The Mexico School District 59 has a clean bill of health in its latest financial audit.
The district once again received an unmodified opinion on its financial statements from auditor Graves and Associates CPAs LLC of Jefferson City. Lindsay Graves, a firm partner, provided a summary of the audit to the board Tuesday. An unmodified opinion is what the district should want to receive, Graves said.
"Nothing came to our attention during the course of the audit that would have rendered any modifications,” she said.
District revenues were up for the 2018-19 fiscal year by 7%. Expenditures were up by 2%.
"That gave you, after transfers to the teacher fund to zero out, it gave you a net income of about $1.8 million as of June 30," she said.
Auditors also looked at district financial health by reviewing how much the district has in reserves and how long the district could expend from those reserves. At the end of the fiscal year, the district had around four months worth of funds in reserves. This matches what the district has built up in previous years, Graves said.
Notes on the district's financial statements then were reviewed. Graves reviewed cash and investments and that district funds are protected by Federal Depository Insurance Corporation and pledged collateral in the district's name.
"The reason for that is if the financial institutions themselves would get into any sort of trouble, that you all would be able to get your deposits back," Graves said.
All district deposits were covered either by FDIC or pledged collateral. The district is following all requirements for its contributions to the Public School Retirement System of Missouri and Public Education Employee Retirement System, Graves said, referencing another audit note.
The district has collected 99% of its current and delinquent taxes as of June 30. This is typical for governmental entities in the mid-Missouri area with collection rates usually between 96% to 99%, Graves said.
"[This makes] sure you're getting all of the tax revenue that are owed to the district," she said.
The district is following state statute by conducting budget comparisons from year to year for the district's general and special revenue funds. Federal compliance also was reviewed by Graves. Auditors looked at the schedule of expenditures for various federal programs, such as school breakfast and lunches, special education, career and technical education and Title I.
"If a non-federal entity such as [the school district] expend more than $750,000 in a year, you're required to have what is called a single audit," Graves said.
Total expenditures of federal awards the district had in 2018-19 was $2.6 million. A single audit involves auditors looking into federal programs used by the district on a rotation. The auditors looked at Title I and child nutrition in checking the district was in compliance with government auditing standards. Auditors found nothing out of the ordinary and that the district was following expenditure reporting rules for its receipt of federal funds.
The audit did have two findings, but they were the same findings as in recent years and are not really a cause for concern. The first is segregation of duties. Due to the district's size, there are fewer employees who are involved with monetary transactions and separating assets from the accounting system.
"So, what we do is we look at what procedures are being done to mitigate risks that errors or omissions could happen because you don't have that many people in a transaction," Graves said.
It's unreasonable for Auditors to expect a district of Mexico's size to hire an additional staff member to increase segregation of duties with regard to finances, she added.
"Nothing came to our attention during the course of the audit, but again it's a risk, so we have to bring that to your attention," she said.
The other finding was oversight in the financial reporting process. Because the district uses Graves and Associates as independent auditors to prepare financial statements and related notes creates a self-review threat, Graves said.
"We're human beings and if we're putting together [financial statements] and we're auditing them, then we could miss something there," she said.
So management of Graves and Associates reviews reports once a draft is made to reduce any significant errors or omissions. "Just like the segregation of duties, we do have to bring that to your attention," she said.
The two findings are put into a corrective action plan, but because they are ongoing findings that likely will occur each year, they do not have applicable completion dates to correct segregation of duties or the self-review threat.
Auditors also looked at state program compliance. The Department of Elementary and Secondary Education requires auditors to review certain statistics, such as transportation and attendance since it drives district funding, Graves said. "We're coming back to you with no findings here, either," she said.
Because of the thorough explanation of the draft audit report, board members had no questions for Graves. The segregation of duties and oversight findings are not significant problems Board President Dustin Pascoe said.
"Exactly. Our firm does about 100 audits in the state of Missouri in a year and I would say probably 95% to 98% of the entities have this finding because we do smaller- to medium-sized, such as your [district]," Graves said.