While Archuleta School District (ASD) has improved internal controls over financial reporting since 2023, room for improvement remains a “significant deficiency” for the district, according to a 2024 audit finding presented to the Board of Education on Feb. 11.
“Even though ‘significant deficiency’ still sounds like a terrible word, it is a lot better,” said Jessica Bogner, summarizing her firm’s unmodified opinion of the district’s 2024 financial strengths and weaknesses.
The same firm found ASD’s internal controls to be a “material weakness” in 2023, resulting in the district being disqualified from a “low-risk” auditee designation.
As of June 30, 2024, the latest audit recognized ASD’s progress but noted the district has yet to implement a “complete system of internal controls over year-end reconciliation procedures.”
According to the audit document, those controls help prevent, detect and correct financial misstatements.
“This is a repeat finding of 2023,” Bogner explained, “meaning that it is very similar in nature. But we did go from being a material weakness to a significant deficiency, so things were improving.”
The auditing team attributed the 2024 finding primarily to ASD’s accounting “system conversion” that took place in fiscal year 2024, which “caused financial reporting difficulties.”
“We still had to make some material audit adjustments,” to journal entries, Bogner said, “but [the adjustments] were because of the change in the system — it reported differently than the other system.”
Bogner also pointed to personnel changes within the district, saying, “Anytime you have turnover or change systems we typically always see a finding, just because you’re not where you were. And it takes a while to get back to knowing how the system works.”
ASD Finance Director Eric Burt was promoted to his current position in July 2024 after almost three years as assistant director under Michael Hodgson, who retired at the end of the 2024 school year.
During the Feb. 11 meeting, Burt explained that discrepancies unearthed in the 2023 finding have since been “resolved, and we have balanced to the penny every month since January of 2024.”
With the improved finding, ASD can again qualify as a low-risk auditee, according to Bogner, providing the 2025 audit does not find any material weaknesses.
“You can have significant deficiencies and still qualify as low-risk,” Bogner said. “You cannot have material weaknesses.”
A low-risk designation means that 20 percent of a district’s federal award spending is scrutinized during the annual audit. As a high-risk auditee, 40 percent of ASD’s federal spending is subject to testing.
In his corrective action plan, Burt writes that ASD will “continue to expand its reconciliation processes to include all balance sheet accounts … on a monthly basis effective immediately.”
ASD Superintendent Rick Holt applauded that approach during the meeting, adding, “We’re just going to add that as regular practice. I think the idea of only looking at that annually is problematic. So, thanks to Eric for increasing the frequency by which we’re checking things.”
Bogner likewise praised the ASD financial team for its cooperation and efficiency.
“If we had any difficulties encountered while performing the audit, we would have to disclose that to you,” she said. “We had no difficulties. Everybody here is really easy to work with and gets us all the information that we request very timely.”
Thanking the auditing team, Burt added, “It’s been a very intense learning experience.”
2024 financial overview
Throughout its 83 pages, the 2024 audit offers an overview of ASD’s financial condition.
“We can’t look at 100 percent of the items that flow through the district,” Bogner told the school board. “We do what’s called a test basis. Based on that, we are able to say that we have gained enough information to provide you with that unmodified opinion.”
In its summary, the audit document offers the following insights into ASD’s financial operations, as of June 30, 2024:
• The general fund experienced a $230,752 surplus in fiscal year 2024, recording a $9.82 million fund balance.
“This amount is 47.5% of the District’s total General Fund expenditures and transfers” for the fiscal year, and represents a decrease of 1.9 percent from 2023, it states.
• When considering all governmental funds, but excluding fiduciary funds, ASD recorded a $10.67 million fund balance — an increase of $200,578 from the previous year.
• ASD’s long-term debt was $418,875 — about $490,000 less than long-term debt in June 2023.
• ASD’s total combined net position was $3,567,675 — a reduction of $108,135 from 2023.
“So, pretty much a break-even,” Bogner said.
• During fiscal year 2024, the district spent $3.36 million in 11 federal grants and awards.
“This spending amount includes Food Service and Secure Rural School spending,” according to the audit document.
• Total current assets in the district amounted to $13.94 million, with noncurrent assets totaling $17.93 million.
• The district had total current liabilities of $2.79 million.
• Total expenses for ASD amounted to $24.22 million — with $19 million in property taxes and other government funds helping to pay them.
“That shows that the district cannot operate without property taxes and state [funds],” Bogner said. “This is a really good statement for the public to see, that we really do need that funding to operate.”
• In reviewing the district’s internal controls over federal funds from three COVID-19-related Elementary and Secondary School Emergency Relief grants, the audit team did not identify any material weaknesses or significant deficiencies.
garrett@pagosasun.com
