Skip to main content
You are the owner of this article.
You have permission to edit this article.
OCSD audit identifies weaknesses; consolidation process blamed for most issues

OCSD audit identifies weaknesses; consolidation process blamed for most issues

LIBRARY money illustration

The Orangeburg County School District received a qualified opinion on its 2019-20 fiscal year audit primarily for its failure to include a list of capital asset records and depreciation schedules from the former three school districts.

"We are qualifying our opinion on the governmental activities," McGregor and Company's Dawn Strickland said. "The reason for this is because management did not have a complete combined listing of the district's capital assets records, including the depreciation schedules from the former three districts."

Strickland said as a result, the capital assets and depreciation balances presented are from the June 30, 2019, balances of the former three districts.

"Due to the lack of available records, the capital asset data could not be updated for the 2020 year's activities," Strickland said.

The issue was among five material weakness findings and one significant deficiency finding in the 2019-20 audit.

Want to get a whole lot more from

Strickland said outside the capital assets and depreciation schedules, the rest of the district's financial statements were presented accurately and received an unmodified opinion.

District officials say the errors and causes of concern have been corrected and they expect a clean audit for the 2020-21 year.

Moody's downgrades Orangeburg County School District bond debt

Assistant Superintendent of Finance Brandi Gist said the district has had to provide information to the state Department of Education on how it has addressed the findings.

"We have put out a proposal for a company to come out and do an overall inventory of the entire district," Gist said. "We had trouble finding files that related to the prior districts' inventory of their fixed assets."

"A lot of this dealt with trying to consolidate those three districts and getting that information into the system and getting all the employees onto the software," Gist said.  "We feel like we have plenty of measures in place now to have a totally different outcome on our '21 audit."

Superintendent Dr. Shawn Foster said the issues are being addressed though the fund balance will "take time to rebuild back to state-required levels."

"We have addressed a majority of the other findings," Foster said.

Foster reminded all that the audit is from the 2019 budget and should have been completed much earlier but was put on hold due to COVID.

"I do realize it was a massive task bringing these three districts together and that we did not cross all our T's and dot all our I's as we went through that process," trustee Dr. Debora Brunson said. "As long as we are addressing all of these findings, I think we are on the right track of getting on track."

Trustees unanimously accepted the 2019-20 audit.

Orangeburg County School District graduates can invite up to four guests; repairs underway at several schools
Want to get a whole lot more from

The district's main funds include: general fund, special projects, Education Improvement Act, and Food Service, debt service and capital projects.

Audit highlights for the 2019-20 fiscal year include:

  • The district's general fund had a decrease for the year of $10,089,133 to end with a June 30, 2020, general fund balance of  $7,126,478.
  • The district had an $86,412 decrease in the special projects fund for a fund balance of $385,601.
  • The district's Education Improvement Act fund had a $0 balance with remaining funds being carried over to the 2020-21 school year.
  • The district's food service fund decreased $116,411 for a year-end fund balance of $403,629.
  • The district's debt service increased $2,395,389 for a year-end fund balance of $7.6 million.
  • The district's capital projects fund decreased $2,338,266 for a year-end fund balance of $8,578,354.

Strickland said the district budgeted about $125 million for its general fund budget revenue but actually received $116.9 million for a budget variance of about $8.1 million.

The district budgeted about $133,970,000 for expenditures but spent about $132,906,000 for a positive variance of about $1.1 million.

Five material weaknesses were found in the audit.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

In addition to the district's failure to have a combined listing of the district's capital assets records including the depreciation schedules from the former three districts, other material weaknesses included:

  • The district's unrestricted fund balance in the general fund as of June 30, 2020, was $7.1 million.

The amount fell below the state law requiring unrestricted fund balances of at least one month or 8.33% of general fund operating expenditures as calculated using the year-ending operating expenditures and the average of the year then ended and the previous year's expenditures.

The district's required reserve of general fund expenditures was $10.7 million and the required reserve based on the average of the ending and previous year's expenditures was $10.5 million.

"The district's 2019-2020 expenditures and other financing uses exceeded its revenues and other financing sources by $10,089,133," the report states.

  • Material audit adjustments -- Several audit adjustments affecting the general fund, special revenue fund, food service fund, debt service fund and capital projects fund were proposed and posted to the district's general ledgers to correct material misstatements.

The cause of the audit adjustments was errors in the district's recording of fringe and indirect cost allocations, voided checks and beginning cash balances, duplicate revenues, omission of some prior-year expenditures paid for the former districts and payroll withholdings.

"Without these proposed audit adjustments, the district's financial statements would have been materially misstated as of the and for the year ended June 30, 2020," Strickland said. 

The report recommends the district make sure to review its general ledger balances and compare the balances to "supporting reconciliations, payables and withholdings and receivables should be traced to payment of receipt."

Want to get a whole lot more from
  • Maintaining the general ledger -- "The district did not import the correct beginning balances from the former three districts into their system," Strickland said. "Many of the receipts of prior-year receivables were recorded in current-year revenues. Payroll withholdings carried from the prior years were not reconciled to payment. Some bank accounts were not reconciled until after year end."

The audit notes the district hired a consulting service to assist in correcting the issues but a trial balance presented Jan. 7, 2021, still contained an unidentified balance of $1.7 million, according to the audit.

The cause of the weakness was due to high turnover in the district's finance office resulting in the failure to review the general ledger for accuracy in a timely manner.

  • Payroll withholdings and related expenditures -- "We noted large balances remaining in the payroll withholding accounts from posting the payments to vendors," Strickland said. "One cause was a portion of the district's expenditures were being recorded in the payroll liability account rather than the proper expenditure accounts."

"We further noted that payments to the vendors for various benefits were in excess of the amounts being generated by payroll journals," Strickland said. "Therefore the benefits are being paid that neither charged to the district's expenditures as its portion of the cost nor withheld from employees' paychecks."

"We recommend the payroll journal entries be reconciled to the actual payments being made to ensure the proper coverages are being billed and withheld or charged to the district," Strickland said.

A significant deficiency was also noted. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention.

The significant deficiency was related to pupil activity funds.

Strickland said the Star Center had receipts to students for collections but that no funds were turned over to the district for deposit.

"The district staff collected the funds and made payments in cash for activity expenditures," Strickland said. "No documentation of these disbursements were retained."


Get local news delivered to your inbox!

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Get up-to-the-minute news sent straight to your device.


News Alerts

Breaking News