Finding 519745 (2024-001)

Material Weakness

Requirement

Questioned Costs

Year

2024

Accepted

2025-01-20

Audit: 338862

Organization: Independent School District 695 (MN)

Auditor: Sterle & CO LTD

AI Summary

Core Issue: Material audit adjustments were proposed due to the District's inadequate internal controls, risking financial statement misstatements.
Impacted Requirements: The lack of a robust internal control system fails to ensure all necessary adjustments are identified and recorded.
Recommended Follow-Up: Management should implement a thorough review and reconciliation of accounts before audits, involving both accounting staff and administration.

Finding Text

Material jounal entires were proposed during the audit process - Material Weakness Condition: During the course of the engagement, we proposed material audit adjustments that were not identified as a result of the District's existing internal controls, and therefore could have resulted in a material misstatementof the District's financial statements. Criteria: A good system of internal accounting control contemplates an adequate system for recording and processing entries material to the financial statements. Cause: The District does not have an internal control system designed to identify all necessary adjustments. Effect: The deficiency could result in a misstatement to the financial statements that wold not be prevented or detected. Context: These entries covered both federal and nonfederal transactions. Recommendation: The District's management should develop a thorough review and reconciliation of accounts in each fund that should be performed prior to the beginning of the audit. This review should be performed at both the accounting staff and administrative levels. View of Responsible Officials and Planned Corrective Actions: The District is aware of the situation and has hired additional business office staff and will provide additional training for UFARS reporting. Repeat Finding: No

Corrective Action Plan

Material Journal Entires Were Proposed Actions Planned - The District has implemented a plan for additional internal controls to develop increased review and reconciliations prior to the beginning of the audit. The District has recently hired new business office staff and has provided additional training for UFARS reporting and compliance. Additionally, the proposed FY24 entries have been thoroughly reviewed by accounting staff and are used proactively for current review and reconciliation. Official Responsible - Business Manager and Superintendent of Schools. Planned Completion Date - December 31, 2024 Disagreement with Finiding - None - ISD #695 Chisholm concurs with the finding. Plan to Monitor - The District is aware of the situation and will monitor, as it deems appropriate. Monitoring will include monthly reiew of accounts in each fund by both the business office staff and administrative levels.

Other Findings in this Audit

519744 2024-002

Significant Deficiency Repeat
519746 2024-002

Significant Deficiency Repeat
519747 2024-006

-
519748 2024-001

Material Weakness
519749 2024-002

Significant Deficiency Repeat
519750 2024-006

-
1096186 2024-002

Significant Deficiency Repeat
1096187 2024-001

Material Weakness
1096188 2024-002

Significant Deficiency Repeat
1096189 2024-006

-
1096190 2024-001

Material Weakness
1096191 2024-002

Significant Deficiency Repeat
1096192 2024-006

-

Programs in Audit

ALN	Program Name	Expenditures
84.425	Education Stabilization Fund	$238,324
84.010	Title I Grants to Local Educational Agencies	$209,810
21.027	Coronavirus State and Local Fiscal Recovery Funds	$118,055
84.027	Special Education Grants to States	$74,307
10.553	School Breakfast Program	$58,192
10.559	Summer Food Service Program for Children	$21,656
84.173	Special Education Preschool Grants	$3,176
84.424	Student Support and Academic Enrichment Program	$2,607
10.555	National School Lunch Program	$1,398
10.649	Pandemic Ebt Administrative Costs	$653