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Auditors find record‑keeping gaps but say Hawthorne schools remain financially stable
Summary
External auditors presented the 2024–25 audit to the Hawthorne Public School District board, listing compliance and timing-related findings — including payroll agency analyses, compensated-absence accounting under a new GASB standard, untimely bank reconciliations, federal grant reconciliation gaps and a $33,000 excess in cafeteria net cash resources — while describing the district's overall finances as stable.
The Hawthorne Public School District's external auditors told the school board on Tuesday that multiple compliance and record‑keeping issues were identified in the 2024–25 audit, but that the district's overall financial position is stable.
The auditor summarized several findings, including a missing analysis of balances in payroll agency accounts, a needed update to the district's compensated‑absences evaluation to comply with a new Governmental Accounting Standards Board (GASB) requirement, missing journal entries that led to inaccurate account balances during the year, and bank reconciliations that were not performed in a timely manner. The auditor said these matters were primarily compliance and timing issues rather than indicators of a weakened operating position.
"This doesn't really affect your your financial well‑being," the auditor said, adding that most financial statement opinions were unmodified and that the single‑audit work for federal and state grants produced clean opinions. The auditor also noted capital work recorded as construction in progress totals more than $16,000,000 and recommended assigning completed improvements to building fixed assets.
Board members asked whether the problems were isolated to particular months or were ongoing. The auditor responded that many of the problems appeared at year end and were related to turnover in the business office and use of interim staff. Board members and district staff said reconciliations and corrective entries were completed after the auditor's review.
The audit also flagged the district's food service fund: net cash resources exceeded the three‑month average expenditure calculation used for federal compliance by about $33,000, which requires documentation and potential corrective action. At public comment, high school teacher Alyssa Schwartzberg asked, "Did he say we have extra money to spend on the students?" The auditor and staff clarified that any excess cafeteria funds are restricted to food service uses under federal rules and cannot be distributed as direct payments to individual students.
Despite the findings, the auditor reported that the operating fund began the year at $10,834,000 and closed at $11,000,001.32, describing the year as "financially stable." The auditor also noted an excess surplus calculation of $1,100,000 that must be applied to the FY27 budget, and the district's capital and major reserves.
District staff told the board they have already implemented new processes to address several recommendations and will provide documentation of corrective actions in writing upon request. The board did not take any new formal action at the meeting beyond asking for written responses and for the recommendations to be placed in the board folder.
The audit presentation and the board's questions and responses were part of a broader discussion about staffing continuity in the business office and the steps the district has taken to correct identified control issues.
