JOHNSONBURG AREA SCHOOL DISTRICTLocal Government

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2025 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2025 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. The District should continue to obtain involvement from its Board of Education in reviewing monthly financial and expenditure reports. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2024 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2024 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2024 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. The District should continue to obtain involvement from its Board of Education in reviewing monthly financial and expenditure reports. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Segregation of Duties Year ended June 30, 2024 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. The District should continue to obtain involvement from its Board of Education in reviewing monthly financial and expenditure reports. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2024 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2024 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2024 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. The District should continue to obtain involvement from its Board of Education in reviewing monthly financial and expenditure reports. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Segregation of Duties Year ended June 30, 2024 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. The District should continue to obtain involvement from its Board of Education in reviewing monthly financial and expenditure reports. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2023 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to GAAP. Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District’s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2023 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor’s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. These duties could be enhanced by having the individual responsible for the preparation of bank reconciliations compare the reconciled bank balances to the District’s general ledger software on a monthly basis, as currently reconciliations are compared against manual worksheets. In addition, we recommend that the individual responsible for opening mail also maintain a cash receipts log, with someone independent of the cash receipts function reconciling the log to the general ledger and bank statements at certain times during the year. For mitigating controls over the District’s payroll, the District should consider having the Superintendent review a monthly change report showing any changes in pay rates or employees. Finally, for controls over cash disbursements, the Board should account for the sequence of checks for each disbursement register to ensure that all checks are being reviewed. In addition a report should be generated that documents any new vendors added to the payable module. This report could be approved monthly by the Superintendent. District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2022 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District?s financial statements not conforming to GAAP. Auditor?s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District?s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2022 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor?s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. These duties could be enhanced by having the individual responsible for the preparation of bank reconciliations compare the reconciled bank balances to the District?s general ledger software on a monthly basis, as currently reconciliations are compared against manual worksheets. In addition, we recommend that the individual responsible for opening mail also maintain a cash receipts log, with someone independent of the cash receipts function reconciling the log to the general ledger and bank statements at certain times during the year. For mitigating controls over the District?s payroll, the District should consider having the Superintendent review a monthly change report showing any changes in pay rates or employees. Finally, for controls over cash disbursements, the Board should account for the sequence of checks for each disbursement register to ensure that all checks are being reviewed. In addition a report should be generated that documents any new vendors added to the payable module. This report could be approved monthly by the Superintendent. District?s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Year ended June 30, 2021 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to recording taxes receivable and applicable deferred inflows of resources, subsidy receivables and revenue, accrued expenses, accounts payable and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors. Effect: AU-C Section 265, entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District?s financial statements not conforming to GAAP. Auditor?s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. District?s Response: The District has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the District considers such assistance provided by the auditors to be the most cost effective in preparing such information.

Segregation of Duties Year ended June 30, 2021 Condition and Criteria: Although there is a limited number of personnel in the business office, we noted that different functions within the cash receipts, cash disbursements and payroll cycles, along with the preparation of bank reconciliations are not properly segregated. Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining the custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. Auditor?s recommendation: We recognize that the District has attempted to mitigate the lack of segregation of duties by having other individuals perform certain ancillary duties of record-keeping including: opening the mail; signing of checks; distribution of payroll and vendor checks; and bank reconciliations. These duties could be enhanced by having the individual responsible for the preparation of bank reconciliations compare the reconciled bank balances to the District?s general ledger software on a monthly basis, as currently reconciliations are compared against manual worksheets. In addition, we recommend that the individual responsible for opening mail also maintain a cash receipts log, with someone independent of the cash receipts function reconciling the log to the general ledger and bank statements at certain times during the year. For mitigating controls over the District?s payroll, the District should consider having the Superintendent review a monthly change report showing any changes in pay rates or employees. Finally, for controls over cash disbursements, the Board should account for the sequence of checks for each disbursement register to ensure that all checks are being reviewed. In addition a report should be generated that documents any new vendors added to the payable module. This report could be approved monthly by the Superintendent. District?s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above.