Independent auditors give district a clean opinion but flag multiple internal-control weaknesses

Brian Jenkins, the engagement director for the district's third-party auditors, told the board the firm issued an unmodified ("clean") opinion on the district's 2024 financial statements but identified multiple internal-control deficiencies that require board attention.

Jenkins said the auditors also completed single-audit testing because the district's federal expenditures exceeded the single-audit threshold; Title I (about $2.18 million) and ESSER (about $3 million) were tested. "We did issue an unmodified opinion," Jenkins said, adding that the single-audit resulted in a significant-deficiency finding related to ESSER compliance that the board should note.

Why it matters: auditors said the district's unassigned general fund balance fell sharply year over year and several control weaknesses increase the risk of late audits and material adjustments. Jenkins outlined specific areas for action: bank reconciliations, financial closeout procedures, capital-asset records and revenue/receivable reconciliations.

Key findings and recommendations

- Liquidity and fund-balance trend: Jenkins presented a five-year trend showing reserves bolstered by prior ESSER inflows but a large decrease from 2023 to 2024. The district budgeted to use roughly $2.3 million of fund balance but used about $5.2 million, contributing to a decline in unassigned reserve levels. Jenkins reminded the board that state law requires at least one month of expenditures in unassigned fund balance and said the district remains in compliance but is trending downward.

- Bank reconciliations: "Fourteen of the district's bank accounts had an unreconciled difference between $500 and $12,457," Jenkins said, recommending monthly reconciliations (or close quarterly practices with monthly cash monitoring) to reduce audit adjustments and tighten controls.

- Financial closeout and accounts payable: The auditors reported material-weakness findings tied to the year-end close process, including omitted prior-year adjusting journal entries and omitted invoices and payroll accruals that required significant audit adjustments across multiple funds.

- Capital assets: Auditors received the capital-asset detail late, required significant reconciliation effort and reported audit adjustments of about $1.4 million (including prior-period adjustments of about $359,000). They recommended quarterly reconciliation and better coordination with department heads to capture purchases during the year.

- Revenues and receivables: The district did not fully reconcile current receivables, revenues and unavailable revenue for certain grants and property taxes; auditors required extensive effort to obtain supporting documentation and make adjusting entries.

- Single-audit compliance (ESSER): In ESSER testing auditors found the district did not maintain the federal-required inventory listing and physical-inventory documentation for equipment purchased with federal funds during the year under audit. The auditors noted the equipment-inventory threshold referenced in the presentation differed during the period under audit; the deficiency produced a single-audit finding.

Board and staff response

Board members asked clarifying questions about the unreconciled cash differences and the timeline for fixing the findings. District staff present acknowledged turnover in finance and said training and continued process changes are underway; Jenkins said most findings are fixable with improved closeout processes and reconciliations before next year's audit.

Next steps

Jenkins encouraged the board and finance staff to use quarterly or monthly close practices, reconcile bank accounts monthly, maintain up-to-date capital-asset records and complete required federal inventory listings. He offered continuing professional education resources and said the auditors will be available as a resource.

The board later entered executive session to discuss personnel and legal matters and then returned to open session to take routine actions (see related meeting actions).