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Florence One Schools receives unmodified financial audit opinion
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FLORENCE ONE SCHOOLS

Florence One Schools receives unmodified financial audit opinion

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FLORENCE, S.C. — The Florence One Schools board learned the results of two independent audits of the district's financial records Thursday evening. 

The district received an unmodified opinion for its financial reporting but seemed to receive a qualified opinion for its purchasing. 

What is an audit?

An audit is an examination of the financial records of a business, nonprofit organization or a governmental entity to determine if that entity is following the appropriate accounting principles.

For Florence One Schools, those accounting principles are known as generally accepted accounting standards. These standards are set by the Governmental Accounting Standards Board, a private organization. The current chair of this board is Joel Black, a partner at Mauldin and Jenkins. 

Mauldin and Jenkins performed the financial reporting audit for Florence One Schools. 

What kinds of audits are there? 

There are two types of audits: internal (within the entity) or external (a person independent of the entity). 

Florence One Schools has two external audits each year. One, required by state law, examines the district's financial reporting. The other, also required by state law, examines the district's purchasing records. 

The audit of the financial statements also examines the internal controls for financial reporting and examines the district's largest federal programs. This year, auditors examined the child nutrition program and the special education program. 

The purchasing audit was performed by Webster Rogers. It looks at whether the district complies with its purchasing rules. 

How does an independent auditor rate the entities it audits?

An independent auditor offers two major types of opinions: unmodified or modified. Unmodified opinions indicate that the records were prepared in accordance with the accounting principles and laws required. Modified opinions indicate that the statements were not prepared according to accepted accounting principles and laws.

There are three sub-types of modified opinions: qualified, adverse and a disclaimer. Qualified opinions indicate that there is a misstatement in the records but not throughout them. Adverse opinions indicate that the misstatements are made throughout. Disclaimer opinions indicate that the auditor cannot access the records it needs to examine. 

Financial reporting audit

Florence One Schools received an unmodified opinion for its financial reporting. 

Tim Lyons of Mauldin and Jenkins presented the opinion and related report to the board at a meeting held Thursday evening. 

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"In accordance with government auditing standards, we had no findings this year," Lyons said. 'So no material weaknesses in internal controls and no material instances of noncompliance." 

Lyons also said his firm found no nonmaterial issues either. However, he did mention near the end of his presentation that the district's expenses exceeded their revenues for the 2019-2020 school year. Lyons said that the district remains above the required thresholds of rainy day money but that the board needed to monitor the trend going forward to make sure it did not continue. 

Lyons added that the auditors had no issues with the management of the district when they conducted the audit. He credited Laura Showe, the district's chief financial officer, for her hard work on the audit. 

Florence One Schools Superintendent Richard O'Malley also praised Showe's work during a discussion afterward.

Purchasing audit

Ellen Adkins of Webster Rogers presented the auditor's report for the district's purchasing audit. The audit focused on the district's purchasing in the 2018-2019 school year. 

O'Malley told the board that the district was supposed to be conducting this audit every year but fell behind. The audit presented last year covered the four years prior to the 2018-2019 school year. 

Showe said the district planned to do the 2019-2020 purchasing audit this year and then finally catch back up in the 2021-2022 school year. 

Adkins implied that the district had received a qualified opinion. 

Adkins cautioned the board that the four-year audit turned up several areas in need of attention. She added that the district had also seen personnel turnover, making it a very challenging period. 

'Fortunately, [you've] made some tremendous hires, and they've put in a lot of effort even though it meant going back to the year before they were here," Adkins said. "You're seeing a big improvement in the procurement processes." 

Adkins identified one material noncompliance and five nonmaterial ones. She said the material noncompliance was related to the board or superintendent ratification of mistakes made during the purchasing process. 

"This was not done," Adkins said. 

She also added that there were now plans in place to do this going forward. 

The five nonmaterial findings were listed in the audit report provided to the board along with recommendations to fix them. 

The district took one step to fixing one of those by holding the first reading of a purchasing policy and another when O'Malley provided some financial information to the board earlier in the meeting. 

State law also mandates that the purchasing audit also examine the district's efforts to purchase 10% of its needs from minority- and female-owned businesses. 

Adkins said the district purchased 3.9% from such businesses, up from 3.75% in the previous four years. She added that no district in the state that she's seen meets the requirement and that many businesses that would qualify simply do not fill out the paperwork required to qualify. 

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Government and Politics Reporter

I cover the city of Florence, the county of Florence, the state legislative delegation of Florence County and surrounding areas, and the federal delegation representing the Pee Dee for the Morning News.

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