An annual audit of Amity Regional Schools’ finances turned up no surprises or issues, according to the auditing team from Mahoney Sabol. Michael VanDeventer and Samantha Thomas oversaw the audit and presented reports to the Board of Education at its December meeting.
“We did issue an unmodified clean opinion on your financial statements. Our opinion provides reasonable assurance that your financial statements are free from material misstatement, whether due to error or fraud and that they have ultimately been prepared in accordance with accounting principles generally accepted in the United States of America,” VanDeventer explained.
“We also issue a report on compliance – we do not express an opinion on compliance with laws and regulations or the effectiveness of your internal controls. Over the course of performing our audit procedures, if we identified materials of non-compliance with the law or material weakness in your internal control structure, we would be required to include those in the report and we did not identify any such matters,” he said.
The district was required to undergo an additional state audit, where the auditors issue an opinion on the district’s major programs. “For fiscal year 2017, the district expended about $1.1 million in state financial assistance. Of that, only $90,000 was considered non-exempt and subject to our testing. The major program for the district is the Open Choice and the Inter-District Cooperative Grant. We did issue unmodified clean opinions for compliance with those programs and we did not identify any material weaknesses in your internal controls over compliance,” VanDeventer said.
He showed a comparative balance sheet for the district which, he said, shows a snapshot in time of where the district stands with its overall financial position. “You have an unrestricted net position of about $3.8 million, last year was about $3.7 million and that reflects your net pension and other post-employment liabilities associated with your pension and OPEC plans,” he explained.
He noted an increase in cash of about $2.3 million that reflects unspent bond proceeds of about $1.6 million. “That is restricted for capital improvements. There was also an increase in other liabilities of about $680,000 and that relates to the amounts that were due back to member towns on your favorable budgetary results for the year,” VanDeventer said, adding, “You did have increase in capital assets of about $1.2 million that was offset by depreciation. Major capital projects include HVAC improvements, LED light projects, classroom renovations as well as your tennis court replacement.”
Amity ended the school year with a surplus of almost $2 million.
Board member John Belfonti asked, “With a surplus of about $1.8 million, which represents about 3.7% of our budget, what do you see in other districts that you audit as a typical range for budget surplus?”
“We do perform audits of about 25 local governments and five regional school districts and typically I see that surplus being around 1% to 3%,” VanDeventer said. “You are on the higher end, but it is something that you might want to look at from a trending perspective year over year. You may want to look at it if you are continuously above 3%.”
The audit turned up no changes that were made to the scope of the audit and no issues with respect to the overall timing.
“In terms of significant audit findings, we do look at your accounting policies and practices. During the year, the district was required to implement a new accounting standard on post-employment benefits and that did result in additional disclosures and additional supplemental information if you’re comparing statements to last years. We did review your disclosures and found them to be neutral and clear,” VanDeventer said.
“In terms of difficulties encountered in performing the audit, there were no significant difficulties or any surprises during the course of the audit. There were no uncorrected misstatements. There were no adjustments that were made to the budget to change the surplus for the year. There were no disagreements with management, there was nothing unusual that we are required to inform you of.”
The auditors did have one recommendation regarding construction and progress and the status of capital projects. “Right now those are all being maintained on a budgetary basis. We do need to provide information on a gap basis and the recommendation there is that during the closing process, we need that reconciliation from a budget basis to a gap basis,” he said.
“The last item I had is on cyber-security and this is more for your information for the board. This is an area where we have seen increased risk, so we recommend that you consider looking at for your information technology, specifically related to cyber security. Although we do look at your internal control environment in terms of backups and passwords, it is not as specific as some of the issues with cyber security. One of the things that we recommend is that the district consider having a vulnerability assessment done on their IT systems. That would help identify where there may be some potential risks,” he said.
After the presentation, the board voted in favor of accepting the financial statements from fiscal year 2017.
By Melissa Nicefaro – Woodbridge Town News Correspondent