Independent auditor gives Montgomery Township schools a clean opinion but flags food-service fund balance

The Montgomery Township School District’s independent auditor presented the FY2025 financial audit Jan. 27 and issued an unmodified opinion on the district’s financial statements, indicating the statements are free from material misstatement and can be relied upon, auditor Eric Zimmerman told the board.

Zimmerman also presented the Auditor’s Management Report (AMR) required by the New Jersey Department of Education. The AMR includes recommendation 2025-01: the district should ensure that net cash resources in the food service account do not exceed three months’ average expenditures. Zimmerman said much of the excess reflects one-time federal COVID-era revenues, timing differences in purchases and invoicing, and higher reimbursement rates in recent years. He said the Department of Agriculture has pressed similar findings across many districts and requires the recommendation be recorded in the report.

District leaders acknowledged the finding and described short-term and managerially feasible options: spend food-service funds on allowable capital purchases for food service (for example, cooking stations or hoods), use managerial offsets such as reallocating allowable utilities or salaries tied to the program, or consider adjusting meal pricing with caution because vendors’ guarantee formulas are affected by price changes. The business administrator said a planned purchase and recently added budget offsets are expected to address the issue and that several legacy housekeeping items inherited from prior administrations have been or are being resolved.

Board members asked technical questions about specific audit exhibits, facility-level maintenance schedule spikes, prior-year audit adjustments and deferred state aid recognition. Zimmerman noted that certain schedules in the audit book are self-reported and that more detailed, school-level inquiries about expenditure spikes or encumbrances would require follow-up with the business office; he explained that encumbrances are open purchase orders that appear as expenditures on a budgetary basis but are backed out for GAAP reporting until goods are received and invoiced.

The board accepted the auditor’s reports as part of the omnibus adoption of agenda items 1.1–4.6.

What the board will do next: the business administrator reported steps already taken to reduce the food service fund balance (planned purchases and offsets); the auditor and business office recommended follow-up accounting and documentation to show the condition resolved in future reporting cycles.