Audit 380215

MATERIAL WEAKNESSES FINDING 2024-003 - RESTATEMENT OF BEGINNING FUND BALANCE Program information This finding applies to the District's financia l statements as a whole .. Repeat Finding from Prior Year No Condition The District's beginning General Fund balance was restated by approximately $2,800,000 as of July 1, 2023. The restatement was required due to errors and incomplete accounting in prior years. Specifically, investment accounts had not been adjusted to reflect changes in fair value, outdated balance sheet accounts had not been reconciled or cleared, and significant interfund balances and excess cash transactions remained unresolved for multip le years. These conditions necessitated substantial adjustments during the audit process. Criteria Management is responsible for ensuring that financial statements are prepared in accordance with generally accepted accounting principles. This includes accurate recogn ition and reporting of assets, liabilities, and investments, as well as proper reconciliation of interfund balances and other accounts. Context The District engaged a consultant during the year to assist in correcting accounting records. Through this process, multiple prior year errors were identified, resulting in the need for a restatement to accurately present beginning fund balance. Cause The need for restatement was primarily due to weaknesses in internal controls over financial reporting, including insufficient oversight of investment fair value adjustments, inadequate reconciliation of balance sheet accounts, and delays in clearing outdated interfund and cash transactions. Effect The restatement indicates that prior year financial statements were materially misstated. As a result, users of the financial statements may have relied on inaccurate information regarding the District's financial position. Although current year activity is not affected, the adjustments underscore the need for stronger accounting controls and oversight. Questioned Costs & Sampling Method Not applicable Recommendation We recommend that the District strengthen internal controls over financial reporting by establishing regular procedures to ensure investment accounts are recorded at fair value, balance sheet accounts are reviewed and reconciled on a timely basis, and interfund and cash transactions are properly cleared. Periodic review by management and continued use of external expertise, as needed, will help ensure that financial information is complete, accurate, and prepared in accordance with generally accepted accounting principles. Response and Views of Responsible Officials See corrective action plan.

SIGNIFICANT DEFICIENCY FINDING 2024-004 - CASH MANAGEMENT AND RECONCILIATION OF ACCOUNTS Program information This finding applies to all federal awards. Repeat Finding from Prior Year No Condition The District did not perform timely reconciliations of its cash and investment accounts throughout the year. Reconciliations were delayed, in some cases extending several months after the related reporting period. This lack of timely reconciliation increases the risk of errors or irregularities going undetected and complicates accurate reporting of federal grant expenditures and reimbursements. Criteria Federal grant administration requires effective cash management practices, including timely reconciliation of cash and investment balances, to ensure that federal funds are properly safeguarded, accounted for, and reported in accordance with Uniform Guidance. Context During the audit, it was noted that the District's reconciliations of bank and investment accounts were not consistently completed on a monthly basis. The delays in reconciliation hindered management's abi lity to ensure that cash balances reported for federal programs were accurate and supported by underlying records. Cause The condition primarily resulted from limited staffing resources and weaknesses in internal controls over cash management. Oversight responsibilities were not adequately structured to ensure reconciliations were completed timely and reviewed on a consistent basis. Effect Failure to reconci le cash and investment accounts on a timely basis increases the risk of misstatement of financial information and could result in errors in the reporting of federal expenditures and reimbursement requests. This deficiency impairs management's ability to effectively monitor cash flow and ensure compliance with federal requirements. Questioned Costs & Sampling Method Not applicable Recommendation We recommend that the District strengthen internal controls over cash management by ensuring that all cash and investment accounts are reconci led to the general ledger on a monthly basis and that reconciliations are subject to supervisory review. Enhanced monitoring procedures will help ensure the accuracy of financial reporting and compliance with federal grant requirements. Response and Views of Responsible Officials See corrective actions plan.

SIGNIFICANT DEFICIENCY FINDING 2024-005 - SEGREGATION OF DUTIES Program information This finding applies to all federal awards. Repeat Finding from Prior Year Yes Condition The number of employees performing accounting and bookkeeping duties in the beginning of the year was not sufficient to provide an adequate segregation of duties. Criteria Circumstances permitting, accounting and bookkeeping duties should be assigned to different individuals to promote safeguarding of assets and accuracy of financial information. Context Noted throughout the finding. Cause The District has limited resources that minimize the possibility to segregate the functions within the business office and was in the process of hiring and filling positions to mitigate the associated risks. The positions were filled but during the beginning of the audit period there was a period when th is risk was present. Effect Because of the limited number of individuals involved in the accounting and bookkeeping functions, there is a greater risk that assets will not be properly safeguarded and that errors in financial information will occur and not be detected in a timely manner. This was only applicable to the beginning of the audit period before hires were made. Questioned Costs Not applicable Sampling Method Not applicable Recommendation None at th is time given adequate hires have been made. Response and Views of Responsible Officials See corrective action plan.