direction, and management of fundraisers. This student involvement, although of great value to those students, is an inherent internal control weakness. The District has determined the costs of implementing controls over fundraising activities, in light of the multiple locations and times of these activities, outweigh the benefits; therefore, the District will continue to rely on activity fund advisors for appropriate oversight and supervision, but will not, at this time, implement procedures and policies to provide for detail internal control processes at each fund raising location and activity.

Official Responsible for Ensuring CAP: Responsible for Ensuring CAP: The District’s Director of Business Affairs is the school official responsible for carrying out the corrective action plan.

Planned Completion Date for CAP: Completion Date for CAP: The CAP will be carried out as part of each annual audit; therefore, the CAP is ongoing.

Plan to Monitor Completion of CAP: to Monitor Completion of CAP: The corrective action plan will be monitored each year by the District financial staff and School Board as a part of the process of developing the annual audit report.

## Year: 2017-2018 Date of Report: September 27, 2018 Auditor: Clifton Larson Allen

## Finding 2018-001 – Financial Statement

### Material Weakness – FINANCIAL REPORTING UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

Criteria: The District should have controls in place to prevent or detect the omission of a material disclosure in the financial statements.

## Condition:

The District relied upon the audit firm to prepare the financial statements and related disclosures.

Cause: The District does not have the expertise to draft the notes to the financial statements; however, management has reviewed and approved the annual financial statements prepared by the audit firm. Effect: The potential exists that a material disclosure could be omitted from the financial statements and not be prevented or detected by the District’s internal controls.

Repeat Finding: Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2017-001.

Recommendation: We recommend the District continue to evaluate its financial reporting process to determine if an internal control policy over the annual financial statements is beneficial.

Views of responsible officials and planned corrective actions: of responsible officials and planned corrective actions: There is no disagreement with the audit finding. The Director of Business Affairs reviews the drafted financial statements and footnote disclosures prior to issuance of the financial statements. This includes comparing information in the financial statements to the UFARS Compliance Table and other District documents. Since the District does not possess the expertise to ensure all required disclosures are included in the financial statements, the District will rely upon the audit firm for completeness of these disclosures.

## Finding 2018-002 - Major Federal Programs

Federal agency: U.S. Department of Education Federal program title: Special Education Cluster (IDEA) CFDA Number: 84.027 and 84.173 Pass-Through Agency: Minnesota Department of Education Award Period: July 1, 2017 through June 30, 2018 Significant Deficiency in Internal Control over Compliance and Other Matter