Finding Text
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 Specifically, investment accounts had not been adjusted to reflect changes in fair value, outdated balance sheet accounts had not been reconciled or cleared, and significant interfund balances and excess cash transactions remained unresolved for multip le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of investment fair value adjustments, inadequate reconciliation of balance sheet accounts, and delays in clearing outdated interfund and cash transactions.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.