MONITEAU COUNTY R-I SCHOOL DISTRICT

Criteria: Pursuant to SAS 115, Communicating Internal Control Related Matters Identified in an Audit, which affect the District for the year ended June 30, 2021, we are required to report on whether the organization is able to prepare financial statements in accordance with the modified cash basis of accounting. The preparation of financial statements, related footnote disclosures, and Schedule of Expenditures of Federal Awards (SEFA) requires internal controls over preventing, detecting and correcting misstatements of the accounting data, and drafting financial statements, related footnote disclosures and SEFA. This finding was also reported as a finding in the June 30, 2020 report. Condition: The District?s ability to prepare financial statements in accordance with the modified cash basis of accounting is based, in part, on its reliance of the external auditors, who cannot by definition be considered part of the District?s internal controls. Context: The District has historically relied on its independent external auditors to assist in the drafting of the financial statements, all required footnote disclosures, and SEFA in accordance with the modified cash basis of accounting. Effect: With respect to ensuring that there are no misstatements or omissions that would be considered to be significant to the financial statements, related footnote disclosures, and SEFA, the District relies on its external auditors for assistance with the preparation of financial statements, and all required footnote disclosures. Cause of Condition: In evaluating the control environment of the District, we considered the abilities of the District?s accounting staff, and though proficient in recording daily transactions, did not demonstrate abilities we considered necessary to prevent, detect and correct misstatements, or the ability to draft the financial statements, related footnote disclosures and SEFA in accordance with the modified cash basis of accounting. Recommendation: We recommend that the Board of Education be aware of the internal control deficiencies over financial reporting. And, if possible, implement procedures to ensure that the District has the expertise necessary to prevent, detect and correct misstatements and be capable of drafting the financial statements, related footnote disclosures and SEFA in accordance with the modified cash basis of accounting. Views of responsible officials and planned corrective actions: The Board believes it has personnel who possess suitable skill, knowledge, or experience to oversee services the auditor provides in assisting with financial statement presentation which requires a lower level of technical knowledge than the competence required to prepare the financial statements, related footnote disclosures, and SEFA in accordance with the modified cash basis of accounting.

Criteria: Segregation of duties encompasses assigning the responsibility for authorizing transactions, recording transactions, and maintaining custody of assets to different people within the District. The basic premise is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. This finding was also reported as a finding in the June 30, 2020 report. Condition: The District has a lack of segregation of duties. Context: During our consideration of internal control over financial reporting we noted employees who had access to physical assets and the related accounting records, or to all phases of a transaction. Effect: There is an increased risk to the District of loss or errors in recording transactions, safeguarding assets and financial statement reporting. Cause of Condition: There is limited staff available to fully segregate duties. Recommendation: Although the small size of the District?s accounting staff limits the extent of segregation of duties, we believe certain steps could be taken to separate incompatible duties. Views of Responsible Officials and Planned Correction: The Board concurs with the recommendations that Reorganized School District No. 1 of Moniteau County would be best served by segregating fiscal duties as outlined above. At the current time, the additional staff sufficient to implement the recommendation is not practical to move toward a level of activity which may allow us to fully implement the recommendation. The District?s Board of Education will remain involved in the financial affairs of the District to provide oversight and independent review functions.

Criteria: Pursuant to SAS 115, Communicating Internal Control Related Matters Identified in an Audit, which affect the District for the year ended June 30, 2020, we are required to report on whether the organization is able to prepare financial statements in accordance with the modified cash basis of accounting. The preparation of financial statements, related notes, and schedule of federal awards (SEFA) requires internal controls over preventing, detecting and correcting misstatements of the accounting data, and drafting financial statements, related footnote disclosures and SEFA. This finding was also reported as a finding in the June 30, 2019 report. Condition: The District?s ability to prepare financial statements in accordance with the modified cash basis of accounting is based, in part, on its reliance of the external auditors, who cannot by definition be considered part of the District?s internal controls. Context: The District has historically relied on its independent external auditors to assist in the drafting of the financial statements and all required disclosures in accordance with the modified cash basis of accounting. Effect: With respect to ensuring that there are no misstatements or omissions that would be considered to be significant to the financial statements, related notes and SEFA, the District relies on its external auditors for assistance with the preparation of financial statements, and all required footnote disclosures. Cause of Condition: In evaluating the control environment of the District, we considered the abilities of the District?s accounting staff, and though proficient in recording daily transactions, did not demonstrate abilities we considered necessary to prevent, detect and correct misstatements, or the ability to draft the financial statements, related footnote disclosures and SEFA in accordance with the modified cash basis of accounting. Recommendation: We recommend that the Board of Education be aware of the internal control deficiencies over financial reporting. And, if possible, implement procedures to ensure that the District has the expertise necessary to prevent, detect and correct misstatements and be capable of drafting the financial statements, related footnote disclosures and SEFA in accordance with the modified cash basis of accounting. Views of responsible officials and planned corrective actions: The Board believes it has personnel who possess suitable skill, knowledge, or experience to oversee services the auditor provides in assisting with financial statement presentation which requires a lower level of technical knowledge than the competence required to prepare the financial statements, related disclosures and SEFA in accordance with the modified cash basis of accounting.

Criteria: Segregation of duties encompasses assigning the responsibility for authorizing transactions, recording transactions, and maintaining custody of assets to different people within the District. The basic premise is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. This finding was also reported as a finding in the June 30, 2019 report. Condition: The District has a lack of segregation of duties. Context: During our consideration of internal control over financial reporting we noted employees who had access to physical assets and the related accounting records, or to all phases of a transaction. Effect: There is an increased risk to the District of loss or errors in recording transactions, safeguarding assets and financial statement reporting. Cause of Condition: There is limited staff available to fully segregate duties. Recommendation: Although the small size of the District?s accounting staff limits the extent of segregation of duties, we believe certain steps could be taken to separate incompatible duties. Views of Responsible Officials and Planned Correction: The Board concurs with the recommendations that Reorganized School District No. 1 of Moniteau County would be best served by segregating fiscal duties as outlined above. At the current time, the additional staff sufficient to implement the recommendation is not practical to move toward a level of activity which may allow us to fully implement the recommendation. The District?s Board of Education will remain involved in the financial affairs of the District to provide oversight and independent review functions.