Finding Text
Criteria: Expenditures incurred for voter-approved capital projects are reported in the capital projectsfund. In accordance with GASB 34, the District capitalizes fixed asset activity as a reconciling item on thegovernment-wide financial statements. Expenditures are reported as construction in progress until theproject is complete, where the total costs are capitalized and depreciated.Condition: The District contracts with a third party service to maintain fixed assets. Throughout the yearthe District sends additional disposal information to the third party to record within the fixed assetmodule. Reports are sent to the District and are used to reconcile the fixed asset activity reported in thegovernment-wide financial statements. In 2021-2022 the report of fixed asset additions did not agree tothe District's records by approximately $5.4 million for additions that were not entered in the properperiod. In addition, current year fixed asset additions did not reconcile to capital project expenditures byapproximately $895,000. The District did not perform a formal reconciliation of fixed asset activity,including construction in progress, to total project expenditures incurred resulting in proposedadjustments of approximately $31.5 million.Cause: The District does not perform a reconciliation of expenditures incurred within the fund financialstatements to the information sent to the third party service to ensure completeness and accuracy oftotal fixed asset activity.Effect: Fixed asset reports required adjustments of $31.5 million to agree to expenditures reported withinthe financial statements and construction in progress activity.Recommendation: We recommend the District review and reconcile fixed asset reports to projectexpenditures periodically throughout the year.Views of Responsible Official and Planned Corrective Actions: The District is reviewing fixed asset controlsand processes in place to implement additional reconciliation procedures moving forward.