Audit 341747

Material Weakness: 2024-001 Monitoring of financial reporting: Criteria: The District should have a system of internal controls surrounding financial reporting which provides for the administration, monitoring and reporting of financial activity of the District on a routine, timely basis. This allows for the District to maintain activity within the financial management system that allows for meaningful, useful and timely financial reporting (internal and external). Condition: While the District has procedures which generally provide for the processing of daily cash receipts and payroll and vendor expenditures through established warrant processing procedures, the procedures for the overall monitoring of the District’s financial activity (inclusive of grants) were not adequate to allow the District to close-out fiscal year 2023 in a timely manner. The deficiencies in overall financial reporting monitoring (inclusive of grants) continued through fiscal year 2024. Current personnel have begun to address these deficiencies as fiscal year 2024 has been closed out and are in the process of implementing enhancements going forward. Potential Effect: Lack of timely financial reporting and monitoring thereof present the reasonable possibility that material misstatements will not be prevented, or detected and corrected, on a timely basis. Cause: The District experienced turnover in key finance and accounting positions, prior to the end of fiscal year 2023 (April 2023) and during the fiscal year 2024. An interim, part-time individual was hired; however, the close-out and reporting issues associated fiscal year 2023 perpetuated the overall financial reporting and monitoring deficiencies through fiscal year 2024. The District hired a new full-time new Director of Finance and Operations officially took the position effective July 1, 2023. Auditor’s recommendation: As recommended in the prior year, in the auditor’s professional opinion, it is important that management and those charged with governance design and implement a system of internal controls surrounding financial reporting which ensures the timely close-out, reconciliation, communication and reporting of all financial activity (inclusive of grants). The design and implementation of internal control policies and procedures should also consider continuity of effective financial reporting and monitoring during periods of staffing turnovers. continuity of operations in the event of staffing turnovers. Per our discussions with management additional procedures are being implemented during fiscal year 2025.

2024-002 Reporting and grants administration: Criteria: Current Uniform Guidance (and financial reporting) highlights the importance and requirements for grantees to maintain a system of internal controls surrounding the administration of federal grants which ensure all compliance requirements and the financial reporting related thereto are achieved for each federal program. Condition: As also detailed in finding 2024-001 above, the District’s processes did not provide for routine, and timely monitoring and reconciliation of financial activity associated with the grant award. Based upon our audit procedures we noted journal entries were required (inclusive of approximately $208,000) to be made by management as part of the fiscal year 2024 close out and overall monitoring of the grant to adjust activity within the ledger to that being reported in the underlying grant reporting. Cause: The District’s general ledger and underlying grants and associated reporting were not reconciled throughout the fiscal year. Potential Effect: The District’s reporting associated with the program is late. Additionally, the lack of reconciliation and monitoring of the grants with the general ledger allow for material misstatements within the District’s general ledger (financial statements and schedule of expenditures of federal awards) to occur. Misstatements could have an effect upon the decisions made by the users of the financial information. Based upon our procedures and discussion with current personnel, adjusting entries were proposed to correct the identified misclassified. Repeat Finding: This is a repeat finding from the prior year. (2023-002). Auditor’s Recommendation: As recommended in the prior year, the District’s procedures should ensure all financial activity is posted as intended on a timely basis. Established internal control policies and procedures should ensure the routine reconciliation of grant and underlying accounting records, as well as formalized review and documentation of the District’s compliance with grant compliance requirements. Management should update current policies and procedures accordingly. Moreover, management should evaluate review of all grant administration as a part of a routine risk assessment program. Based upon our discussions with current management, additional enhancements are being addressed in fiscal year 2025.

Material Weakness: 2024-001 Monitoring of financial reporting: Criteria: The District should have a system of internal controls surrounding financial reporting which provides for the administration, monitoring and reporting of financial activity of the District on a routine, timely basis. This allows for the District to maintain activity within the financial management system that allows for meaningful, useful and timely financial reporting (internal and external). Condition: While the District has procedures which generally provide for the processing of daily cash receipts and payroll and vendor expenditures through established warrant processing procedures, the procedures for the overall monitoring of the District’s financial activity (inclusive of grants) were not adequate to allow the District to close-out fiscal year 2023 in a timely manner. The deficiencies in overall financial reporting monitoring (inclusive of grants) continued through fiscal year 2024. Current personnel have begun to address these deficiencies as fiscal year 2024 has been closed out and are in the process of implementing enhancements going forward. Potential Effect: Lack of timely financial reporting and monitoring thereof present the reasonable possibility that material misstatements will not be prevented, or detected and corrected, on a timely basis. Cause: The District experienced turnover in key finance and accounting positions, prior to the end of fiscal year 2023 (April 2023) and during the fiscal year 2024. An interim, part-time individual was hired; however, the close-out and reporting issues associated fiscal year 2023 perpetuated the overall financial reporting and monitoring deficiencies through fiscal year 2024. The District hired a new full-time new Director of Finance and Operations officially took the position effective July 1, 2023. Auditor’s recommendation: As recommended in the prior year, in the auditor’s professional opinion, it is important that management and those charged with governance design and implement a system of internal controls surrounding financial reporting which ensures the timely close-out, reconciliation, communication and reporting of all financial activity (inclusive of grants). The design and implementation of internal control policies and procedures should also consider continuity of effective financial reporting and monitoring during periods of staffing turnovers. continuity of operations in the event of staffing turnovers. Per our discussions with management additional procedures are being implemented during fiscal year 2025.

2024-002 Reporting and grants administration: Criteria: Current Uniform Guidance (and financial reporting) highlights the importance and requirements for grantees to maintain a system of internal controls surrounding the administration of federal grants which ensure all compliance requirements and the financial reporting related thereto are achieved for each federal program. Condition: As also detailed in finding 2024-001 above, the District’s processes did not provide for routine, and timely monitoring and reconciliation of financial activity associated with the grant award. Based upon our audit procedures we noted journal entries were required (inclusive of approximately $208,000) to be made by management as part of the fiscal year 2024 close out and overall monitoring of the grant to adjust activity within the ledger to that being reported in the underlying grant reporting. Cause: The District’s general ledger and underlying grants and associated reporting were not reconciled throughout the fiscal year. Potential Effect: The District’s reporting associated with the program is late. Additionally, the lack of reconciliation and monitoring of the grants with the general ledger allow for material misstatements within the District’s general ledger (financial statements and schedule of expenditures of federal awards) to occur. Misstatements could have an effect upon the decisions made by the users of the financial information. Based upon our procedures and discussion with current personnel, adjusting entries were proposed to correct the identified misclassified. Repeat Finding: This is a repeat finding from the prior year. (2023-002). Auditor’s Recommendation: As recommended in the prior year, the District’s procedures should ensure all financial activity is posted as intended on a timely basis. Established internal control policies and procedures should ensure the routine reconciliation of grant and underlying accounting records, as well as formalized review and documentation of the District’s compliance with grant compliance requirements. Management should update current policies and procedures accordingly. Moreover, management should evaluate review of all grant administration as a part of a routine risk assessment program. Based upon our discussions with current management, additional enhancements are being addressed in fiscal year 2025.