PONDERAY — The Lake Pend Oreille School District received its annual audit report Tuesday, and Steve Flerchinger, CPA with Magnuson, McHugh and Company, gave the district a "clean" bill of health.

"We did express a 'clean' opinion on (the district's) audited financial statements," Flerchinger said.

A "clean" audit, he said, means the district's financial statements can be relied upon because they are free from material misstatement, and were presented adequately with adequate disclosure. The auditor also looked at compliance of major federal programs, which in the case of LPOSD was the nutrition cluster. Internal control over financial reporting is a factor in the "clean" audit as well.

Internal controls are the processes that support the district's objectives for operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policy, Flerchinger said.

One example of a "strong" internal control includes the establishment of a separate fund to account for the receipts and expenditures of the district's supplemental levy — Flerchinger said LPOSD is one of few district's in the state that separates supplemental levy tax receipts to account for all the expenditures paid for by the local taxpayers. More examples include internal audits of student body funds, dual signatures on checks and segregation of duties.

"Your school district does a great job at these particular ones," Flerchinger said of the district's internal controls.

Some financial highlights in Flerchinger's report include:

- The district finished the year with a general fund balance of $2,187,990, which represents 7.2 percent of total expenditures — a decrease of $191,399 from the previous year.

- Actual revenues in the general fund were $2,755,909 higher than budgeted.

- Actual expenditures in the general fund were $2,569,317 higher than budgeted.

- The district has no bonded indebtedness.

"The fact that you don't have any bonds — most school districts do," Flerchinger told the trustees. "... That's huge, the fact that your district has kept you from having any bonds; there are sometimes that you need to think about doing that, but the fact that you don't have any right now puts you in a pretty good financial position."

Lisa Hals, the district's chief financial and operations officer, followed up the report with a financial update for the district. In her update, Hals said that while fiscal year 2017 ended on June 30 with $191,000 more in expenditures than in revenue, the actual difference was much less. The district made a payment to the wide-area network provider earlier this year as it awaited the federal government ruling on grant dollars. The district was approved for the grant funding in the third week of September, after more than a year and a half of waiting.

"We received $171,000 back in late September, which will be re-deposited into our fund balance," Hals said. "We really ended the year of a $30 million budget within $12,000, which is really remarkable."

The audit report, as well as the discussion and analysis, are posted on the district's website at lposd.org.

Mary Malone can be reached by email at [email protected] and follow her on Twitter @MaryDailyBee.