What’s New for 2024 School District Audits?
The past two years have been busy with the implementation of two significant Governmental Accounting Standards Board (GASB) Statements. While 6/30/2024 year-ends enjoy a break from complicated standards, there are still things to keep in mind as we head into audit season.
GASB Statements Effective for June 30, 2024 Year-Ends
Implementation Guide 2021-1, Question 5.1
Although issued in 2021, this question becomes effective with 6/30/2024 year-ends. The question clarifies that a government’s capitalization policy should be applied to groups of assets whose individual acquisition costs are less than the threshold for an individual asset if those assets in the aggregate are significant.
Examples provided in the response include computers, classroom furniture, and library books.
We encourage schools to revisit their capitalization procedures for these types of assets.
Leases and Subscription-Based Information Technology Arrangements (SBITAs)
Although the challenging work of identifying a complete population of leases and SBITAs is behind us, a reminder that this standard requires ongoing assessment.
You should evaluate any new lease or software agreements entered during the year for proper accounting under the standards.
GASB Clarification on Retainage
We recently received a clarification from GASB through a technical inquiry that retainage should only be accrued at the fund level if it is due and payable in full at year-end (meaning it is paid within a reasonable amount of time after year-end). Retainage that is not paid within a reasonable amount of time after year-end is not considered payable at year-end and, therefore, is not accrued at the fund level. In these cases, the retainage is still accrued in the government-wide statements and included as a fixed asset in governmental activities.
Single Audits of Elementary and Secondary School Emergency Relief (ESSER)
For the past several years, the Education Stabilization Fund, which includes ESSER grants, has been identified as a higher-risk program in the Compliance Supplement, requiring the program to be audited if total expenditures for the year exceeded $750,000.
The 2024 Compliance Supplement, which was recently issued, no longer designates this as a higher-risk program. Therefore, there may be cases where the program does not have to be audited this year. As always, program determination will be done once we receive your schedule of expenditures of federal awards, and your audit team will communicate the major programs required for audit.
Uniform Guidance Revisions
You may have heard about the excitement over Uniform Guidance revisions, which increase the threshold for a single audit from $750,000 to $1,000,000.
Unfortunately, this change is not effective until 6/30/26 year-ends, so the threshold for 6/30/24 audits remains at $750,000.
Upcoming GASB Statements
- Statement No. 101: Compensated Absences (6/30/25 year-end implementation)
- Statement No. 102: Certain Risk Disclosures (6/30/25 year-end implementation)
- Statement No. 103: Financial Reporting Model Improvements (6/30/26 year-end implementation)
If you have questions regarding this article or other audit matters, your Herbein audit team is ready to discuss any of these topics.
Article contributed by Megan Thompson
