Linn R-2 approves FY20 audit with two findings

By Neal A. Johnson
Posted 2/24/21

Superintendent Dena Smith said the audit by Gerding, Korte & Chitwood CPAs of Columbia was favorable and the district was praised for its internal controls.

“We have a lot of systems in place to …

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Linn R-2 approves FY20 audit with two findings

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Superintendent Dena Smith said the audit by Gerding, Korte & Chitwood CPAs of Columbia was favorable and the district was praised for its internal controls.

“We have a lot of systems in place to make it very difficult to commit fraud or embezzlement or anything like that,” she said.

A deposit goes through three and sometimes four people before it gets to the bank. “There’s virtually no way it can go wrong,” Smith said.

Linn is also good at cross-training its employees so that everyone can cover each position. “They always like it when you have more than one person in an office that knows how to do everything because it keeps everything going without a break in services,” said Smith. “Overall, they were very happy with the audit.”

There were two findings, however.

One was related to the fact the auditor had to come in and help the district reconcile statements with the bank because of a change last July in the software used by the school.

“All of a sudden we didn’t balance,” said Smith. “There was no reason for it and since we couldn’t balance in July, we couldn’t balance for the whole year.”

Smith noted the school requested help from the software provider, SUI. On more than one occasion, Smith said some revenues and expenditures were double-posting. These entries could not be erased but could be changed manually, which was done by school staff.

Later, when the double-postings were deleted by SUI, it negated the manual changes.

At the end of the audit, however, everything was reconciled correctly going into the 2021 fiscal year.

The second finding relates to bond refinancing.

When the district refinanced its bond issues last year, Smith said the total was reduced by $720,217, which resulted in an economic gain of $601,862.

“It’s nice to see the savings by refinancing the bonds,” said Smith.

Smith noted that when this took place, though the district didn’t spend any money, the budget should have reflected an expenditure of $7,298,490 in refinancing the bonds.

“I could have amended the budget a hundred times and I still wouldn’t have done that because I didn’t know I was supposed to,” Smith said. “To me, it wasn’t an actual expense.”

“Is having two findings typical?” board member Dr. Shawn Strong asked. “I’m not used to having findings so I’m curious if that is good or bad.”

“All that means is that we have to tell them we’re aware of it, and we’re not going to do it again,” said Smith. “Both of those were due to unique situations.”

Dr. Strong also asked if the presentation of the audit findings by the auditor is in the school’s contract.

“It is not in our contract,” Smith replied, noting the previous superintendent said previous boards have not required it. “If that’s something we want, we can arrange that but it would be an extra charge.”

Dr. Strong said he would be in favor of a live presentation by the auditor in the future, even if it’s virtual.

Board member Dennis Gravedoni said that provision was removed because it costs thousands of dollars to have the auditor come to the school to make a presentation.

Board President Sam Niederhelm agreed, saying he believed the cost was around $15,000.

“It shouldn’t be that much,” said Dr. Strong. “We need to look for a different auditor if that’s the case when the time comes to renew. When you negotiate that, I would recommend negotiating for that in the contract.”

Dr. Strong also asked about variations between the adopted budget and the final budget, specifically, executive administration, which was $37,852 over the initial budgeted figure of $148,596, the final budgeted amount of $274,709, and the actual expenditure of $312,561. Smith could not address specifically why there was a variance but said she would research the issue and have an answer at the board’s next meeting.

Smith said the budget was adopted in June before she started working at the school, and therefore could not speak to how it was created, but noted she began working on amendments in July, with the board approving changes in November.

All told, Linn R-2 collected revenues of $7,089,477, the bulk of which was $3,808,581 from local taxes, with $499,558 in county tees, $2,251,488 from state funds, and $529,850 from federal sources. Total expenditures were $14,197,171, including the retirement of bonds as previously mentioned.

Debt service for the end of 2020 totaled $1,592,709 and unrestricted fund balances of $2,485,474 gave the district a net position of $4,078,183 as of June 30, 2020.

Smith said the unrestricted balance gives Linn R-2 reserves of about 39% even with challenges related to COVID-19.