At a Nov. 24 school board meeting, Sarah Roberts—an audit partner at Weaver, an assurance, tax and advisory firm—presented audit findings to the board. The audit identified two material weaknesses, or deficiencies in internal control: The issuance costs for the Series 2019 Refunding Bonds were overpaid by $28,404; and there were incomplete year-end accruals and closing account adjustments in special revenue funds.
Although these errors were corrected, the audit findings recommended additional finance department staffing and training. Roberts said she recognized that because the chief financial officer position was vacant from November 2019 to April 2020, when Kris Lynn took the position, it was understandable that budget issues would occur.
“We were not surprised, to be frank with you. The vacancy in such a key position naturally results in a level of oversight that is probably not sufficient,” she said.
The audit also identified MISD’s misallocation of CTE funds as a significant deficiency, which Roberts said is less severe than a material weakness but important enough to merit attention. In June, Lynn announced to the board that the district spent $1 million less in FY 2019-20 on its career and technical education department than was required by state law.
“There should have been a flag raised that this could have been a problem, but that flag was never raised. And if it was raised, the response was not adequate,” Roberts said.
However, Roberts added that the concern about the decrease in CTE funds was brought to her attention early and that she appreciated the transparency.
The Texas Education Agency will ultimately determine the compliance implications of these findings, she said.
Although MISD received an A for its FY 2018-19 annual financial management report—which is based on student, staff, budget and financial data—because of these findings, Lynn said, a C is the maximum rating the district's FY 2020-21 budget can receive.
“With material weakness being identified in this audit, as we stand here next year at this time, our ... rating will be significantly lower,” he said.
Board members asked Lynn how the district will ensure this does not happen again. Lynn responded that the district has already submitted a corrective action plan to auditors. The FY 2020-21 budget has the correct amount allotted for special programs—in some cases, he said, the district allotted more than required—and expenses will be monitored quarterly.
“We are increasing the level of staffing training for the finance staff ... so that we don’t wind up in this situation at the end of the year,” Lynn said. He further recommended a degreed accountant be added to the department.
“I believe the issues that were identified in the [FY 2019-20] audit at this point ... have already been corrected for [FY 2020-21],” he continued. “I want the community to understand this was a difficult situation walking into with a position being vacant for so long, but ... this board and this community has my full power behind [them] to make sure these issues don’t happen again.”