Nov 23, 2004 (FY2003-04)

[Guest sullinss]

Proceedings of the Audit Committee

District No. 2, Yellowstone County and

High School District No. 2, Yellowstone County

 

November 23, 2004

 

Call to Order

 

Chair Jane McCracken call the Audit Committee to order at 12:03 p.m. on Tuesday, November 23, 2004, in Room 216 of the Lincoln Center. Committee members in attendance were Jane McCracken, Dick Fellows and Conrad Stroebe. Members Dale Getz and Mike Dimich were absent. Also in attendance were Business Manager Thomas Harper, and John Jacobsen and Sarah Collins of Eide Bailly, LLC.

 

Audit Committee Minutes of September 14, 2004

 

Dick Fellows introduced a motion to approve the Audit Committee minutes of the September 14, 2004 meeting. Conrad Stroebe seconded the motion. The motion carried unanimously.

 

Review of Annual Financial Report for Year Ended 2004

 

John Jacobsen stated globally the audit was consistent with last year in terms of the types of reports they issued. They are unqualified opinions in all respects. While there is a finding again that relates to time and effort, it was not considered a material finding. It was a misunderstanding of what it means from a technical standpoint to record time and effort properly. Since we have had a lack of material findings two years in a row, at the end of next year June 30, 2005 we will be considered a low-risk auditee.

 

Dick Fellows asked if another sentence could be added to clarify to the reader in the Summary of Audit Results that we are only one year away from not being a high risk auditee, because it appears that no progress has been made. John is not sure anything can be added since the Summary is supposed to state the facts for this time period. John will check on this item.

 

John noted there is a prior period adjustment related to compensated absences. Notes need to be added to the disclosure in the Statement of Activities to clarify this. The compensated absences at the end of June 30, 2004 were a little over $18M. They did not find any problems during the testing of compensated absences but yet there were some issues in that people were listed more than once for various reasons but the salary was not broken down by their FTE’s. They were listed differently because their FTE’s were segregated in various fashion, but yet the salary was still grossed out. Those compensated absences were double counted for certain people. We were over-accrued in liability, so we are adjusting the net assets with a prior period adjustment. The disclosures are in the footnotes and the schedule that relates to long-term debt. The long-term debt should start the balance July 1, 2003 “as restated” and asterisk it and say it was this before prior period adjustments reduced it to this other amount. The footnotes will say it’s a reduction in liability. The problem occurred the way the data came out in the audit work paper, and it has been corrected. John does not believe the Trustees Report would have to be changed because there is a bridge between the Trustee Statements and what shows up in the Annual Financial Report; but, Thomas can check with Joan Anderson of OPI if a change is required. If a change is required, they might have to run it through as a prior period adjustment on this year’s report.

 

Regarding the MD&A, John suggested we may wish to expand the section under the “Government’s Future” with the Supreme Court’s finding and our viewpoint of that; but, they must be fact based disclosures and not editorial in nature. The current wording may cause the reader to ask more questions. We may wish to expand on the budget amendment and why it was not used.

 

Each page of the financials was reviewed. Questions raised will be clarified.

 

The Notes were reviewed. Under long-term debt, last year’s retirements will be broken out of compensated absences. Discussion was held if it is financially significant that we do not have aggregate stop-loss coverage. We are a defendant in various lawsuits, but they don’t appear to be material.

 

The auditors’ report expresses an unqualified opinion of the basic financial statements. One finding is related to time and effort recording. One individual had a misunderstanding of what was to be recorded as time and effort. They recorded time and effort based on location rather than based on the grant.

 

The Management Letter summarizes the smaller mistakes found that are not at the level of a finding. These involved an expenditure oversight in a federal program, vacation accrual, public notification of a Board meeting, and an extracurricular fund. The Management Letter findings are significantly less than last year.

 

The prior year 2001 corrective action plan as it related to the BiTech Asset Receiving Module is still only partially implemented. We are moving toward implementing web-based modules. As we go through this process we will evaluate this module.

 

Conrad suggested the report to the Board should include a letter of commendation to the Business Office and Deborah Long for implementing changes that resulted in an excellent audit for year ending 2004.

 

The Audit Report will go to the Business Committee on December 13, 2004 for review and to the Board of Trustees for approval on December 20, 2004.

 

Adjournment

 

There being no further business, the meeting was adjourned at 1:31 p.m.

 

 

 

 

Jane McCracken, Chair

 

 

 

 

Sherrill Sullins, Recorder