okay the meeting is being live streamed Aon so now committee we want [Music] to we want to introduce John Paul from CLA CLA has been the district's Auditors for quite
some time for everyone's information the board hires CLA we go through a purchasing process and RFP process we go through a contractual process all of
those pieces again will be covered by purchasing if we need to look at other ways in which we do our RFP process and how we do our overall contractual process what we are asking John Paul to
do is come this time and preview of Coming Attractions he'll be back this session once the audit is complete and issued to the board once as again I said CLA works for the
board so he will be presenting the audit and no audit findings he will be presenting no audit findings to the board that was uh ah head nod to John
Paul so then once he has done that and CLA has presented to the board then he will come back to the committee and and do a further report to the committee and answer any specific questions for the
monitoring report itself so John Paul I will I will turn this over to you all right thank you Aon um not sure that I'll be quite as brief as Phil was but I
anticipate still being um you know quicker than what's on the schedule at least so again my name is John Paul Lal with CLA or Clifton Larson Allen um basically the purpose of this um this presentation is to we're at basically
the beginning of our uh audit fieldwork uh before we'll kind of get everything wrapped up uh over the next month or so um so at this point basically introducing myself making sure that the finance and audit committee is aware
that the audit is going on Who We Are Who to reach out to if there's any questions comments concerns risks basically anything Financial related uh that would make sense to discuss so basically kind of give a brief overview
of the audit again introduce myself so you know who to reach out to um know that we're starting on the audit and that's that's pretty much it so that's the that's the goal for uh this presentation so briefly talking about the scope of the audit there's really
two main components there's the financial statement audit which will be the annual comprehensive financial report which is the the majority of the district's annual uh Financial audit the majority of the pages of that report is going to be those financial statements
and footnotes then there's also the single audit which is a required um audit over Federal awards for any government entity that's or non-government entity that's received over $1 million in federal Awards which
um the district easily clears that uh every single year there is um a kind of rotating process of which Awards we look at uh for this year we are anticipating looking at the idea or the special
education clust as well as the emergency connectivity fund um Aaron and I have been looking there may or may not be one additional award that would be tested depending on where the final numbers uh land but that's what we're initially expecting
and so all of those awards are presented within the schedule of expenditures of federal Awards or the ca that gets presented uh as a component of you know towards the very end of that annual comprehensive financial report um and then as Aaron is is um wanting to make
sure that there's nothing included in this last section um but that would be any findings or recommendations that we would have would also be included within the audit report um so we do have a couple of slides here on our responsibilities as
the Auditors U mainly I wanted to just focus on uh some of the um items on the second slide I guess mainly our audit is focused to make sure that they U the financial statements are uh materially
correct and presented accurately the analogy that I like to use is that the district if the financial statements are a book The District is the author of that book and we would be the editor of the book making sure that uh what's listed in there is uh correct and
factual uh based on the activities of the district um so that would mean that the district is responsible for the creation and accuracy of the financial statements and then we're basically double-checking to make sure that that
is correct um we do have um a lot of time spent over internal controls and making sure that those are uh in place and that there's a good environment for the accuracy of those financial statements but we're not specifically um
issuing an opinion over internal controls we're also looking to obtain reasonable but not absolute assur Insurance over whether the financial statements are materially correct what that means is that we review samples make sure that the large dollar amounts
are uh correct but there is the possibility that since we're looking at samples and not every single transaction that there could be uh errors or mistakes that are not detected within the audit procedures one of the thing that I'd like to highlight is that we do
consider fraud risks um and do have certain procedures over uh fraud but the audit's not primarily designed to detect fraud that's something that's a common misconception is that the audit is primarily going to be looking for fraud if you've been around audits for a
while you know that that's um not the case uh but again we would hope that uh looking at those internal controls and making sure that the environment um is of quality nature would limit or reduce
those fraud risks there's a couple things that I wanted to bring up with um specific to fiscal year 2024 um there's no new accounting standards that are expected to significantly impact atams 12 I think there has been a new accounting standard
every year for at least the last 10 years um just sometimes they impact uh or have more significant impacts on the financial statements and sometimes they don't there is a new accounting standard effective for this year we're just not expecting it to to uh significantly
impact atams 12 there is also a couple of new auditing standards that are effective for this year but one that I wanted to highlight is statement of auditing standards um 145 which does require additional procedures relating
to it systems so this has already been uh mostly complete at this point I just received an update that um the IT team is working on wrapping things up and anticipate having that uh fully complete probably within the next week or so uh so we are utilizing a separate team
within uh CLA of it audit specialist to perform those procedures so if there's uh any we may have basically the scope is expanded a little bit relating to it and we are um so we may have some recommendations again depending on what
the results of that was um so that's primarily focused on um making sure that it has good policies and procedures again to kind of create that effective environment for things to go smoothly um it's going to be looking at user access
making sure that the appropriate people have the appropriate amount of access looking at um it backups uh making sure that there's a system in place that if something happened that all the information of the district wouldn't be
lost um as well as a number of other things looking at um firewall settings and um you know bunch of other security items so not not there's always more that can be done with it systems um and
certainly a lot more procedures that could be performed than what we're doing but it is a required now audit step to perform a little bit more into the it space So just a a heads up that that is included this year I also did just want to briefly bring up the net pension
liability relating to Pera uh this has now been present for 10 years so it's been uh been a while that this has been presented but it's typically kind of the annual financial statements are one of the only times that this uh would be
reviewed this is uh pera's overall liability if you take out a the small percentage of that that relates to Adams 12 that's what gets presented on the financial statements this is not something that the district has any uh
control over it's really more of a disclosure but because it goes on the financial statements I did just want to give a heads up uh the amounts that were expecting to see this year uh so last year it was about uh 674 million and
this year we're looking at 89 million so a pretty significant increase in the net pension liability that will be presented though overall based on there's a a whole bunch of you know hundreds of
pages of requirements relating to the net pension liability but um part of that is that that overall change the you know a little over 130 million increase in that liability not all of that's
presented as a expense within fiscal year 2024 that gets smoothed out over a number of years as well as taking into account the kind of a smoothing impact from previous years so while there is an in uh increase of about 130 million we'd
only expect to see an increase of about 19 million in expenses uh for fiscal year 2024 so again it would be a an additional expense relating to the net pension liability but not nearly as significant as what the overall change
in the liability is also wanted to just point out that there is what's referred to as um OPB or post-employment benefits other than pensions the other go in front which is how you get oped um that
also relates to Pera it's a much less significant amount and that actually did decrease going from 23 million in fiscal year 2023 to 20 million in fiscal year 2024 uh again one of the items that
similar to the net pension liability gets looked at uh once a year typically um so just bringing uh that item up in terms of the timing we did did already perform on here you can see um the planning and interim procedures were
performed over the summer that included um reviewing internal controls and some of the single audit uh requirements we're starting on uh final fieldwork now which would be making sure that the ending balances are correct and
everything else is set up to be able to issue those uh that annual comprehensive financial report including the single audit uh which we anticipate to be completed around the end of October and then we do have um the audit committee
meeting scheduled for uh middle of December so um again just really uh from here wanted to highlight the again the communication between the audit committee and CLA uh we do as Aaron mentioned uh report directly to the board we work quite a bit with
management um of the district obviously especially with Aaron to um to perform all of the audit procedures but this report does go directly uh to the board as well as um to the audit committee and so one thing that we want to make sure
and why we're having this meeting is making sure that you know you're you're aware of who we are if you do have any uh questions we highly value your input uh especially on any risks if there's something that's a concern that gets brought up um we do incorporate that
into our audit procedures especially the sooner that we hear that the better so for example we did have with another client a concern that was brought up by a member of their audit committee uh relating to pecards and so that was something that we incorporated into the
audit to review for their concerns so things like that um and again if there's if there's not concerns that's fine too uh but just wanted to make sure that you're aware of who we are and how to get in touch with us so with that that's all the items that I
have just want to open it up for any questions comments any other discussion items uh Etc before we wrap up this presentation please feel free to unmute your mics or to
type any question into the chat so we can get those those questions to John Paul like to also emphasize a little bit about what JN Paul said in that where we where we see questions at times or where
we see assumptions at times one of those assumptions and he shares this with the board is the Auditors no auditor including CLA has been retained to pass judgment on
what we spend our money on so if we said you know sometimes we get a question from the board that is do you think that do you agree with what the district is spending on are they spending too much on salaries is their fund balance High Enough Etc and
those decisions are really decisions of management and that is has not really been any piece that we've retained CLA to do is that clear John Paul did I say that correctly yeah no I think that
that's a a really good point Erin is that uh we're making sure that the financial information that's presented is accurate so that management of the district as well as the board and the audit committee can make decisions on what the district should do with that
information going forward um but unless there's a concern about fraud or something that is egregious our um our role is not to um make comments or judgments on what the district is
spending money on what the emphasis is it's more to just make sure that if the district says that it's spent you know a million dollars constructing a building that that's what actually occurred and the last piece I would just
emphasize John Paul's comments is in the presentation you talked about both internal control and material misstatement and in those words what I want to make sure that the committee is aware
of is whether or not the district has internal controls in place so that if there were a material misstatement we would have internal controls or processes and
procedures in place where we have we meaning the district we would been have been able to identify it ourselves and with if we lack the internal controls or if we lack any
Financial processes and procedures that would lead to a a material misstatement then that is something certainly that cla's job is to alert the
board that we do not we do not have a system of in internal control or an environment of processes and procedures that would be able to
identify any potential misstatement on our financial statements before they were presented to the Auditors before they were presented to the board obviously we can't do that if we
do not have the processes in place to to identify it and as John Paul mentioned he is not aining upon whether is absolutely free but they they are looking to make
sure that they have that they have assurances and in John Paul you can emphasize the correct phrasing to ensure that that no material misstatement either has been identified
or has been has been possible and then there and we don't have to talk about these potential ones today but that's the that's sort of the top one that is the worst and there are different gradations
beyond that and I wanted to make sure that the committee was really aware of those two aspects both of what a material misstatement is and then the role as it relates to what we're
actually spending our funds on so John Paul that I say with some level accuracy the piece to be up material misstatement and internal controls yes no I think that was a good summary and I think um the one of the
thing that you mentioned is that what we're looking at is to see that the district has the internal controls to detect any of those issues within its own structure so while we are double-checking we're not part of the
internal control uh structure of the district so we may be helping to make sure that there's no material misstatements within within the financial statements we're also according to auditing standards and what's required not part of the
district's um internal control uh structure we did have one question in the uh chat relating to um what was driving the selection of the idea program um so there's a number of
requirements that the federal government has I would say that part the single audit is the most uh defined structure in terms of the audit procedures um the federal government lays out they have
guidance every year of this is how we want you to select uh programs this is what procedures we want you to perform and they do I mean obviously it's not exactly everything that needs to be done it's guidelines but it's it's quite a bit of information
um one of the requirements is that any uh programs that are of a significant threshold um are tested every three years and so the idea program is one that gets tested every three years based
on being one of those significant programs so basically the last time we looked at this was three years ago and so we're looking at it again this year uh title one being another program that gets looked at every three years um Esser was a required program every
year until this year uh where that's not a required program and then the emergency connectivity fund uh being a newer program uh was one of the other uh ones selected so that's part of the um
justification for that there's a requirement that for lowrisk audities uh which the district meets the criteria for um that at least 20% of the federal awards are tested so that's another
component of um how those programs are selected great thank you one of our other major programs continues to be nutrition and that is again one of those that are on the rotation as John Paul said around that
three-year rotation where they touch all of our major programs idea title all of our tital funds when we look at at at nutrition and then this particular
year the district and this comes from the FCC and it's a different program of the last couple of years that was possible because of Esser funds through the FCC that is the emergency connectivity
fund with and what the district did with those funds over the years is purchased Chromebooks so that those pieces John Paul will be looking at specifically this year because of the S of the
program and then any other uh questions Kelly thank you so much for that question it was great great question as you know Kelly that was a great question I'm not saying anything
that you didn't already know of course it was a great question thank you dear and jump all just on side note I did load that 24 FY 24 CA up to the drive where I did the math at the
bottom I do believe that with both idea and ECF we have some new news to share with you around ECF so I'll load those comments that we received over the latter part of last
week it sounds good any other questions before we move on to the final topic again this is not the last time we'll be able to contact John Paul or hear from him around the audit so thank you John Paul so much and thank
you for you and your team and the work that you do on behalf of the district and you've been doing it well for for a while for quite and time CLA has been the auditor of the district and we
appreciate the the partnership and their and their work for the board absolutely thank you Aaron and again if anyone has any comments questions things that pop into your mind after uh this meeting my contact
information um is included in the slides um and then obviously you know if if you can't find that feel free to reach out to Aaron and he can um connect us so otherwise I appreciate the time this morning thank you everyone thanks Paul great and now we will transition to
the last part of today's review of the of the monitoring report in this particular section is one that is a recurring theme so let me pull up
my schedule and make sure that those pieces are ther is one day and Carolina did you have the CLA presentation that you were going to put in the September folder yes I actually
just put something in the chat reminding them yes it's in the September 26 folder yes I don't see and then did you put the the other monitoring report in the drive as
well uh the new one yes uh yeah hold on a sec I have the workbook there Aaron not the monitoring Report with us one second every quarter we
present meaning Gina or I would in her absence we are required to to present to the board a 2.4 monitoring report this monitoring report is
available on um board docs because that's those are when we are presenting it overall to the board and what we want to do today is share that with you
sorry thought that we had that already saved to the drive so bear with me while I go I'm finding it okay so I will share my screen and again this report is always
available both on board dos after the meeting uh Etc but we want to be able to pull out a couple of pieces on the monitoring report and put some emphasis on it so that what you're doing is
seeing again how this relates to your work as well as how it relates to the superintendent monitoring of or the board's monitoring of the superintendent the first piece is we
look at compliance with Taber and we ensure the board that our Taber reserves are what they need to be this is both a 3% requirement of fiscal year
spending in then we also have reserved for multi-year contracts and the district has one multi-year contract that is a portion of Prior Master agreement which is no longer in place which relates
to payments that employees receive once they've retired we also ensure the board that we are keeping track of our four charter schools and ensuring that those four Charter Schools also hold the two
required reserves that they have in place the first Reserve is they are also constitutionally required to hold a table reserve and then contractually with the district they are required to hold a reserve for special education and
that is the contract Reserve that we have for all four districts all four Charters I apologize the next piece that we look at is the overall forecasted unassigned
fund balance and again this is when the board gets these reports it's always on the prior quarter so this would be on the quarter ending July 31st of
2024 which is also the end of the FIS SCH year what we know and what we can see here is is these again follow the interpretations of pieces that we are
looking at some of these are not given to the committee as pieces that the committee would review but these are pieces that the finance group and the superintendent are reporting
compliance so when it say The District's performance complies with the standard that is CIS as Assurance to the board that we've applied U to the standard the board's policy on unassigned fund Balan is of is
4% with a maximum of 8% and we are as you can see we are well underneath the maximum of 8 8% and we are above that minimum unassigned fund
balance I would do this by color but I'm color blind and I could not tell you what those colors are even though I put this together the next one deals with uh further
deals with uh fund balance we believe is is fairly redundant in and the next piece deals with the district's overall cash and this has to do a lot with
liquidity and ensuring that the district has unrestricted cash in order to run the operations of the district this you would assume that we would always
pass in Prior years you can see that in February February tends to be our lowest plan for cash this is very important for for you to understand for the board to understand is because for the
first eight months nine months of the fiscal year the bulk of the cash that the district receives is the state share or the state share portion of total
program and then the portions of our Mill Levy that are collected but until taxpayers receive their bills and their due date their first due date is in
February when those are collected in February they are paid to The District in March and you see this dramatic uptick in March that gets us additional cash INF
infusion again in ail all we would receive is the state share and mil ly override payments because then the second half of property taxes when those different
pieces of property taxes are due and you can see then that we run right up into May and June and June is always the end of June is always the district's high point for cash historic
we've had the opportunity to participate in the state's interest free Loan program the interest free Loan program is exactly what it says we would borrow money from the state and pay no interest
through the month that we were lowest here we generally have been February and then the district pays it back by the end of the year so this has this is not a Taber ISS issue we are not doing any sort of long-term borrowing it is a very
short-term borrowing does not require the Taber ballot initiative or the approval of Voters is then last year and I think we may have shared this with you certainly shared it with the board the state changed its formula and
they are no longer paying their portion of total program over 12 months they're now paying it over 9 months that may sound somewhat immaterial but what it means is the
district's position in February will be approximately $50 million higher than it was before because the equalization payment is meant to then ensure that we are receiving approximately 12 equal
payments of total program regardless of source meaning regardless of whether those payments come from the state or from our property taxpayers Aaron there is a question in the chat
sorry let me pull that up I can't remember how to do that when I'm presenting sorry I could have just unmuted too um you might have just addressed it with what they just did in the special
session with property tax relief right so again depending [Music] on but depending on what happens at the ballot
then the property tax calculations would change for the majority of property tax fairs both commercial and uh individual homeowners those
pieces would then create for the county a different assessment rate for school districts versus other taxing entities including
the counties in the cities when they do that we would not expect in the first year for that change to have a material impact on the
district going forward however the bill as it was passed would then limit the growth of Av of net assessed valuation on a go forward basis so if
the net assessed valuation were to increase the state would not allow the assessors to increase the AV by that amount what happens then is is there is
a possibility that it shifts back the responsibility to a higher amount of total program to the state for the last 10 plus years School
District taxpayers property taxpayers have been paying a larger proportion of total program this will begin to shift that back around where the state would then
be NE needed to pick up more of total program Our concern in the ma the majority of CFOs around the state for all of our school districts do believe that this
puts the state at risk in the future for not being able to afford again its portion of total program and in my personal opinion and in the personal opinion of
some folks that I trust we believe that should that happen we will see the negative factor again so the budget stabilization Factor would need to be reintroduced because it forces
back the necessary growth of total program back to the state and away from any sort of assessed valuation growth on the districts James what we won't know for
now is how the AVS will come in in December again this is after the election and the assessors don't know which law will apply until then it could be one of
three potential law that will need to be applied so the I think the overall concern is that there'll be nothing initially impacting the district but it could have an impact on the state
in future years okay thank you for that and not that it matters but I share your personal opinion we're we I don't believe uh how it would change the the cash flow is again in
theory all things being equal at least in this would be the we in 25 26 the 26 27 year it would probably increase the district's cash flow and make it uh even better to the point that it was being
paid for by the state and more equal payments the concern then is what would happen in in the future future it's a very good question thank you and there is more that came out on this past week in the economic forecasts
as well we do show just quickly that the district is not spending its um a fund balances down with the exception of for example capital reserve here we would
spend down capital reserve by $2.6 million and that as you can imagine would fluctuate year toe we also have Debt Service payments within capital reserve for uh cops and list and
leases the other special revenue is not is is more related to activities that are at the schools and some that are the Departments and that again is outside of the general fund here we're making sure
that there is not a significant continual decrease in the district's fund balance that would make any future spending unsustainable it's a very very good
piece uh I think it's probably can be written a little bit better but we want to make sure that both um both look liquidity and fund balance are there here we we tend not to need to spend too
much time on on fees or penalties that the district might receive we're not in control of what those penalties might be here over the last 12 months we've had issues and all school districts have had
issues with Excel Energy processing timely payments and so that has been uh really an issue for us you can imagine with fewer payments necessary for Universal
free meals that are accounts receivable are generally lower or accounts receivable then is under uh student fee payments and what happens there is really student fees
start individuals individual families Etc start to to apply for free lunch in those fees that then would be waved the distri the superintendent cannot borrow this is constitutional
with state law it's District policy the state the district cannot borrow without going through the Board of Education all of those pieces are there we've spent down now our entire Bond proceeds in 2016 and
2018 and the the pieces that we would normally report the the monitoring report no longer relevant we also look at how each of the
M levies each of the existing five M levies are spent in accordance with this board goals and that has a lot to do with the current strategic plan and making sure that we're spending those
amounts on what was required under the Strategic plan remembering that that M Levy overrides are shared with Charter Schools on an eall per puple basis so we walk through we walk
through with the board the amounts that we've spent and how we're tracking those as well and those are all being tracked within within the system here whether it be enrollment growth or enrollment
decline we're not committing uh any sort of revenues that we we need to not just have needs associated with potential new schools but because we're in a declining
enrollment it would just be that we would not want to uh before we' spent any new remaining revenues received for any new students that has not been a requirement uh or a piece that has been in
there here we make sure that the adopted budget does what it's supposed to do and includes uh funds for The Debt Service payments we've already talked about sorry the annual audit and again we'll make sure that this is saved out
there so that you know that it was produced and that there were no pieces of policy uh prohibitions that that the superintendent compliance statement
interpretation would would not have met the standard so many of these we will revisit because they're part of the fax responsibility so some of this we will come back to
this is one of them and this is the district's overall Market portfolio these are pieces that we uh will do again as this is out there and we'll make sure that this is saved because it's currently on board dos it then just
shows you that we are in compliance with uh presenting a internal monitoring report or even an interim monitoring report for the period uh ending June 30th 2024 and that
we're in compliance with issuing that monitoring report to the board did want to walk you through it I I don't know if there are necessarily any questions about it we do not find that the board asks very many questions
about the monitoring report itself but that uh it was issued okay so that is the last piece for that we have on the presentations so we're going to go ahead and stop the public
Pro uh portion of the