Audit & Finance Committee Presentation
In the Charleston County School District 2023 Financial Audit, the responsibility of maintaining effective internal controls, assessing fraud risks, and ensuring financial statements accuracy is emphasized. The audit by Greene Finney Cauley, LLP focuses on providing reasonable assurance on the correctness of financial statements, though it does not address the organization's financial condition or detect fraud directly.
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Presentation Transcript
Audit & Finance Committee Presentation Year Ended June 30, 2023
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ OPINION The District s responsibility: Maintain effective internal controls There are limitations on internal controls. Regular risk assessment is important, including assessing the risk of fraud. Financial Statements Accuracy, completeness, and propriety of balances, amounts, and disclosures
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene Finney Cauley, LLP s ( GFCLLP ) responsibility: Opinion reasonable assurance that financial statements are materially correct Does not address the financial condition of the Organization Purpose of the audit is not to detect fraud. GFCLLP cannot take responsibility for finding fraud, if it existed We estimate materiality based on what might cause a reader of the financial statements to make a different decision
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ GFCLLP responsibility: Obtain an understanding of internal controls (typically by performing a walk through of each significant process) Design procedures based on a risk assessment Obtain sufficient evidence to express an opinion as to whether the financial statements are materially correct
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Total fund balance increased $27.3M to $186.3M Nonspendable Fund Balance of $11.5M (inventory and prepaids) Committed Fund balance of $88.0M for operating reserves and ESSER Stabilization Assigned fund balance of $42.3M for FY2024 budget and ESSER sustainability and stabilization GENERAL FUND $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 2020 2021 2022 2023 Fund Balance
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Unassigned fund balance is $44.5M, which is 6.9% of 2023 actual expenditures and 6.4% of 2024 budgeted expenditures GFOA recommends a minimum of 16.7% (two months) District policy requires 12.5% in committed reserves and a minimum of 4.2% in unassigned fund balance GENERAL FUND 14 12 10 8 6 4 2 0 2020 2021 2022 2023 Unassigned Fund Balance as a % of General Fund Expenditures
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Major Reasons To Maintain An Adequate Fund Balance: Cash flow through second half of calendar year; property taxes are cyclical. Significant emergencies and unanticipated expenditures. Flexibility for discretionary funding needs. Potential for better interest rates on debt issues (can save the District money). To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of a change in legislation (i.e. as when residential property taxes from operations were eliminated and replaced by the state with a one cent sales tax increase ( Act 388 )).
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Revenues: $658.4M for 2023: $419.4M from property taxes $230.5M from State revenues $8.5M from all other revenues $69.8M (12%) increase from 2022 Property tax revenues increased by $44.3M, or 12% State revenues increased by $19.0M, or 9% $40.5M (6%) better than budget Primarily due to property tax revenues and State revenues being higher than anticipated Transfers In of $20.0M EIA funding of $12.2M SR and FS indirect costs of $7.8M GENERAL FUND REVENUES $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 2020 Intergovernmental Federal State Other Local Sources Property Taxes 2021 2022 2023
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Expenditures: GENERAL FUND EXPENDITURES $648.2M for 2023: $297.9M in instruction $265.0M in support services $1.2M in community services $18.6M in intergovernmental $64.7M in payments to charter schools $1.2M in capital outlay $815k in debt service $55.0M (9%) increase from 2022 $37.1M increase in salaries and benefits $8.9M (1%) under budget $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 2020 2021 2022 2023 Other Payments to Component Units Intergovernmental Community Services Support Services Instruction
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Special Revenue Funds Special Projects Fund had approximately $15.4M in fund balance at year end; $4.2M is restricted for student activities and remaining $11.2M is assigned for special programs. Revenues of $180.7M primarily consist of State and Federal grant funding EIA Fund does not report a fund balance since any unspent funds must be returned to the State or carried over to the next year and reported as unearned revenue. Revenues of $33.3M funded by the State s EIA Act of 1984 Food Service Fund had approximately $6.0M in fund balance at year end, including $335k in inventory and $5.7M restricted for food service Revenues of $30.1M primarily consisted of federal reimbursements for the District s school breakfast and lunch programs
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Funds Capital Projects District Fund had approximately $171.1M in fund balance at year end, all of which is restricted for capital projects. Revenues of $168.4M primarily consist of local one cent sales tax revenues Debt Service - District Fund had a deficit fund balance of $6.1M primarily as a result of the $62.8M outstanding BANs. Debt service payments of $30.2M were primarily funded through property tax revenues Debt Service - CEEF Fund had approximately $553k in fund balance at year end, all of which is restricted for debt service Debt service payments of $37.3M were primarily funded through transfers from the Debt Service District Fund
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note Capital Assets Total capital assets were $1.7B as of June 30, 2023 increase of $8.4M from June 30, 2022: Total capital asset additions of $67.6M which consisted of: Completion of the Mitchell Elementary School, James Island Charter High School and Stoney Field projects Depreciation expense of $51.8M. Net disposals of $6.7M. Construction commitments of $49.0M as of June 30, 2023.
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note (Continued) Long-Term Obligations Total long-term obligations outstanding as of June 30, 2023 were $446.3M decrease of $48.0M from June 30, 2022: Principal payments of $48.0M made during 2023. Short-term Bond Anticipation Notes of $185.2M outstanding as of June 30, 2023 Compensated absences outstanding at June 30, 2023 $7.1M.
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Pension & OPEB Accounting Relates to the School District s proportionate shares of the net pension and OPEB liabilities and deferred outflows/inflows of resources related to the School District s participation in the South Carolina Retirement System and the state s retiree health insurance plan. No impact to the fund level financial statements. Impacts the School District s government-wide financial statements: Net Pension Liability as of 6/30/2023 of $688M Net OPEB Liability as of 6/30/2023 of $559M Employer contribution of 17.56%, an increase of 1% compared to FY22; rate increased by an additional 1% to 18.56% for FY24
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Compliance Single Audit was required for FY2023: USDA Elementary and Secondary School Emergency Relief Fund ( ESSER ) Testing is near completion Financial Statement Finding - Cutoff Management Letter Required communications to management and those charged with governance Pupil Activity Funds
Charleston County School District 2023 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Questions?
