Valley View Community Unit School District No. 365-U

Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct accrued payroll, leased capital assets, buildings, land improvements and equipment categories of capital assets, and grant receivables that were improperly recorded in prior years. Criteria: A good system of internal controls would provide for accurate recording and reporting of accrued payroll, leases, capital assets, and grant receivables on a regular basis in order to provide for accurate financial reporting. Cause: Year-end entries related to accrued payroll, leases, capital assets, and grant receivables were required in order to accurately present the District’s financial statements. Effect: A material adjustment to the District’s beginning fund balance was required to properly state accrued payroll, leases, capital assets, and grant receivables. Recommendation: We recommend the District implement effective internal controls in order to provide an accurate assessment of reporting requirements. This implementation of improved controls would result in the appropriate recognition for financial reporting requirements. Corrective Action Plan: The District and Assistant Superintendent of Administrative Services will implement internal controls to properly record accrued payroll, leases, capital assets, and grant receivables on a timely basis prior to audit fieldwork.

Condition: During audit fieldwork, our testing resulted in significant audit adjustments in order to present materially accurate financial statements. Criteria: A good system of internal controls would provide for accurate representations of adjusted account balances for all District accounts prior to audit fieldwork. Cause: Year-end entries related to various accruals and other items were required in order to accurately present the District’s financial statements. Effect: The District’s financial statements were not fully adjusted prior to audit fieldwork. Recommendation: A vital process of effective internal controls is the review and subsequent adjustment of general ledger balances. This review and adjustment will aid in the appropriate budgeting and management of the District’s financial activities and resources. Corrective Action Plan: The Assistant Superintendent of Administrative Services, along with staff, will review year-end adjustments as part of the audit preparation process and work to reduce the number of entries proposed by the auditors and prepare fully adjusted financial statements prior to audit fieldwork.