External Audit Letter of Findings – 2018

October 1, 2018

To the Superintendent and School Board

Members of the Monticello Central School District

Monticello, NY

We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Monticello Central School District for the year ended June 30, 2018, and have issued our report thereon dated October 1, 2018. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards (and, if applicable, Government Auditing Standards and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards), as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter to you dated November 16, 2016. Professional standards also require that we communicate to you the following information related to out audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Monticello Central School District are described in Note 1 to the financial statements. The District has implemented the following new standards issued by the Governmental Accounting Standards Board (GASB) for the year ended June 30, 2018:

  • ASB 75 -Accounting and Financial Reporting for Postemployment Benefits Other than Pensions.
  • GASB 81 – Irrevocable Split-Interest Agreements.
  • GASB 85 – Omnibus 2017
  • GASB 86 – Certain Debt Extinguishment Issues

We noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were fixed assets, pension reporting and the liability related to post employment health insurance benefits.

Management’s estimate of fixed assets is based on capitalization thresholds of $5,000. Therefore, all fixed assets with a cost of less than $5,000 are expensed and not included in the balance of fixed assets in the statement of net position. Fixed assets with a cost in excess of $5,000 are depreciated in the statement of activities on a straight line basis over the estimated useful life of each asset.

The estimate of the District’s liability for post employment health insurance benefits was calculated by an actuary using various assumptions detailed in the Notes to the financial statements.

The estimates of the District’s various account balances related to pension reporting were calculated by an actuary using various assumptions detailed in the Notes to the financial statements.

We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:

Note 1 – Disclosure of the District’s significant accounting policies, which includes the new accounting standards implemented for the year ended June 30, 2018 and definitions of the equity classifications required by GASB 54.

Note 2 -Disclosure of excess unassigned fund balance and/or deficit fund balances. Note 9 – Disclosure of the District’s outstanding liabilities.

Note 11 – Disclosures related to the District’s liability for post-employment health insurance benefits in accordance with GASB 75.

Note 12-Disclosures related the District’s accounting treatment of pensions in accordance with GASB 68 and GASB 71.

Note 15 – Disclosure of restated opening balances due to the implementation of GASB 75 and GASB 86 for the year ended June 30, 2018.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management m performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated October 1, 2018.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the District’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to the budgetary comparison schedules, management’s discussion and analysis, and other required supplementary information, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the supplementary information, which accompanies the financial statements but is not RSI. With respect to the supplementary information, we made certain inquiries of management and evaluated the form, content and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

This information is intended solely for the use of the Board of Education and management of the Monticello Central School District and is not intended to be and should not be used by anyone other than these specified parties.

Very truly yours,

Cooper Arias, LLP