Audit 393208

Bank Reconcilations, Interfund Balances Reconciliations and Balance Sheet Account Reconcilations, Year ended June 30, 2025. Condition and Criteria: During the current year, although bank reconciliations were prepared on a regular basis, they were not reconciled to the District's general ledger. In addition, the District carries interfund receivable and payable balances, however, amounts did not reconcile throughout the year. Differences that existed in cash and interfund balances had to be corrected after year-end. Lastly, we noted that the District does not perform reconciliations of assets and liability accounts during the year on regular or routine basis, including receivables, payables and withholding accounts. Cause and Effect: The effect of not reconciling bank balances against the District's general ledger balance and reconciling interfund balances is that reporting errors in posting cash receipts and cash disbursements can occur and not be detected or resolved in a timely manner. Without regular and rountine reconcitliation of asset and liability accounts balances (including cash and due to/due from accounts), a significant misstatement in the general ledger of the District would go undetected for extended periods of time. This could result in inaccurate or incomplete information which is ultimately utilized by management and the Board of Education in its decision making process throughout the year, including the establishments of annual budgets. Within the current audit, the lack of reconcilations resulted in significant audit adjustments. Auditor's Recommendation: We recommend that the District prepare bank reconciliations soon after the end of each month. As part of the reconcilation process the District's general ledger cash balances should be compared against the bank reconciliation, with any differences being immediately investigated. Once complete, the bank reconcilation should be reviewed by someone independent of the preparer. In addition, a worksheet should be developed which reonciles interfund balances on a monthly basis. Any differences in the reconcilation process should be immediately investigated. We recommend that asset and liability accounts be reconciled on a regular and routine basis. Further, reconciliations should be reviewed by management to ensure their accurate and timely completion. District's Response: The District will ensure that bank reconciliations are prepared in a timely manner and verify that balances within the general ledger cash accounts agree to the bank reconciliation, along with ensuring that interfund balances reconcile and that balance sheet asset and liabilities are reconciled to supporting documentation.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2025. Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordnce with generally accepting accounting principles. Some of the adjustments and footnotes were related to converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance with preparing the financial statements to be indicative of an internal control deficiency. Without assistance, the potential exists of the District's financial statement not confirming to GAAP. Auditor's Recommendation: Although auditors may continue to provide such assistance both now and in the future, under new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. School District's Response: The District has received, reviewed and approved all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District has a thorough understanding of these financial statements and the ability to make informed judgements on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost-effective approach to prepare such information.