Finding 5680 (2023-002)

Financial Reporting for Federal and State Assistance Conditions: The Uniform Guidance and the State Single Audit Guidelines requires the District to prepare appropriate financial statements, including the schedules of expenditures of federal awards. While the current staff of the District maintains financial records supporting amounts reported in the schedules of expenditures of federal awards, the District contracts with its auditor to compile the data from these records and prepare the single audit report for the District. Criteria: Having staff with expertise in federal reporting to prepare the District’s single audit report is an internal control intended to prevent, detect and correct a potential misstatement in the schedules of expenditures of federal awards, or accompanying notes to the schedule. Cause: The additional cost associated with hiring staff sufficiently experienced to prepare the District’s single audit report, including the additional training time, outweigh the derived benefits. Effect: Because management relies on its auditor to assist with the preparation of the financial statements, including single audit reports, the District’s system of internal control may not prevent, detect or correct misstatements in these financial statements. Recommendation: We recommend District personnel continue reviewing the District’s single audit report prepared by its auditor. While it may not be cost beneficial to hire additional staff to prepare these items, a thorough review of this information by appropriate staff of the District is necessary to ensure all federal programs are properly reported in the District’s single audit report.