With at least a few accounting jokes thrown in, Mike Decoria told the school board Dec. 11 that the district is in pretty good shape.
“If you’d turn 56% down the page,” he said, pointing out a chart. “That’s a little accounting joke. We accountants like to be precise.”
Jokes aside, the certified public accountant was there on behalf of his firm — Decoria, Machiel and Teague — to deliver the results of Teton County School District No. 1’s annual audit. It wasn’t an evaluation of the district’s spending practices or an attempt to find efficiencies. Instead, it was a dive into the district’s accounting practices.
As a steward of public money the school district is audited annually to ensure it doesn’t leave a window for embezzlement or any other nefarious activity. The team of auditors presents its report to the Board of Trustees, which has to approve the report following a presentation.
Wednesday night Decoria was giving the board the rundown on its performance, which he said was laudable overall. Decoria and his team were there to identify weaknesses in their practices, and they have been working with Executive Director of Resources Kristen Mayo and her financial department to get the books in order.
The district switched auditors a couple of years ago, Mayo said, and Decoria’s firm expects more of the district than the previous auditor.
“We’ve been pushing to prepare all of our financial statements ourselves. It’s something that not a lot of other school districts do,” Mayo said.
Auditors use the district’s financial records, some of which are featured in the attached graphic, to determine how well financial systems are working. For instance, they go through the district’s revenue and expenses tracking to determine how well they match funding sources and spending totals.
Last year was the first time Decoria, Machiel and Teague audited the school district, and the firm labeled the district a “high-risk auditee.” Again, it wasn’t judging how the district spends its money, but how it tracks that spending. In the 2018 audit it had four “findings,” or “deficiencies,” dings against the district’s practices.
This year Decoria said his team found the district had made significant progress.
In the past the district’s records lacked support in the financial tracking system for some expenses. Mayo said that was because in the past the auditor would track things like capital expenses, so the school district didn’t have capable systems for doing so.
“You have to keep records,” Decoria told the school board. “Last year your records didn’t contain support for all those numbers.”
Decoria’s team worked with the school district to show the financial department what was required of it, essentially teaching district staff to do what the former auditors were doing.
“They helped us set up a spreadsheet, and this year we had that done for them,” she said. “These are things we should have been doing. In a lot of school districts in Wyoming auditors do this.”
Mayo said the main reason for that is staffing. Financial tracking takes specialized knowledge, effective systems and staff time, and some school districts in counties with low populations can’t spare the staff to do their capital expense tracking and other financial work. Decoria’s team, however, expects the district to do its own legwork.
Another improvement from 2018, Decoria said, was in matching expenditures. The district sets its budget in the spring based on how much money it receives from the Wyoming Legislature, but budget projections don’t always match expenditures over the course of the year. State and federal requirements stipulate expenditures cannot be over the budgeted amount at the end of the fiscal year, so districts amend their budgets once they know their actual spending.
In the past the school district amended its budget in July, which Wyoming allows. However, the fiscal year ends in June, and the auditors took issue with the district ending the fiscal year with its budget not matching expenditures.
“The auditors ask us to do it in the year. We’re stuck between state expectations and the auditors,” Mayo said. “We moved it to June, so it happens in the current fiscal year.”
The other two findings the auditors had in 2018 were still present in this year’s report, but Decoria said they weren’t as critical. One is that staff doesn’t always follow board policy that governs administrative accounting duties. Decoria said Mayo and her staff were aware of the problem, so it wasn’t as big a deal as it could be, and Mayo attributed some of the failure to the intricacy and volume of district policy.
The auditor said the district could remedy the policy finding, but that the last finding is likely always going to appear on its audits. To truly rule out all chance of embezzlement and other financial wrongdoing, the school district would need true “segregation of duties,” meaning different staff members handle each step of a financial process with other staff there to provide oversight.
“You could come up with perfect separation of duties, but the cost-benefit doesn’t pencil out,” Decoria told the board. “You’ll have that forever. I wouldn’t worry about that.”
The district could create better separation of duties in its current staffing setup, but hiring new people just to provide more oversight wouldn’t be an efficient use of public money, he said. All in all, he said, the school district is making progress to have a better handle on its finances without relying on outside help to track its money.
“We look at things in the aggregate. If you have material weaknesses we have to consider you a ‘high-risk auditee,’” he told the board. “You are not now with only those two deficiencies.”
With that, he bid “calc-you-later” to the board, and the trustees unanimously approved the audit report.