Auditor gives district clean financial and federal opinions but flags state compliance items and internal-control gaps

The district's independent auditor reported an unmodified (clean) opinion on Newark Unified's financial statements and on federal-award compliance, but identified several state-compliance findings and internal-control deficiencies at the study-session presentation on Wednesday.

Key takeaways from the audit presentation: Auditor Jeff Jensen said the financial statements and federal compliance testing received unmodified opinions. The district's measure-G bond fund also received clean performance and financial audits and no findings, and the bond fund was reported to be fully expended as of June 30, 2024.

State compliance and internal control issues: The auditor reported six state-compliance findings; only one produced a fiscal impact (about $15,000 relating to unduplicated pupil count). The firm also reported two internal-control problems: the district lacked a formalized cybersecurity policy and had deficiencies in student-body financial controls.

Budgetary position and near-term numbers: On a full-accrual basis the district showed positive net position; on the general-fund (budget-to-actual) comparison the district ended the year with a general-fund deficit vs. budgeted amounts (the final general-fund position showed a negative $485,000 actual vs. the final budget). The auditor noted no audit adjustments were required to the numbers staff provided.

Board follow-up: Trustees thanked auditors for the clarity of reporting and asked staff for timelines to address the cybersecurity policy, strengthen student-body controls, and return with corrective actions for the six state findings.

Ending: The audit does not indicate systemic financial misstatement, but it does require targeted remediation of state-compliance items and internal controls. The board accepted the audit during the meeting.