Every year Thompson has a financial audit of our financial statements for the most recent fiscal year that ended. The audit is done to ensure accuracy, legal compliance and adherence to accounting standards. I have audits from 2005, and the audits have never found any issues and were completed by the same company Swanhorst which was acquired by Hinkle in 2018.
It is highly recommended that a company change auditing firms approximately every five years and/or rotate the lead auditor within the firm a company is using. Why?
Having the same audit firm over time leads to friendships developing, which degrades the objectivity of auditors and often leads to audit standards and processes not being strictly followed. Thompson has had the same audit firm for at least 13 years and audits from 2004 and older might show an even longer time frame.
In 2024 the CFO selected a new audit firm of Plante Moran which is a national firm with a deeper bench of audit talent and can provide a larger team to perform the audit. It is important to note that when changing audit firms, the first-year audit will most likely find issues not found by the previous firm.
And in fact, Plante Moran did identify six issues (see page 144 of report) and all revolved around internal controls. A simple definition of internal controls from Investopedia is:
The summary of what the audit found is that while the finance department does have policies and procedures, enforcement, accountability, and oversight is lacking.
Is this discovery alarming? Yes. Is this bad news? Yes. And yet the auditor’s discovery of the internal controls issues is also good news!
And you may be saying, “Nancy have you lost your mind? How can this be good news?”
I see this as an opportunity to be fully transparent with the community and recognize that we must talk openly about what the failures are and what the plan is to rebuild the finance department as the guardian of all district resources and assets to ensure the integrity of our financial data and reports.
The reality is that the district is in dire need of a bond to address the maintenance of aging buildings, finish adding secured vestibules and add capacity for the growth in Berthoud. The district must provide better information on what all the maintenance needs and costs are for each school and include capacity expansion needs for Berthoud with costs.
It is also reality that many taxpayers do not trust that the district is spending their money appropriately on educational needs. Much of this distrust comes from budget and financial reports not being presented in a format that easily shows where and how their money is being spent, is not easily accessible and spending priorities are not clear.
I am hopeful that the audit report will be the catalyst to unite the school board in addressing the much-needed revamp of financial reporting and oversight so that taxpayers understand why money is needed and will trust us to be good stewards for their money.
As a board it is our duty to establish clear direction and expectations with our one employee Dr. Schaffer regarding budget priorities, regular financial updates, and restoring taxpayer trust. The audit report highlights that it is way past due for the board to establish a finance/budget committee and I am hopeful that my repeated requests for this committee will finally be taken seriously by the entire board.
I am confident that Dr. Schaffer will hire a new CFO who will have the skills and vision to restructure the finance department and who can quickly address transparency needs that will start improving relationships and restore trust with our community.
In my opinion the board must focus now on establishing a finance committee that will begin the work of reviewing the budget process, budget priorities, and plan to change financial reporting and accessibility to financial data for all in the district.
Thompson has many successes, and the district can continue to be successful by choosing to be open, honest and willing to address the financial challenges the audit has illuminated.