Notice of Audit of the Fiscal Affairs of Big Stone City School District 25-1, May 2022
Notice of Audit of the Fiscal Affairs of Big Stone City School District 25-1, May 2022
Notice is hereby given that the records and books of account of Big Stone City School District 25-1 of Grant County, South Dakota, have been audited by Eide Bailly LLP for the two fiscal years ended June 30, 2021, and that a detailed report thereon is filed with the governing board, the Business Manager, and the Department of Legislative Audit, 427 South Chapelle, Pierre, South Dakota, for public inspection.
The following findings and recommendations referred to in the report are hereby published in compliance with the provisions of SDCL 4-11-12:
Current Audit Findings and
Recommendations
2021-001 Preparation of Financial Statements and Footnotes and
Significant Journal Entries,
Including GASB 68 Calculations
Criteria: The School District’s internal control structure should be designed to provide for the preparation of the financial statements and footnotes, which includes having an adequate system for recording and processing entries material to the financial statements being audited in accordance with generally accepted accounting principles.
Condition: Big Stone City School District 25-1 requested the external auditors to assist in the preparation of the financial statements and related notes for the two years ended June 30, 2021. As part of the financial statement preparation process, at times, we propose material audit adjustments that are not identified as a result of the School District’s existing internal controls and, therefore, could result in a misstatement of the School District’s financial statements. We were also requested to assist in calculations related to GASB 68.
Cause: The limited size of the School District’s staff and resources cause the inability to prepare the financial statements and footnotes and could cause the need for auditors to, at times, propose material journal entries.
Effect: This condition may affect the School District’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements.
Recommendation: This circumstance is not unusual in an organization of this size. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Also, a thorough review of the transactions in each fund should take place prior to the beginning of the audit, to ensure generally accepted accounting principles have been followed for each fund type, especially for transaction types infrequent in occurrence.
Views of Responsible Officials: Management agrees with this finding.
2021-002 Lack of Segregation of
Duties
Criteria: A good system of internal controls contemplates an adequate segregation of duties so that no one individual handles a transaction from its inception to its completion.
Condition: Big Stone City School District 25-1 has a limited number of office personnel and, accordingly, does not have adequate internal accounting controls in revenue, expenditures, and payroll functions because of a lack of segregation of duties.
Cause: The School District has insufficient number of staff to adequately separate duties.
Effect: This condition increases the risk that fraud or errors might occur in the financial reporting process and not be detected and corrected on a timely basis.
Recommendation: Although it is recognized that the number of office staff may not be sufficient to permit an adequate segregation of duties in all respects, it is important that management and those charged with governance be aware of this condition. We recommend that the School Board exercise adequate oversight of the accounting function.
Views of Responsible Officials: Management agrees with this finding.
May 11 May 18
Category:
Grant County Review
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