I mean, >> I'm sure they did at lunchtime, but they didn't have much when we were there. >> Well, so healthy stuff will be probably good, too. I think I think everyone will be here.
I'll send >> I'll text the principles and tell if award >> No, it's funny. We knew that we just didn't know what I told him either Tuesday or Wednesday. So is it all tomorrow? >> Um some will be Wednesday.
>> Okay. And then the guys tomorrow >> perfect. Yes. And by the way, I signed up and I put I just put my name on it and >> I was like, >> I'm not going to be here to give it to them today.
>> Yes. >> What's that? >> No. It is true. That's how you want it to be. >> Yes. Also really understand. >> Sorry, that wasn't funny. Too close. Too
close. It's good. >> I know. >> I didn't put the chairs out. Candy and water. It's all >> I know peanut butter peanut butter. Usually I'm the one in the chair that's
like >> we all just give you a second to Okay, you can start. >> All right, we'll call our special meeting to order.
>> Laura, are you ready for roll call? >> Here. Davidson >> here. >> Here. >> Here. Green Street >> here. I need a motion to approve the agenda. I move we approve the agenda. >> I second it.
>> All right. Roll call, please. >> I Davidson. >> Hi. >> Gilgeness. >> I. >> Gordon. >> I. >> Green Street. >> I. >> All right. Agenda is approved. So, first on the agenda for the evening is our discussion
for the fiscal year audit. I'm sorry, fiscal year 2025 audit. Um, we have Chris Fanta of Holding and Company here to present to us. >> Perfect. >> All right. Well, thank you all for having us. Um, I really appreciate it.
Um, as we all were aware, it was a a tougher audit this time around, uh, which is unfortunate, but I do want to start by thanking David and his team. Um, you know, there was a lot of long nights, long hours, uh, a lot of effort that got put into this audit to where to
get us to where we are today. Um, I always like to start by saying the the presentation we give is pretty high level. Um, if you have questions, feel free to ask. U, we're here to, uh, present to the board and answer your questions. So, if you do have questions
along the way, feel free to uh, ask any that you might have. Um, you should have received, well, you did receive an email from me with our board presentation. Um, I'm just going to run through that. Um, and then we will, uh, from there with
any questions um, at the end. Uh, starting off in number one, uh, as has been discussed, uh, we did issue disclaimed opinions this year, um, over all of the funds except for the component unit. Um, uh, with that, there was a specific unique audit challenges
that we faced this year. Um the district was not prepared to work in October uh due to uh accounting system limitations um and trial balances that didn't balance. Um the district worked hard to get us trial balances that did balance
and we started field work in midFebruary uh which was you know after the the 1231 deadline. U so we worked hard with the district after that to make sure that we were able to get everything we needed to get the audit done as timely as possible. Uh field work as I mentioned
had been rescheduled multiple times. Um we do provide a uh a fairly comprehensive uh items needed list. That's a roughly a 100 items on there various things that we know we're going to need to ask. Uh throughout uh the district provided uh some items timely,
but a lot of it was not provided ahead of time. Uh to be fair, there's a lot that we can't do with those items until we start in field work. Uh but we were waiting on uh various items. A few of the balance sheet and uh a lot of the
significant income statement accounts uh were not reconciled or balanced at year end. Grants were not balanced at year end and significantly more work was required by us uh to assist with the reconciliations of grants and other accounts. Uh as a result of this uh lack
of uh preparation uh like I said field work was done in February. Uh as a result we uh had uh there was a lack of accurate and timely information uh to the board uh to the public and uh to grant and funding agencies and we
issued disclaimed opinions for all opinion units uh except for the component unit. As I mentioned, uh we did make uh a total of 27 journal entries to various uh or 27 entries to plug accounts. And what that means is that we had uh we knew based on audit
evidence we had obtained that we needed to get certain balance sheet accounts to certain numbers. Um an example, cash. If you have a cash bank statement and you know there's no outstanding items, you know what that number needs to be. We didn't know what needed to get hit to adjust that. So we put it to plug
accounts. Uh the goal of the disclaimed opinions was to get balance sheets uh like cash to the correct numbers so that when you roll forward to the next year that way you have good starting numbers on those. Uh as I mentioned 27 entries were related to that. Um looking at
internal controls and compliance findings. Uh we're not formally uh presenting our findings here. that will be issued at our with our single audit package with our yellow book report. Um, but I'll go through the findings that we're going to be recommending in that.
Um, and it's a lot of the same findings that we had last year. Um, there was a lack of appropriate uh closing procedures at year end. Um, as evidenced by not being prepared for fieldwork and the disclaimer opinions, uh, the lack of travel policies uh, increasing the risk
of fraud and abuse. uh a lack of effective controls over grant accounting. Uh there was many grant balancing uh requiring or grant balancing entries that were required uh to be done throughout uh fieldwork. Uh the bank reconciliations were not
completed timely and uh in some instances uh for more than 6 months they had not been done and even when we were doing field work we were noting that the bank reconciliations were not were not correct and required material adjustments. Um there were uh ineffective controls
over the recording and reconciling of pupil activities. Uh multiple of those plug entries relates to the pupil activity fund fund 23. Um and in that the letter to the board we did list out uh each of those 27 entries with um exactly what that entry was. Uh so to
give just the board a kind of an idea of hey this is why those uh entries were needed and what those entries were doing. Uh there were uh ineffective controls over uh reporting and reconciling to both these activities. Lack of appropriate controls over the component
unit accounting. Um the component unit activities uh were not reconciled until we uh one of the plug entries we did which was to force the true documentation that was approved to tie out exactly to the general ledger. Uh
what that meant was it was about a $3 million entry that we had to make. um that had over 80 line items for that. Uh that was a particularly um big one that we had to do. Um
there was a lack of appropriate controls uh over review of journal entries um and a significant number of uh uh incorrect or unsupported journal entries. um that we're not we think that had to do a lot with uh past um
past management, past entries that were being tested before uh current staff were were looking at those. >> Could you um speak into the microphone just a little closer? Sorry, you're just so tall and our microphones are not
>> We can get him a book to hold >> this is fine by me. Hey, I always tell you not to slouch. >> We need permission. >> Thank you. Thank you. >> Um, we noted a lack of controls over required rent reporting to CDE, a lack of controls over reporting and
reconciling sales tax activity. Um, and that was an item that we had uh noted last year, but due to the disclaimer opinions, we were not able to fully verify that that had been done this year. uh lack of controls over reporting and reconciling investment activity. Lack of controls over reporting and reconciling
capital asset activity. Um once again due to the disclaimer opinion we weren't able to fully verify that one. So we went ahead and kept uh lack of controls over uh transitioning the accounting and ERP systems and overall many of these findings fall under um and over lack of
segregation of duties. another uh responsible another responsible individual uh needs to be verifying the bank wrecks um the monthly reconciliations the payroll process um approvals etc. Um and we think that
would be a good thing for the district to implement. Uh looking at the financial statement findings, uh as of uh June 30th, the financial, uh condition of the district, uh you know, is starting to trend downwards as we'll kind of discuss
later. Um not necessarily that's been a concern that the board has been addressing throughout the year. So not necessarily a shock. Um and we did issue dispend opinions. Um our recommendation our recommendations is that uh management should consider whether the finance department is appropriately
staffed that management should ensure that all finance staff are properly trained on accounting and uh on governmental accounting and in the accounting software and that management should continue monitoring accounting and finance uh function and specifically the board should continue monitoring
that. Uh moving on to the financial statements as a whole. Uh item number two, we're going to look at the governmentwide and the fund financial statements. Um your guys' fund financial statements reflect how the district keeps its books on a day-to-day basis.
Um when you're looking at those, that's what you should be getting reporting on regularly. Uh and it's on the modified and cruel uh or modified yeah basis of accounting, which is going to be your day-to-day cash in cash out. um adopted budgets and monthly financial reports uh
provided to the board are based on this fund presentation. Uh the governmentwide statements however are the full acrruel uh statements and those are going to show all your uh debt fixed assets all of your long-term uh acrruels all your acrruels will be reported there. Um,
looking at the statement of net position, uh, we did note that cash and investments were down about a million dollars, um, and primarily due to the loss of the sales tax and reduced PPR funding. Capital assets were down about $100,000 as depreciation exceeded capital outlays during the year and
other assets were down about $100,000 as well. other liabilities were down about uh $7.3 million uh largely due to the reduction of the uh net pension and oped liability that gets adjusted every year. Uh and uh for for those that are um
unaware or unfamiliar, uh those get those get uh adjusted based on the district's proportionate share of the unfunded state pension and oped liability and that changes drastically from year to year. >> Chris, I'm sorry. Did you like on the deferred outflow list, can you help us
understand just clearly what that means? >> Yeah, absolutely. So, that was that's going to be related to those pension activities as well. Okay. >> So, with those pension activities, you have deferred inflows, deferred outflows, and the pension liabilities themselves. Every year those change very drastically based off of the actuarial
calculations that the state does get in conjunction with PAR. Um and then based on how much you contribute as a district, those contributions are divided by the total contributions and then that percentage is what gets allocated across. So like I said, from
year to year, you'll see a wide variety of fluctuation um in those items. Um it it can make the governmentwide financial statements a little more difficult and challenging to make sense out of because you see such large and you look at it and say, "Hey, we we decreased by over
$7 million in liabilities." Well, did you actually pay $7 million in to to write that? Well, no, it was due to the actuarial adjustments. >> Okay. Thank you. >> Okay. Um, overall net position was uh decreased by about $475,000.
And uh looking at the general fund, uh the ratio of unassigned fund balance to expense is dropping. Um in uh fiscal year 24 it was at 115 days and fiscal year 25 it dropped to uh 79 days. Uh we
like to see that around 90 days to 120 days is what we consider healthy. So it has dropped below that. So it is definitely uh something to be aware of and be watching and I know that the district is fully aware of uh of those items there. Can you um explain for
maybe people who aren't as >> sure >> in the know with that what the what those days mean and and what that act like what? >> Sure. The >> the basic and what you're trying to get up there is how much of our fund balance meaning our uh assets that are available
for use are available to fund expenses. Uh we we try to get a a rough estimate of that. So we're saying that hey there's about 79 days if no other activity happened you had enough assets to cover about 79 days. So that would be you know 90 days 3 to 3 months to 6
months is kind of or you know 3 to four months is kind of the the the range that is you know healthy for a district but uh and it like I said is starting to trend down. Uh looking at long-term liabilities item
number five, uh there was an increase um with a SAPA this year, which is a subscription-based information technology arrangement. Uh essentially a lease of software with that new accounting system. So there was a new uh liability addition, but outside of that for the COP's all of the payments were
paid uh according to schedule, which is good. That's what we want to see. Looking at item number six, changes in fund balance. Uh the general fund, we did see a fund balance decrease of $1.5 million. Uh and overall revenue was down
about 8%. Uh with a decrease of sales tax at about $1.1 million for the year. Uh increase uh there was an increase uh in property tax of about 600,000 and PPR was also down about $1.1 million for the year. State grants were down about $500,000 and expenses were down about
$240,000 in the general fund. uh grant activities were down about $338,000 and the federal grants were down about $443,000 as uh some uh several co grants expired. Um so there you know as you would in
moving forward in FY26 and going forward that number should I would expect to stabilize more um as the more normal grant activities are resuming. Uh we'll briefly uh talk about internal controls. I went over our findings uh or
suggested findings to start but our reports on internal control as I mentioned will be included in single audit report single audit is done which will give the standard hey this is the the finding what led to that finding management's response to that finding etc
um looking at federal awards as I mentioned the single audit uh was delayed uh mainly to make sure that the financial statement audit could be completed as timely as possible uh so that way the property tax can be restored just as quickly as possible. So, that'll be our next priority is
jumping back into that single audit. Um, in closing, uh, the audit challenges and findings we've deemed are serious and definitely need to be addressed. Um, this is the second year of similar serious findings. Uh, and in spite of the district's plans to address these issues, we do remain concerned that the
district does not have the appropriate controls, process, or staff in place to prevent a recurrence of the same findings and challenges in the current year. Um, with that I'll uh answer any questions you guys might have. >> Um, Chris, I have a question about the
displained um opinion >> and I'm wondering how how does that impact the audit for next year? Um does that does that typically complicate um create a you know um um maybe a bigger
dive into things? Can you just address that so we have an idea? >> It will complicate things for next year. Um as I mentioned briefly we when we do our testing and and look at the discriminion our goal is to make sure the balance sheets uh all the numbers on
the balance sheet make a lot of sense or are very supportable. Uh for example, uh because it was cash, we can look at receivables and say, "Okay, if you're saying that you're owed a million dollars at year end, did you actually receive that million dollars in the period after?" And so we go through and make sure that things like that are
supportable and that they do make sense. Now, where it becomes tricky is that the firm coming in behind us is going to have to satisfy themselves with that as well. And so if uh if there were a continued engagement for us, we would have said, "Okay, great. we we are satisfied with those balances because we did a lot of work to make sure those are
correct. When you disclaim opinions, you're disclaiming the whole opinion. And so for another firm, they would have to come in and, you know, become satisfied with those beginning balances. Uh we'll make ourselves absolutely available to that firm and they can review all the support we gathered and
that might be simple enough for them to say, "Hey, this is uh we're comfortable with these beginning balances. There's no further testing we need to do on those. It's just normal audit testing." But we wouldn't be able to speak for whoever that form is.
>> Thank you. >> So yeah, a lot of work to be done. Um I'm just wondering from a board perspective of like what you see as our part to own for this next
year to help have a cleaner audit, less not late audit. >> I think the the biggest thing that the board can do throughout the year is require from management uh
how they how they're going about the activities throughout the month, the month end closes, saying, "Hey, can you show me those bank reconciliations? Can you show me how that ties to the general ledger? Can you show me how that all agrees?" Um, it doesn't necessarily have to be in a full meeting like this. It
can be in a with a finance committee where you guys meet and say, "Hey, okay, let's go over these um, you know, pretend like I don't know what I'm looking at and teach me how this works and then show me this is how I get from A to B." Uh, and walk through that process. Uh, that would go a long way.
U, same with grants. Grants are a huge factor. Um, if they don't balance, u, and when I say they don't balance, revenue should equal expenses. If we're looking at it and your grant balancing is wildly off on a number of grants, well, that would be something I'd be asking. U there's reports that CDE puts
out that say, "Hey, you have this much grant funds available to be used or that say, hey, uh this is how much we've paid you throughout the years." Um all of those should be reconciled against the district books and the district records. Um so I'd be asking management for for those reconciliations throughout the
year and say, "Hey, can you show me this is how this is reconciled?" Um once again you don't need to be the expert but just in saying that hey this is how this should be done um and isn't being done timely. Um I would also uh throughout the year uh if the board can
be holding management accountable to various trainings um and understanding that hey school finance and governmental accounting is a very difficult thing to learn. Um so what is the what is our team doing to make sure that they are on top of their game and that they're becoming the experts that we need them
to be. Uh so that would be another area of accountability. Uh for the audit itself uh I would recommend uh the finance committee or starting an audit committee however the board would go about that. Uh but meet with the auditors u and say hey what's your guys'
time on how would it for this audit to go perfectly what would you expect and that would give you an outline of accountability as well of saying okay great we can make sure that we're doing our part so that way the auditors can do their part. Um, so I I think more active
engagement in accountability is where I would uh recommend. >> Um, one of the things you mentioned, Chris, was the the staffing like that we might not have the right staffing or that we need like more staff. Is there any specific areas of expertise or like
functionally like skill skill sets that we are lacking that we might need to consider and and maybe think about with staff as we're prioritizing budget for next year? >> Yeah, absolutely. Um where we see particular concern is lack of skills around uh governmental
accounting and school finance accounting and the ability to catch issues and identify issues as they come up. Uh when we're coming through and saying, "Hey, you know, we've got all these issues." U and I understand that this year was particularly
challenging um in that it was it was rough. Uh but that's where we would say the oversight would be needed. Um, you were talking about the the grants earlier and um maybe a a lack of
reporting or things not working out. Yes. Um, that one baffles me a little bit because most of the grants, so maybe correct me if I'm wrong here, are um, reimbursement, right? So, you have to show the state or
whoever's providing the grant that you spent it appropriately. So, how did we receive the reimbursement if we did then didn't have documentation for the audit? >> That's a that's a great question. Uh, a lot of times, um,
and I guess I should back up. I I am not entirely sure what CDE requires for every grant that they are reimbursing for. A lot of times it's making an attestation on the on your guys' side saying we do have documentation for that. Um, depending on the grant and
what CD is monitoring, they might require that documentation up front or they may not. Uh so when you're looking at that, what we're looking at to say, "Okay, great." Um you have so much grants available, you have uh what's called an FDW report. It's the federal data warehouse report that CDE puts out
which says this is all the money you requested. Um to your point, a lot of it is reimbursement. And so what we would expect is okay, you have a reimbursement type grant for uh you you requested reimbursement for $150,000. we should be able to see a general ledger or see grant codes that tie out
to show revenue and expense for the $150,000. So, a lot of our plug entries were related to that to where those didn't balance. So, we had to go in and make them balance. Uh for uh for the uh FDW reconciliation, it's a mathematical
reconciliation where you're saying, okay, you have uh receivables, deferred unearned revenue, and then your current cash receipts. um going through the math equation, you can come down to exactly uh what CDE would have paid you. And if that doesn't reconcile, that's a
problem. And so plug entries would have been put there as well to make the math work. But no, to your point, that's that's exactly why it should tie out. Um and one of the things you guys can do as the board is request that and say, you
know, the FDWC publishes every month. You could pick a couple and say, great, these are reimbursement types. I want to see the underlying accounting data for these three requests. How does it tie to that? That would be a great check.
Um, I know you can't probably say this for sure, but is would it make sense that there had been documentation and then that documentation had been lost, destroyed, moved, or was there not any to begin
with? >> Yeah, that's a tough call on that. Um mainly because we're just flaming opinions to try. We we stopped and started the balance sheet at that point >> where we we're uh there's you know like I said the grant balance about the grants fund fund 22 you need revenue and
expenses to balance to zero. Uh and that fund should never have a net income or loss should never have equity. And so when we're going through while we're those are not balance sheet items to look at revenue expense. We need that to balance to zero. So we would have made adjustments in that fund to make it
balance to zero. Um and then in conjunction with that reconciliation to the federal data warehouse report um to make sure that it ties out to the cash that was received. Um but uh yeah that's so yes that's where I would be looking at.
Um, another question I have is noting knowing that this audit is for like the previous fiscal year right for 2425. I'm curious what like from the perspective of the accounting practices that are done in like taking place in that year
and then the period that follows right the time between June and December when the preparing for the next audit. I'm curious like how much of that work and how many of like the errors attributed to the internal controls took place and
can like can only be resolved within that particular fiscal year versus like how much work can get done to be kind of caught up cuz like I want to acknowledge like the fact that like our finance team largely came into this and David especially in June and like is trying to make sense of it and and improve the
situation but I don't know how much of that is largely like said and on and happened in the past or could have been rectified between the end of the year, end of the fiscal year and the start of the audit if you know what I mean. Absolutely. Can you speak to that? Yeah. >> Yeah. So, there's really a couple kind
there's really a couple kinds of findings you you'll come across or I guess to your point there are some that it was it done within the year or not? Was it done timely or not? And that's going to kind of drive that finding. Bank reconciliations for example, but we have our finding kind of touches on it from both ends. One we're saying, hey,
it wasn't done timely. And to your point, well, if it was done in July and no bank wrecks were done all year, it doesn't matter who was doing it at that point because it wasn't done all year, then at that point it's that's going to be a finding because there wasn't controls over bank reconciliations. Uh,
but when we look at bank reconciliations and say, hey, we have to make a $600,000 adjustment still after it was done. Um, and in that case, it was because accounts payable were being reported as uh checks that had been written. Um well that would be regardless of when it was
done timely or not. It was the presentation we were provided. So certain findings yes were attributed to another one would be the the district travel policies. Well, you know, wholly dependent on what happened during that year. Um, after June 30th, you know,
that would be a spot for management to comment and say, "Hey, we've changed it since we've updated our practice." >> But throughout the year, what we're testing, >> you know, were those policies followed or not or those did were there controls or not? That that's does that make sense?
>> Yeah. Yeah, it does. Yeah. I think, you know, to Cass's point, what we're trying to figure out as a board is how much of this was because of the people who were in charge >> Sure. >> that year, many of whom are no longer here, and how much of this is something
we need to fix going forward and which of those things should we be focusing on. So, I appreciate the, you know, the specifics of the types of reporting we should request going forward to ensure that doesn't happen again. But I think we're trying to figure out okay like
where is there still an issue and where is it that you know this was just a a group that wasn't following good procedure. >> Absolutely. And I think you know we had say we I had mentioned it back to the previous management group when they
talked about implementing a new accounting software uh in the time and my recommendation was that's a terrible idea that you should not do that and this was long before it got implemented. you know, we can't >> I can't control that. But that did play a huge factor in this because you were
already struggling to get caught up and then implementing a new software in the middle of that. That's it's just not ideal. Um, one of the things that was of concern would be a good uh would be a good thing for you guys to uh uh initiate
accountability on was there's a report that goes into the um audited financial statements at the end called the auditors and terror report the what that does is we uh district takes its data from its accounting software runs it through CDE through their pipeline and
then it produces reports to show that hey the data you've submitted was ties back to your financial statement audit. One of the uh with that um the report did not tie back to the financial statement audit um and with CDE's
permission um CDE say hey you can go ahead and plug that report as well uh i.e. manipulate the data outside of the accounting software to make it tie to the audit. What that means is your guys's data right now and your accounting system doesn't tie to the audit u which is a which is a problem.
um that will hinder uh the next auditor in beginning balances and beginning balance testing. Um it was communicated to us that would be addressed by June 30th uh of 26. Um and so that would be maybe a good way to, you know, a good thing for the board to hold management
accountable to and say, "Okay, great. We understood we understand that to uh timely get this done and filed that this had this is the route that the district took but we need this to be corrected you know well in advance of uh the fiscal year close so please that this
has been done um and that might mean uh getting in touch with CDE if you if someone on the board doesn't have the skills knowledge or experience to you know truly verify that it might be reaching out to CD and say hey can you verify that this has been addressed Um, from other reports we've received, I
I think our district had an unusually large number of codes or or the different accounts that make things particularly difficult. Is would you agree with that or >> um I I don't know that I have an opinion
one way or the other on that. Um the uh CDE's chart of accounts the way they structure things is uh it creates a unique amount of accounts that can be uh created um or that should be created
based off the various situations. um you know there's I forget exactly how many or how many sets are in each string but it's like seven or eight different unique number sets that each mean unique things whether it's fund or location or program or source or grant uh and so
there is a need for a robust amount of uh account codes uh due to that um you know I work with we work with districts that have up to like 50,000 um account codes that they use So, I mean, it's not uncommon to have a ridiculous number.
>> 75,000 is 75,000 is our largest one. >> That's a lot. >> So, that that in and of itself is not necessarily unusual. >> But, I mean, anywhere anywhere there's room to trim down or put, you know, solid uh coding um procedures in place
is is obviously preferred. So, if that's a project the district is taking on, that's that's that's a worthwhile project. >> Yeah. I know even even prior um you know we had contract CFO in here for a while as well asking her questions about you
know where what fund does this money come out of or she was like I don't there's so many I don't know >> fair enough and you know it's weird for an accountant to say it but simple is better so um I I would you know anywhere you guys can simplify I mean I
definitely would do that uh that might not be a bad thing to run by uh like a blank CDE or some of their um uh training staff that works with that to maybe give them the chart of accounts um and say, "Hey, this is our active chart of accounts. Do you guys see any room
for trimming this down or any room for improvement?" Um, one other quick thing on the um, as we're looking at our strategic plan, one of the areas that we're hoping to um, attain some measurable successes in in future audits, of course, to try to make sure that things are clean. So, I'm
wondering if you can help us based on your experience in working with other districts and also knowing the district's history with audits in the past. Um, what would you consider like it's it's easy to say clean audit, right? Like it's like a general phrase, but can you help me understand maybe and
maybe be a little bit more specific about what that what do you think success reasonably looks like and like what's a what's a reasonable number of findings for any given district in in an audit that we might want to look for in the future? Uh, sure. Uh, I'll start with saying, you know, to to Carol's
point, we were talking before the meeting. Um, it used to be where audit reports were very boring and, you know, very glanced at them and and that was it. Um, you know, up until a couple years ago, there were no findings. Um, and that's that's common. Um, so anytime
there's one finding is a serious >> Yeah. >> to look at. Um, most of our clients we don't have findings for. um I guess a a touch point on history. Um back when I uh first started working on this
district and much prior um this district was always our first school district to get issued and so it would get issued by the end of October and it was our always kind of our first district out the door. Um so it is possible. Um I mean it's it's not just from a hey we did it do with other school districts, other
clients. It's a oh we used to do this like it used to be >> it used to be done by you know issued by the end of October with no findings. Mhm. >> You um one of you guys may recall I believe it was probably in um about
2010ish there was a a um um the auditors came and it wasn't ready and he the finance director was gone
and I think that was the that and then I recall the next year there was a there was some recommend recommendation. It was the thing that that I find so important about the auditors coming and presenting is that we did have a clean audit, but that doesn't mean you don't have recommendations for us.
>> And the only way we know that is if we as a board get to hear from you and and ask questions. And I remember that that specific suggestion was that we needed more crossraining and we needed more people that knew, you know, each other's
jobs. And um and I believe that happened fairly quickly after that. So um yeah, I do I I do remember those beautiful boring reports. >> Yeah. And by the way, I remembered that
audit because I walked into the room with nothing in there and >> Yeah. And I think in that situation um the superintendent had not been informed that that they were not ready and his assumption was and it was yeah
so it was not not the right person >> to address uh there was a question asked about what would a clean audit look like and what would it look like to be prepared for that. I think by by really focusing on making sure bay reconciliations are done and make sense
timely is a huge first step and grants if you if you're able to knock out those two things that covers a majority of the issues that we would come across. um the rest of it, you know, if it's the salary acrals are slightly wrong or what not. I mean, that's an easy calculation that's
easy to address and to fix. But once you start having to mess with grants and start having to balance a number of grants and start doing that and start looking at cash or questioning is everything, you know, in the in the records, uh that's where it really becomes difficult. Um I guess the third
>> Chris for this year too, beginning balances, >> beginning balances as well. Uh making sure those beginning balance equities agree. uh there's really not much we can do or really any auditor can do if there's beginning balance discrepancies. >> Um so you mentioned that the plug entry
made to match uh your or the pipeline to the audit that needs to be five correct? >> Yeah. What that would indicate is that you were provided a trial balance in February. >> Yeah. We made entries throughout the
audit and then turned those trial balances back over. But then after the entries were made and that data was pulled again, it didn't agree back to our trial balances. U which would indicate that additional adjusting additional activity occurred in that
fiscal year that is not uh being reflected uh in our trial balances. So that would need to get reversed back. Um it would be a much bigger deal if it was a clean opinion uh because we would be uh you know giving assurance over it and we would be saying hey revenue and
expense are are are going to tie out uh with it being uh balance sheet focused on our end. Um we feel really good about our numbers and so that's where we're saying hey you know it needs to be corrected and needs to be tied out so that we have good numbers and don't have
a beginning balance issue. Uh but it wasn't it didn't raise the concern of we don't think our numbers are incorrect because we did substantial work to make sure that hey cash can is reconciled and makes sense accounts payable. We can see that yes these were what is sitting in
accounts payable ties out to uh you know invoices for services provided or goods received during the fiscal year and it's paid after or receivables that it's representative of amounts that were owed to the district at year end and the district didn't get those amounts. So from our perspective, we feel good about
our balance sheets, but the district will need to um adjust back Um, okay. So when I know so there's a lot of plugged entries. Yes. All over the place. And >> I just wanted to make sure we're kind of covering like when when there's a
plugged entry, does that mean that there was no data to support the numbers or that it wasn't found in an appropriate amount of time or does it mean like the ending balances match up? So, we're just
making assumptions. >> Uh, a combination of all of that. Um, with it with the audit starting so late, the we really posed it, we posed the question to the the management team um and said, "Hey, this is everything we
would need in order to get to a clean opinion. >> This is all the support we need." Um, these are um due twos fronts would be a great example. um due to twos, two froms are between funds, one fund might owe another fund money. Um those should
reconcile with zero. Okay. Um if in a clean opinion, if we're, you know, fully doing the audit, if it doesn't reconcile to zero, we're going to have the district staff hunt that down, figure out where do these entries go wrong, how do we get this to uh reconcile it to zero in the correct manner, i.e. what
transactions actually occurred here to to get us there. um because we're disclaiming it, we know it has to reconcile with zero, that it has to agree. And so we would put a plug, you know, where we're saying, hey, we're making broad assumptions um that this
has to agree in the broad assumption that we're going to make that agree by using the general fund to do that. Um do we know that it was, you know, incorrect in the general fund versus another fund? We don't because we're not getting that detail um or slaying the opinions. So,
we're going to go ahead and force it to reconcile. What we did is make paper one account in every fund and called it plug. They made it an expense account and then so every single item that was plugged in a fund hit that account. U so therefore you could go back if the
district could go back if they wanted and see this is exactly what entries got posted to those accounts and where they came from and they could have unwinded at that point. Uh but yeah once the once the decision was made that hey this is too much work to get a clean opinion we're going to disclaim the opinion then
at that point we know that due two from need to balance to zero we're going to force them to balance to zero and move on. Does that make sense? >> Yeah. Chris, would you explain the relationship to the the the balance sheet in the income statement and just
why it was a focus to get the balance sheet right, whereas the the income statement is less critical. >> Yeah. Um I I touched on this briefly earlier, but when we're looking at balance sheets versus income statements, balance sheets are those numbers that are going to roll to the next period. Um
cash, for example. Um you have a million dollars in cash. Well, if that's what you ended with, that's what you start with the next year. Versus if you had a million dollars in revenue, you start at zero the next year. So, when we're looking at, hey, what's of critical importance to get right to go into the
next year, we're less concerned with those income statement items because it's going to be a fresh clean slate going into the next period. But from the uh the moving into the next period, those beginning numbers, those balance sheet numbers, those cash, those receivables, those payables, etc., those
need to be correct. So when we're looking at that, we're saying, "Hey, cash needs to be a million dollar. It's $900,000." We feel very confident that needs to be a million dollar because we can show that, you know, bank statement said you had a million in one and there was a $100,000 outstanding checks. So we
need to adjust this to a million dollars and we would throw the offset into a plug at that point to in order to force it to get be accurate on the balance sheet side. Does that make sense? So if it's a so on the balance sheet noting that those are the amounts that
are carry over from year to year and the end of the fiscal year was in June right then um in terms of like our current school year fiscal year starting in July >> y >> um if if the adjustments were made to
the balance sheet for the end of the school year during this audit and there was also a certain amount right that we started with like in actuality, right? Like in July. Um I'm just curious if you could speak to like the how the changes that were made during the process of the
audit and the reconciling all those numbers might reflect on our current school year to date and the future audit that we'll look at. >> Absolutely. And that in conjunction with what I was talking about the audits of terror report, the plugging area, >> that's where we're very concerned. That's where we would say that's why
we're not confident that the next period's audit would you know necessarily go much better at least be timely is that we're exactly what you're saying is that okay you're making adjustments to those ending numbers but we've already been doing work this year
>> but now we have to roll those numbers figure out what our differences are to even roll clean numbers roll those clean numbers and then essentially re-reconcile everything up to As I recall, in a boring year, that audit is done and in January when
it's time to do the revised budget, any corrections got made so that it was made mid year and anything that was found that wasn't accurate. Is that correct? It's in most of our relationship with clients, it's
an ongoing process typically done in fieldwork to where if uh we do have some adjustments. Um rule of thumb, >> she's talking about the budget the budgeting process specifically I think. >> Oh, what how do they correct to like beginning equity numbers and all?
>> Oh, sure. Yeah, that would be done in a January time frame. Yes. >> In a boring year. >> In a boring year. Um, one of the things you mentioned earlier and and I found it in here for
it, but um was a plug for the merit true up. >> Yes. >> Um I am confused why there is a puzzle there. I felt like we had a lot of
meetings and a lot of documentation on that. Uh yeah, if you look at the I'll actually point you back to the journal entry I uh it's actually on page 17. Uh uh you'll notice that actually starting on the prior page on page six
entry number 88 uh to adjust marriage to agreed upon documents. Um this is one of those where if we were doing a clean, we would absolutely require the client to come back and say, "Hey, your numbers don't agree to uh what has been agreed
upon in Furthermore, we want to test this. We want to see how you came up with these numbers. Um, given that it was disclaimed, um, and both parties had come up with this document saying, "Hey, this is exactly what we think or what we're agreeing to as reality." Um, we
did it exactly backwards as to how it should go. Meaning, we took that document and forced the accounting system to agree to that. What what should happen is you should have your accounting system that is reporting those transactions on any you know any period and then pull that say hey what
are we paying the charter school um and you should be able to run a report to say okay this is how much was charged for x y or z or um service and this is how that is showing what you see with this journal entry journal entry number
88 is that we had to make a $3,130,000 entry to force that document to bring it to the general ledger. Um, that would make me question, you know, similar to what you you're questioning is how did you come up with that true document
then? If the if there was over 80 line items that had to be adjusted to to get there, how did that come about? >> Um, and then I I believe you also do merits on the merit side of this audit
also. That is correct. when when looking at their documentation, did the true up cause a journal entry for on their side as well or did they have documentation? >> Uh, it did, but more align more along the lines of what we would expect. So with true-ups, there is a uh every year
there is a typical true up uh between a district and a charter school where you're coming to year end acrruel amounts saying hey we had up until a point of time all of our activity recorded and then we're making a journal entry to say uh you know we actually the district owes us XYZ for capital
construction or for for people revenue or for hey we didn't fully bill you for trash service or you know portable. um those kind of entries is what we would expect to see. Um and that was a lot more in line with the internality we made on their side. It >> was a a typical okay, we're just
adjusting to the um adjusting to the final numbers per se. um where there was um you know ultimate concern and where their books didn't agree to the uh the district's uh books.
We they got to the spot where uh the net amount owed back to the district agreed but the starting point where saying hey we've received x y or z um didn't agree between what they were showing and what the troop was saying what the district
was showing. So, they got it to agree in net own back, which is fine, but the those beginning spots, it wasn't one for one. What do I mean by that? If you uh have capital construction revenue um and you've received $10,000 throughout the
year and you were going to be owed $1,000 extra dollars, well, you would expect to increase the capital construction revenue by $1,000 and a receivable for $1,000. You're owed that $1,000 and it goes against that revenue. All of the balance sheet line items made sense for them. But where it had been
coded to various different things was was different. Um and when we were diving into it, it was because largely uh there wasn't agreement on what that starting number was. They said, "Hey, this is our starting number. We have the documents to support that starting number."
And that's not what was presented. Transportation, they wouldn't recognize as an expense even though the charter agreement said it was. So I don't think I put that at the offset that we donated the under
which is gas compliant fail Chris >> but we would have documentation of that that we were charging them. So that's where I'm like, how? >> So when we're looking at it, we're
saying, well, I mean, if you look at that journal entry, I hit one, two, three, four, five, six, seven >> plug accounts >> in that. Um, let me see. There's others. Eight. In that journal entry, I hit a
plug account eight times to get that journal entry to balance. So, I mean, it was a material net amount. So, what that what that tells me or what I would be concerned about is just like grant accounting, you should be able to pull at any time out of the
accounting system. Okay. Uh, we've paid, you know, to date $2 million of PPR. Okay? That should be reflected in monthly journal entries that sum up to that 2 million. And by having to make such a large entry, it's telling us that
that just it wasn't. So the district basically wasn't properly correct documenting how much money ascending to merit or why. >> Correct. Or at least I should say not recording it in their system. >> If there was outside supporting
documents for it, I mean entirely possible but anything that you could tie back to general lenders not provided. >> And we were able to tie such payments to bank statements on the other side. >> Correct. from looking at the merit books, we can look at the bank
statements, see the exact money come in. >> Okay. So, the accounting department or the finance department during this period was not properly tracking what they were sending over. >> Which makes sense because that's what we've heard from the
audit. We had the forest as well. >> And that would be >> for the prime also. That would be a good thing for accountability for the board to add on as part of that monthly process to say okay and you made your payment for the month to the charter school. What did you make and why?
>> Provide the general ledger detail to show that it agrees to those amounts. Then maybe a few things to say great. Okay, I see you did you charged XYZ for trash. Show me the invoices that and how that was determined. uh that
would be a good spot check throughout the year to ensure that it's being done appropriately and that way it's not a big tro entry point or that the trope is more in line with a normal TR where you're saying okay it's truly just saying we're acrewing some additional expense at your end rather than having
to massively reduce the whole thing >> um along the lines of the charter as we um as a board are learning more about what um good uh you accountability looks like when it when it comes to um you know being the
authorizers of a charter school. We had um CASA come in and talk to us about that. Um I was curious, do you audit other districts who have charter schools? >> Okay. And then follow-up question to that would be, do you usually present
the charters audit to the district board as the fiduciary kind of control of the charter? Is that >> I can't say I ever have. I don't I don't think you've ever the charter works. >> Yeah.
>> So that' be presented typically just >> and then the charter itself has its accountability too. >> Correct. So the charter should be presenting to us what they're >> to the extent that your your charter agreement requires it.
>> I would say I've not seen an instance where that's been the case where a charter is presented to the board in the public format like this. >> Yeah. and say there's a result audit. You know, there's there's different accountability mechanisms for charters
and their authorizers that are supposed to be met whether it's timelines for audit submission so that their audit can be submitted on time or various attestations or agreements that have to be agreed upon true. >> So, I mean there's multiple spots throughout the the process where that
that should happen. Yeah, >> there's some uh school districts too that do it really really well. Uh District 11 has a great reconciliation process. Uh you might be able to get with them. Um also um the charter school incident uh uh institute really good
reconciliation process and they're making sure that the the basic data that or the basic funding that you're providing or the expenses you're providing the revenues you're providing all tie out on a monthly basis. So you
get to the end and there's almost no choice but in matching. And to Tom's point, what those typically look like is one workbook that shows month by month. This is, you know, coming down to the net amount that hit that left your account, hit their account. This is what
makes up that amount and that's provided monthto month and it just rolls just every month to where you know the the charter can then just record that and and see that and it's just one document. And what like Tom said that it makes it really hard to
>> not agree. >> Yeah. of the year. >> Yeah. I mean, I think we've kind of established that the past few years the district did not do a good job of documenting all of the things it should have and it's one of the things we're working on reconciling as we go forward
here is being documenting everything. Um, another question I have in relation to that is I know I've came up a couple times over the year. Um, again with coding, right? Um, do you normally see where a charter and a district use the
same kind of coding so that when we send over our numbers match their numbers and they send over it matches rather than trying to draw squiggly lines. >> We don't like lines.
uh and uh yes there is there's a regime that CDE has for that exact purpose to where it is recorded on the district side as a specific code going out the chart records it has a specific code coming in to where when you submit that data pipeline they net out
>> and reconcile out um there are uh you know we can I can get into it now but it would be pretty detailed and I don't know if you guys are that interested at this point uh but I mean that's absolutely something that uh CD has guidance um even in a chart of accounts
document they have an appendix describing that process. >> Um but there's absolutely trainings out there um for that. But yes, I mean the district and the charter should use that regime. Um, Chris, you mentioned the um the potential future interaction or engagement with a uh with a finance
committee and I'm curious about um if you could speak to that a little bit more specifically about like cuz we're as that something we're considering like how have you seen them best utilized like you mentioned these checkpoints and them reviewing like the monthly reconciliations as the port reports come
in but is there any other anything else you would expand on that for us on? >> Yeah, I was I was uh I had a conversation with Laura today and one of the things that I think is is important is there's a as as the board you guys are operating on a trust but
verify kind of a mentality of accountability. When it's boring and there's things aren't going well, there's a lot more trust, a lot less verify um needed. when there's things are not boring and things are exciting um there's a lot more verify a lot less trust that needs to be there. Uh so
that's where you know as much as you know the board is willing uh to request accountability or to um be asked into the situation and and it's not so much I mean accountability yes but learning and saying hey finance team why don't can you teach me about this show me your
process show me how this works show me how this is being done u you can pretty quickly find out is it being done correctly or not and you know is it being done well and timely Um like I said things like bank reconciliations or grant reconciliations those are being
done uh regularly uh you know monthly would be ideal but if they're being done regularly it's going to have good results for the audit and you know if you're having them show that yes or getting verification from CD that yes beginning balances agree on uh the on
their current books to the prior audited financial statements. That's huge. Mhm. >> So in the next year or two, it's probably much more a verify more trust less situation. Uh because you really want to obtain that assurance that it is being
done and that it's being, you know, and as it gets cleaner and cleaner and cleaner over time. Then it can scale back to that more normal level of accountability where it's, you know, looking at a bank reconciliation here or there or asking questions at a finance committee meeting, etc. But it's not as
in-depth. Ultimately, you don't want to um smother the the finance team with just, you know, constantly breathing down their necks. But, you know, at the same time, when it's, you know, situations like this, it's more appropriate to be on more on that side
of the the line than than not. >> Thank you. >> I would I mentioned this to Laura, too. I may have mentioned this tonight already, but uh meeting with your uh uh the next auditors and saying, "Hey, what does a good audit process look like for you guys?" and what can we be doing to
hold our finance team accountable for that and then hold them accountable for that. I would help significantly and I would do that sooner rather than later as in like you know you guys get a new auditor selected and then I would meet with them pretty much immediately and say hey I know that audit's not until
the fall and we've engaged you in June but we need to know what you need from our team to ensure that we can issue by the end of October and just start off with that relationship >> and there are C and D level auditors out
there too um so talk to CD de if you identify somebody and get their take on whom you were considering >> that that is a good point there's you know not all auditors do the same level of work same level of deep diving it
would be a shame to uh engage with a you know a firm that isn't good at audit you know that's more to just sign off on reports >> in our discussion with your team You mentioned finance committee like board
level you know two or three members of the board having a finance committee but also we talked about an audit or oversight advisory there's so many names um that involves staff and community
members. Could you explain more of that? >> Sure. Yeah. I thought that was a a really good idea that you brought up of having a an advisory committee, not a committee that's really making any decisions or that is, you know, ultimately responsible for any of the
the finances as a whole, but saying, "Hey, we're going to have something from the board." And then a a group of stakeholders from the community, whether it be staff, whether it be uh interested community members or um you know, other individuals that are, you know, that can be brought in to conversations on things
or have ideas floated around. You know, one such would be like, "Hey, we're thinking about changing accounting systems mid year. It's not a good idea." And then you have, but you know, but that would be where like you mentioned the sale of a building or, you know, purchase of an asset. Well, that would be a good spot
to say, "Hey, this is what we're thinking and how, you know, how does the group feel about it?" And be able to advise typically like a finance committee at that point say, "Hey, we've looked at this, debated this, and this is what we think the options are, the best options are." that can be then tossed around with the the management
team and the finance committee and the board as a whole. Yeah, I think it's a good way to involve multiple members of the stakeholder community. Um Chris, you commented that partially because of the disclaimer audit and the cleanup and all of this that next year
we're probably going to have some findings likely have some findings as well. Um um would you when you when you've seen an audit two years in a row of audits that are
pretty messy? >> Yeah. >> Um what's a what's a reasonable time frame to expect us to move back into the boring audit category? >> Yeah, I would a couple years at least.
Um, it would be when you think about it, we're in May currently, which means your your end is over next month. So, if something's like bank reconciliations, if bank reconciliations haven't been have not been done timely, are not cut up, well, that's a finding that's going
to stick. Um, if certain things like grants have been reconciled timely, that's a finding that's going to stick. Um, it's also important to recognize that not all auditors approach findings the same way. Um, some are much more strict in their findings. Um, i.e. if
there's a material adjustment period, it's a finding. Um, or there's they might be a lot more strict on their findings as to what they would call a finding. Um, we typically operate in the more u lenient side on findings
typically. Um, I would say over the last couple years once an audit starts to go sideways, we typically start to really uh clamp down on those and say, "Okay, no, we're moving to anything that is what we would consider reportable is going to be reportable." Um, but for
example, um, large firms, large national firms, they are typically fairly ruthless in findings. um if you have anything that is could even remotely be considered a deficiency that's significantly material, they're going to hit you pretty hard with it. Um and
we've seen that a lot. And then there's other firms that you could essentially have a number of material entries and there's just no findings at all. So it's there is a wide variety in audits that I've worked with where it has been rough and then gotten
better. Uh, typically it's about I would shoot for maybe cleaning up half a year. So if you had 16 audit findings in one year, maybe trying to get it down to less than 10 the next year and then trying to have that again the next year um would be a good goal. Um gosh, it also depends on how aggressive uh the
management team is. There are some that, you know, I had a I had a charter school that we worked with where they had one finding that I thought was pretty benign, pretty, you know, it was it needed to be reported, but it was, you know, not a huge deal, but they this was years ago, and they still talk to me about it to that they're not in any
territory having that. So, I mean, it's it's it's dependent on the client side and the auditor side. guess out of morbid curiosity when question is >> um no when when given that you had you
know conducted last year's or the 24 audit and we had I think 16 or 18 >> 16 findings >> findings. Yeah. Um at that point, did it surprise you knowing that not only had
the same people been in kind in position during that time and they implemented this, you know, software change halfway through the year that we had issues this year? >> Yes and no. I mean, we talked I remember
having a conversation with you last year um about the number of findings and that hey, we're saying like, you know, a dozen entries is kind of a big deal. That's probably what we say. That's that's a lot. >> But I think last year he said like 45 entries and that was like >> that's a lot of entries we're making.
>> This year we're 95. That's double. I mean, so I would say would I did I expect that? No. I I expected it to be ending felt. That 45 entries was to get to a clean opinion. Meaning all those discrepancies we found, we we made the district go
back and figure it out and and so we could issue a clean opinion. This was 95 entries to get to a disclaimed opinion, which means that we're not providing assurance over it, but that's the number of entries it took just to get there. Um so yeah, I mean it was definitely worse than what we had anticipated. Um uh I
mean we we communicated it was a little earlier than this time last year. Um all of the findings there was a plan that we had in place to ensure that it was going to be corrected. Um you know I had met with David when he was hired. Um we went over a lot of them um in the process. Um
I know the district has engaged with multiple consultants over the time. Um, you know, so there is, there was definitely a part of me that does wonder because of just the, you know, it wasn't like it was a, oh, we didn't know that this was going to be an issue. It was,
hey, we've very clearly said these are very big problems that are >> that happened that are you're looking at. Um, and then for for the level that we saw even coming in at that point, it was definitely I didn't I expected to be rough. I didn't expect it to be that rough. Does that answer your question?
>> Yeah. I think you know again last year it was slightly earlier than now but we also had a late audit last year. >> That is correct. And so again the amount of runway you have to correct things once they've been you know identified
was shorter. >> And to as been mentioned uh you know previously the implementation of the new software certainly did not make things easier and only very made things much more difficult. It exasperated the situation a lot.
Did you do that? Yeah, I have a lot of notes down >> and we will absolutely, as I mentioned before, when you guys do select new auditors, we're more than happy to meet with them. We're more than happy to provide all the standard paperwork, all the standard work papers and say this is
exactly what we did exactly how we came to our members. Um so that way it will minimize hopefully minimize as much as possible. We uh work having to be replicated together balances. We certainly don't want to put more strain on the district than is necessary in
that transition. >> Do you feel that um sorry I just question that um you know obviously we were we created or the you know the last CFO created a budget to operate through this school year based on
numbers that they had from last year. Were those numbers accurate enough that like uh am I asking this? Well, um are the numbers we made budgets off of
accurate so that when we get to the end of this year, all of that is still going to make sense >> for FY26? >> Yes. >> Oh, good question. We didn't we don't typically evaluate FY26 in that level of detail. Um I could I was just pulling up the financial statements. We could look at >> like the starting balance, I guess. Was
that accurate enough or the ending balance for 25 was accurate enough so that our starting balance for 26 was correct? >> With the way the district bal or budgets, they appropriate all the balance. So the the risk of going over
budget is fairly low because you say, "Hey, you know, we've got x amount million as our uh beginning balance. We're going to go ahead and say we're going to spend all of it." um that doesn't mean that you're actually going to spend all of it, but it's called fully appropriating the reserves to where it gives you much more of a runway
if other items go out of uh you know, if other items go over, you're not exceeding your expenditures for the that's a very common practice. >> Okay. >> So, u I I couldn't speak to the the accuracy of your FY26 budget. >> Sure. I guess just the starting balance,
I guess, was what I was asking. >> Yeah, I I would Yeah, I think the starting balance was would be tough. I I do have a question. So, in your experience um with other school districts who authorize charter schools, do they have the same auditors or do
they have different auditors? And >> yeah, good question. Uh that depends entirely on the district. Um some require the same auditor. Um some don't. Um I think the the bigger piece to that is getting uh I guess why would you
require the same auditor? Well, there's a there's a continuity there of saying, "Hey, you've got one audit that's doing the same that can talk to each other in in our office uh to say this is when are these data getting issued, etc." At the same time, we have districts like uh
like district 11, they don't use uh they use one of the big firms to do their audit, but they have a number of audit firms that do all the charter school audits, but they just have substantial deadlines of saying you've got to get us your audit by X day. And that's just a
that's a part, you know, charter renewal process. If you're not hitting that, that could put your charter in effect. >> So, it's just that's their mechanism for compliance. >> So, I mean, I I don't I don't think there's a one way or the other on that
one. Tom, do you >> No, it varies. Depends on the district. Yeah. Any last questions? I'll ask it out loud instead of doing the >> I've got a lot of internal questions but
for Chris. >> Okay. >> Well, thank you guys for having me. >> Thank you. >> Thank you guys so much. Okay then. Um, all right. So, I guess at this point it moves us to our action item which is
to accept the audit as presented. So, look for motion there and then we can discuss if needed. I make a motion that we accept um the fiscal year 25 audit as presented.
>> Second. >> Do we have any further discussion? >> My only question is I mean what if we don't accept as as it I mean I know the ramifications after but like what would be the
process? of it. >> Why you wanted to not accept uh and then we'd have to figure out how to remedy whatever issues
you had. >> Like if >> you didn't want to accept it because you're like, I don't like this. This feels gross. Then I'd be like, probably not what we can do. um if you didn't want to accept it because you felt that the auditing firm hadn't done their job,
that's a whole different conversation. >> I'm more just wanting to learn the process of like because when you get an audit presented to you, it doesn't necessarily have to mean blanket approval. you know, if there are concerns and what would be a level of
concern that you start we don't approve just and I'm wondering you know if it the R number is still not matching
the CD pipeline and the auditors remember the term it was called um and that's still needing to be worked out. >> Is that a reason districts don't
approve? I don't know. >> Um, well, I guess I would ask, is that a problem you see with the audit or with something the internal teams haven't completed yet? >> Yeah, I don't know.
Because if we think that the audit is correct, but there's still things on the inside, right, internally with the finance department that they need to finish, then again, I don't know that that's a reason to not approve the audit, but certainly a reason to have a conversation with the finance department
to make sure we're finishing that up. >> I don't know. Uh you've you have more experience with audits than I do at this point. >> Boring audits. I I would agree. I don't I mean I think this is if we if we think there is
something not complete or incorrect about the audit that would be a reason to not um um approve the audit. >> I don't even know what you would do at that point. >> Well, I guess that like to that point if that would be the criteria. I wanted to
note that like Chris mentioned specifically the single audit point package with recommendations. that's like an action another action item that actually because of the necessity to present the audit of the financial statements in the balance sheet. So is that I guess that's one thing to note is
that if there's another deliverable that we're expecting do we need to delay the acceptance to receive all of the deliverables in their entirety from the audit? I don't >> um I don't believe that our approving of the audit as presented this evening
constitutes as a completed contract with the audit firm. They have agreed to present us with specific deliverables and even if we agree to the audit this evening, they still need to present those. Uh so so I think it's again something we need to make sure is
delivered upon. Um but I don't know that it would affect our ability to approve to the audit as >> the audit as presided as it is currently. Okay. >> I I would just comment that um uh at least one year the prior board did not
even have a presentation. >> Yes. >> The entire discussion was the superintendent saying it was a clean audit. It's in your packet. Let's let's move on. And I think it's important to hear them, but it's not actually their
their their verbal presentation that we're approving. It's >> this and the submission to the CDE. Right. And correct me if I'm wrong on this one, David. It's already been submitted to CDE. We didn't have to
approve it for CDE to receive it. they have already received it and are communicating with the county to release the funds. So, um, >> so this is just it is a little procedural, a >> little bit of a rubber stamp. Yeah.
Well, not not not in that sense, but just in the sense of like it's completed and and presented >> and we are we are fully aware. >> It is our it is our check, right? And it is it is the board doing its due
diligence in ensuring that the proper work has been done that the numbers that have been presented to us throughout the year up until this point are in alignment with what the auditor is saying. And if it's not, it gives us the opportunity to step in, make
recommendations to finance department or the superintendent on how to remedy that and and like he was saying, maybe ask for additional reports throughout the year to ensure we're holding them accountable. But as far as what goes to the state or what has already happened,
>> our approval tonight doesn't change that. >> Yeah. Again, I think it's more to ensure that the board has accurate information, knows what's happening because we're not in it every day, right? Like I'm not sitting in on finance meetings every day. So I think this is just like a
checkpoint. >> So basically the work really is not tonight's presentation. If we've been doing the work to be informed and and keep informed, >> then that's the real work >> for the more. Yeah.
>> To me, this almost feels like a starting place. Like now we know the areas specifically that we need to be making improvements on, having procedures, having accountability so that we are, you know, sharing that
information with the board as requested. And um to me like that's a that's a place to move forward too. >> Perhaps stabilized. >> Mhm. Exactly. Yeah. >> Good word. >> I just want to make it clear. I wasn't
considering that wanting to learn like >> what are what's our responsibility >> as what are our options? >> Yeah. I think I think what this audit
and last year's audit honestly showed was that there were not enough controls over what was happening. Uh not enough separation of of duties um and you know it wasn't fixed with the prior
administration. So these problems came up again. I think we know that this board is going to operate differently and and ask those questions and and have the accountability there part of our plan going forward, right? Having a
finance committee um you know to help out with that as well. And so I think this just reinforces some of the things we put into our our plan and um gave us some more specifics that the finance team can take back and use as their
deliverables and KPIs to show that they are making that progress. >> Great. Uh Laura, just really quick, um based on the conversations you've had, do are you are we going to discuss more about a finance committee at a future meeting sometime soon?
>> It's on the agenda. >> Is it for 13th? >> 13th. Next Wednesday. >> Okay. Okay. >> I think it's the 13th. I >> think it missed the an original draft, but it is on >> It's on now. Okay.
>> Are we any more discussion? Good. >> Uh, Barkley. >> Hi, >> Davidson. >> I >> Gordon. I >> Green Street. >> I
audit has been approved. >> All right. Um, so as there is nothing else on the agenda for this evening, I will look for a motion to adjourn the special meeting. Guys, I'll make a motion.
I'll second it. Thank you. Call please. Arley. >> I. >> Davidson. >> I. >> Gilgeness. >> I. >> Gordon. I. >> Green Street. >> I adjourned. Do not like to make motions.