[read complete report - pdf]

Audit Objective

Determine whether the District accurately reported fund balance and other related accounts, and whether fund balance was within the statutory limit.

Key Findings

• Unrestricted fund balance was not reported accurately because encumbrances, accrued liabilities and accounts payable were overstated.
• Recalculated unrestricted fund balance ranged between 4.8 and 8.3 percent of the ensuing years’ appropriations, exceeding the 4 percent statutory limit.
• The unemployment insurance reserve was overfunded and accumulated enough funds to finance 46 years of related appropriations.

We referred our report to OSC’s Division of Investigations.

Key Recommendations

• Use surplus funds to fund one-time expenditures and needed reserves or to reduce District property taxes.
• Correct accounting records for misclassifications, and accurately report unrestricted fund balance.
• Adopt a written reserve fund plan and policy that includes how the reserves will be funded, the optimal funding levels for each reserve and the conditions under which reserves will be used to finance related costs.

District officials generally agreed with our recommendations and have initiated, or indicated they planned to initiate, corrective action.