Finding Text
Condition – During the year ended September 30, 2025, it was discovered depreciation methods for certain capital assets were applied inconsistently in current and prior years, resulting in the need to adjust depreciation expense and accumulated depreciation. Criteria – Controls in place over capital asset additions include obtaining purchase documentation, matching to accounting system, and using project codes and descriptions to input into capital asset software. Categories, methods, and lives are based on the inputs mentioned above. Effects – Clerical errors in descriptions, account or project grouping, and failure of review resulted in the capital asset group of land and land rights being depreciated incorrectly. Recommendation – Abacus has recommended a review of authoritative guidances on allowable depreciation methods, an evaluation of current capital asset control processes, and an additional evaluation of controls and abilities of capital asset management system. Managements Response – The misstatement of current year depreciation expense and accumulated depreciation amounts resulted from the misapplication of depreciation methods related to land and land rights. The affected assets represented a small portion of the total capital asset population and were primarily related to assets acquired in prior years. Current year depreciation expense was overstated by $57,000, representing 0.9% of the total depreciation expense of $6,557,584. The effect on accumulated depreciation for fiscal year 2025 was $330,000, representing 0.3% of $111,195,665 in accumulated depreciation. The 2025 financial statements have been adjusted to reflect the correct amounts. The District has committed to perform evaluations of the existing capital asset control processes and the abilities of the capital asset management system.