DBOE receives clean annual audit results

During its regular meeting on Wednesday, July 24, the Daleville Board of Education received a clean audit with one finding for the Fiscal Year 2018.

Brian Free, a CPA with accounting firm Carr Riggs & Ingram, told the board it had received an unqualified opinion, which he said was "the highest level of assurance that we can provide.”

He described the board's statement of revenues, expenditures and changes in the fund balance.

“In the general fund, we had $8.1 million in revenues for the year and $8.1 million in expenditures,” Free said. “Our overall decrease in the fund balance was $254,000, which left us at the end of the year $760,000 in available resources to cover operating expenses going forward for the next year.”

For overall operations, Free said the board had almost $2 million left for operating expenses.

“Our total operations overall, we had almost $10.7 million in revenues, $11.6 million in expenditures and, at the end of the year, $1.5 million in the fund balance, which is an improvement over several years ago when we were having trouble maintaining our fund balance to the level it needed to be” he said.

Free also spoke to the board about its assets, which include cash and inventory, and liabilities, which include salaries and accounts payable, under the audit.

“I’ll point out, at the end of the year, we had $1.3 million in cash and cash equivalents at the end of the year, which is pretty strong for a system our size,” he said, adding that a new accounting standard was added to the audit this year. “A new accounting standard, which is referred to as GASB 75, had to be implemented. This standard covered other post-employment benefit obligations.”

Free said this standard computes liability for these post employment benefits “as far out in the future as our employees have earned those rights.”

He said this standard was placed under the board’s long-term liabilities in the audit.

“We had to pick up the liability of almost $7.2 million this year,” Free said, stating this new liability has “effectively increased” the board’s deficit. “One thing I’d like to emphasize about this new standard is that it’s very similar to GASB 68, which was implemented three years ago related to pension. This is a projected liability. It has nothing to do with how we operate or how we fund our pension plan or our (post employment) plan, so it has no impact on our current operations anywhere in the next few years.”

While also reviewing the funding of the school system, the company is required to review compliance and the internal control systems of the district, according to Free.

"This is our independent audit through the report issued in connection with an audit in accordance with government auditing standards," he said. "Those standards require us to do two things. One is we have to make an assessment of internal control in order to plan the audit.”

He said there were no deficiencies in internal controls for the system.

“Then, we also have to assess whether or not the board complied in all material respects with significant laws, contracts and financial regulations,” he said. “We had no issues with noncompliance.”

Free also said that the company is required to look at a specific department each year that receives federal funding. This year, the board’s Child Nutrition Program was tested.

“This audit is strictly a compliance audit that’s driven by federal dollars that we spend,” he said. “Any government or not-for-profit entity that spends more than $750,000 in a given fiscal year has to have an audit under these standards.”

He said this audit is also divided into two sections: internal control and compliance.

He said there was one finding in internal control for the system’s CNP program.

“That was related to eligibility,” Free said. “As part of operating our Child Nutrition Program, we have to assess whether or not students are eligible for free or reduced-priced meals.”

He said the company tested a sample of 21 students, with one of the students being classified as being eligible for reduced-priced meals when this student was actually eligible for free meals.

“There were no compliance findings related to it, so this really is a minor issue,” Free said. “This really, in my opinion, looked to be an isolated incident, but we have to report it.”

He said this issue has been addressed with the system’s CNP director.

Following Free’s presentation of the FY18 audit, the board approved accepting the audit as presented to the board.

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