OTTO-ELDRED 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 receivables, payables and accruals and converting to the full accrual method for GASB 34 purposes. In additiona, the adjustments included adjusting interfund balances. Lastly, the financial statements were drafted by the auditor and accepted by the District. Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters in an Audit, issued by the American Institute of Certified Public Accounts (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 assistance, the potential exists of the District's financial statement 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 propsed adjusting journal entries and footnore 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 judgements based on these financial statements.

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 receivables, payables and accruals and converting to the full accrual method for GASB 34 purposes. In addition, the adjustments included adjusting interfund balances. Lastly, the financial statements were drafted by the auditor and accepted by the District. Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters in an Audit, issued by the American Institute of Certified Public Accounts (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 assistance, the potential exists of the District's financial statement 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 propsed adjusting journal entries and footnore 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 judgements based on these financial statements.

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 receivables, payables and accruals and converting to the full accrual method for GASB 34 purposes. In addition, the adjustments included adjusting interfund balances. Lastly, the financial statements were drafted by the auditor and accepted by the District. Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters 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 assistance, the potential exists of the District’s financial statement 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.

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 receivables, payables and accruals and converting to the full accrual method for GASB 34 purposes. In addition, the adjustments included adjusting interfund balances. Lastly, the financial statements were drafted by the auditor and accepted by the District. Cause and 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. Auditors? Recommendation: Although auditors may continue to provide such assistance both now and, in the future, under this 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.

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 receivables, payables and accruals and converting to the full accrual method for GASB 34 purposes. In addition, the financial statements were drafted by the auditor and accepted by the District. Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters 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 assistance, the potential exists of the District?s financial statement 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.

Reconciliation of Cash and Interfund Balances Year ended June 30, 2021 Condition and Criteria: During the year ended June 30, 2021, we noticed that bank reconciliations did not reconcile to the District?s general ledger throughout the year. In addition, the District carries interfund receivable and payable balances, however, amounts did not reconcile throughout the year. Differences that existed in cash and interfund balances had to be corrected after year-end. Cause and Effect: The effect of not reconciling bank balances against the District?s general ledger balance and reconciling interfund balances is that reporting errors in posting cash receipts and cash disbursements can occur and not be detected or resolved in a timely manner. Auditors? Recommendation: We recommend that the District prepare bank reconciliations soon after the end of each month. As part of the reconciliation process the District?s general ledger cash balances should be compared against the bank reconciliation, with any differences being immediately investigated. Once complete, the bank reconciliation should be reviewed by someone independent of the preparer. In addition, a worksheet should be developed which reconciles interfund balances on a monthly basis. Any differences in the reconciliation process should be immediately investigated. District?s Response: The District will ensure that bank reconciliations are prepared in a timely manner and verify that balances within the general ledger cash accounts agree to the bank reconciliation, along with ensuring that interfund balances reconcile.