DeKalb Schools 2018 and 2019 Independent Auditor’s Reports

By Anna Hill, DeKalb Schools Board of Education Elect

The 2018 and 2019 Annual Financial Report and Independent Auditor’s Reports have been issued. I am grateful that the Department of Audits and Accounts and State Auditor Greg Griffin were willing/able to audit two years at once, especially during a worldwide pandemic.

Anna Hill DeKalb Schools Board of Education
Anna Hill
DeKalb Schools
Board of Education Elect

I encourage everyone to keep in mind we have a new Superintendent who was not employed by DCSD for FY 2018, FY 2019, and FY 2020. I have been very impressed and encouraged by Ms. Watson-Harris’s commitment to DCSD and I look forward to getting to know her after I am sworn in on January 5, 2021.

As a CPA, I thought it would be helpful to share some highlights from the 2018 and 2019 audits issued October 5, 2020 and October 16, 2020, respectively.

Please remember this situation did not get this way overnight and cannot be fixed overnight so I encourage you to exercise patience as DCSD works to complete the Corrective Action committed to in the 2018 and 2019 audits (current completion date of 12/31/20.)

Audit Results: The audit opinion for both 2018 and 2019 is that the financial statements present fairly the financial operations of DCSD.

Supporting Documents
DeKalb Schools 2018 Audit Report
DeKalb Schools 2018 Audit Report

DeKalb Schools Audit Trends

The Findings and Questioned Costs (Section IV) are as follows.

2018:
* Material Weakness and Significant Deficiencies were identified related to internal control over financial reporting.
* Noncompliance material to financial statements were noted.
(Source: Section IV, Page 1-7; page 79-86 in the 2018 audit .pdf.)
DCSD concurred with the findings.

2019:
* Material Weakness and Significant Deficiencies were identified related to internal control over financial reporting.
* Noncompliance material to financial statements were not noted.
(Source: Section IV, Page 1-7; page 81-88 in the 2018 audit .pdf.)
DCSD concurred with the findings.

Each year, the auditors document the cause of the deficiencies as reported by DCSD. They do not perform audit procedures to confirm the cause of the deficiencies reported.

2018:

“In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant.”
(Section IV, Page 3; .pdf page 82.)

2019:

“In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant.”
(Section IV, Page 4; .pdf page 85)

Note: 2017 cause of deficiency was as follows:

“In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant.”
(Section IV, Page 3; .pdf page 76)

FAQs:

What is internal control and why does it matter?

Internal Control: Keep in mind that the purpose of the audit is not to express an opinion on the effectiveness of the entity’s internal control. You can google the definition of internal control, but I think this definition from Investopedia is easily understandable:

Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

The AICPA (American Institute of Certified Public Accountants) explains that internal control is important because effective internal control reduces the risk of asset loss, and helps ensure that plan information is complete and accurate, financial statements are reliable, and the plan’s operations are conducted in accordance with the provisions of applicable laws and regulations.

What is a Material Weakness and Significant Deficiency in Internal Control?

Material Weakness – A material weakness is a significant error or irregularity found in a company’s financial information or internal controls. Internal controls are the rules and guidelines instituted by companies to protect their accounting information from a material weakness.

Significant Deficiency – A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.

What does this all mean?

In a publicly traded company, this is a good summary from the CPA Practice Advisor website about the impact of a Material Weakness:

Material weaknesses can have damaging effects on a company’s credit rating and share price, and lead to higher audit fees and loss of investor confidence. Oftentimes, there is not one simple cause for the material weakness, but rather an aggregation of control deficiencies that could yield a material misstatement in the financial statements. As a result, public companies strive to prevent such deficiencies in internal control.

https://www.cpapracticeadvisor.com/accounting-audit/news/21093512/five-common-scenarios-that-can-lead-to-a-material-weakness

Where can I read details of what led to these findings?

2018 – Section IV, pages 2-3 (.pdf pages 81-82.)
2019 – Section IV, pages 2-3 (.pdf pages 83-84.)

16 responses to “DeKalb Schools 2018 and 2019 Independent Auditor’s Reports

  1. Linda Gagliano

    I am just so excited that accountability is coming to DeKalb school system. Bravo, and good luck in the work ahead.

    3
  2. Thank you Mr. Jester for for sharing this very important information on your blog!

    Yesterday evening after the BOE meeting, I posted this on my Facebook Page, Anna Hill, Board Member-Elect, District 1. I will continue to post more on my Facebook Page and encourage those of you interested in this complex issue, and other issues related to DCSD, to “like or follow” my Facebook page.

    7
  3. Hey Stan, didn’t the BOE vote not to approve the monthly financial report at yesterday’s meeting, because it didn’t look believable?

    Even the Interim CFO thought it looked funky. Kudos to you for bringing it to the Board’s attention, and kudos to the other Board members who joined you in voting not to approve it.

    DCSD spends over $5M per year for Finance salaries, yet they can’t prepare a valid monthly financial report nor can they receive a “clean” Audit without Findings or Material Weaknesses.

    This financial mismanagement has got to stop! What can the average citizen do to make this happen?

    The only folks who seem to understand the terrible financial situation at DCSD are credit rating agencies like Moody’s.

    This lack of even minimal financial management directly harms our students and teachers. No one knows where the money goes, but the mismanagement means that many school buildings are poorly maintained and overcrowded because of “lack of funds.”

    Ideas, anyone?

    8
  4. I’m not sure how well you’ll do and what you can accomplish as a CPA considering what you’re up against, a few idiots on the board. And I suspect you’ll be treated like Stan.

    Just like Stan was just one of two votes opposing $25k month in marketing, you would have been too (I hope)$ What would you have done different? You can expose and expect fiscal responsibility every second of the day, but you’re up against evil.

    And I think all district 1 folks would love for you to run a similar blog as Stan has over the years, not just put stuff on your FB page.

    9
  5. What is the 2020-2021 teacher pay scale?

    11
  6. I was never told how much I’d be paid this year, and now I’ve heard some principals saying we won’t be paid for the PDI…

    5
  7. @Stan, can you find out when teachers will be told the amount of their contracted pay for the year is? I wouldn’t want to work without knowing what I would be paid.

    Also, not being paid for work that was done during the PDI seems like another lawsuit.

    13
  8. Joanne Torres

    The 2019 audit report attached is labeled 2018.

    1
  9. Southern Charm

    We just worked on correcting errors with our PDI payroll. The reviewer stated that we should receive payment during November. Please check with your Principal. It’s a shame how long it takes to finally get compensation for something you completed in August! First, they lied and stated we would receive our daily rate and now it’s taking forever to receive the stipend. Stan, please inquire about this matter.

    6
  10. Thank you Anna Hill!

    A clean opinion and a good audit are two different things. I am disappointed in the Interim CFO and Superintendent is stating the audits were clean and not acknowledging the material weaknesses in them. That seems disingenuous.

    Stan & Anna, do either of you now why the monthly financials are still delayed a month? With the new MUNIS financial software, everything should be up to date.

    6
  11. I agree with Kirk. There was no hint of any problem until BOE member Allyson Gevertz asked for clarification.

    For too long DCSD Administration puts a positive spin on things, and usually either the BOE isn’t aware of this “spin” or the BOE doesn’t want to cause a fuss and just goes along. Thanks to Allyson Gevertz for having the knowledge and courage to ask for more detail.

    I am disappointed that the Superintendent didn’t step in to clarify Ms. Mailliard’s report. Either the Superintendent is complicit in the spin or she doesn’t understand what the Audit Report really means.

    Neither is acceptable.

    7
  12. Stan, I am sorry your wife lost District 1. So no Republicans on school board and no Republican commissioners. I have little hope for your replacement and little hope for Nancy’s replacement.

    4
  13. Hello Stan,

    In the past each school was given a budget, some of the money was on a P-Card. Schools were able to buy things like copy paper, ink and materials needed for instruction. Will there also be an audit of the individual schools? It seems like it is important not only to know how that money was being used but also how the money is being used now. Since we are all virtual, I would imagine that the needs of the schools have changed some. There have been several changes in personnel. Who is monitoring way that schools are using their funds?

    2
  14. National nightmare ended with trumps defeat

    No republicans sounds good to me!!!

    2
  15. That’s a hurtful comment. I thought Be Kind was Democrats’ mantra. And some would think the nightmare is just about to begin.

  16. Really?

    Yes. The nightmare of cleaning up the messes.

    #nomorenepotism

    3

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