Jan 28, 2026
By ANASTASIA PENCHI
The De Soto Area School District is implementing new procedures in its Business Office after its most recent financial audit.
The audit for the 2024-2025 school year had no findings of non-compliance and looked at $9.3 million in revenue and expenditures ending June 30, 2025.
“We didn’t come across anything as far as audit results that gave us pause,” Bill Moilien, audit supervisor with Johnson Block CPAs, told the school board during its January meeting. “All of these rural schools are facing the same issues.”
While the unmodified opinion had no findings of noncompliance, Moilien identified four areas for improvement:
1. Cash reconciliation – The district’s cash account is not being reconciled in a timely fashion. He said turnover in the business office staff contributed to the delays. Best practice is monthly reconciliation, and Moilien recommended the district adopt a procedure.
2. Receipt data delays – Receipt data from off-site buildings was not consistently provided in a timely manner. Best practice is monthly reconciliation, and Moilien recommended the district adopt a procedure.
3. Capitalization Policy – The federal capitalization of fixed assets limit has increased from $5,000 to $10,000. The district is currently updating its capitalization policy to reflect this, the district’s Business Manager Cherryl Knowles, told the school board.
4. Special Revenue Trust Fund Investments – Some funds the district has received are invested in mutual funds, which Moilien said is not allowed via state statute. He said this is actually a “fairly common” issue, and recommended the district review the statute and consider consulting its attorney for more information.
Moilien said nothing found during the audit was shocking, and the district’s financial statements are in “good shape.” He said there is “good, quality leadership” in the Business Office.
“She wears a lot of hats,” he said of Knowles, who started with the district June 15, 2023.
Knowles said changes in business office personnel required “some procedural clean-up and a lot of training time.” Staff in that office have multiple responsibilities, she said, so they have to prioritize work by immediate deadlines.
One challenge noted has been a lack of a consistent process for inter-district mail. When there is paperwork at the elementary schools, Knowles said they typically wait until someone can bring it to the business office without making a special trip.
As for the funds that are invested in mutual funds, Knowles said it is scholarship money and she does not know why that was done in April 2016. After talking with auditors, Knowles said she is looking at other investment options.
“We are in the process of improving our procedures in all of these areas,” she said.
Knowles said residents should know there has been “tremendous progress” in the district. She said they have cut budgets, put new procedures in place to monitor budgets and have established a strong fund balance.
The general fund balance increased from $3,443,510 in 2024 to $3,927,525 in 2025, according to the audit. Enrollment decreased from 491 students to 482, which directly affects revenue, and equalization aid decreased from just over $3 million to $2.97 million as a result.
De Soto’s Interim Superintendent Craig Gerlach, who has 26 years experience as superintendent in various Wisconsin schools, said school budgets are challenging because they are based on historical data and preliminary information that can’t be finalized until next year’s audit.
He said De Soto’s 2025-2026 budget is operating under a deficit, just like the previous years, and this could result in the district reducing its fund balance, but the district won’t know until audit time next year. According to the 2024-2025 audit, $485,107 was added to the general fund after numbers for that school year were finalized even though the budget set for that school year showed a deficit.
Gerlach said he believes the increase was partially due to staff members who subconsciously don’t want to spend money even if it was put in their budget.
Voters have refused three operational referendums in De Soto during the past two years, and the district is wrestling with additional challenges. Community members protested an elementary principal who was put on leave at the beginning of 2025. By the end of last year, he was rehired, the superintendent resigned and several incumbent school board members were not re-elected.
Gerlach is currently working with De Soto Middle & High School Principal Tim Fergot, who will become the fourth superintendent in four years for the district. This was done by design to help him transition into the job.
“I feel good where the school district is at,” Gerlach said. “We are in much better condition than we’ve been in years.”
In February, the De Soto Area School Board expects a recommendation from its Community Stakeholder Committee, which was created last year in response to the failed referendums to identify district challenges and options. The committee has discussed closing off-site elementary schools in a few years and adding an elementary school to the Middle & High School campus.
School Board President Holly Nickelatti said there has been a lot of change in the district during the past three years, and Johnson Block is a new auditing firm for the district.
She said she considers the audit favorable since there are no major deficiencies or areas of non-compliance – just recommendations/areas for improvement that come as a new team is better defining their roles.
“That’s what is good about audits,” Nickelatti said. “It’s a good opportunity to tighten things up.”
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