January 13, 2021 — Regular Meeting
Conroe ISD Board Meeting — 2021-01-13
Regular Meeting — Unofficial Notes
Based on auto-generated transcript. Not an official record.
Generated 2026-03-28 13:26 UTC
Unofficial Meeting Notes
Conroe Independent School District – Audit Committee Meeting
January 13, 2021 | Meeting Called to Order: 7:32 AM
These are unofficial notes based on an auto-generated transcript and may contain errors or omissions.
Opening
Chair Ray Sanders called the Audit Committee meeting to order. A quorum of the board was present. An opportunity for public comment was offered on the three action items; no members of the public spoke.
Action Items
Item I: Selection of Audit Committee Chair for 2021
- Nomination: Board member Moore nominated Ray Sanders as Audit Committee Chair. Seconded by Board member Chase.
- No other nominations were made.
- Vote: Approved unanimously. Ray Sanders will continue as Audit Committee Chair for 2021.
Item II: Approval of Minutes from September 9, 2020 Audit Committee Meeting
- Motion: Moore moved to approve as presented; seconded by another member.
- Vote: Approved unanimously.
Item III: Presentation and Recommendation of the 2019-2020 Comprehensive Annual Financial Report (CAFR)
Introduction by Darren Rice (Finance):
- Rice recognized finance staff members Janith Stowers, Karen Garza, Rachael Batalla, Cyndi Westrup, and Mandy Deckwa for their outstanding work. Staff attended this meeting instead of the regular board meeting due to COVID-19 restrictions.
- Sarah Roberts, Partner at Weaver and Tidwell LLP (the district's independent auditors), presented the CAFR.
Audit Scope & Results (Sarah Roberts, Weaver and Tidwell):
- Type of Audit: Single Audit (required for governmental entities expending more than $750,000 in federal awards; Conroe ISD expended more than $40 million).
- Three reports issued:
1. Financial Statement Audit Report – Unmodified (clean) opinion – the highest level of assurance that financial statements are free from material misstatement.
2. Yellow Book Report (Internal Control & Compliance) – No reportable findings – no material weaknesses, significant deficiencies, or noncompliance matters.
3. Uniform Guidance Report (Federal Awards) – Unmodified (clean) opinion on compliance; no internal control findings related to federal awards.
- Major programs tested: Title I and ESSER (Elementary and Secondary School Emergency Relief – a new CARES Act program).
- Combined federal expenditures for these two programs: ~$13.4 million (~33% of total federal expenditures).
- No material misstatements, no lack of authoritative guidance, no difficulties or disagreements during the audit. COVID-19 presented general challenges, but nothing specific to the audit.
Financial Statement Highlights:
- Government-Wide (Statement of Net Position):
- Overall increase in net position: $12 million (or $42 million excluding OPEB/Pension adjustments).
- Cash and investments increased by $93 million (driven by bond issuance, increased property tax revenues, state funding, and timing).
- OPEB (Other Post-Employment Benefits) and Pension net increase: $30 million.
- Total net position and unrestricted net position both show a deficit, but this is primarily attributable to OPEB/Pension liabilities, which is common across nearly all Texas school districts.
- Key discussion: Chair Sanders and Roberts confirmed that OPEB liabilities are allocated proportionate shares of the statewide pension/OPEB system, not direct district obligations to be liquidated with district resources. Rice noted that bond rating agencies do not focus on these government-wide statements; they focus on fund financial statements.
- Board member Hubert asked about OPEB components: Roberts confirmed TRS Care (retiree healthcare benefits) is essentially the only OPEB component, and the OPEB system is funded at approximately 1% compared to the pension system at more than 50%.
- Statement of Activities (Government-Wide Income Statement):
- Excluding OPEB/Pension, the increase in net position was $13 million year-over-year.
- Property taxes increased by $11 million (due to increased appraised values).
- State revenue increased by $38 million (Foundation School Program).
- Charges for services decreased by $4 million (reduced lunchroom revenues due to COVID).
- Payroll expenses increased by $35 million (~7.5% increase).
- General Fund Financial Statements:
- Total fund balance: $163.9 million (93.7% unassigned, consistent with 96.1% prior year).
- Total expenditures: $529.9 million (prior year: $495.5 million).
- Unassigned fund balance to expenditures ratio: 29% (~3.5 months of expenditures; prior year: 27.2% / ~3.25 months).
- Rice noted the expenditure increase was primarily attributable to employee raises and staffing for new schools.
- Budget to Actual:
- Expenditures came in approximately 5% under budget (~$28 million under).
- Contributing factors: COVID-related reductions (especially utilities, as buildings were in standby mode), reclassification of ~$6 million in expenditures to the ESSER grant fund.
- Upcoming Accounting Standard – GASB 84 (Fiduciary Activities):
- Effective for fiscal year 2021 (delayed one year due to COVID).
- Agency funds (used for student activity funds) will be renamed "custodial funds."
- Changes are primarily presentational (balance sheet will show assets, liabilities, and net position; income statement format will show revenues, expenses, and change in net position).
- Roberts characterized the impact as minimal; the district is well-prepared.
Action on CAFR:
- Motion: Chase moved to recommend the CAFR for presentation to the full Board of Trustees at the January 19th regular meeting. Seconded by Hubert.
- Vote: Approved unanimously.
Item V: Internal Audit Work Plan & Schedule of Work Completed
The Internal Auditor (Brian) presented an update on internal audit activities.
Band Instrument Inventory Audit (Final audit of 2019-2020 Plan)
Findings:
- Significant issues discovered: 153 missing instruments out of approximately 4,700+ total instruments across all high schools and junior highs.
- Instruments not on campus inventory records; checkout/tracking documentation not being properly used.
- It had been 10 years since a high school instrument inventory was conducted and never for junior high band instruments.
- Three of six high school head band directors had turned over during that 10-year period, and junior high turnover was even higher, contributing to training gaps.
- Approximately $60,000–$80,000 in tuba/sousaphones were known to have been stolen from one campus a couple of years ago but were never removed from inventory.
Corrective Actions (presented by Dr. Horton, Fine Arts):
- Mandatory annual inventory with established reporting dates, submitted to Dr. Horton.
- Standardized written procedures for checking out and tracking instruments.
- Principals will now be required to sign off on annual inventory reports (previously, accountability ran only through Fine Arts).
- Campuses that do not complete annual inventory will not be eligible for critical needs purchases (the annual program to replenish/replace instruments).
- Standardized purchasing specifications for instruments established with the Purchasing Department.
- A central inventory system using Charms software with actual manufacturer serial numbers (not district-assigned numbers) for granular tracking.
- Next phases will include 5th and 6th grade band instrument inventory and string instrument inventory.
- Directors were informed of findings at a January 4th training; individual campus post-audit reports were shared.
- The internal auditor confirmed a follow-up audit (random sampling at high schools and junior highs) would be conducted after approximately six months.
Discussion on broader inventory management:
- Rice noted that computer/technology inventory has been well-managed, but with COVID-related Chromebook and hotspot distribution, ensuring Tip Web (the technology inventory system) is fully updated is a current priority. A Friday deadline was given for all campuses to update Tip Web.
- Chair Sanders requested that the Audit Committee receive a periodic executive-level summary of district-wide inventory completion status as part of an annual report cycle. Staff agreed this was a good idea.
- An administrator noted that for the previous five years, internal audit had focused almost exclusively on activity fund audits, which allowed issues like the instrument inventory to go unaddressed. The shift in audit focus was credited to the Audit Committee's direction under Chair Sanders and the hiring of the current internal auditor.
Payroll/Leave Audit (Completed)
Findings:
- Leave activities are handled in the Payroll Department rather than HR (which differs from corporate best practices). Employees were contacting Payroll for leave issues rather than HR.
- Bus driver standard hours changes are very labor-intensive and manual:
- Changes are currently processed three times per year (September, November, February).
- 93% of changes occur in the first two periods; the third period is unnecessary for most.
- 336 changes were processed, with 90% being one hour or less.
- The manual recalculation process (no payroll system can automate it) is extremely time-consuming, especially for employees with multiple changes per year (up to six).
Corrective Action:
- Going forward, standard hour changes will only be processed if the change is one hour or greater, which is expected to significantly reduce workload.
- Only two change periods per year will be utilized (eliminating the third).
Discussion:
- Rice provided extensive explanation of the 12-month pay spread for 10-month bus driver employees, the manual calculation challenges, and competitive considerations with surrounding districts (most nearby districts have also moved to 12-month pay). Only ~15 of ~500 bus drivers elected the 10-month pay option.
- Board members discussed the mechanics but agreed the one-hour threshold change should resolve most issues.
Transportation Audit (Kicked Off)
- Kickoff meeting held the previous day with the Transportation Department.
- Scope: Bus routing efficiency (including use of Compass routing software), inventory controls, parts inventory, management of fuel costs, general operations, and security.
- Visits will be made to each bus depot.
- A Weaver senior auditor is assisting with this audit as a co-sourcing arrangement (to avoid hiring another full-time internal auditor while addressing the large scope).
- Board member Hubert asked about how frequently the Compass routing software is updated with new roads, traffic signals, and subdivisions; the auditor indicated this will be examined during the audit.
Upcoming Audits (2020-2021 Plan)
- Activity fund audits: Three completed; currently working on Woodlands College Park.
- Remaining audits: Child Nutrition, Flex-20 Construction Close-Out, and additional activity funds.
General Comments on Internal Audit Direction
- An administrator (believed to be a senior district leader) praised this as the most productive Audit Committee meeting in seven or eight years, noting the shift from exclusively auditing activity funds to examining major operational areas like payroll, transportation, and instruments. He credited Chair Sanders and the current internal auditor for driving this change.
- Chair Sanders concurred, noting the meeting lasted about an hour (longer than typical) but was very productive.
Next Meeting
- Confirmed: Wednesday, March 10, 2021, at 7:30 AM (the Wednesday before spring break).
Adjournment
The meeting was adjourned following confirmation of the next meeting date. No other business was raised.