Speaker 1: Hello, my name is PJ Capozzi, I am Superintendent of Schools for Meridian 223 and I want to go over our fiscal year 21 audit findings and areas for improvement. Each year the district by-law has to have an audit done by an independent third party. We have for a long time contracted with Benning Financial to come down and do this work for us. And while the audit is a public document, it's easy to access and somewhat easy to read if you are familiar with basic school finance and or just general financial principles. What I intend to do with this presentation and every year when I do this presentation is to focus on the elements that we are struggling in as opposed to just highlighting everything that's in there. That said, and I'll hit this a couple times, our financial rating improved significantly this year, again demonstrating the improved financial health of the district and we have healthy fund balances. And each year, and if you guys are familiar, we really struggled with the audit process when I first arrived in the district and for a handful of years. And so each year the audit continues to trend positively as we continue to clean up some of the issues that plagued the district in the past. As I go through, there's levels of comments. One is just a comment, which is just basically the auditors note it. The next is a finding, which is a little bit more serious. And material weakness is something that obviously is a little bit higher level of weakness. And we did have one material weakness this year. That is over our internal control and financial reporting. What this means is that occasionally with reporting, the auditors are forced to, when they're in our district, to help us and provide suggestions that certain things need to be coded different ways. So what this means is that all of the money is getting spent from the appropriate bucket, but within each bucket there's additional sub-buckets. And occasionally we're taking the money out of the wrong sub-bucket. The auditors help clean us up while they're here. The issue is that they shouldn't have to help clean us up. Another issue was reconciliation of bank statements and interest. So this means that when we have investments like our CDs, sometimes when the interest first posts, we're not posting it in real time to our ledger. And so obviously at the end of the year this gets reconciled, but it's a thing that we need to improve. Two other things, one that I listed, one that I don't, is activity accounts. There's a process that they would like us to follow that we were following at the junior high that the auditors would not like us to adopt that process at the high school. They also assured us that almost every district has activity account findings. And the second thing is tort. Tort has gone from 12 line items to 70 line items, so with that expansion there were some errors, as there's now new areas where we can place things. We had three findings in regards to grant expenditure reports. So each quarter we have to turn in everything that we've spent on a federal grant and show how we're progressing, not only in how we're spending the money, but how we're progressing and trying to achieve what we said we would with the grant. With ESSER money flowing in and some of the deadlines pushed back as a result of the pandemic, we just simply made an error and didn't turn in our title grant expenditure reports on time. They're due in mid-October. We did not turn them in until November, literally when we got a nasty gram saying we did not turn them in. So that was just a mistake on our part. It's not common that we've made this mistake over the decade that I've been here, and it's not something that we really need to change process or procedure to ensure it doesn't happen again, with the exception of I now have reminders on my calendar and on the bookkeeper's calendar. Treasurer's bond. So any time our treasurer has to have a bond, which essentially is insurance, in a way over a percentage of whatever our cash on hand is in our bank account. And for a handful of days, we had a couple thousand dollars more than what our treasurer's bond was for. That cues an automatic finding in audits. So while this is, again, not a massive deal and easily rectified and already been rectified, it is an automatic kind of cliff that once you get over, you get dinged for not being in compliance. Just another item of note is that this year we were subject to single audit, which means that we have a little bit more intense scrutiny over our grants. This is a result of receiving over $750,000 in federal money, which we don't typically, but as a result of ESSER, we certainly did. What this is, it's just an additional cost, additional time, additional work on behalf of the auditor. Our findings were positive in terms of what we found in the single audit. And lastly, our overall feedback. The auditor has been very direct with us. And as you guys remember, we were in a really messy place a handful of years ago. So they were borderline effusive in praise and how far we've come, but also very direct in saying that we still have a handful of things that we need to clean up to get better. But each year it gets a little bit better and a little bit easier for them, which they appreciate and then that obviously indicates that our changes in processes and procedures are working. And again, just most importantly, the overall point of the audit is to tell us where we're standing financially and we're in a really healthy position. In our financial rating, it was a 3.9 out of a 4.0. The one area where we do not receive full credit is our bond level, which again, I don't know that we ever will because as soon as we get to a place we might get to a 4.0, then that's when health, life, safety comes up again and we bond again. So just given where we're at, I'm not sure that that's possible. But other than that, we are in a really sound financial position. Thank you for taking the time to listen to this. Hopefully it was informative. If you have any questions, you know how to get ahold of me.