Audit 385190

Finding 2025-002 – Internal Control over Compliance – Reporting (Significant Deficiency) CFDA Title and Number 84.354A Qualified Zone Academy Bonds (QZAB) Name of Federal Agency: U.S. Department of Education Compliance/Internal Control over Compliance: Auditee Responsibilities - 87 - Criteria: Uniform Guidance CFR Part 200.303 requires entities to maintain effective internal control over compliance for federal programs, including accurate financial reporting. GAAP requires proper recognition and disclosure of long-term obligations such as Qualified Zone Academy Bonds (QZAB). In-ternal controls should ensure debt balances are reconciled to lender statements and amortization schedules to prevent misstatement in reports and the SEFA. Condition: Myrtle Point School District No. did not perform routine reconciliations of QZAB debt bal-ances during the fiscal year ended June 30, 2025. The general ledger balance for QZAB differed from the amortization schedule and accrued interest was not updated. No documented review or reconciliation was performed. Failed to report the interest for the QZAB bonds and failed to post the principal pay-ments that were paid from the QZAB for the Flex fund. Entries were required to correct this deficiency in order to complete the audit. Cause: Lack of formal reconciliation procedures and oversight; reliance on outdated schedules without updates. Effect or Potential Effect: Failure to accurately reconcile QZAB balances or amortization records, can result in a risk of material misstatement of liabilities and interest expense for the financial statements; po-tential errors in SEFA reporting when QZAB financed federally funded assets. This could lead to non-compliance with reporting requirements and misclassification of debt-financed assets. Questioned Cost: None reported Repeat of a Prior-Year Finding: Yes Recommendation: We recommend that Myrtle Point School District No. 41 implement a monthly recon-ciliation process for QZAB debt, agreeing general ledger balances to lender statements and amortization schedules, and require documented review and sign-off by the Director of Business Services. District's Response: The District concurs with the recommendation. Corrective Action Plan: The District will implement reconciliations and update the schedules, and inte-grate review into the year-end close process. Planned Implementation Date: January 31, 2026 Responsible Person: Director of Business Services, Myrtle Point School District No. 41