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Pequot Lakes board accepts FY25 audit; auditors report clean opinion and new compensated‑absences liability
Summary
The Pequot Lakes Public Schools Board accepted the FY25 audit, receiving an unmodified (clean) opinion from auditors; a new accounting standard required recording roughly $3 million in compensated‑absences liability on districtwide statements but did not affect the general fund.
The Pequot Lakes Public Schools Board voted to accept the district's fiscal year 2025 audit after a presentation from Ryan Schmidt, a partner at auditing firm Schlenner Wener.
Schmidt told the board the auditors issued an unmodified (clean) opinion — the highest standard — and found no unusual accounting treatments. "The opinion that we've given you this year is the same one that you had last year. It's an unmodified clean opinion," Schmidt said. He recommended the board approve the audit now and reopen it only if final federal guidance requires changes.
The auditors noted one accounting change required by new Governmental Accounting Standards Board (GASB) guidance: the district had to record compensated absences (employee leave) on the districtwide financial statements. Schmidt said that resulted in an approximately $3 million long‑term liability appearing on the governmentwide statements but did not change the general fund presentation used for day‑to‑day operations.
Auditors also reviewed internal controls and compliance. They said prior segregation‑of‑duties concerns had been addressed through changes to journal‑entry approvals and bank reconciliations, and Minnesota legal compliance checklists produced no findings. The single audit of federal programs focused on the child nutrition cluster; auditors issued a clean compliance opinion but flagged two internal‑control items: one month of underreported meals (the district is recovering about $13,000) and two student free/reduced‑price application miscategorizations that auditors recommended the district review.
Board members pressed for details about revenue variances and timing around recent bond activity. Finance Director Heidi Hagen explained the revenue surplus included late voluntary pre‑K funding, higher career and technical education levy receipts (about $150,000), and several grants that were not budgeted. On bond proceeds, auditors confirmed the 2024A bonds will appear in the building construction fund as "other sources" once the issuance is recorded; any interest accrued through June 30 is disclosed in the audited footnotes.
Following discussion, a motion to accept the FY25 audit passed by voice vote. The board will revisit the audit only if the final federal compliance supplement (delayed by a federal shutdown) produces required changes.
