In a change from audits in recent years, a “clean opinion” on the financial practices of both the Region 4 Board of Education (BOE) and Supervision District for fiscal year 2020–’21 was reported by the auditing firm Mahoney Sabol in early January.

The results of the fiscal year 2020–’21 audit were presented by Michael VanDeventer, a partner at Mahoney Sabol, at separate meetings of the Supervision District Committee and Region 4 BOE on Jan. 6.

Region 4 Audit Findings

“We did issue unmodified clean opinions on the district’s financial statements and again that is the type of an opinion that you would want to see...from a board perspective,” said VanDeventer.

In addition, auditors did not find any issues with compliance or internal control over financial reporting, which came up in the prior year’s audit.

“We did not report any material noncompliance of laws or regulations,” said VanDeventer. “This year, we did not report any significant deficiencies or material weaknesses in internal control over financial reporting.

“So, again, the significant deficiency that was reported last year has been removed from our audit reports and we deem those to be resolved,” he added.

VanDeventer reported on total fund balances, saying the district continues to run a deficit in the capital nonrecurring fund of about $18,000, but that it should be eliminated with a future allocation to the fund that was a part of the district’s budgeting for fiscal year 2021–’22.

The district also had $689,113 in surplus funds for fiscal year 2020–’21, which the BOE voted to return back to Chester, Deep River, and Essex based on Average Daily Membership (ADM), according to VanDeventer.

Region 4 Finance Director Robert “Bob” Grissom reported that Chester would receive a total of $168,309 based on an ADM of 24.42 percent, Deep River would receive a total of $246,906 based on an ADM of 35.83 percent, and Essex would receive a total of $273,899 based on an ADM of 39.75 percent.

“That surplus is really driven by favorable budgetary results on your expenditures, really due to staff and utilities and transportation savings that were directly impacted by the effects of the pandemic,” said VanDeventer, adding that other districts are experiencing similar budgetary surpluses as a result of the pandemic.

Another problem area for the district in prior year audits, the health insurance fund, is now in a favorable position, according to VanDeventer.

“Again, a significant change from prior years, the ending net position has increased to about $3.3 million,” said VanDeventer. “And again, consistent with management’s communication, that increase was really due to increased contribution rates from participating members to really establish a reserve within that fund combined with an overall favorable claims year.”

VanDeventer touched on other areas of the audit, including the ease with which a new accounting standard was implemented, as well as the status of the district’s capital assets.

“Again, happy to report that we did not have any significant difficulties encountered in performing the audit this year,” said VanDeventer. “We had no uncorrected misstatements.”

At the end of the audit presentation, Region 4 BOE Treasurer John Stack spoke about the auditing process.

“There [was] nothing significant, or changes, from the start in terms of numbers that Bob [Grissom] was reporting or changes or anything unusual [that] happened in the process and there were no unusual activities that I could detect between the administration and the auditors as well,” said Stack.

Several board members discussed the positive findings and how the process was much improved from prior years, including being able to obtain the findings much earlier in the year, the result of moving the auditing timeline up.

“I want to commend everyone and thank everyone involved in this process,” said Region 4 BOE Chair Kate Sandmann. “This is one of the best and most comprehensive and really best news that we have had in a while, that issues have been resolved, that things are moving forward and that we are having the presentation so early. I mean we really appreciate everyone working together and getting after it a bit. Well done.”

Supervision District Audit Findings

Mahoney Sabol presented similar favorable findings for the Supervision District’s fiscal year 2020–’21 audit.

“We did issue unmodified clean opinions on your financial statements and again, an unmodified opinion is expressed when the auditor concludes that the financial statements are presented fairly in all material respects,” said VanDeventer.

He also reported on compliance and internal control over financial reporting.

“Essentially, during the course of performing the audit, if we identify a material noncompliance with laws or regulations, or what we consider to be a significant deficiency or material weakness in the district’s internal control over financial reporting, we’re required to include it in this letter,” said VanDeventer. “And, so, again, we did not report any such matters.”

The budgetary surplus for Supervision District totaled $418,932, which is eligible for distribution back to Chester, Deep River, and Essex based on a specific financial formula relating to the ADM calculation for fiscal year 2020–’21. For Chester, this would be a $108,929 reimbursement; for Deep River, this would be a $144,003 reimbursement; for Essex, this would be a $166,000 reimbursement.

“Again, that surplus was really driven by favorable budgetary results on your expenditures and again favorable variances on staffing and transportation...directly impacted by the effects of the pandemic,” said VanDeventer.

Members of the Supervision District committee voted to accept the audit report on Jan. 6, sending a vote to approve the refund allocations to Chester, Deep River, and Essex, to the next regular meeting of the joint Board of Education.