Once again, Great Bend USD 428 has received an “unmodified opinion” on the financial statements for its annual audit, accord to CPA Vickie Dreiling from accounting firm Adams, Brown, Beran & Ball.
“That’s the highest opinion that we can give on financial statements,” Dreiling told the school board on Monday when she reported on the audit for the past fiscal year, which ended June 30, 2019.
However, Dreiling reported three statute violations and the district has taken steps to keep them from occurring again:
• The school district did not make its bond payments 20 days ahead of the due date, which is in violation of K.S.A. 10-130.
The district paid its bond payments on time but the statute requires early payment, Dreiling said.
• The District had a contract in place that did not contain a nondiscrimination provision, which is a violation
of K.S.A. 44-1030.
• The District had negative cash in two agency funds, Ag Metals and STUCO, which is a violation of K.S.A.
The Ag Metals fund at GBHS ended the fiscal year with a cash balance of -$152 and the Student Council fund at GBHS had a balance of -$11, records show.
“All three of these are easy fixes for the district,” Dreiling said.
“Overall, a good audit,” Dreiling said at the conclusion of her presentation. The audit was approved by the school board.
No bonded indebtedness
During the fiscal year, in September of 2018, the district paid off the last of its bonds and is currently debt-free, a position not common for Kansas school districts, she noted.
According to a Great Bend Tribune story on the 2018-2019 budget hearing, the school district spent $967,125 on debt service in 2018-2019 and paid off its bonds. Therefore, it required no tax to be levied the next year for debt service. In 2017-2018, the district spent $1.72 million in this category and the tax rate was 0.717 mills; in 2016-2016 it spent $3.6 million and the tax rate was 5.044 mills.
Internal control material weaknesses
Auditors also conducted single audits for federal program expenditures and found no deficiencies in internal controls that they considered to be material weaknesses, Dreiling said.
Next, the auditors reported on compliance for each major federal program and on internal control of required compliance. Here, one deficiency was reported, Dreiling said. A teacher was paid $54,144 using federal Title VI funds, but that teacher did not meet the “highly qualified” requirement. The examination of the teacher’s credentials was not completed prior to the decision to allocate his or her salary to the federal program.
“The district has done a corrective action plan,” Dreiling said. The plan has been submitted by the district so this won’t happen again.
Summary of balances
The audit provides a summary statement of receipts, expenditures and unencumbered cash. Among other things, Dreiling noted that the district started the 2018-2019 year with $6.27 million in the capital outlay fund and ended with almost $7.4 million.
The total primary government funds showed an ending cash balance of $20,244,194, up $61,000 from the beginning cash balance. “Basically your cash balance has stayed the same but you did add ($1.1 million) to the capital outlay fund,” Dreiling told the board.
The auditors provide recommendations each year for improving operational or administrative efficiencies and for improving internal control.
One issue not changed from the prior year was that a club account in the Great Bend Middle School Activity Fund had no current year transactions. ABB&B recommends that the school complete an annual evaluation of the accounts that do not have activity and make a decision as to if they are necessary to continue holding open. If programs no longer exist it is recommended that the funds remaining in those accounts be transferred to a group that would benefit the entire student population.
For the latest audit, ABB&B also recommended that all cash and checks received should be deposited the same day. Lincoln and Park schools received cash and checks that were not deposited until days later.
The auditors also recommend that internal control should be in place to ensure that all applications for free and reduced meals are processed correctly and awarded at the correct level.