January 11, 2023 — Regular Meeting
Conroe ISD Board Meeting — 2023-01-11
Regular Meeting — Unofficial Notes
Based on auto-generated transcript. Not an official record.
Generated 2026-03-28 15:05 UTC
Unofficial Meeting Notes
Conroe ISD Audit Committee Meeting
January 11, 2023 — Regular Meeting (7:30 AM)
Note: These are unofficial notes based on an auto-generated transcript of the meeting. They are not official minutes and may contain errors or omissions.
Members & Attendees
- Board President / Superintendent: Dr. Noel (presided over initial portion)
- Audit Committee Members: Including Mrs. Chase (newly elected chair), Mr. Hubert, and other members (some new to the committee)
- District Staff: Darren Rice (Chief Financial Officer), Brian Hayden (Internal Auditor), Dr. Horton (Fine Arts), Marshall (Custodial/Maintenance Director)
- External Auditor: Sarah Roberts, Partner, Weaver
Item 1: Citizens Participation
No members of the public signed up to speak.
Item 2: Nomination and Approval of Audit Committee Chair
Dr. Noel explained the chair's role: presiding over meetings, working on agendas, and conducting the annual review of the internal auditor. As board president, Dr. Noel noted he is not eligible to serve as chair.
Nomination: Mrs. Chase was nominated (noted as "an auditor by trade" from a Fortune 100 company). She accepted the nomination.
Vote: Approved unanimously by show of hands. Mrs. Chase assumed the role of presiding officer for the remainder of the meeting.
Item 3: Approval of Minutes from September 14, 2022 Audit and Investment Committee Meeting
Motion: To approve minutes as presented.
Vote: Approved unanimously.
Item 4: Presentation of Annual Comprehensive Financial Report (ACFR) by Weaver
Presenter: Sarah Roberts, Partner, Weaver (external auditor for approximately 14 years)
Introduction
- Darren Rice introduced the district's six-member finance team, noting no management comments in the report for approximately 14 years.
- The district consistently receives the GFOA (Government Finance Officers Association) Certificate of Achievement for Excellence in Financial Reporting.
Audit Scope and Standards
- Type of Audit: Single audit (financial statement audit + federal awards audit)
- Standards: GAAS, Government Auditing Standards (Yellow Book), and Uniform Guidance (2 CFR 200)
- Three Reports Issued:
1. Independent Auditor's Report (opinion on financial statements)
2. Yellow Book Report (internal controls and compliance)
3. Uniform Guidance Report (federal award compliance)
Audit Results — All Clean
- Financial Statements: Unmodified (clean) opinion — highest level of assurance
- Yellow Book Report: Clean — no material weaknesses, no significant deficiencies, no material non-compliance
- Federal Awards Report: Unmodified (clean) opinion — no findings; approximately 50% coverage of ~$100 million in total federal expenditures
Non-Audit Services (Independence Considerations)
1. A separate Weaver department has provided services to the internal audit function
2. Assistance with preparation of notes to the Schedule of Expenditures of Federal Awards (2 pages within the 160-page ACFR)
- Neither service impairs auditor independence
Key Financial Highlights
- Total net position: Improved from a deficit of $12.7 million (prior year) to positive $30 million
- Excluding pension/OPEB items: Net position approaches $400 million (positive both years)
- Major year-over-year changes:
- Issuance of Series 2022A bonds — approximately $340 million in new debt
- Increased cash/investment balances and ongoing construction
- Federal and state funding increased approximately $30 million
- New GASB 87 (Lease Standard): Net impact less than $15,000 across five new line items
General Fund Highlights
- Fund balance remarkably consistent year over year (increased ~$1 million)
- Unassigned fund balance covers approximately 95% of total fund balance
- Unassigned fund balance as a percent of expenditures: ~29-31% (approximately 4 months of operating coverage)
Pension & OPEB Discussion (TRS)
- Pension liability (net): Decreased from $165 million to $86 million (nearly halved) due to outstanding TRS investment returns in fiscal year ending 8/31/2021 (~$40 billion in investment income vs. normal $10-15 billion)
- Sensitivity analysis: A 1% change in the discount rate could result in swings of up to $100 million for pension and significant swings for OPEB
- Key context: These are actuarial estimates reported on a one-year lag; the district has no control over TRS investment decisions
- Deferred recognition: Accounting standards smooth these swings — net pension effect changed only ~$7 million year-over-year (vs. $80 million raw swing)
- TRS governance: Board of Trustees is governor-appointed (some positions nominated by TRS membership); TRS manages ~$195 billion in assets
- Committee members noted the contradiction that school districts are restricted to conservative investments while TRS invests across all markets
Upcoming Accounting Change
- GASB 96 (Subscription-Based IT Arrangements): Effective for fiscal year 2023; similar framework to lease standard; not expected to have a huge impact
Item 5: Approval of Recommendation of ACFR to Full Board
Motion: To recommend the 2022 ACFR be presented to the Board of Trustees at the next regular board meeting.
Vote: Approved unanimously by show of hands.
Note: Sarah Roberts will provide a briefer presentation to the full board the following week.
Item 6: Update on 2022-2023 Internal Audit Plan
Presenter: Brian Hayden, Internal Auditor (CPA, Certified Internal Auditor, Certified Fraud Examiner; 3.5 years with CISD)
Internal Audit Department Overview
- Performs operational and financial audits (not curriculum or testing)
- Staff: One staff auditor dedicated to activity fund audits and PTO audits
- Co-source arrangement with Weaver: Provides supplemental resources, especially for IT audits, without the cost of additional full-time hires
- Audit plan is based on annual risk assessment (questionnaire sent to leadership ~April; plan approved by audit committee in May)
- Significant shift over past 3-4 years: Expanded from primarily campus activity fund audits to full-service internal audit covering major district systems (IT, transportation, police, payroll, etc.) while maintaining activity fund audits
Completed Audits
1. Activity Fund Audits
- Bozeman Intermediate and The Woodlands High School — completed
2. Custodial/Maintenance Audit
Two Findings (Opportunities for Improvement):
Finding 1 — Warehouse Inventory Accuracy:
- Random physical count revealed a 5% initial error rate; expanded testing showed 12% error rate
- Warehouse processes ~13,000 items annually
- Root cause: Mostly packaging issues (e.g., partially empty boxes appearing full)
- Dollar impact: Approximately $1,000 in discrepancies
- Recommendation: Implement random monthly inventory counts
- Management response: Implementing automated monthly count alerts, similar to preventative maintenance system
Finding 2 — Accident Report Documentation:
- Reviewed all accident reports January 2021 through August 2022
- 37% error rate in report completeness (missing at-fault designations, drug test documentation, incomplete sections)
- ~75% of issues were incomplete form completion; ~25% were missing supporting documentation
- Only 19 accidents over the period across ~300 vehicles operating daily — a low accident rate
- Recommendation: Train supervisors on complete documentation; implement supervisory review
- Management response: Transitioning from paper to electronic forms with required fields and notification workflows
- Committee expressed concern about potential liability from incomplete records and employee welfare documentation
Two Observations (Lower Risk):
Observation 1 — Attic Stock (Construction Leftover Materials):
- Leftover construction materials (paint, tiles, doorknobs, etc.) stored at zero cost with no tracking controls
- Recommendation: Implement tracking controls for when items are removed from stock
- Management response: New warehouse will include inventory accounts for attic stock items
Observation 2 — Duplicate Accident Reporting (Paper and Electronic):
- Recommended choosing one format; electronic was selected
Recognition: Marshall (Maintenance Director) was noted as a state finalist from TASBO for operations management excellence.
3. Band Instruments Audit (Follow-up — Two-Year Project)
- Scope: All junior highs, intermediates, and K-6 campuses (22 campuses visited)
- Physical inventory conducted with Dr. Horton (Fine Arts) at each campus
- Results out of 2,752 instruments:
- 7 missing instruments (~$35,000 value)
- 63 instruments added to Charms system (~$156,000 — already present but not recorded)
- Various updates needed (wrong serial numbers, manufacturer, descriptions)
- Context:
- ~5,600 instruments at capital outlay level across the district
- ~40% teacher turnover in 5-8 grade campuses over last five years
- Instrument purchases were delayed twice until inventory was accurate
- Many "added" instruments were community donations or parent gifts
- Teachers voluntarily worked nights and weekends to prepare for audits
- Going forward: Internal audit will step back; schools will maintain under established guidelines; random audits every other year by Dr. Horton
- Committee expressed appreciation for the urgency and thoroughness of this effort
Remaining Audit Plan Items for 2022-2023
| Audit | Timing | Notes |
|-------|--------|-------|
| Child Nutrition | In progress (work program development) | School-centric focus on cash controls and inventory; Weaver resources to assist with scale; state/federal auditors cover nutritional compliance |
| IT Cybersecurity Plan Review | February 2023 | Weaver-led; review of new cybersecurity plan against best-in-class standards |
| IT General Controls Follow-up | February 2023 | Follow-up on prior audit with 14 findings; separate Weaver team (same personnel as original audit) |
| Caney Creek High School Remodel | During year | Standard review of construction/remodel financials |
| Police Department Follow-up | Summer 2023 | Follow-up on 2021 audit |
| Annual Attendance (PEIMS) Audit | Summer 2023 | Annual verification that attendance is taken correctly (basis for state funding) |
Next Meeting
Confirmed: Wednesday, May 10, 2023 at 7:30 AM
Meeting Adjourned
Motion to adjourn was made and the meeting was concluded.