Audit 3688

Criteria: In accordance with prescribed definitions in AU-C 265, it is a strong indication of a material weakness in internal control if an entity lack sufficient controls over the period-end financial reporting process. AU-C 265 provide guidance regarding the extent to which the auditor may be involved in drafting an entity's financial statements. Condition: The District prepares interim financial statements using software specifically designed for school district financial reporting. These interim reports are reviewed and approved by the District's Board of Education. For year end reporting purposes, the District relies on the auditor to prepare drafts of full disclosure financial statements (including footnotes) in a format acceptable by ISBE. The District currently lacks sufficient expertise to prepare year end, full disclosure financial statements without significant assistance from the auditor. The District does not lack the ability to review and approve all journal entries and the drafted financial statements. Context: Although the auditor can propose adjustments and assist in assembling or drafting the financial statements, the auditor cannot establish or maintain the District's internal controls, including monitoring ongoing activities, since doing so would impair the auditor's independence.

Criteria: 2 CFR section 200.302(b)(3-4) states “The financial management system of each non-Federal entity must provide for the following… (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.” Condition: During our audit we noted cases where cumulative expenditures claimed for ESSER II and ESSER III did not agree to the general ledger. Many journal entries were used to move expenditures to/from applicable grants, but they were not always properly reported on the grant expenditure reports. Context: We noted numerous immaterial discrepancies in reporting compared to actual general ledger information from the District. We consider this to be a systemic problem. None of the amounts were material to the program and extrapolation wasn’t practical because of the nature of discrepancies it was difficult to quantify them against all grant expenditures.

Criteria: In accordance with prescribed definitions in AU-C 265, it is a strong indication of a material weakness in internal control if an entity lack sufficient controls over the period-end financial reporting process. AU-C 265 provide guidance regarding the extent to which the auditor may be involved in drafting an entity's financial statements. Condition: The District prepares interim financial statements using software specifically designed for school district financial reporting. These interim reports are reviewed and approved by the District's Board of Education. For year end reporting purposes, the District relies on the auditor to prepare drafts of full disclosure financial statements (including footnotes) in a format acceptable by ISBE. The District currently lacks sufficient expertise to prepare year end, full disclosure financial statements without significant assistance from the auditor. The District does not lack the ability to review and approve all journal entries and the drafted financial statements. Context: Although the auditor can propose adjustments and assist in assembling or drafting the financial statements, the auditor cannot establish or maintain the District's internal controls, including monitoring ongoing activities, since doing so would impair the auditor's independence.

Criteria: 2 CFR section 200.302(b)(3-4) states “The financial management system of each non-Federal entity must provide for the following… (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.” Condition: During our audit we noted cases where cumulative expenditures claimed for ESSER II and ESSER III did not agree to the general ledger. Many journal entries were used to move expenditures to/from applicable grants, but they were not always properly reported on the grant expenditure reports. Context: We noted numerous immaterial discrepancies in reporting compared to actual general ledger information from the District. We consider this to be a systemic problem. None of the amounts were material to the program and extrapolation wasn’t practical because of the nature of discrepancies it was difficult to quantify them against all grant expenditures.