001of the united states of america and to the republic for which it stands one nation under god and indivisible with liberty and justice for all roll call mrs please president mrs price president mr mcgibbon president mr ellen mr austin all right with that um we have our study session for the 2021 financial statements and the usfr part to introduce our guest uh cynthia the cpa who did you were the primary auditor right yes we also have um the audit partner on the job uh my court okay welcome thank you so with that i think it's greg's show here so i invited cynthia here today so she can go over to the findings within our audit and to discuss any questions that's made to arrive each of those as well as our financial cases i understand
002the financial statements about 110 pages long so it's really incorporating reading so with that i will turn it over to cynthia whenever go through the audit maybe talk about the process a little bit before we actually go into the findings all right yeah so we were engaged to perform the financial statement audit as well as the u.s department plans questionnaire audit the financial statement audit is more numbers-based so we're looking at the different accounts that the district has such as revenues expenditures the cash that they hold at year end as well as any liabilities that they might have and with that we were also engaged to perform the state audit which is a document put out by the auditor general which is what you have in front of you they put out this document yearly
003they have 175 questions on it all of which we have to answer either yes the district complied with this requirement or no the district did not comply with this requirement and each questions has like several different requirements within it as well so i think we've calculated about 400 to 450 total requirements that we're testing through this um question here i'll pass it over to mike who's going to go over the financial statements a little bit and then i'll go in more detail into the question here yeah i might understand you don't have the financials hard copy yet it's coming from the printers you've got the electronic copy so i i was going to go through and highlight certain pages but since you don't have it in front of you people just talk a little bit
004high level but certainly after the meeting if there are other questions contact us through the credit or superintendent we can address those questions if there aren't any with the financials so but i will start aside from the financials there's another letter that you should have received probably last week um it's not i see that it's not attached to this it's the governance communication level and that's something that we issue every year it's really just a high level summary of what the audit is and what we found different different areas in there that talk about qualitative aspects quantitative aspects of an audit talks about the fact that we had no significant difficulties in performing the audit which is obviously a positive it talks about audit adjustments um the fact that there were no disagreements with management
005the uh various compliance aspects that we're looking at kind of like somebody had just covered and then there's a section in there about responsibility fraud there's a fraud checklist attached to that there's the engagement letter attached to a general representation so i just want to highlight that that's recall requirement auditing standards that we've issued that letter directly to you as board members again just take a summary of the audit um so when you do get a chance you know look through that quickly have we received that i believe i emailed it last friday i mean the financials just came out last last week wednesday so the earliest we would have sent it is last week so yeah it probably was not in time for this agenda but once again it's a summary we're going to
006cover everything that is mentioned in that letter here today um so as far as the financial statements i'll just kind of move on that um the the financials themselves no different than what we've issued in previous years the you know page one is your audit opinion for fiscal year 22 it was unmodified or clean audit opinion which all in audit opinion means you know when we performed our procedures nothing came about that was the material statement all the various testing that we do on the financial statements nothing came out that indicated that something was materially mistaken whether it's assets liabilities revenues expenditures within the report there's what's called the management's discussion and analysis that is on page seven um the vmdna is really management's ability to there's some year-to-year tables in there comparisons to the
007prior year numbers and that's management's um you keep going to page seven so it's it's pages seven through 15. actually if you want to go to page 10 and this is in every every annual report that that is issued for the district so that what we're looking at there is the the comparison to the prior year activity stages you can see the program revenues the cap the general revenues and if you scroll down you've got some of the expenditures this is this is part of the management's discussion and analysis and the point of this part of the report is just to kind of give you that historical comparison of the prior year and then you can see the bulleted items there where management has offered their explanations on why numbers have gone up or down
008from one year to the next guys that's crazy i guess point being i wasn't going to cover any numbers specifically in this unless there are questions on those numbers right now but point being management's discussion analysis kind of an executive level uh summary of the financials themselves the core financials and the net disclosures so when you get a chance certainly that would be an area where you where you you know put some focus if you don't have the time to dive into the deep numbers which really start off page 20. uh page 20 is what we refer to as the government government-wide financial statements and under governmental accounting you've got your fund-based statements whether it's your general fund your classroom site fund but then you've also got this government-wide approach which it takes all the
009individual funds and kind of swishes them into one single column and it incorporates some full accrual funding so like you can see there your capital assets are included on that statement whereas you won't see your capital assets included on like a general fund or the classroom site fund because it's just got a different focus see we're talking about fund-based focus versus government-wide focus and these first two schedules on pages 20 and 21 are kind of your government-wide so 20 would be like a balance sheet at a for-profit business 21 would be like your activity or your income statement if you will at a for-profit business but this is the government version of that under [Music] page 24 is where we kind of get into the cloud-based focus and now we're outside of that government-wide that
010that kind of condensed single column format and now we're into the individual columns this is where you can see your actual general fund and we're looking at the balance sheet for the governmental fund you can see ectc extracurricular activities tax credit fund was a major fund and that's one other thing to note on this page when we're talking about fund basis financial statements like we are here on pages 24 through 28 we're talking about major funds once again that's prescribed by gatsby accounting standards the major funds are usually dictated by the size of the plan so they can change from year to year general fund will always be a major fund but some of the other lesser funds can become a major fund and sometimes drop off anything that's not presented there on the face
011of the financials is in the last column called non-major government health funds so that'll be kind of a combination of the periods of age 28-29 so you can see that non-major governmental fund so anything that's not a major fund kind of gets condensed into the non-major column and that's just prescribed through uh gatsby accounting standards page 31 of the notes this to the financial statements once again the purpose of the notes is just to provide more detail on the numbers most most governments focus on the capital asset note the debt footnote obviously that's where most of your your investments are and where most of the money that you owe are going to be displayed in those two footprints so that in fiscal year 21 that would be foot note 6 7 8. the last part
012of the report is starting on is where you get into some of the non-major funds that you don't see presented at the front and again these are the lesser funds these these are not unimportant from that perspective but more these just do not have as much activity or balances are considered non-major problems but back here is where we show the budgetary financial statements so this is where we'll we'll show or present your what you adopted or what you had as a revised budget versus the actual you can see that there's activities budget actually for each of the non-major ones in this section once again no differences than what we presented or what we've provided in past years in terms of the financial statements the system reports that traditionally continental elementary is issued i think maybe
013two or three years ago you guys issued like a kafir or what is now called an afro where you go out for awards with the asphalt and gfoa organizations i think stopped doing that a couple years ago but really all that is is just you know even more detail of what you're seeing here this is the bare minimum of what governments need to issue in the state of arizona and nationally the last part of this report is what we call the government auditing standards or the report of internal control this is something called this is all required under auditing standards that if you're in government and you receive uh you know government funding you we are required to issue what's called a gas letter for the report on internal control and really that's just a
014different set of audit requirements put out by the federal government that we have to adhere to and when we perform an audit in accordance with yellow book or gas or whatever you want to call it we have to issue this letter which essentially says we did or we did not come across issues so when you think about audit findings you can have at the top of the list if you will would be like a material weakness that is that's the most severe probably below that would be a significant deficiency below that would be some sort of controlled efficiency that we may or may not report in in a written report and then you've also got the state compliance that cynthia's going to go over with the usf so different varying levels of an audit finding
015it can fall anywhere in there and sometimes it can be a state compliance and it can be a state compliance issue that's so severe that it also ends up in this gas level so just competing standards on on how we perform the audit and therefore where we have to report findings that we come across so i'll let her talk about the finding that we do have in this report for fiscal 21 so if you were to turn to page 93 in this report we did come across one um material weakness in the general controls and this is due to the cash reconciliation performed against the county school superintendent there were as you can see on the context section of it several unbreakables or a few unreconciled differences that led to the district's records when we
016came to audit not being accurate so we had to post other adjustments for them to be able to be presented accurately on the actual financial statements which is what led to this material maintenance being presented here was it several or a few um well because it's it's um i guess relative is in different phones it's um we did identify like one expenditure one for the bond payments slot being posted to the general ledger which is a pretty big amount as you can as you can probably imagine so that what materially misdated the funds fund balance and then just one revenue posting that then when revenue received that didn't get posted and several others that we didn't identify what they were for how many that you couldn't identify that they were for i i couldn't tell
017you about the amount i think it's around seventy thousand dollars yeah it's the third bullet that's in there so it's not like it's like items that were imposed because we couldn't we can't tell there's many things going on it's just a balance amount that we couldn't trace back or agree to the county schools superintendent's record and it may be on the county school superintendent's records it's just the fact that it didn't get researched to the point where that either the county school superintendent caused their journal or the district posted on your knowledge and this is that letter no that's not that that that wasn't printed that's the big report that didn't get delivered this is on page 93 so it's on page 93. and there's a lot of that because the county is so far
018behind and the timing that they might be on we'll make this up november and here we are in early march and maybe in part because of that because yes uh the past reconciliation has to be performed once the county has their records ready and sometimes that is delayed by a couple months so it's always we're always trying to catch up with the county and identify stuff that or transactions that they might not have sent to you or you might not have sent to them so it's very various reasons but yes the county being like the timeliness of that definitely but you couldn't do the adjusting entries until you get caught up is that correct correct but so you so we must be caught up because you did the adjusting entries correct yes so we are
019caught up it's not a lag time as of june 30th correct which is what we were editing so they were already caught up in order for us to do the adjusting entries for the items that we identified yes but that was seventy thousand dollars that we don't know what it is so we're just kind of writing that off often well i don't know i don't know that our recommendation would be to write it off i think our recommendation would be for management to research that further and find out if it's your records or county school office who is off by that amount and it could be a combination of goals as your auditors we don't have the ability or the resources to go in and you know audit to the dollar to the single dollar
020value and i don't think you want to pay us to do that so um what we state is we get it to a number that we say okay we're okay with that we can still issue an opinion even though we think that there could be a statement here but we don't have enough information it's going to require some more investigation on the management side we're telling you we're reporting it to you to let you decide how you want to look into that and part of the difficulty with the monthly reconciliations is here's an example just today i'm posting revenues today that the county received in december so i do my monthly reconciliations with accounting based off of a trial balance that they have and now i've got to go back once they finally issue a
021final copy which could be two three four months in the past and re-reconciled so i'm having to reconcile to the county twice for a month that could have been two to three four months and that is the way the state of arizona works county by county they all have their own county directors obviously they all have their own county school offices and some counties are more proactive they're faster at this process than others and right now and sometimes counties are really good and then they have a changeover in personnel and they develop a lag time and eventually they become good again so this is it's kind of a cyclical thing and now you're not the only one of people counting dealing with you others are also given as well they may not always result in
022findings they may identify other controls or other ways to perform the reconciliation um but they're all in the same boat because you're all dealing with the same county treasurer county and also within this one it simply correctly went wrong when i was doing that reconciliation i did reconciliation and not definitely yes so and and we noted that once you get a chance to break this we didn't know that the reconciliations were performed fundamentally that management was performing those reconciliations on a monthly basis and they were timely as far as how timely the county was providing the trial balance is just taking it a step further and analyzing the reconciling differences and identifying whose records needed to be adjusted to them for a while i think that's what that first bullet is i think that's what
023we're talking about up from the bottom of this number it's the first bullet under the contact section of this finding that's that's the aspect of this finding that we're referring to you're doing the reconciliations that's just the mechanism but unless there are any other questions on the financial statements and this gas letter i was going to move on to the u.s parking plans questionnaire so i know mr hillary just got here so i know you're coming from tucson i don't want anybody to reiterate what's already going on and i don't know exactly where we are so the the attack was since you don't have the balance copy report yet and we did send it electronically you have preliminary questions on the finance report that you saw that you wanted to ask but between now and
024our board meeting on the 21st if you have specifics you could email greg and i and we'll forward it to the team and then they can respond prior to the 21st board meeting but if there's anything right now that stands out because we haven't released sheldon asked for conclusions right now but the plan was it to go through the entire financial report well i do have some questions on on the biannual report itself uh i i don't know that they're going to affect in any way if they're the answers as far as our acceptance right right um i've got i've got a few questions um that uh i've especially got some long-term questions and concerns about our burgeoning pension liabilities and i know that we are not alone i'm sure every school district that belongs
025to the ar the retirement system for public employees is in the same situation but we had an 834 000 increase in pension liabilities in one year and it's already up to 5 million which is 158 of our covered payroll and this during probably one of the greatest bull markets we've had we've got three hundredths of a percent or something there or three percent of the total statewide uh proportion of the of the pension fund and and i mean a simple division is going to tell you how big the overall unfunded liability is of the statement but no matter how you look at it this board and this school district is responsible for paying out the benefits to our teachers and our administrators anybody in continental so if the whole fund goes south we still have
026to pay those benefits out of this school district as far as i understand and um i just don't understand are you getting these kinds of questions from other school districts from other public entities that you audit and you see any movement on the part of the arizona retirement system to either change the discount rate so it it more reflects what true returns are which would unfortunately cause higher retirement contributions on the part of the school district and impact our own year-to-year budget could you just walk me through that just a little bit i mean i will to the extent that i can i don't work for the srs i don't know exactly what they're thinking um they do various presentations at different industry conferences that we attend and i guess to your point about the
027discount rate um and really any any of the variables because there are so many variables that go into it the different actuarial studies that they perform they're legally required to perform under state statute every five years they have an actuarial study performed where they look at discount rates they look at um benefit terms they everything that goes into the actuarial calculation they're required to get five year study every year it's disposed of your financials it's not disclosed they choose whether or not they want to increase or decrease the discount rate investing the expected investment return rate i'm not speaking on their behalf but i think that there is a lot of work that goes into that for them to decide whether or not they're comfortable with the factors that they're using the end result is
028this little continental owes five million if they were wrong that yeah that's that's a concern that every school district in the state has i don't know what you do about it though there some some governmental entities will issue pension obligation bonds because they don't want it but that that fiscally probably does not make sense especially with csrs because it's a cost-sharing plan and a cost-sharing plan just means that they don't have an individual account for you you're just part of the overall goal which is the 0.03 that you're talking about even that number changes from year to year because it's all driven by the amount of contributions that every school district and you know it's not just school districts it's governmental entities so it can be cities it can be towns it can be counting
029so there's so many factors there's so many variables in it um you can't throw cash at this number it's not going to make a difference because it's a pulled count does that make sense like they don't they don't they don't have a number up there it says continental is 4.99 they've got a number up there that says the state of arizona owes billions and billions to fund this life so if you had five million playing around and you you gave it to them you would probably still have a four million dollar liability because that they it's just not treated that way um for those who might be familiar with the public safety retirement system the retirement system at the state level for the police officers that is an individual plan so every city has their
030own plan if they had a five million dollar liability and they had fund nothing in cash they could shoot it up to the state and that would wipe out their liability but it's it's because it's just it's structurally completely different the way asrs is structured now there's some benefits of the pool though too you know you when there's good investment returns everybody gets the good investment returns whereas psprs some entities may get a good investment return and some may not depend on how their goals are invested so i don't know if i'm answering your question i don't know why i guess the ability to i guess my only my only statement is that you know if all of their actuarial assumptions were solid we wouldn't have a pension liability that grew by 20 percent um
031and my question is did you address that at all in the report address address the issue that we had a pension liability that grew 20 percent well it's standard numbers it's in there every year yeah number eight changes in long-term liabilities your statement in that position that we talked about when i said that's your government-wide financials it's like a full approval basis the number is right there on the finances that's required under gasb auditing standard accounting standards if you include that liability look at any school district in the state they will have which is a change number about five or six years ago that did not have to be reflected that was a government county standard towards change and there was a lot of of course i have another question just um i'm not so
032sure i understand the difference between committed funds and assigned funds this is on page 38 of the audit report [Music] it says you know the committed funds can only be used for purposes imposed by governing board actions and we don't have any so-called committed funds assigned funds it also says uh none reported um i'm not so sure could you define for me the difference between committed and assigned so this is another gazmia area something that came out probably eight nine years ago you can see it there on that page it's up there the fund balances so at the fun level you can have non-spendable which is something that it's just not even cash you can't even spend it below that is restricted most of your federal grants your state grants are restricted which means an
033entity outside of the school district says you must spend it in this way below that is committed so these kind of go in a certain hierarchy here below that is committed this is going to be something that requires a formal action like this this room you as governing board members you would have to designate certain funds and certain monies as committed that's what makes something compelling assigned might be something where you've given her responsibility you give her the ability to assign fund balances so it's a hierarchy committed is it's just it's a stronger word than a side i guess it's not as strong as a restriction but restriction you guys can't change it's coming from outside but a committed you can and then what this is saying is that under the gatsby standings the commitment
034can only occur if you have a policy that says you will make commitments to our knowledge you do not have such a policy you first need to adopt a policy that says we want to commit funds and then you would have to pass an action that said this dollar amount this one is what we need to connect for this purpose don't ever spend it until the audit also said that we have unassigned bonds of around 1.6 million dollars so any of this money could be committed or assigned by action of this governing board if we so desire is that correct correct yes in simplest terms if we adopt a policy pardon if we adopted the policy yes yeah we don't have a policy to do that right okay um and i guess the last question
035i have on page 44 talks about contingent liabilities did you make any evaluation on the expenditure of government funds whether they be grants or whether they be hesser funds as far as the proper reviews of those funds we do sample we do a sampling transaction sort of transaction for that but the district did not reach the level of federal expenditures it would have needed to need a federal audit so we didn't specifically test against like the essa requirements because in fy 21 you weren't there yet i do believe for fy22 we will need a third audit which would be that federal audit to ensure the expenses are being incurred for those purposes and just for your record so you know it reaches that level when the district spends 750 dollars in bed almonds and an
036important distinction there is that not that you receive 750 000 but you actually expect because you can receive three million and not spend any of that if you hold on to it for another year but that year that you got three million it still would not trigger that federal audit i'm ready so i think if there's no further questions on the financial statements we can move on to the state audit which is the usf compliance questionnaire that you do have in front of you um i'm like i mentioned um this is a document put out every year by the um arizona auditor general's office they put out this document based on different statutes or the usf compliance or the usfr manual i'm just asking to make sure districts are following these statutes and the manual
037they have about 175 questions in the questionnaire but each question covers several different requirements which were calculated to be about 400 different requirements that we're looking for whether it be a statute or a manual policy that we need to look at um so if you started at page two you can see them and i i apologize it's so small it's just the way the uh other general releases is it's an online form that we can't enlarge or make small i wouldn't want to make it smaller but we can't enlarge it um so if you were to look at the format there's several different sections we start off with a section of governing board and management procedures but it moves on to other sections such as budgeting accounting records student activities i won't go over all
038of them i just want you to get fam familiar with it um you'll see like a list number of questions like on this page we have seven questions until each of these questions we have to be answered either yes the district complied with the requirements of these questions or know the district didn't comply and then you'll see a comment right below it um specifying what we ran into where the district didn't comply with follow-up specific procedure so i wasn't going to go over any of the yeses but um i am going to point out the notes as we go through so the first and these aren't page numbered either so we'll just have to follow along here but the first note that we have is for government governing board and management procedures number eight and
039this was due to when we had a change in management the student activities treasurer had to be reappointed by the governing board which didn't happen over the last year but i believe this already went to the war right after the audit so i already got fixed for the next year but we still still have to record it during the year that we were auditing um if you keep scrolling down we move on to budgeting we had one budget that didn't have a notice for public meeting in the december revision um and these are all just requirements like this specific question has over 20 i believe over 20 requirements that we have to look into and this is just one of them that we there was no notice and didn't have any question so then moving
040on within accounting records this is a very broad question uh that the other general has put out is there they just want to make sure that districts are following the usfr chart of accounts to ensure there's districts within this they are following the same sort of coding and for a for comparability for them uh we didn't know um federal revenues that were recorded as state revenues uh we noted one transaction where an expenditure for food was coded to a different code rather than what the usfr chart of accounts has food at and then lastly we noted um just a liability that was on the general ledger that was adjusted improperly and hit a liability rather than cash within accounting records we also look at other areas such as adjusting journal entries and we want to
041make sure that there is a segregation of duties between who's posting adjusting journal entries out of the sample that we selected six of the journal entries that we looked at were reviewed or there was any notation that someone other than the preparer reviewed it or looked at it before it went into the academic system and the district's general ledger did you re review the entire general ledger pretty much we looked at the trial balance first so just like the broad picture of the figures at the end of the year but we do request the general ledger and sample specific transactions from there but then just depending on some of our test work if there were variances or um any other items that required it would then go into a general ledger and look at it
042okay what was your sample size sample size for expenditures we looked at i mean 40 but we also look at like five student activities disbursements we look at other cash receipts for other um yeah credit cards we also look sample five to ten transactions for credit cards it's just a various sample throughout if this is a question well in number two you sample 15 of 82 items yes i'm questioning item number one oh item number one the accounting records is that you're talking about the coding issues yes yeah so i mean that can come about from different ways that's not just that you know like she said we're scanning the trial balance we vouch revenues so like that 130 000 that's probably um we saw the trial balancing you had state revenue 130 000 so
043then we said give us the support for that we looked at it we said you know this is actually a federal so like that's not really a sample that's really just substantive audits so like cynthia said there's a very broad question so we're bringing in the results of what you see here that's the results of various different types of tests it's it's impossible to say it's all from this so on that one i said it correctly if i'm misspeaking we coded it exact same way that we received it from the counties not knowing that it was a pass-through payment from the federal from the state so that's why it was how it was coded as a state revenue versus a federal right so it came it's one of the kelvin martins received um it came
044from the federal government they gave it to the governor's office who acted just as a pass-through so um ultimately it didn't end up being fed all but it's just the way it was coded when the accounting passed it on to you guys um we also look at the transfers so there's specific transfers that the usfr chart of accounts allows for just so that the district's not moving money between funds where it shouldn't be moving or if the money is restricted for something you're not moving it to a different one where there's no restrictions and and this was probably just a misunderstanding of when management was trying to clean up those uh cash reconciliations uh to write it off a mechanism was used to utilize transfers as that rather than maybe researching it or reaching a
045point where it could hit a different account code so the transverse accounts codes were used and that's why we have noted here that those two answers weren't allowable as the use of our chart of accounts before and that goes back to if you remember we talked about beginning how we could tell you when the last time we balanced the county treasurer and then i was waiting on the auditors to show up to have that discussion with them so when i did talk to cynthia so she knew it was coming for this audit and we did a transfer in the transfer out to balance with the account where instead we should use a function called the fund balance to do that instead and that's where we know like there was a sample of 28 we actually
046looked at the 28 transactions and this the remaining of this section is all related to those cash reconciliations that we've already discussed um so if you were to look at four we noted that the reconciling differences were researched and resolved number five we know where the unreconciled differences that we could identify where in number five we know the um the 72 or it's just a refrigeration just based on how the ps4 is asking the question sometimes we have to have the same answer for two questions just because they're basically asking the same thing but this was also a material weakness since identified this was part of that year before 20 or 1920 on it yes and this is a part of the attempt to get that clear so it wasn't it wasn't uh cleaned up
047in the 20 of it we didn't fix it after the 20 audit and you're recording it again now in 21. thank you um the next note we have within the cash and revenues section is on question number three and the district also has not just the the cash at the county treasurer but they're the districts are also allowed to have cash in deposited and several bank accounts um one of them being the miscellaneous receipts clearing account which is where the district is receiving all those electronic payments from parents whether it be for extracurricular or student activities um just at various um just from various sources these accounts or this account does have to be deposited with accounting pressure on a monthly basis just to make sure that the revenue is recorded in the current year
048which we know that wasn't done until later in the year or wasn't done monthly during the fiscal year that we're auditing um and then on number four there's also the district also holds a bank account for food service um so this would be for any payments that the students are doing at the school site or parents are depositing online for them this account only allows for checks to be written to the county treasurer however we didn't know um several checks that were written out to parents to brief on them for money now that that that the the food was free pretty much last year and however that the district wasn't allowed to do that on that bank account they would have needed to clear it out of the bank account move it to the county
049treasurer and then write checks from the accounting treasurer so just to be clear on that if if a refund has to be made i'm assuming this to a supplier for example no so what these are um parents had cash on their student accounts for food service right and either they were leaving the district or they had put money in knowing that their students were to have to pay for food but then it became free they wanted their money back so the proper procedure would be to transfer that money to the county treasury and ask the county treasurer to cut a chat to the parents okay so you know you guys decide if you can justify that if you kind of it's required to be reported here because it's a question that we have to specifically
050look for doesn't necessarily mean that it was a sound or unsound management because um within cash and revenues we also look at several different deposits whether it be into those different bank accounts that the district holds or for different restricted activities we sampled five deposits for axillary we couldn't completely reconcile it this deposited actually more than what the support uh provided for so we were almost assumed that it was a donation that just didn't get written down or um just didn't agree at the end received so then that question was specifically for auxiliary operations but if you go to question number 23 that's broader and that actually includes the whole sample that we did so we did have to re um repeat that one in addition to two of five student activities deposits that we
051reviewed that we couldn't find or we're gonna find any support for or the support wasn't or the support wasn't issued when the clubs collected the money is that one of the ones where they do a fundraiser selling popcorn and the teacher probably didn't have an adequate vlog the easiest thing for this one is when we get a check from the student that the parent wrote a month ago if we don't put on there the date that we received the actual check that's how you get this money so now we're making sure you put receipt dates on every single chapter yes so it's when uh they have a fundraiser and they sold 20 lollipops so they should have gotten 20 but they just did it right but they sold money they just gave you guys them
052so that's what sort of totally looked for and like the club sponsor signing it and ensuring that it's proper and then on 24 that's where the timeliness comes in the auditor general wants school districts to be districts to be timely deposited depositing any cash that they receive just because it is um a very it's very easy to just misplace cash or for for it to be misappropriated so we test for that to make sure the process are made timely uh for two of the ones we reviewed we couldn't determine if it was a positive timely just because it wasn't stamped like and your sample there was 20 out of how many would they have a thousand they don't ask us for that but we could get you that yeah because we're just going there to
053the band statements and so let's select deposit from the bank statements or go to the general ledger and just randomly select mine items within different deposits but since so the auditor general the ones that's asking for samples and populations this is not a population that they ask for so we don't have it written down here was there any reason why you selected 20 we just sell it from different accounts so we had we do a standard of five so five student activities five and the clearing account five in the food service account i find it the other account i can't remember exactly and then number 25 is that repeat question of one of the ones in the accounting records section for that material because of the reconciliation that we've already gone through um the last
054question that we have as a no in the cash and revenue section is related to that i get the bank the the bank accounts and those were being reconciled up until february 2021 so when we came for the audit last year we noticed that um and we pointed that out and that and that got corrected after beyond it last year but they still have six months in the current uh um the next section is property control fixed assets stewardship items we have to go through these and ensure the district's maintaining an accurate list so on question number one you'll see that we are saying that the district included additions that did not meet the district's capitalization threshold when we reviewed the kappa asset listing we noted that there were a few items under 5000 that
055were included in the capital asset listing however the capital asset listing is for those assets that are worth over five thousand dollars there's a stewardship listing where those go to um reviews after so [Music] and then within capital assets as well we made sure that um any purchases that the district made for fixed assets during the year are included in those fixed asset listings uh through review of the capital outlay expenditures we noted that the of an initial review of the fixed asset listing two vehicles were not included in it um which got corrected after our interview were those advanced we've missed clicking the button and then within fixed assets for number five we also go out to the school site and from those listings we select different items randomly and go look for them
056and find them on the school sites and then we also once we're in on the school set grounds we just if we see a tag number we grab that tag number and go type back into the listing to ensure well um it's correct both ways for one of the five assets that we looked at we found the asset however let's just move to a different location to what was uh specified on the listing and that was a foreigner and then for another asset we noted that we identified it i believe based on maybe serial numbers however there was no timeline tab on it the next question number eight whenever the district disposes of any uh assets we have to see board approval of the disposals there was one item that got disposed in the fiscal
057year that we were reviewing which we didn't see on google for then we move on to the expenditure cycle we review different we sampled 46 different transactions we reviewed just different requirements for purchase orders approvals receiving reports and the one thing we have to notice is just for one of the for three of the purchase orders that we reviewed the purchase orders was approved after the the invoices were received and then for two of those the purchase service was approved after the services were performed or received in the district and that's just to ensure budget just for approvals and budget capacities there before you actually get the expenses number five is related to student activities we noted two student clubs who have negative cash balances at year end and we also sampled five transactions where
058we couldn't and for one of them we couldn't with it see it student approval for the expenditure moving on um so there's different requirements that are needed to be followed for procurement one of them being receive and written quotes for any expenditures between ten thousand dollars and ninety nine thousand dollars uh for one of five of the purchases that we reviewed we couldn't um there were three quotes in file for the purchase and then we also looked at the sealed procurement or our biz rfps now for this we we look at several different requirements one of the requirements being that when you whether just receives the bids from the vendors that they're staffing when they received it to make sure it was before the deadline um and we noted that a few of the envelopes
059received weren't stamped or were kept so we just didn't have that support to be able to answer that question i'll say yes and then within this these bits as well anyone who's evaluating the bids who's reviewing it to make sure everything's received who's on the evaluation committee should have a conflict of interest statement for that specific bit in the bid file uh we didn't see those signed conflict of interest forms for these two bits that were issued last year another one was the reveal math because we weren't aware that they needed to sign the disclosure form so that's why when we did the ela reviews everybody's signs signed up and they were the district for procurement districts are also allowed to use those contracts issued by others through a co-op um as mohave or like
060a state contract that you guys use however you do have to perform some sort of due diligence which is uh typically a checklist that you go through to ensure that if other requirements are being followed we didn't see any support for that so we have to answer no to this question we'll look at them next year and then within those due diligence forms as well the district has two in writing say why they're using the [Music] a co-op instead of going out to them themselves which most of the time is just a statement at the bottom of the due diligence forms that's being signed by the appropriate employee and then moving on i don't think there was anything else within procurement or classroom site cable was also pretty clean financial reporting so this is for
061the afr submitted to the 280p um and we have to make sure we we agree all the records on the usfr i mean on the afr and comparing them to the district's records to make sure that they agree we just noted that transfers didn't agree for a couple of few of the funds while all the revenues and expenditures and cash are consistent and then that we also have to make sure that it's submitted timely to both the county school superintendent and the county treasurer we we couldn't get any support for the submittal of the um to the county school superintendent i mean i did talk to them we were on the phone with the county school superintendents they they knew they had received that they just didn't have any support for it and it wasn't
062kept on the district side either so we just couldn't answer yes because we didn't have the physical proof for that within the financial records section we also look at what's called the sdr report so the school district employee report that's submitted to ade and this is not for financial figures but for employee figures in this report the district reports however many ftes they have in the different departments so we selected five positions and agreed back to district support for but for two of them we couldn't agree it took the supporting documentation the next section is student attendance this is a pretty big section the first note that we'll see is on question number three which is where for when students are leaving early or coming in late the auditor general wants to make sure that
063the district is reporting those half absences properly we selected five students and for one of them the absence wasn't recorded correctly to ade and then you'll see a couple of nodes there but it's just saying that the district is strict but the next number you'll see is not until special numbered um and i think this relates to the same as the earlier question um for absence information does this drink is it synergy so within synergy we could see that the absence was proper and correct however the way it made it to ada's website or 2808 it just it it was different so i think albert was looking into it and they were going to do a little bit more research to see why he wasn't reconciling with the absence information was transferring over properly to
064ade that's all within student attendance and we've moved on to information technology which is also a pretty big section for which we have nothing to report on there's one question on transportation support every year the district is required to submit what's called the trans55 report which is where the district is reporting the miles up to the 100th day so the actual miles that they traveled on the the bus ride routes as well as the students that they transported we couldn't agree what was reported on that report to the district's support can you also explain how it wasn't from last year oh correct so this is not for last year we're always a year behind on this because the transportation information is used in the budget for the year that we're auditing so we looked at
065the transportation before that was submitted for 1920. um that's all we had to know uh if you have any questions i'm more than happy to answer any of them so the findings that you have for us how many of these are pumped throughout they're all coming to summit some extent we didn't know i mean you know that the material weakness is what we focused on the most and that's what holds a heavier weight i guess but student attendance are pretty common um a lot of times procurement just because there's very many different requirements within procurement as well procurement it's also something we see out there like that accounting records especially like that broad question i think about it's also a pretty common question i have a kind of cash receiving that's a common amount yeah
066sometimes districts want to know how many findings they have and sometimes it's more important to talk about qualitative aspects of it how serious are the finances you can have a hundred very small findings and that may not be as bad as one very large serious fundraiser sometimes you don't get too counting the number of things especially when you're talking about state compliance that was a long discussion that cynthia just went through and that's probably only 25 of what we looked at because of how thick the usmr is and how much we deal with to answer these questions i mean you saw there's a bunch of yeses in there too if you want to quantify it very so what level would you give us as a great sincere school i guess just keep in mind that
067there's competing sets of audit requirements there's a financial statement on it the grade there is did you get an unmodified opinion and you did you got a clean audit opinion meeting these financial statements based on our on procedures there were non-material statements these are reliable financial statements that's that's what it means so that's your brain if you will for financial for the state compliance audit this is your grant you you decide what what you think of that where you want to focus your efforts in the coming year to take care of those issues just note that this is reported to the auditor general the auditor general really is the one who decides grades right to answer your question our our mechanism is to report the information their role was to make decisions you our responsibility
068then now is to not only discuss internally what we need to do to change this but also do we have a report to the auditor general a response to this audit no i mean unless they just they ask for listen to come to you and ask for information um but no that isn't good this like i said like cynthia said it's small it's tiny because this is an auditor general website this information already went to them this is in their hands they get it from every school district company has to file this they decide if they want to contact you afterwards i'm sure you've heard of like the 90-day letters or in the worst worst case scenarios it's a receivership where they take over history obviously it's not anything what we're talking about here but
069a 90-day letter would be they see your compliance questionnaire they also get a copy of your financial statements you're required to file that with them so they will see that material weakness as well but what they do is they evaluate the seriousness of the situation and a lot of times they look at it over a multiple year period it's not just about one point in time they look and see if you're making improvements or if you're going the wrong direction i believe i can speak for them but that is our understanding if they if they don't like or they want to know more about it occasionally they will issue the call and then you get better which is you know show us we want you to give us a corrective action plan for these items
070and you've got 90 days to do it and in 90 days we're going to come down we're going to see if you've done something but that that is something that they they start they start that process so if you don't hear anything from them that's not something and of course greg and i have already sat down and gone through these items that we did with cynthia as well even as the audit was occurring okay what is you know what does this look like what do we need what do we have to do how is it done in other districts how did we get to this point how were we doing it before and like we talked about the change in um in business managers and you know what we have done in transportation with the
071work we've done in paid role like all of that um the work we've done in the past is reflected also in those other areas where we worked hard to clean those areas up so now it's just going to happen and what do we have to do now and who's going to do that one other thing to keep in mind of course one of the faults if you will with an audit is we're performing our audit in january so you're already seven months into this fiscal year so any finding you see reported here potentially could be reported in fiscal year 22 but not due to a lack of care from management it's because they weren't notified themselves now this this is what we came across and you can see the way the question is written it's
072a yes or no it's not a yeah they were they had an issue for seven months but they were good for the other five sometimes it takes two or three years for it to cycle out before there you go so next steps would be we have time like we mentioned you know 13 days before our board meeting so as you go back and look at now that we've um had a little bit more conversation and explanation from cynthia mike then we can continue to ask questions and um maybe we can have you on the phone the day of the board meeting sydney and mike if you want to call in to the board meeting but definitely we can get the questions answered prior to the 21st as you have been able to bring them to
073our attention and as soon as you get the bound copy it should be straight it should be here okay so as soon as we get them we will let you know board members and if we can have you come pick them up or we'll but we'll make sure you have them because i know that you want to mark them under the bills on the actual document might help guide questions thank you appreciate it guess what that word thank you so much