; Dennison recommended budgeting for approved projects and preparing timely amendments when the county pays project costs after a board meeting so the district can reflect those expenditures in the correct fiscal year.