BOE had a representative from their auditing firm, Mauldin and Jenkins, come to a special called meeting on Monday to discuss the fiscal watch declaration from the state.

On Feb. 9, district officials received a letter from State Superintendent of Education Molly Spearman that a review of the 2020-21 annual audit indicate the district had a repeat material audit finding 2021-001 identifying deficiencies and material weaknesses that could have a significant effect on the financial condition of the district.

This finding means internal controls should be in place to censure the district, and their external accountants perform timely and accurate financial close out procedures in order for the district to produce its monthly and annual financial statements

Audit adjustments totaling $1,373,000 in the year ending June 30, 2020 and adjustments totaling $11,007,580 in the year ending June 30, 2021 were required to correctly report current year balances.

On Feb. 28, the district received a letter that fiscal watch had been declared by the SC Department of Education.

Chief Financial Officer Sharon Hubbard said the district has proposed a corrective action plan to rectify the repeat audit findings in audits for fiscal years 2020 and 2021.

Hubbard added, while fiscal watch is the lowest level of concern, the finance department was taking the declaration seriously to avoid repeat audit findings.

Tim Lyons, partner in charge of Maudlin and Jenkins, discussed the fiscal year 2021 audit findings.

Audit finding #1 was the financial closeout and reporting. This is a repeat finding from FY 2020. This finding will be corrected with additional measures to ensure that all year-end entries are made before the trial balance is submitted to the auditors. In addition, Mauldin and Jenkins will assist in this endeavor by offering professional development before the fiscal year ends. Audit finding #2 was failure to comply with cash management policy. This finding has been corrected. The board approved 2nd reading of the district’s cash management policy, along with other policies, to comply with grant administration and grant management on December 6, 2021.

Audit finding #3 was the failure to comply with equipment and Real Property Management Guidelines. This finding will be corrected. A Fixed Asset Request for Proposal (RFP) has been posted at SCBO and the district’s website. A district-wide fixed asset inventory will be conducted before June 30, 2022.

Coachman said he has been on the board for 14 years and never had a letter come from Spearman.

He wanted to know why they didn’t know about deficiencies that were not addressed.

“Why are we paying you if you are not giving us the answers?” Coachman asked.

Lyons noted Coachman was reading information from their audit report to the board and it was presented to the board.

“What you are reading is our audit report,” Lyons said. “This is included in the district’s financial report.”

Board member Reginald Gaymon wanted to know if money was missing and if the auditors were moving the money around.

Lyons said they were not moving money, but it deals with the timing of when the business transactions are posted. For instance, when the fiscal year ends, activity for the district does not stop.

Interim Superintendent Donald Andrews told Lyons what he had learned in the last few months with about the board was this: if there was a mistake, they wanted it brought forth and discussed.

When asked what needed to happen for the district to go forward, Lyons said they would be more proactive with Hubbard and her staff at year end.

“We can’t do it for the district, but we can help Sharon,” he said.

Hubbard explained they had met the 10-day deadline in the first letter and had written a tentative corrective plan.

In the plan, the district would request professional development from the auditors to assist the finance department in the preparation of adjusting entries for the district’s debt service capital projects funds, as well as other district funds.

Also, a checklist of year-end processes would be prepared detailing processes, responsibilities, and time to complete tasks among the finance staff.

Hubbard admitted due to the transition in the fall, a resignation on June 30, and a retirement in December, this left the department in a void.

“Some things can be missed as a result of those transitions,” Hubbard said. “We try to do our due diligence to make sure everything is taken care of, but we do miss some things.”

She added technical assistance would be pivotal to make sure those type of issues would be taken care of.