Newell School DistrictLocal Government

2023-003 FINDING: Preparation of Financial Statements and Schedule of Expenditures of Federal Awards. Federal Program Affected: Elementary and Secondary School Emergency Relief (ESSER) Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: As in prior years, we were requested to draft the audited financial statements, and related footnote disclosures and SEFA as part of our regular audit services. Additionally, we were requested to draft the schedule of expenditures of federal awards. Ultimately, it is management’s responsibility to provide for the preparation of the District’s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do with organizations of the District’s size. Criteria and Effect: It is our responsibility to inform the School Board this deficiency could result in a material misstatement to the financial statements that would have not been prevented or detected by the District’s management. Repeat Finding from Prior Year: Yes, prior year finding 2022-003. Recommendation: As in prior years, we have instructed management to review a draft of the auditor prepared financials in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the District’s financial statements. We are satisfied that the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the School Board to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan. (SEFA)

2023-004 FINDING: Audit Adjustments Federal Program Affected: Elementary and Secondary School Emergency Relief (ESSER) Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: During the course of our engagement, we assisted with adjusting SDRS pension activity and we proposed material audit adjustments. The adjustments included: a. Adjusting property tax receivable and unavailable revenue b. Adjusting capital assets of governmental activities c. Adjusting accounts payable and accrued leave d. Adjusting reoffering premium amortization on refunding bonds e. Adjusting federal revenue and receivable for ESSER expenditures incurred but not yet received. Other entries were proposed as part of the audit but were not recorded due to the overall insignificance on the financial statements. Criteria and Effect: These adjustments were not recorded through the District’s existing internal controls, and therefore, resulted in a material misstatement of the District’s financial statements. As in past audits, these adjustments were made by us as part of our audit process. Repeat Finding from Prior Year: Yes, prior year finding 2022-004. Recommendation: We recommend management adjust all significant accounts at year end. This will provide the District with accurate financial information. Specifically: a. Property tax receivable and related revenues should be monitored and adjusted at least annually b. Capital expenditures should be capitalized and depreciated over the useful life of the asset c. Accounts payable and accrued leave balances should be monitored and recorded on an annual basis d. Amortization on refunding bonds should be recorded over the life of the bond e. Federal revenue and receivables should be recorded at year end to reflect federal expenditures not yet reimbursed. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Program Affected: ESSER Fund Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: As in prior years, we were requested to draft the audited financial statements, and related footnote disclosures as part of our regular audit services. Additionally, we were requested to draft the schedule of expenditures of federal awards. Ultimately, it is management?s responsibility to provide for the preparation of the District?s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do with organizations of the District?s size. Criteria and Effect: It is our responsibility to inform the School Board this deficiency could result in a material misstatement to the financial statements that would have not been prevented or detected by the District?s management. Recommendation: As in prior years, we have instructed management to review a draft of the auditor prepared financials in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the District?s financial statements. We are satisfied that the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the School Board to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Program Affected: ESSER Fund Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: During the course of our engagement, we assisted with adjusting SDRS pension activity and we proposed material audit adjustments. The adjustments included: a. Adjusting property tax receivable and unavailable revenue b. Adjusting capital assets of governmental activities c. Adjusting accounts payable and accrued leave d. Adjusting reoffering premium amortization on refunding bonds e. Adjusting federal revenue and receivable Other entries were proposed as part of the audit but were not recorded due to the overall insignificance on the financial statements. Criteria and Effect: These adjustments were not recorded through the District?s existing internal controls, and therefore, resulted in a material misstatement of the District?s financial statements. As in past audits, these adjustments were made by us as part of our audit process. Recommendation: We recommend management adjust all significant accounts at year end. This will provide the District with accurate financial information. Specifically: a. Property tax receivable and related revenues should be monitored and adjusted at least annually b. Capital expenditures should be capitalized and depreciated over the useful life of the asset c. Accrued leave balances should be monitored and recorded on an annual basis d. Amortization on refunding bonds should be recorded over the life of the bond e. Federal revenue and receivables should be adjusted at year end for accuracy Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.