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Auditor gives district an unmodified financial opinion but flags material weakness and independent‑study compliance issues
Summary
External auditors issued an unmodified opinion on the district’s financial statements but reported a material weakness in controls tied to significant audit adjustments (including a $38.3 million solar purchase accounting entry) and a state compliance finding on independent‑study contracts; the district is revising closing procedures and updating agreements.
An external audit presented to the Yucaipa‑Calimesa Joint Unified School District board found the district’s financial statements to be fairly stated but identified a material weakness in internal controls over financial reporting and a state compliance finding related to independent‑study contracts.
Joe Tarantino, senior manager with the auditors, told the board the audit resulted in an unmodified opinion on the financial statements and federal and state awards — the highest level of assurance — but required significant adjusting entries to make the audited totals materially correct. Tarantino cited a $38.3 million accounting entry related to a solar purchase agreement that had not been included in the district’s unaudited actuals, along with lease receivables (including an AT&T cell tower lease) and other timing and cash adjustments.
The auditor characterized the omission as part of a broader material‑weakness finding in the financial close and reporting process and recommended the district revise its close procedures and adjusting‑entry controls. District staff said they are working with the auditors to correct cut‑off periods and will incorporate recommended changes; Tarantino offered assistance during the closing process.
Tarantino also reported a state compliance finding tied to independent‑study agreements and Education Code documentation requirements (EDC 51747). The auditors found missing elements in some written agreements — for example, the required statement of "manner, time, frequency and place" for submitting assignments, documentation of academic supports for students not performing at grade level, and timing of required signatures. The district reported it has corrected attendance reporting (P2), trained staff, is updating master agreements and moving independent‑study contracts to an electronic system to prevent omissions. The auditor noted the potential fiscal penalty would have been minimal — approximately $532 — but emphasized the compliance role of the new documentation.
Financial highlights the auditors presented include a $12.3 million increase in net position to $90.4 million, and a reported rise in district debt driven largely by $38.3 million in private placement debt for the solar purchase agreement; capital assets increased by $11.8 million. The auditors also noted that about 80% of expenses were for instruction and pupil services.
The board accepted the audit presentation; district leaders said they will implement policy and procedural changes recommended by the auditors and continue staff training to address independent‑study documentation and financial close controls.
