Dearest reader,
Lady B has reached Step 5 of the Chippewa Hills School District ledger.
The audits. 🪶
And this is one of those times when Lady B does not need to add much commentary.
The auditors already did.
Let's begin with FY2024.
📌 Financial Reporting
The auditor identified a MATERIAL WEAKNESS.
State revenue was overstated and unearned revenue was understated by:
$220,533
The issue involved account reconciliations that did not adequately reconcile to supporting documentation.
📌 Budget Overages
SIGNIFICANT DEFICIENCY / NONCOMPLIANCE
Actual General Fund expenditures exceeded final budgeted expenditures.
And this was a repeat finding from FY2023.
📌 Bank Reconciliations
SIGNIFICANT DEFICIENCY
Cash accounts were not reconciled timely.
📌 Title I
NONCOMPLIANCE
The district charged expenditures to the grant that were not authorized in the MDE-approved budget.
Amount over the approved budget:
$74,502
📌 ESSER III
MATERIAL WEAKNESS / NONCOMPLIANCE
Expenditures charged to the federal grant exceeded amounts allowed in the MDE-approved budget by:
$377,467
The auditor also found supplies and equipment charged to the grant that had not been approved.
This, too, was a repeat issue.
📌 ESSER III — Prevailing Wages
SIGNIFICANT DEFICIENCY / NONCOMPLIANCE
The district could not provide evidence that prevailing wages had been paid on two construction projects charged to the federal grant.
The auditor listed the cause as:
"Management oversight."
Then came FY2025.
And one problem remained.
📌 Material Journal Entries — Multiple Funds
MATERIAL WEAKNESS
REPEAT COMMENT.
The auditor found materially misstated balances in the district's initial trial balance across multiple funds.
Among them:
Federal revenue overstated: $256,624
Accounts receivable overstated: $285,260
Due from other governmental units understated: $377,820
Due to other funds understated: $442,777
Food Service accounts receivable overstated: $156,158
Food Service due to other funds understated: $216,176
Multiple interfund transfers and balances were also misstated, including amounts of $437,678.
The auditor again pointed to account reconciliations that did not adequately reconcile items to supporting documentation.
Management's response?
"We are in agreement with this finding."
📌 Food Service Fund — Loading Dock
SIGNIFICANT DEFICIENCY / NONCOMPLIANCE
The district purchased a loading dock using the Food Service Fund.
The auditor found that it was not on MDE's approved equipment list and MDE approval had not been obtained before the purchase.
Questioned cost: less than $25,000.
Cause:
"Management oversight."
There is some good news in the ledger.
The FY2024 findings involving budget overages, untimely bank reconciliations, Title I unauthorized expenditures, ESSER III unauthorized expenditures and ESSER III prevailing-wage documentation were not repeated in FY2025.
But the material weakness involving the district's accounting records did repeat.
And now Lady B turns back one page.
In Step 4, we found that Chippewa Hills paid T2 Professional Services:
$142,655.43 over these same two fiscal years.
The check-register descriptions included training, audit preparation, audit assistance, completion of audit-related work, FID submission and other professional services.
That was separate from the:
$79,362.50
paid to the district's independent auditor.
So Lady B is left with a question:
📌 How did Chippewa Hills spend $142,655.43 on outside professional services that included financial training and audit-related assistance over two years, while a material weakness involving account reconciliations and materially misstated balances still repeated in the FY2025 audit?
That is not an accusation.
It is a question prompted directly by the district's own check registers and independent audits.
Sometimes the breadcrumbs lead to answers.
Sometimes they lead to more questions.
With receipts and respect. 🪶
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