Fremont County School District #14

MATERIAL WEAKNESSES FINDING 2024-003 - RESTATEMENT OF BEGINNING FUND BALANCE Program information This finding applies to the District's financia l statements as a whole .. Repeat Finding from Prior Year No Condition The District's beginning General Fund balance was restated by approximately $2,800,000 as of July 1, 2023. The restatement was required due to errors and incomplete accounting in prior years. Specifically, investment accounts had not been adjusted to reflect changes in fair value, outdated balance sheet accounts had not been reconciled or cleared, and significant interfund balances and excess cash transactions remained unresolved for multip le years. These conditions necessitated substantial adjustments during the audit process. Criteria Management is responsible for ensuring that financial statements are prepared in accordance with generally accepted accounting principles. This includes accurate recogn ition and reporting of assets, liabilities, and investments, as well as proper reconciliation of interfund balances and other accounts. Context The District engaged a consultant during the year to assist in correcting accounting records. Through this process, multiple prior year errors were identified, resulting in the need for a restatement to accurately present beginning fund balance. Cause The need for restatement was primarily due to weaknesses in internal controls over financial reporting, including insufficient oversight of investment fair value adjustments, inadequate reconciliation of balance sheet accounts, and delays in clearing outdated interfund and cash transactions. Effect The restatement indicates that prior year financial statements were materially misstated. As a result, users of the financial statements may have relied on inaccurate information regarding the District's financial position. Although current year activity is not affected, the adjustments underscore the need for stronger accounting controls and oversight. Questioned Costs & Sampling Method Not applicable Recommendation We recommend that the District strengthen internal controls over financial reporting by establishing regular procedures to ensure investment accounts are recorded at fair value, balance sheet accounts are reviewed and reconciled on a timely basis, and interfund and cash transactions are properly cleared. Periodic review by management and continued use of external expertise, as needed, will help ensure that financial information is complete, accurate, and prepared in accordance with generally accepted accounting principles. Response and Views of Responsible Officials See corrective action plan.

SIGNIFICANT DEFICIENCY FINDING 2024-004 - CASH MANAGEMENT AND RECONCILIATION OF ACCOUNTS Program information This finding applies to all federal awards. Repeat Finding from Prior Year No Condition The District did not perform timely reconciliations of its cash and investment accounts throughout the year. Reconciliations were delayed, in some cases extending several months after the related reporting period. This lack of timely reconciliation increases the risk of errors or irregularities going undetected and complicates accurate reporting of federal grant expenditures and reimbursements. Criteria Federal grant administration requires effective cash management practices, including timely reconciliation of cash and investment balances, to ensure that federal funds are properly safeguarded, accounted for, and reported in accordance with Uniform Guidance. Context During the audit, it was noted that the District's reconciliations of bank and investment accounts were not consistently completed on a monthly basis. The delays in reconciliation hindered management's abi lity to ensure that cash balances reported for federal programs were accurate and supported by underlying records. Cause The condition primarily resulted from limited staffing resources and weaknesses in internal controls over cash management. Oversight responsibilities were not adequately structured to ensure reconciliations were completed timely and reviewed on a consistent basis. Effect Failure to reconci le cash and investment accounts on a timely basis increases the risk of misstatement of financial information and could result in errors in the reporting of federal expenditures and reimbursement requests. This deficiency impairs management's ability to effectively monitor cash flow and ensure compliance with federal requirements. Questioned Costs & Sampling Method Not applicable Recommendation We recommend that the District strengthen internal controls over cash management by ensuring that all cash and investment accounts are reconci led to the general ledger on a monthly basis and that reconciliations are subject to supervisory review. Enhanced monitoring procedures will help ensure the accuracy of financial reporting and compliance with federal grant requirements. Response and Views of Responsible Officials See corrective actions plan.

SIGNIFICANT DEFICIENCY FINDING 2024-005 - SEGREGATION OF DUTIES Program information This finding applies to all federal awards. Repeat Finding from Prior Year Yes Condition The number of employees performing accounting and bookkeeping duties in the beginning of the year was not sufficient to provide an adequate segregation of duties. Criteria Circumstances permitting, accounting and bookkeeping duties should be assigned to different individuals to promote safeguarding of assets and accuracy of financial information. Context Noted throughout the finding. Cause The District has limited resources that minimize the possibility to segregate the functions within the business office and was in the process of hiring and filling positions to mitigate the associated risks. The positions were filled but during the beginning of the audit period there was a period when th is risk was present. Effect Because of the limited number of individuals involved in the accounting and bookkeeping functions, there is a greater risk that assets will not be properly safeguarded and that errors in financial information will occur and not be detected in a timely manner. This was only applicable to the beginning of the audit period before hires were made. Questioned Costs Not applicable Sampling Method Not applicable Recommendation None at th is time given adequate hires have been made. Response and Views of Responsible Officials See corrective action plan.

FINDING 2023-002 -TIMELY DRAW DOWN GRANT REIMBURSEMENTS Program information This finding applies to all federal awards. Repeat Finding from Prior Year Yes Condition The District continues to exhibit delays in performing drawdowns and reporting for federal grant programs administered through the Wyoming Department of Education. Multiple grants remain undrawn for extended periods of time. Criteria Grant administration is expected to take place on a more frequent periodic basis in order for grant funds to align with when they are spent. All of the grants noted with the condition above are cost reimbursement grants and are not funded until proper reporting and draw down requests are filed. Context Not applicable Cause The District's internal control system regarding the timing of grant reporting and drawdown requests lacks consistency and regularity. The current structure has the responsibility for this task falling solely on the Business Manager. Effect The District is entitled to submit and receive millions of dollars from the Wyoming Department of Education for program expenditures covered by grants, which remain unreimbursed. This negatively affects the free cash flow for operational expenses funded through federal grants. Questioned Costs Not applicable Sampling Method Not applicable Recommendation In addition to designing and implementing a control process for timely grant drawdowns and reporting, management should prioritize the allocation of sufficient resources to support these functions. This entails ensuring the Business Manager receives necessary training and support, and delegating responsibilities among the business office staff. Furthermore, regular monthly reports on drawdown status should be provided to the board and superintendent to enhance transparency and accountability. Response and Views of Responsible Officials See corrective action plan.

FINDING 2023-003 - CASH MANAGEMENT Program information This finding applies to all federal awards. Repeat Finding from Prior Year No Condition The District's management of cash flow related to federal grant programs is lacking effectiveness. Delays in timely drawdowns and reporting have led to several grants remaining undrawn for periods extending across fiscal year ends. Moreover, the frequent interfund borrowings have complicated accounting processes significantly. Criteria Grant administration requires a more frequent and punctual drawdown process to ensure that grant funds match expenditure requirements. Since all mentioned grants operate on a cost reimbursement basis, funds are released only upon the submission of accurate reporting and drawdown requests. Context The District became aware of its non-compliance with the State of Wyoming and had to appeal for forgiveness to safeguard against missing out on over $2 million in ESSER grant funding. Cause The District's inadequate management of cash flow for federal grant programs stems from a combination of limited resources and weak internal controls. Delays in drawdowns and reporting, along with frequent interfund borrowings, have extended the retention of grants across fiscal year ends, further complicated by the district's abnormal financial resources compared to others, enabling this situation to persist. Currently, the Business Manager carries the exclusive burden of these tasks. Effect The District's failure to effectively invest significant sums owed by various grant programs for covered program expenditures results in unreimbursed funds, directly impacting its free cash flow for operational expenses funded by federal grants. Subsequently, the district resorts to borrowing from other funds, causing accounting complications. Questioned Costs Not applicable Sampling Method Not applicable Recommendation To resolve the issue, the District should strengthen internal controls and allocate additional resources to support grant management activities. Improved communication between departments involved in grant management is crucial, as is reducing reliance on interfund borrowings through better cash flow forecasting. Establishing regular monitoring and reporting systems will provide visibility into grant fund status and facilitate smoother accounting processes. Response and Views of Responsible Officials See corrective action plan.

FINDING 2023-004 - SEGREGATION OF DUTIES Program information This finding applies to all federal awards. Repeat Finding from Prior Year Yes Condition The number of employees performing accounting and bookkeeping duties in the beginning of the year was not sufficient to provide an adequate segregation of duties. Criteria Circumstances permitting, accounting and bookkeeping duties should be assigned to different individuals to promote safeguarding of assets and accuracy of financial information. Context Noted throughout the finding. Cause The District has limited resources that minimize the possibility to segregate the functions within the business office and was in the process of hiring and filling positions to mitigate the associated risks. The positions were filled but during the beginning of the audit period there was a period when this risk was present. Effect Because of the limited number of individuals involved in the accounting and bookkeeping functions, there is a greater risk that assets will not be properly safeguarded and that errors in financial information will occur and not be detected in a timely manner. This was only applicable to the beginning of the audit period before hires were made. Questioned Costs Not applicable Sampling Method Not applicable Recommendation None at this time given adequate hires have been made. Response and Views of Responsible Officials See corrective action plan.

MATERIAL WEAKNESSES FINDING 2022-005 ?TIMELY DRAW DOWN GRANT REIMBURSEMENTS Program information This finding applies to all federal awards. Repeat Finding from Prior Year No Condition The District is not timely performing draw downs and reporting on federal grant programs administered through the Wyoming Department of Education. Several grants had not been drawn down in excess of a six month period. Criteria Grant administration is expected to take place on a more frequent periodic basis in order for grants funds to align with when they are spent. All of the grants noted with the condition above are cost reimbursement grants and are not funded until proper reporting and draw down requests are filed. Context Not applicable Cause The District?s internal control system over the timing of grant reporting and draw down requests is not consistent and infrequent. The Business Manager is solely responsible for this duty. This last year several employees have been hired within the business office and they need to be taking on additional duties from the business manager. Effect The District is due in excess of $1,800,000 from the Wyoming Department of Education for program expenditures the District has made related to grants that has not been reimbursed. This effects the free cash flow for operating items funded through federal grants. Questioned Costs Not applicable Sampling Method Not applicable Recommendation Members of management should design and implement a control process to ensure the timeliness of grant draw down and reporting functions. This should be a priority of the business manager and include training of additional business office staff so that the business manager has adequate time to address this vital process for the District frequently and on a normal monthly schedule. We would further encourage a monthly report to be provided to the board and superintendent on the status of drawn downs. Response and Views of Responsible Officials See corrective action plan.

SIGNIFICANT DEFICIENCIES FINDING 2022-006 - SEGREGATION OF DUTIES Program information This finding applies to all federal awards. Repeat Finding from Prior Year Yes Condition The number of employees performing accounting and bookkeeping duties in the beginning of the year was not sufficient to provide an adequate segregation of duties. Criteria Circumstances permitting, accounting and bookkeeping duties should be assigned to different individuals to promote safeguarding of assets and accuracy of financial information. Context Noted throughout the finding. Cause The District has limited resources that minimize the possibility to segregate the functions within the business office and was in the process of hiring and filling positions to mitigate the associated risks. The positions were filled but during the beginning of the audit period there was a period when this risk was present. Effect Because of the limited number of individuals involved in the accounting and bookkeeping functions, there is a greater risk that assets will not be properly safeguarded and that errors in financial information will occur and not be detected in a timely manner. This was only applicable to the beginning of the audit period before hires were made. Questioned Costs Not applicable Sampling Method Not applicable Recommendation None at this time given adequate hires have been made. Response and Views of Responsible Officials See corrective action plan.

The number of employees performing accounting and bookkeeping duties is not sufficient to provide an adequate segregation of duties.

A member of management created new positions and changes to District compensation schedules without prior board approval.

The number of employees performing accounting and bookkeeping duties is not sufficient to provide an adequate segregation of duties.

The number of employees performing accounting and bookkeeping duties is not sufficient to provide an adequate segregation of duties.

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