NCSD board accepts 2017-2018 audit

An audit conducted by certified public accounting firm Hunt & Associates, PC is reporting mostly positive results for the Newton Community School District’s financial records for fiscal year 2017-18.

The Newton Community School District Board of Education voted unanimously to accept the audit report during its meeting Monday night.

A NCSD news release stated the district’s revenues increased 1.6 percent from the prior year and totaled nearly $40.65 million for the year ending June 30, 2018, while district operations expenses decreased 1.6 percent from the prior year, totaling $39.02 million.

Mike Stanley of Hunt & Associates, PC, approached the school board with a detailed comprehensive annual financial report (CAFR), which he said differs considerably from the reports conducted in previous years.

Since only about 4 percent of local governments across the United States use CAFR, Stanley said the NCSD’s implementation of the report makes it unique when it comes to financial recording.

The CAFR — a compilation of government financial statements consisting of fiscal reports of a state, city or other governing entity — has been prepared by and meets the reporting standards of the Association of School Business Officials International and Government Finance Officers Association of the United States and Canada.

Addressing key high and low points in the CAFR, Stanley pointed out, although the district “overall is doing very, very well,” there was a blip in the general fund, which accounts for all sources used to finance operations and maintenance within the district except money required by state regulators to be segregated into other funds.

According to the report, the unassigned fund balance for the general fund saw a deficit of $81,570 or -0.25 percent of general fund expenditures, as of June 30, 2018.

“Two years ago, the balance was $1.2 million, so it’s clearly a downward trend in the general fund, and that is something that is going to have to be addressed going forward,” Stanley told the board.

A statement of governmental funds also reported a loss of $411,113 in the general fund, but Stanley indicated a positive trend even though the district is “seeing a fairly large deficit” in that particular area. Last year, he said, the recorded loss was about $710,000, and two years ago the district had a deficit of $1.2 million in the general fund balance for governmental funds.

“So, clearly, you as (a board) have already addressed at least part of the problem in the general fund because you’re already lowering the losses,” Stanley said. “I’m really glad to see that as an auditor.”

Although Stanley said the nutrition fund at the NCSD is “doing very well,” he noted it did record a loss of $41,502. However, the net position at the end of the year for nutrition was a positive $218,289. Still, there is concern over the size of the loss, even if it is an improvement of last year’s approximately $59,000 deficit.

Stanley highlighted the district’s governmental activities capital assets’ end of year balance of $52.2 million, which is more than 50 percent increase from its balance of $33.4 million at the beginning of the year. Combined with the number of total capital assets not being depreciated sitting at $21. 8 million, a length of which accounting for the newly constructed Berg Middle School, Stanley said it shows him, as an auditor, “the district is looking toward the future.”

“You’re maintaining learning facilities as well as keeping equipment up to date, making sure that all the students have a positive learning environment going forward,” he said.

Drawing from the report’s required supplementary information, Stanley pointed out the district’s positive budget expenditures, indicating the NCSD “has done a very good job controlling the expenses” and “did not exceed the budget in an illegal function.”

School board member Donna Cook asked Stanley if he could offer any recommendations or advice to remain in good standing with its budget and fund balances. Stanley stressed the student activity fund is the area that auditors “see the most fraud occurring in” and encouraged better education on how to handle and account for those funds.

Tim Bloom, business services director for NCSD, said the district is working closely with its activities director Ryan Rump. At the beginning of the next fiscal year, the district will be meeting with sponsors and “review policies and procedures with them so that they know the proper steps on requesting, purchasing and doing the check requests and getting reimbursements and how that happens.”

“As a previous former auditor, I review processes and internal controls all day, so every time I see something out of whack I immediately call into question,” Bloom said.

According to the NCSD news release, a copy of the audit report is available for review in the district secretary’s office. It is also accessible in the office of the Auditor of State and on its website at auditor.iowa.gov/audit-reports.

Contact Christopher Braunschweig at 641-792-3121 ext. 6560 or cbraunschweig@newtondailynews.com